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EXHIBIT 10.3
FIRST AMENDMENT TO AMENDED AND
RESTATED GUARANTY OF PAYMENT AGREEMENT
THIS FIRST AMENDMENT TO AMENDED AND RESTATED GUARANTY OF PAYMENT
AGREEMENT (this "Agreement") is made this _______ day of November, 2000,
effective as of September 30, 2000 by and between AMERICAN RETIREMENT
CORPORATION, a Tennessee corporation (the "Guarantor") and BANK UNITED (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 Agreement 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 ARC Capital Corporation II and the
other 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, as amended pursuant to the First Amendment to Amended and Restated
Financing and Security Agreement of even date herewith (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 the Guarantor pursuant to the terms of the Amended and Restated Guaranty of
Payment Agreement dated February 11, 2000 (the "Guaranty").
D. The Borrowers have requested and the Lenders have agreed to modify
certain provisions of the Financing Agreement and the Guaranty.
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E. The Lenders have required, as a condition to continuing to make
available the Credit Facility, that the Guarantor 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 Guaranty shall have the same meaning under this Agreement.
2. The Guaranty is hereby amended as follows:
(a) Subsections (a), (d) and (f) of Section 3.2 of the Guaranty are
hereby amended and restated in their entirety as follows:
(a) Minimum Tangible Net Worth. Maintain, on a consolidated
basis with all subsidiaries, at all times during the term of the Credit
Facility measured quarterly, a minimum Tangible Net Worth of not less
than $92,000,000 as of September 30, 2000 and beginning with the
quarter ending December 31, 2000 a Minimum Tangible Net Worth of not
less than the sum of $92,000,000 plus fifty percent (50%) of the
Guarantor's net income (if positive) for each subsequent quarter plus
seventy-five (75%) of the net cash proceeds to the Guarantor of any
equity capital (or equity equivalent) securities offering received
during such quarter, excluding the dollar amount of any such equity
offering issued in connection with and acquisition, merger or business
combination which is attributed to the purchase of the goodwill of the
acquired entity. "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 except leasehold acquisition costs, if any, for
the Senior Living Facility known as "Freedom Plaza Peoria".
(d) Ratio of EBITDAR to Interest and Rent. Maintain on a
consolidated basis a minimum ratio of EBITDAR to the sum of Interest
plus Rent as shown below for the period or periods indicated; provided,
however, that 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 more than
$3,000,000) taken by the Guarantor in that
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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:
(i) Measured on a rolling four (4) fiscal quarter basis as
follows:
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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
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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
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June 30, 2002 1.40 to 1.00
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(ii) Measured on a single fiscal quarter basis as follows:
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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
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September 30, 2001 1.20 to 1.00
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December 31, 2001 1.30 to 1.00
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March 31, 2002 1.40 to 1.00
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June 30, 2002 1.50 to 1.00
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(f) Minimum Liquidity. Maintain on a consolidated basis Liquid
Assets of not less than the greater of (i) (aa) ten percent (10%) of
its Tangible Net Worth or (bb) $12,000,000, measured quarterly plus
(ii) $.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,
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(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; and
(iv) the dollar amount spent on new (i.e., first initiated
after the effective date 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; 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; or (2) the cost of proposed
expansion of the Senior Living Facility knows as "Park Regency".
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.
(b) The following new Subsection (g) is hereby added to Section 3.2
(Financial Covenants) of the Guaranty:
(g) Fixed Charge Coverage Ratio. Maintain on a consolidated
basis a minimum ratio of EBITDAR (as defined in the Financing Agreement
as modified pursuant to Subsection (d) of this Section 3.2) to Interest
plus Rent plus current of principal amortization of debt of 1.05 to
1.00, measured quarterly on a rolling four (4) quarters basis. In
determining the amount of principal amortization of any debt any
balloon or bullet payment shall be excluded.
3. Except as specifically set forth herein, the terms, provisions and
covenants of the Guaranty are hereby ratified and confirmed and remain in full
force and effect.
4. 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.
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WITNESS the signatures and seals of the Guarantor and the Agent on
behalf of the Lenders under seal by their duly authorized representatives as of
the day and year first above written.
WITNESS OR ATTEST: AMERICAN RETIREMENT CORPORATION,
a Tennessee corporation
By: (SEAL)
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Xxxxxx X. Xxxxx
Executive Vice President
STATE/COMMONWEALTH OF _______________
COUNTY/CITY OF ______________, TO WIT:
I HEREBY CERTIFY, that on this ___ day of November, 2000, before me,
the undersigned Notary Public of said State/Commonwealth, personally appeared
Xxxxxx X. Xxxxx, who acknowledged himself to be the Executive Vice President of
American Retirement Corporation, known to me (or satisfactorily proven) to be
the person whose name is subscribed to the within instrument, and acknowledged
that he executed the same for the purposes therein contained as the duly
authorized officer of said corporation by signing the name of the corporation by
himself as Executive Vice President.
WITNESS my hand and Notarial Seal.
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Notary Public
My Commission Expires:
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WITNESS OR ATTEST: BANK UNITED, as Agent on behalf of the
Lenders
By: (SEAL)
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Name:
Title:
STATE/COMMONWEALTH OF _______________
COUNTY/CITY OF ______________, TO WIT:
I HEREBY CERTIFY, that on this ___ day of November, 2000, before me,
the undersigned Notary Public of said State/Commonwealth, personally appeared
____________________, who acknowledged himself to be the
__________________________ of Bank United, known to me (or satisfactorily
proven) to be the person whose name is subscribed to the within instrument, and
acknowledged that he executed the same for the purposes therein contained as the
duly authorized officer of said bank by signing the name of the bank by himself
as _______________________________.
WITNESS my hand and Notarial Seal.
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Notary Public
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