EXHIBIT 10.43
SECOND AMENDMENT TO GUARANTEE REIMBURSEMENT AGREEMENT
This Second Amendment to Guarantee Reimbursement Agreement ("Amendment") dated
as of October 2 , 1991, is entered into by and between National Medical
Enterprises, Inc., a Nevada corporation ("NME") and The Hillhaven Corporation, a
Nevada corporation ("New Hillhaven").
RECITALS
A. New Hillhaven and NME entered into that certain Guarantee Reimbursement
Agreement, dated as of January 31, 1990 (as amended by that certain first
Amendment To Guarantee Reimbursement Agreement, dated as of May 30, 1991 (the
"first Amendment"), and as the same may be amended, restated, modified,
supplemented, renewed or replaced from time to time, the "Reimbursement
Agreement"), which provides, among other things, for the reimbursement by New
Hillhaven of all Obligations paid by NME after the Distribution Date. Unless
otherwise defined herein, the terms defined in the Reimbursement Agreement are
used herein as therein defined.
B. New Hillhaven and certain of its Subsidiaries entered into that certain
Master Loan Agreement, dated as of May 29, 1991 (as the same may be amended,
restated, modified, supplemented, renewed or replaced from time to time, the
"Master Loan Agreement") with THC facilities Corp. (the "Lender") pursuant to
which New Hillhaven and such Subsidiaries (collectively, the "Borrowers") may
borrow from time to time amounts up to a total principal sum of $200,000,000
(the "THC facilities Loans"). In connection therewith, NME guaranteed the
obligations of Lender under that certain Credit Agreement, dated as of May 29,
1991, with Swiss Bank Corporation and certain other banks (the "Banks") to
assist Borrowers in obtaining the THC facilities Loans. New Hillhaven and NME
entered into the first Amendment to, among other things, specifically add the
obligations of the Borrowers pursuant to the Master Loan Agreement as
"Obligations" under (and as defined in) the Reimbursement Agreement.
C. First Healthcare Corporation ("FHC"), a wholly-owned subsidiary of New
Hillhaven, has exercised its option to purchase 20 facilities which it currently
leases from certain subsidiaries of NME, pursuant to that certain letter dated
August 9, 1991 (the "Letter of Intent").
D. To facilitate FHC's purchase of facilities from subsidiaries of NME, New
Hillhaven has requested and Lender has agreed to permit Borrowers to reclassify
$12,000,000 of the THC facilities Loans designated to refinance MP funding loans
(which funds are part of the funds designated as "Refinance Loans" in the First
Amendment) so that said $12,000,000 is available to finance Parcels and Projects
(as that term is defined in the Master Loan Agreement) (which funds are part of
the funds designated as "New THC funds" in the First Amendment). Accordingly,
the Master Loan Agreement and the Credit Agreement are being amended by that
certain first Amendment to Master Loan Agreement, dated October 2, 1991, and
that certain First Amendment to Credit Agreement, dated October 2, 1991,
respectively.
E. In connection with its acquisition of the facilities described in Recital
C, above, FHC will assume certain debt obligations, as more specifically defined
in Schedule 1, attached hereto and incorporated herein by this reference.
F. Consistent with the amendment of the THC Facilities Loans, New Hillhaven
and NME desire to further amend the Reimbursement Agreement to (l).reallocate
the amounts designated as "New THC Loans" and "Refinance Loans" in the First
Amendment, and (ii) reaffirm that the guarantee fee applicable to the New THC
Loans, as reallocated, shall be as stated in Paragraph 2(a) of the First
Amendment. Additionally, New Hillhaven and NME desire to amend the Reimbursement
Agreement to add the debt obligations being assumed by FHC as described in
Schedule 1 hereto as Obligations under the Reimbursement Agreement.
NOW THEREFORE, in consideration of the foregoing Recitals and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, hereby agree to
amend, modify and supplement the Reimbursement Agreement as follows:
AGREEMENT
1. Allocation of THC Facilities Loans.
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New Hillhaven and NME acknowledge that, consistent with the First Amendment
to Credit Agreement, the funds available under the THC Facilities Loans that are
designated as "Refinance Loans" in the First Amendment are hereby reduced from
$117,000,000 to $105,000,000, and the funds available under the THC Facilities
Loans that are designated as "New THC Loans" in the First Amendment shall be
increased from $83,000,000 to $95,000,000.
2. Assumed Obligations.
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The obligations identified in Schedule 1 hereto that are being assumed by
FHC in conjunction with its acquisition of certain facilities (the "Assumed
Obligations") are hereby added as, and shall be deemed to be, "Obligations"
under (and as defined in) the Reimbursement Agreement, and all terms, covenants
and conditions of the Reimbursement Agreement, except as expressly provided
herein, shall apply to the Assumed Obligations.
3. Guaranty Fee.
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(a) New THC Loans. The guaranty fee set forth in Section 2(a) of the
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First Amendment shall be applicable to the New THC Loans, as reallocated
pursuant to Paragraph 1, above.
(b) Assumed Obligations. The guaranty fee provisions of Section 2 of the
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Reimbursement Agreement shall not apply to the Assumed Obligations. Instead, New
Hillhaven shall pay to NME a guaranty fee equal to 1% per annum of the daily
outstanding balance of the Assumed Obligations. Such guaranty fee shall be paid
in quarterly installments on the last business day of each fiscal quarter, with
the first Installment due November 30, 1991. The principal amount of the Assumed
Obligations shall not be included as part of the outstanding Obligations under
Section 2(c)(i) of the Reimbursement Agreement for the purposes of calculating
the guaranty fee referred to in Section 2 of the Reimbursement Agreement.
4. Effect on Reimbursement Agreement.
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Except as expressly amended by this Amendment, all of the terms and
conditions of the Reimbursement Agreement shall remain in full force and effect.
5. Captions.
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The captions and headings used herein are for the convenience of reference
and shall not be construed in any manner to limit or modify any of the terms
hereof.
6. Governing Law.
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This Amendment shall be governed by and construed in accordance with the
laws of the State of California.
7. Counterparts.
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This Amendment may be executed in counterparts, each of which shall be an
original, but all of which together shall constitute but one and the same
instrument.
IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment to
be duly executed on its behalf as of the date first set forth above.
NATIONAL MEDICAL ENTERPRISES, INC.
By: [SIGNATURE ILLEGIBLE]
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Title: Senior Vice President
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THE HILLHAVEN CORPORATION
By: /s/ Robert F. Pacquer
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Title: Senior Vice President
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SCHEDULE 1
ASSUMED OBLIGATIONS
Facility 461: Edmonds, WA Promissory Note, dated 7/1/84, executed by
Hillhaven, Inc. in favor of Villa Care, Inc. in
the original sum of $5,875,572.99. Assumed portion
of Promissory Note allocable to facility 461 is
approximately $22,794.54.
Facility 825: Suffolk, VA Financing Agreement, dated 12/28/83, between
Suffolk Development Authority and The Hillhaven
Corporation with an outstanding balance of
$4,000,000.00.
Facility 829: Holmes, VA Financing Agreement, dated 12/29/83, between City
of Virginia Beach Development Authority and The
Hillhaven Corporation, with an outstanding balance
of $3,925,000.00.
[LETTERHEAD OF HILLHAVEN]
August 9, 1991
Mr. Timothy L. Pullen
NME Properties Corp.
c/o NME Properties, Inc.
1148 Broadway Plaza, Suite 260
Tacoma, WA 98402
Re: Acquisition of NME Leased Facilities (File No. 2004)
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Dear Tim:
First Healthcare Corporation ("FHC") leases the 20 facilities listed on
Schedule 1 (hereinafter, individually a "Facility" and collectively the
"Facilities") from NME Properties Corp. and/or its wholly-owned subsidiaries,
NME Properties, Inc., NME Properties West, Inc., NME Properties Holding Co.,
Inc. and Guardian Care Inc. (collectively, "NME Properties").
Pursuant to Section 30 of the respective Leases for the Facilities, FHC
hereby exercises its option to purchase each of the Facilities. The aggregate
purchase price for the Facilities is $90,300,000 (the "Purchase Price"). The
individual Facility purchase prices are set forth on Schedule 1.
Subject to receipt of all necessary regulatory and lender approvals and
consents, the proposed closing date for the transaction is September 30, 1991,
or as soon as possible thereafter. In compliance with the Leases, we will make
arrangements this week to forward to you the deposit of $4,515,000 which is an
amount equal to five percent of the purchase price. The deposit shall be
credited against the cash down payment requirement referenced below at time of
closing of each Facility sale.
The deposit shall be paid into an interest-bearing escrow account and all
interest shall accrue to FHC's benefit; provided, however, if the sale of any of
the Facilities is not completed as a result of a breach by FHC, the amount of
the deposit applicable to such Facility shall he paid to NME Properties as
liquidated damages. Withdrawals may be made from the escrow account only with
the signature of both NME Properties and FHC.
Timothy L. Pullen
August 9, 1991
Page two
FHC shall pay the Purchase Price as follows: (a) $21,655,000 in cash and
(b) $68,645,000 by (i) assuming approximately $8,800,000 of existing debt and
(ii) subject to certain bank approvals, approximately $59,845,000 in borrowings
from THC Facilities Corp. FHC agrees to obtain $18,060,000 (20% required cash
down payment) of the cash consideration from sources other than borrowings
guaranteed by National Medical Enterprises, Inc. ("NME"). Such sources may
include, for example, net cash provided from operations or from the sale of
assets, notes receivable or other investments. The amount of debt being assumed
by FHC will have a l% guarantee fee as long as such debt is guaranteed by NME
or an affiliate. The parties also acknowledge that for the transaction to close
as contemplated, the amount designated for "New THC Loans" under the THC
Facilities Corp. financing line needs to be increased by approximately
$12,000,000. Our mutual intent is to have $12,000,000 of the existing
approximately $95 Million remaining and currently designated for "Refinancing
Loans be reclassified for use in this transaction. Once this $12,000,000 is
redesignated for use for a New THC Loan and such amount is drawn upon for this
transaction, the parties agree such amount will be subject to a guarantee fee as
provided for in Section 2(a) of the First Amendment to Guarantee Reimbursement
Agreement dated May 30,1991 between NME and The Hillhaven Corporation, FHC's
parent Company ("Hillhaven").
Also, NME is willing to agree, subject to final approval by NME's CERC and
Relationship Committees, to assist and cooperate with Hillhaven in expanding the
current THC Facilities Corp. line of credit, or if this is not possible,
obtaining new financing with terms and conditions similar to such line of credit
in an amount equal to that actually borrowed from THC Facilities Corp. to
acquire the facilities listed in Schedule l.
If you have any questions concerning this transaction, please contact me or
Jacinta Titialii at 572-4901.
Very truly yours,
/s/ Robert K. Schneider
Robert K. Schneider
Vice President
Timothy L. Pullen
August 9, 1991
Page three
Accepted and acknowledged this 9 day of August, 1991.
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NME PROPERTIES CORP.
By: /s/ Timothy L. Pullen
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Timothy L. Pullen
Vice President
cc: The Hillhaven Corporation
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Robert F. Pacquer
Richard P. Adcock
Jacinta Titialii
Jean T. Fukuda
Carl Anderson
NME
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Ray Mathiasen
Nita Heckendorn
Karen Rothberg
SCHEDULE I
NME PROPERTIES
SALE OF FACILITIES
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Fac Facility Option
No. Name State Price
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143 Hillhaven Conv Ctr NC $5,900
146 HH Rose Manor Conv Ctr NC 3,800
190 Winston-Salem Conv Ctr NC 5,600
752 Golden Age Manor/Long Pt TX 3,600
825 Nansemond Conv Ctr VA 7,600 (Note 1)
829 Holmes Conv Ctr VA 6,800
861 Green Meadows Nrng Ctr KS 4,200
138 HH Rehab & Conv Ctr NC 4,200
765 Eastview Manor WI 4,100
137 HH Sunnybrook Conv Ctr NC 3,500
448 Dirksen House Healthcare IL 3,400
461 Edmonds Care Center WA 2,900
610 Boca Raton Conv Ctr FL 5,500
660 Hillhaven Conv Ctr GA 2,600
704 Guaridan Care of Roanoke Rapid NC 4,200
780 Columbus Conv Ctr IN 7,000
809 Country Club Home KS 3,000
760 Golden Age Manor-Bellfort TX 3,900
753 Golden Age Manor-No. Loop TX 4,600
754 Golden Age Manor-Rookin TX 4,000
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TOTAL $90,300
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Note 1: The Option Amount in the Lease is
$5.6 Million plus the Cost of the
Addition. An estimate of $2 Million
for the Cost of the Addition has
been included in the Option Price on
this schedule, however, it will be
adjusted to actual at closing.