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EXHIBIT 10.14
AMENDMENT NO. 4 TO
MASTER CONSTRUCTION LINE OF CREDIT AGREEMENT
THIS AMENDMENT NO. 4 TO MASTER CONSTRUCTION LINE OF CREDIT
AGREEMENT, dated as of May 25, 2000 ("THIS AMENDMENT"), among the following:
(i) ALTERRA HEALTHCARE CORPORATION, a Delaware corporation
formerly known as Alternative Living Services, Inc. (herein, together
with its successors and assigns, the "COMPANY");
(ii) ALS NATIONAL, INC., a Delaware corporation (a "BORROWER");
(iii) the lending institutions listed on the signature pages
hereof (the "LENDERS");
(iv) BANK OF AMERICA, NATIONAL ASSOCIATION, as successor to Bank
of America National Trust and Savings Association, a national banking
association, and SOUTHTRUST BANK, NATIONAL ASSOCIATION, a national
banking association, as Co-Agents; and
(v) KEY CORPORATE CAPITAL INC., a Michigan corporation, as
administrative agent (the "ADMINISTRATIVE AGENT")
PRELIMINARY STATEMENTS:
(1) The parties hereto entered into the Master Construction Line of
Credit Agreement, dated as of October 6,1998, as amended by Amendment No. l
thereto, dated as of January 5, 1999, and Amendment No. 2 thereto, dated as of
May 5, 1999, and Amendment No. 3 thereto, dated as of March 1, 2000 (as so
amended, the "CREDIT AGREEMENT"; with the terms defined therein, or the
definitions of which are incorporated therein, being used herein as so defined).
(2) In connection with the satisfaction of the New Capital Funding
Requirement, the parties hereto desire to change certain of the terms and
provisions of the Credit Agreement, all as more fully set forth below.
NOW, THEREFORE, the parties hereby agree as follows:
SECTION 1. AMENDMENTS, ETC.
1.1. INTEREST. Effective on the Effective Date of this Amendment
provided for in section 4 hereof, section 2.9(b) of the Credit Agreement is
amended to read in its entirety as follows:
(b) The unpaid principal amount of each Loan which is a
Eurodollar Loan shall bear interest from the date of the Borrowing
thereof until maturity (whether by acceleration or otherwise) at a rate
per annum which shall at all times be the relevant Eurodollar Rate for
such Loan PLUS (i)
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200 basis points per annum, at all times during the period from the
date of this Agreement through December 31, 1999, or (ii) 260 basis
points per annum, at all times thereafter; PROVIDED that if (A) the
ratio of (I) Consolidated EBITDAR for any Testing Period, to (II)
Consolidated Lease and Debt Service Charges for such Testing Period,
exceeds 1.25 to 1.00 for such Testing Period, with the first eligible
Testing Period to be measured hereunder being the four consecutive
fiscal quarters ending December 31, 2000, (B) the Company delivers its
financial statements pursuant to section 8.1(a) or (b), together with a
certificate pursuant to section 8.1(c) containing computations
demonstrating compliance with such condition and a letter addressed to
the Administrative Agent which specifically refers to this provision of
this section 2.9(b) of the Credit Agreement, and (C) the Administrative
Agent notifies the parties hereto that such condition has been
satisfied (which the Administrative Agent shall issue promptly upon
review of such financial statements and such computations and
satisfaction of such condition), then on the effective date of such
notice from the Administrative Agent, the interest rate margin
specified in clause (ii) above shall change from 260 basis points to
237.50 basis points and shall remain at 237.50 basis points until the
last day of the next Testing Period as of which such ratio does not
exceed 1.25 to 1.00 at which time the interest rate margin shall revert
to 260 basis points.
1.2. REDUCTION IN TOTAL TRANCHE A COMMITMENT. In light of the Tranche A
Commitment Period Termination Date and after giving effect to the qualification
of 14 Projects and approval of their respective Project Summary & Feasibility
Reports pursuant to Section 2.2 of the Credit Agreement, the maximum aggregate
principal amount of Tranche A Loans which can be incurred under the Credit
Agreement is $59,187,084. Accordingly, the Total Tranche A Commitment is
$59,187,084 and Annex I to the Credit Agreement is amended to reflect the
following Tranche A Commitments:
========================================================= =============================
NAME OF LENDER TRANCHE A
COMMITMENT
========================================================= =============================
Key Corporate Capital Inc. $13,810,323.54
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Bank of America National Trust and Savings $7,891,609.23
Association
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SouthTrust Bank, National Association $7,891,609.23
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Fleet National Bank $7,398,385.50
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Bank One, Texas, N.A. $7,398,385.50
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Comerica Bank $7,398,385.50
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U.S. Bank, National Association $7,398,385.50
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TOTAL $59,187,084.00
========================================================= =============================
1.3. ADDITIONAL SUPPLEMENTAL RESERVE. The Lenders hereby consent to the
execution and delivery of Amendment No. 2 to Supplemental Reserve Pledge
Agreement, substantially in the form attached as Exhibit A hereto ("AMENDMENT
NO. 2 TO SUPPLEMENTAL RESERVE PLEDGE AGREEMENT").
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1.4. FINANCIAL PROJECTIONS. Effective on the Effective Date of this
Amendment provided for in section 4 hereof, section 7.8 of the Credit Agreement
is amended by deleting the sentence:
No facts are known to the Company at the date hereof which, if
reflected in the Recent Financial Projections, would result in a
material adverse change in the assets, liabilities, results of
operations or cash flows reflected therein.
and inserting in its place the sentence:
No facts are known to the Company at the date hereof which, if
reflected in the May 5, 2000 Model, would result in a material adverse
change in the assets, liabilities, results of operations or cash flows
reflected therein.
1.5. NO MATERIAL ADVERSE CHANGE. Effective on the Effective Date of
this Amendment provided for in section 4 hereof, section 7.9 of the Credit
Agreement is amended to read in its entirety as follows:
7.9. NO MATERIAL ADVERSE CHANGE. Since December 31, 1999,
there has been no change in the condition, business or affairs of the
Company and its Subsidiaries taken as a whole, or their properties and
assets considered as an entirety, except for changes, none of which,
individually or in the aggregate, has had or could reasonably be
expected to have, a Material Adverse Effect, other than changes in the
condition, business or affairs of the Company described in the
Company's annual report on form 10K for the fiscal year 1999 and the
Company's quarterly report on form 10Q for the first quarter of 2000 as
filed with the SEC and as reflected in the May 5, 2000 Model.
1.6. PROMPT TAKE-OUT. Effective on the Effective Date of this Amendment
provided for in section 4 hereof, section 8.14(c) of the Credit Agreement is
amended by adding the following text to the end of such section:
Notwithstanding anything contained in the foregoing to the contrary,
the Company agrees that it will repay pursuant to a refinance the Loans
for a Project in accordance with the Project Take-Out Agreement related
to such Project, or otherwise prepay such Loans, within forty-five (45)
days of the first anniversary of the earlier to occur of (i) the date a
Certificate of Occupancy is issued for such Project together with any
required governmental licenses and permits necessary for the Borrower
to commence commercial operation of such Project, or (ii) the date such
Borrower commences commercial operation of such Project.
1.7. MINIMUM CONSOLIDATED NET WORTH. Effective on the Effective Date of
this Amendment provided for in section 4 hereof, section 9.5 of the Credit
Agreement is amended to read in its entirety as follows:
9.5. MINIMUM CONSOLIDATED NET WORTH AND NEW CAPITAL. The
Company will not at any time permit the sum (without duplication) of
(x) its Consolidated Net Worth, (y) the aggregate liquidation value of
its outstanding PREFERRED STOCK, if any, which was issued in connection
with the New Capital Funding Requirement (including any additional
shares of Redeemable PREFERRED STOCK issued thereafter as an additional
investment in the Company or as "payment in kind" of accrued
dividends), and (z) the aggregate principal amount of its outstanding
subordinated Indebtedness, if any, which was issued in connection with
the New Capital
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Funding Requirement and is subordinate to the Obligations (including
any Additional Debentures (as defined in the Purchase Agreement) or
other additional subordinated Indebtedness issued thereafter as an
additional investment in the Company or as "payment in kind" of accrued
interest), at any time to be less than $105,000,000, EXCEPT that
(i) effective as of the end of the Company's fiscal quarter
ended March 31, 1998, and as of the end of each fiscal quarter
thereafter, the foregoing amount (as it may from time to time be
increased or decreased as herein provided), shall be increased by
50% of the Consolidated Net Income of the Company for the fiscal
quarter ended on such date, if any (there being no reduction in
the case of any such Consolidated Net Income which reflects a
deficit);
(ii) the foregoing amount (as it may from time to time be
increased or decreased as herein provided), shall be increased by
an amount equal to 75% of the cash proceeds (net of underwriting
discounts and commissions and other customary fees and costs
associated therewith) from any sale or issuance by the Company
after March 31, 1998 of equity (other than any sale or issuance to
any Subsidiary or to management or employees pursuant to employee
benefit plans of general application);
(iii) the foregoing amount (as it may from time to time be
increased or decreased as herein provided), shall be increased
(WITHOUT DUPLICATION OF ANY INCREASES PURSUANT TO SECTIONS 9.5(ii)
OR (iv)) by an amount equal to 75% of the cash proceeds (net of
underwriting discounts and placement commissions and other
customary fees and costs associated therewith) from any sale or
issuance by the Company of the Initial Securities or any
Additional Debentures (as such terms are defined in the Purchase
Agreement);
(iv) the foregoing amount (as it may from time to time be
increased or decreased as herein provided), shall be increased by
an amount equal to 75% of (x) the principal amount of Indebtedness
or (y) the higher of stated value or liquidation value of
Redeemable Stock, as the case may be, which, in either case, is
converted or exchanged after March 31, 1998 into common stock of
the Company or any of its Subsidiaries;
(v) the foregoing amount (as it may from time to time be
increased or decreased as herein provided), shall be increased by
an amount equal to 75% of the increase in Consolidated Net Worth
attributable to the issuance of common stock or other equity
interests subsequent to March 31, 1998 as consideration in any
Acquisition;
(vi) the foregoing amount (as it may from time to time be
increased or decreased as herein provided), shall be decreased by
an amount, not in excess of $25,000,000 in the aggregate,
representing 75% of the non-cash losses from the sale of assets
outside the ordinary course of business subsequent to March 31,
2000;
(vii) the foregoing amount (as it may from time to time be
increased or decreased as herein provided), shall be decreased by
an amount, not in excess of $10,000,000 in the aggregate,
representing 75% of the non-recurring losses or charges incurred
after March 31, 2000 related to the reduction or elimination of
overhead or other costs, charges or expenses in connection with a
restructuring of the Company's stock option program;
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(viii) the foregoing amount (as it may from time to time be
increased or decreased as herein provided), shall be decreased by
75% of the amount of any reduction made after March 31, 2000 in
the book or tax carrying cost of any assets as a result of any
change in GAAP; and
(ix) the foregoing amount (as it may from time to time be
increased or decreased as herein provided), shall be increased
(WITHOUT DUPLICATION OF ANY INCREASES PURSUANT TO SECTION 9.5(iv)
by 75% of the amount of interest "paid-in-kind" or otherwise
treated as an accretion to principal pursuant to the terms of the
Initial Securities or the Additional Debentures (as such terms are
defined in the Purchase Agreement).
1.8. RATIO OF CONSOLIDATED EBITDAR TO CONSOLIDATED LEASE AND DEBT
SERVICE CHARGES. Effective on the Effective Date of this Amendment provided for
in section 4 hereof, section 9.10 of the Credit Agreement is amended to read in
its entirety as follows:
9.10. RATIO OF CONSOLIDATED EBITDAR TO CONSOLIDATED LEASE AND
DEBT SERVICE CHARGES. (a) Subject to section 9.10(c) below, the Company
will not permit the ratio of (i) Consolidated EBITDAR for any Testing
Period, to (ii) Consolidated Lease and Debt Service Charges for such
Testing Period to be less than the amount indicated below for such
Testing Period:
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TESTING PERIOD RATIO
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Testing Period consisting of the single fiscal .85 to 1.00
quarter ended March 31, 2000
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Testing Period consisting of the two fiscal .80 to 1.00
quarters ended June 30, 2000
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Testing Period consisting of the three fiscal .85 to 1.00
quarters ended September 30, 2000
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Testing Period ended December 31, 2000 .90 to 1.00
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Testing Period ended March 31, 2001 .90 to 1.00
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Testing Period ended June 30, 2001 .97 to 1.00
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Testing Period ended September 30, 2001 1.05 to 1.00
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Testing Period ended December 31, 2001 1.10 to 1.00
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Testing Period ended March 31, 2002 1.15 to 1.00
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Testing Period ended June 30, 2002 1.20 to 1.00
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Any Testing Period thereafter 1.25 to 1.00
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(b) Subject to section 9.10(c) below, the Company will not
permit the ratio of (i) Consolidated EBITDAR for any Testing Period, to
(ii) Consolidated Lease and Debt Service Charges for such Testing
Period to be less than the amount indicated below for such Testing
Period:
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TESTING PERIOD RATIO
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Testing Period consisting of the single fiscal .85 to 1.00
quarter ended March 31, 2000
- --------------------------------------------------------- -------------------
Testing Period consisting of the two fiscal .75 to 1.00
quarters ended June 30, 2000
- --------------------------------------------------------- -------------------
Testing Period consisting of the three fiscal .75 to 1.00
quarters ended September 30, 2000
- --------------------------------------------------------- -------------------
Testing Period ended December 31, 2000 .80 to 1.00
- --------------------------------------------------------- -------------------
Testing Period ended March 31, 2001 .85 to 1.00
- --------------------------------------------------------- -------------------
Testing Period ended June 30, 2001 .90 to 1.00
- --------------------------------------------------------- -------------------
Testing Period ended September 30, 2001 .95 to 1.00
- --------------------------------------------------------- -------------------
Testing Period ended December 31, 2001 1.05 to 1.00
- --------------------------------------------------------- -------------------
Testing Period ended March 31, 2002 1.10 to 1.00
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Testing Period ended June 30, 2002 1.15 to 1.00
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Testing Period ended September 30, 2002 1.20 to 1.00
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Any Testing Period thereafter 1.25 to 1.00
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(c) If the Company fails to satisfy the ratio set forth in
section 9.10(a) for any Testing Period but does satisfy the ratio set
forth in section 9.10(b) for such Testing Period, then such failure
shall not constitute an Event of Default pursuant to section 10.1(c)
if, within 45 days following the end of the applicable Testing Period,
(i) the Company (A) notifies the Administrative Agent and demonstrates
that it has sufficient Carry-Over QLE Credit such that when such
Carry-Over QLE Credit is added to and considered part of Consolidated
EBITDAR for such Testing Period, the ratio set forth in section 9.10(a)
shall be satisfied, or (B) completes what it believes is a Qualifying
Liquidity Event resulting in net cash proceeds which, if added to and
considered to be part of Consolidated EBITDAR for such Testing Period
would result in the ratio required by section 9.10(a) being complied
with, and the Company notifies the Administrative Agent and the Lenders
thereof and provides evidence of the occurrence thereof in reasonable
detail (including; without limitation, a written description of the
information provided to the Board of Directors of the Company with
respect to any sale of residence-level assets, including the location
of the asset, financial performance of the asset for the most recent
year and the projected following year, the current financing of the
asset and anticipated cash proceeds resulting from the sale, and
further including a representation to the Administrative Agent and the
Lenders that the sale of such asset would not result in a future
violation of any covenant contained in the Credit Agreement), together
with a computation in
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reasonable detail of the ratio set forth in section 9.10(a) which gives
effect to the net cash proceeds received from such Qualifying Liquidity
Event, together with the Carry-Over QLE Credit, if any, and (ii) the
Administrative Agent confirms its belief that there is a sufficient
Carry-Over QLE Credit and/or a Qualifying Liquidity Event has occurred
and that the Company's computations support the conclusion that no
Event of Default occurred by virtue of this section 9.10(c) and so
notifies the parties hereto (which notice the Administrative Agent
shall issue promptly upon confirmation of such conditions).
(d) If on a single occasion during any single fiscal quarter
ended after March 31, 2000, the Company incurs non-recurring losses or
charges related to the reduction or elimination of overhead or other
costs, charges or expenses in connection with a restructuring of the
Company's stock option program, THEN notwithstanding anything to the
contrary contained in this Agreement, in computing Consolidated EBITDAR
for any Testing Period which includes such fiscal quarter, for purposes
of sections 9.10(a) and (b) only, the aggregate amount of such
non-recurring cash losses and charges, up to a maximum of $2,500,000,
shall be an addition to and considered part of Consolidated EBITDAR.
(e) If during any fiscal quarter ended after March 31, 2000,
the Company or any Affiliate receives advances of loan proceeds
pursuant to (i) the Credit Agreement, (ii) the Master Construction Line
of Credit Agreement dated as of August 31, 1999 among Third Party
Investors I, LLC, the lending institutions named therein, the co-agents
named therein and Key Corporate Capital Inc. as administrative agent,
as amended (the "TPI CREDIT AGREEMENT"), or (iii) the master commitment
with ALS-Northeast, LLC as guaranteed by the Company and Assisted
Living Equities LLC (the "PIONEER JOINT VENTURE AGREEMENT"), related to
project lease-up interest expense or project lease-up operating
deficits (but only to the extent that such losses would be reflected on
the financial statements of the Company with respect to such advances
pursuant to the Pioneer Joint Venture Agreement), THEN notwithstanding
anything to the contrary contained in this Agreement, in computing
Consolidated EBITDAR for any Testing Period which includes such fiscal
quarter, for purposes of sections 9.10(a) and (b) only, the aggregate
amount of such advances shall be an addition to and considered part of
Consolidated EBITDAR.
1.9. MINIMUM CASH & CASH EQUIVALENTS. Effective on the Effective Date
of this Amendment provided for in section 4 hereof, section 9.11 of the Credit
Agreement is amended to read in its entirety as follows:
9.11. MINIMUM CASH & CASH EQUIVALENTS. (a) The Company will not
permit the aggregate of its unrestricted cash and Cash Equivalents
together with the undisbursed funds deposited by the Company pursuant
to section 4(f) of Amendment No. 4 to Credit Agreement and section 4(e)
of Amendment No. 2 to the TPI Credit Agreement, at any time, to be less
than $10,000,000, PROVIDED, HOWEVER, that the covenant contained in
this section 9.11(a) shall be of no further force or effect upon the
satisfaction of the ratio of (i) Consolidated EBITDAR for any fiscal
quarter, to (ii) Consolidated Lease and Debt Service Charges for such
fiscal quarter, exceeds 1.00 to 1.00 for two consecutive fiscal
quarters, with the first eligible fiscal quarter to be measured
hereunder being the fiscal quarter ending June 30, 2000, and continued
maintenance of such ratio thereafter.
(b) The Company will not permit the aggregate of its unrestricted cash
and Cash Equivalents together with the undisbursed funds deposited by
the Company pursuant to section 4(f) of
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Amendment No. 4 to Credit Agreement and section 4(e) of Amendment No. 2
to the TPI Credit Agreement, as of the end of any fiscal quarter, to be
less than $20,000,000, PROVIDED, HOWEVER, that the covenant contained
in this section 9.11(b) shall be of no further force or effect upon the
satisfaction of both (i) sale of Additional Debentures (as defined in
the Purchase Agreement) resulting in cash proceeds of at least
$50,000,000 (net of underwriting discounts and placement commissions
and other customary fees and costs associated therewith), and (ii) the
ratio of (A) Consolidated EBITDAR for any fiscal quarter, to (B)
Consolidated Lease and Debt Service Charges for such fiscal quarter,
exceeds 1.20 to 1.00 for two consecutive fiscal quarters, with the
first eligible fiscal quarter to be measured hereunder being the fiscal
quarter ending June 30, 2000.
1.10. QUARTERLY MINIMUM CONSOLIDATED EBIT; MOST FAVORED COVENANT
STATUS. Effective on the Effective Date of this Amendment provided for in
section 4 hereof, SECTIONS 9.13 AND 9.15 of the Credit Agreement shall be of no
further force or effect.
1.11. EVENTS OF DEFAULT. Effective on the Effective Date of this
Amendment provided for in section 4 hereof, sections 10.1 (c) and (k) of the
Credit Agreement are amended to read in their entirety as follows:
(C) CERTAIN NEGATIVE COVENANTS: the Company shall default in
the due performance or observance by it of any term, covenant or
agreement contained in sections 9.3, 9.4, 9.5, 9.6, 9.10, 9.11, 9.14,
9.16 OR 9.17 of this Agreement; or any Borrower shall default in the
due performance or observance by it of any term, covenant or agreement
contained in sections 5, 10, 16(a)(i) or 16(c) of any Mortgage; or
(K) MATERIAL ADVERSE EFFECT: (i) any event or circumstance
shall occur or exist which has a Material Adverse Effect upon the
Company, as compared to the business, operations, property, assets,
liabilities or condition (financial or otherwise) of the Company and
its Subsidiaries as reflected in the financial statements and the
Financial Projections referred to in section 7.8 other than changes in
the condition of the Company described in the Company's annual report
on form 10K for the fiscal year 1999 and the Company's quarterly report
on form 10Q for the first quarter of 2000 as filed with the SEC and as
reflected in the May 5, 2000 Model; or
(ii) any representation or warranty contained in section 2.6
of Amendment No. 4 to this Credit Agreement, dated as of May 25, 2000,
with respected to the May 5, 2000 Model referred to therein, shall
prove to be untrue in any material respect as of the date when made or
deemed made.
1.12. ADDITIONAL COVENANTS. Effective on the Effective Date of this
Amendment provided for in section 4 hereof, new sections 9.13, 9.16 AND 9.17 are
added to the Credit Agreement, reading in their entirety as follows:
9.13. NEW DEVELOPMENT PROHIBITION. Neither the Company nor any
of its Subsidiaries will (i) commence construction of the three
so-called land-only Devco 11 projects, (ii) continue construction of
the six halted and secured so-called Devco II projects commonly known
as Clare Bridge Cottage of Valley Station (Valley Station I), Sterling
House of Valley Station (Valley Station II), Clare Bridge of Frederick
(Frederick I), Sterling House of Frederick (Frederick II), Clare Bridge
of Irving VRI, and Clare Bridge of New Castle (New Castle I) or (iii)
begin any other construction or development projects, unless
appropriate financing for such project(s) has been arranged and closed
and information with respect to such financing has been forwarded to
the Administrative
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Agent prior to the commencement of construction, including projections
demonstrating compliance with the financial covenants contained in this
Credit Agreement throughout the construction period.
9.16. CASH PAYMENTS ON INITIAL SECURITIES, ETC.; PREPAYMENTS AND
REFINANCINGS OF SUBORDINATED AND OTHER DEBT, ETC. (a) The Company will
not make any payment or prepayment in cash in respect of the principal,
liquidation or stated value of, or the interest or dividends or premium
or "make whole" on, or the repurchase, redemption or prepayment price
of, or the sinking or similar fund in respect of, any of the Initial
Securities or the Additional Debentures (as such terms are defined in
the Purchase Agreement), whether now outstanding or hereafter incurred
or arising,
(i) prior to May 31, 2004; or
(ii) thereafter if a Default or Event of Default has occurred
and is continuing or would result therefrom;
OTHER than any nominal cash payments (A), for fractional shares in
connection with the conversion or exchange of any of the Initial
Securities or the Additional Debentures or the PAY-IN-KIND SECURITIES
ISSUED WITH RESPECT TO THE INITIAL SECURITIES OR THE ADDITIONAL
DEBENTURES into common stock of the Company OR THE ISSUANCE OF
PAY-IN-KIND SECURITIES IN PAYMENT OF DIVIDENDS ON THE INITIAL
SECURITIES OR THE PAY-IN-KIND SECURITIES ISSUED WITH RESPECT TO THE
INITIAL SECURITIES, AND (B) FOR FRACTIONAL PRINCIPAL AMOUNTS OF
ADDITIONAL SUBORDINATED INDEBTEDNESS ISSUED AS "PAYMENT-IN-KIND" OF
ACCRUED INTEREST OR COUPON PAYMENTS ON THE INITIAL SECURITIES OR THE
ADDITIONAL DEBENTURES OR THE PAY-IN-KIND SECURITIES ISSUED WITH RESPECT
TO THE INITIAL SECURITIES OR THE ADDITIONAL DEBENTURES.
(b) The Company will not, and will not permit any of its
Subsidiaries to, make (or give any notice in respect thereof) any
voluntary or optional prepayment or redemption or acquisition for value
of (including, without limitation, by way of depositing with the
trustee with respect thereto money or securities before due for the
purpose of paying when due) or exchange of, or refinance or refund, any
of the Initial Securities or the Additional Debentures (as such terms
are defined in the Purchase Agreement), whether now outstanding or
hereafter incurred or arising (OTHER THAN EXCHANGES, REFINANCINGS OR
REFUNDS FOR EQUITY OR DEBT WHICH IS AT LEAST AS SUBORDINATE AS THE
DEBENTURES WHICH ARE INITIAL SECURITIES AND THE ADDITIONAL DEBENTURES
9.17. MODIFICATION OF INDENTURE, PREFERRED STOCK TERMS OR
RELATED DOCUMENTS THE COMPANY WILL NOT ENTER INTO AMENDMENT TO, OR
MODIFICATION OR CHANGE OF, THE TERMS OF THE INDENTURE OR THE PREFERRED
STOCK (EACH AS DEFINED IN THE PURCHASE AGREEMENT) OR ANY OTHER
DOCUMENTS RELATED THERETO, EACH AS IN EFFECT ON THE EFFECTIVE DATE OF
THIS SECTION OR ANY DOCUMENTS ENTERED INTO IN CONNECTION WITH ANY
REFINANCING OR REFUNDING RELATED THERETO, UNLESS IN ANY SUCH CASE, (I)
SUCH AMENDMENT, MODIFICATION OR CHANGE WOULD NOT MATERIALLY AND
ADVERSELY AFFECT THE INTEREST OF THE LENDERS AS SENIOR CREDITORS OF THE
COMPANY, AND (II) PRIOR TO THE EFFECTIVENESS THEREOF, THE COMPANY SHALL
HAVE NOTIFIED THE ADMINISTRATIVE AGENT OF SUCH AMENDMENT, MODIFICATION
OR CHANGE AND PROVIDED COPIES OF ANY DOCUMENTS RELATED THERETO TO THE
ADMINISTRATIVE AGENT.
1.13. CONSOLIDATED EBIT. Effective on the Effective Date of this
Amendment provided for in section 4 hereof, the definition of Consolidated EBIT
contained in section 1.1 of the Credit Agreement is amended to read in its
entirety as follows:
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"CONSOLIDATED EBIT" shall mean, for any period, Consolidated
Net Income for such period, PLUS (A) the sum of the amounts for such
period included in determining such Consolidated Net Income of (i)
Consolidated Interest Expense, (ii) Consolidated Income Tax Expense,
and (iii) extraordinary and other non-recurring non-cash losses and
charges (including non-cash losses and charges attributable to the sale
of assets by the Company which may not qualify as extraordinary or
non-recurring in accordance with GAAP), LESS (B) gains on sales of
assets and other extraordinary gains and other non-recurring non-cash
gains, all as determined for the Company and its Subsidiaries on a
consolidated basis in accordance with GAAP (except as otherwise
explicitly provided herein).
1.14. ADDITIONAL DEFINITIONS. Effective on the Effective Date of this
Amendment provided for in section 4 hereof, the following definitions shall be
added to section 1.1 of the Credit Agreement in appropriate alphabetic order:
"CARRY-OVER QLE CREDIT" shall mean excess net cash proceeds resulting
from a Qualifying Liquidity Event which have not been previously utilized in
accordance with section 9.10(c) to cause compliance with section 9.10(a).
"MAY 5, 2000 MODEL" shall have the meaning provided in section 2.6 of
this Amendment No. 4 to Credit Agreement.
"PURCHASE AGREEMENT" shall mean the Purchase Agreement dated as of
April 26, 2000 by and among the Company as seller and RDVEPCO, L.L.C., Group One
Investors L.L.C. and Holiday Retirement 2000 L.L.C. as purchasers, as amended by
the First Amendment thereto.
"QUALIFYING LIQUIDITY EVENT" shall mean the completion of one or more
of the following types of transactions which are not contemplated in the May 5,
2000 Model, resulting in net cash proceeds received after May 31, 2000:
(i) the sale of Additional Debentures (as defined in the Purchase
Agreement) pursuant to section 2.2 of the Purchase Agreement;
(ii) the sale of assets of the Company, with a limit on net cash
proceeds from the sale of residence-level assets of $25,000,000 and
which sale of residence-level assets shall (A) exclude any Projects,
any projects financed under the TPI Credit Agreement and any projects
financed under the Pioneer Joint Venture Agreement, and (B) be sold at
not less than fair market value;
(iii) the sale of shares of capital stock of the Company (other than
Redeemable Stock and other than pursuant to the Purchase Agreement);
(iv) the sale of subordinated debt securities of the Company, provided
such subordinated debt securities (A) have a maturity of at least five
years and no sinking fund or similar requirements, (B) are subordinated
to the Obligations on terms satisfactory to the Required Lenders, and
(C) such subordinated debt securities are not in replacement of
Indebtedness of the Company or any of its Affiliates;
(v) the refinance of assets of the Company to the extent that actual
cash is made available to the Company in excess of that reflected in
the May 5, 2000 Model; and
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(vi) the procurement of bridge financing (other than the debt
evidenced by the Amended and Restated Loan Agreement dated as of
February 3, 2000 between the Company and RDVEPCO, L.L.C., a Michigan
limited liability company, in the original principal amount of
$15,000,000 as thereafter increased to $35,000,000 and other than
bridge financing referenced in the Purchase Agreement) on terms
satisfactory to the Required Lenders, which terms shall include, but
not be limited to, (A) subordination of such bridge financing to the
Obligations, (B) the Company will not make any payments pursuant to
such bridge financing until such time as the ratio of (I) Consolidated
EBITDAR for any Testing Period consisting of the immediately preceding
4 fiscal quarters, to (II) Consolidated Lease and Debt Service Charges
for such Testing Period, shall exceed 1.25 to 1.00 for such Testing
Period, and such ratio shall have been achieved for two consecutive
Testing Periods, and (C) the amount of such payments shall be limited
to the amount which if included in Consolidated Lease and Debt Service
Charges for the most recent Testing Period, the ratio of (1)
Consolidated EBITDAR for such Testing Period consisting of the
immediately preceding 4 fiscal quarters, to (II) Consolidated Lease and
Debt Service Charges for such Testing Period, shall exceed 1.10 to 1.00
for such Testing Period.
1.15. LENDERS' ACKNOWLEDGMENT. Effective on the Effective Date of this
Amendment provided for in section 4 hereof, the Lenders party hereto acknowledge
and agree that:
(a) (i) Completion of the New Capital Funding Requirement, as
well as,
(ii) any event or circumstances in which RDVEPCO, L.L.C.,
Group One Investors, L.L.C., and/or Holiday Retirement 2000, LLC
(any such person, together with any person who through the
ownership of securities or other equity interests controls any
such person, collectively the "PURCHASERS") acquires or holds,
pursuant to the Purchase Agreement, or any subsequent agreement
among some or all of the Purchasers and the Company, or
otherwise, convertible or exchangeable debt and/or convertible or
exchangeable preferred stock, or warrants, rights or options to
acquire capital stock of or other equity interests in the
Company, or any common stock or other securities of or equity
interests in the Company issuable upon conversion or exchange of
any of the foregoing, representing beneficial ownership (within
the meaning of Rule 13d-3 and 13d-5 of the 1934 Act) of more than
50%, on a fully diluted basis, of the economic or voting interest
in the Company's capital stock,
shall BE DEEMED to constitute a Change of Control hereunder but shall
not constitute or result in a Change of Control Prepayment Event; and
(b) That the execution and delivery of the Purchase Agreement
and the consummation of the sale of the Initial Securities as
contemplated thereunder shall satisfy the obligations of the Borrower
set forth in section 9.12, and such section 9.12 shall be deemed
amended to reflect that the requirements thereof are already satisfied.
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SECTION 2. REPRESENTATIONS AND WARRANTIES.
The Company represents and warrants as follows:
2.1. AUTHORIZATION AND VALIDITY OF AMENDMENT, ETC. This Amendment has
been duly authorized by all necessary corporate action on the part of the
Company, has been duly executed and delivered by a duly authorized officer of
the Company, and constitutes the valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms, except to the
extent that the enforceability thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws generally affecting
creditors' rights and by equitable principles (regardless of whether enforcement
is sought in equity or at law).
2.2. REPRESENTATIONS AND WARRANTIES. The representations and warranties
of the Credit Parties contained in the Credit Agreement, as amended hereby, or
in the other Credit Documents are true and correct in all material respects on
and as of the date hereof as though made on and as of the date hereof, except to
the extent that such representations and warranties expressly relate to an
earlier specified date, in which case such representations and warranties are
hereby reaffirmed as true and correct in all material respects as of the date
when made.
2.3. NO EVENT OF DEFAULT. No condition or event has occurred or exists
which constitutes or which, after notice or lapse of time or both, would
constitute an Event of Default under the Credit Agreement as amended hereby, or
under the other Credit Documents.
2.4. COMPLIANCE. The Company is in full compliance with all covenants
and agreements contained in the Credit Agreement, as amended hereby, and the
other Credit Documents to which it is a party. The Company acknowledges that the
Obligations are outstanding without offset, defense or counterclaim.
2.5. FINANCIAL STATEMENTS, ETC. The Company has furnished to the
Lenders and the Administrative Agent complete and correct copies of
(a) the audited consolidated balance sheets of the Company and
its consolidated subsidiaries as of (December 31, 1999, and the related
audited consolidated statements of income, stockholders' equity, and
cash flows of the Company and its consolidated subsidiaries for the
fiscal year then ended, accompanied by the unqualified report thereon
of the Company's independent accountants; and
(b) the unaudited consolidated balance sheets of the Company
and its consolidated subsidiaries as of March 31, 2000, and the related
unaudited consolidated statements of income, stockholders' equity and
cash flows of the Company and its consolidated subsidiaries for the
fiscal quarter or quarters then ended.
All such financial statements have been prepared in accordance with GAAP,
consistently applied (except as stated therein), and fairly present the
financial position of the Company and its consolidated subsidiaries as of the
respective dates indicated and the consolidated results of their operations and
cash flows for the respective periods indicated, subject in the case of any such
financial statements which are unaudited, to the absence of footnotes and to
normal audit adjustments which the Company reasonably believes will not involve
a Material Adverse Effect.
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2.6. MAY 5, 2000 MODEL. The Company delivered or caused to be delivered
to the Lenders, under cover dated May 5, 2000, financial projections prepared by
management of the Company for the Company and its Subsidiaries consisting of,
among other things, a projected balance sheet, income statement and cash flow
statement for its fiscal years ended December 31, 1999 through December 31, 2002
(the "MAY 5, 2000 MODEL"). The May 5, 2000 Model was prepared on behalf of the
Company in good faith after taking into account the existing and historical
levels of business activity of the Company and its Subsidiaries, trends known to
the Company, including general economic trends, and all other information,
assumptions and estimates considered by management of the Company and its
Subsidiaries to be pertinent thereto. The May 5, 2000 Model was considered by
management of the Company, as of such date of preparation, to be realistically
achievable; PROVIDED, that no representation or warranty is made as to the
impact of future general economic conditions or as to whether the Company's
projected consolidated results as set forth in the May 5, 2000 Model will
actually be realized. No material facts have become known to the Company
subsequent to the date of preparation of the May 5, 2000 Model and prior to the
date hereof which, if they had been appropriately reflected in the May 5, 2000
Model, would have resulted in a material adverse change in the assets,
liabilities, results of operations or cash flows reflected therein.
SECTION 3. RATIFICATIONS.
Except as expressly modified and superseded by this Amendment, the
terms and provisions of the Credit Agreement are ratified and confirmed and
shall continue in full force and effect.
SECTION 4. BINDING EFFECT.
This Amendment shall become effective on a date (the "EFFECTIVE DATE"),
on or before June 2, 2000, if the following conditions shall have been satisfied
on and as of such date:
(A) EXECUTION OF AMENDMENT. This Amendment shall have been
executed by the Company and the Administrative Agent, and counterparts
hereof as so executed shall have been delivered to the Administrative
Agent; and the Administrative Agent shall have been notified by the
Required Lenders that such Lenders have executed this Amendment (which
notification may be by facsimile or other written confirmation of such
execution).
(B) NEW CAPITAL FUNDING REQUIREMENT. The Company shall have
provided reasonable evidence to the Administrative Agent and the
Lenders that it has received net cash proceeds of at least $53,000,000
(INCLUDING ANY AMOUNTS, NOT IN EXCESS OF $14,000,000, FUNDED ON OR
AFTER APRIL 26, 2000 UNDER THE BRIDGE FINANCING REFERENCED IN THE
PURCHASE AGREEMENT) in connection with satisfaction of the New Capital
Funding Requirement.
(C) SUPPLEMENTAL RESERVE PLEDGE AGREEMENT. Amendment No. 2 to
Supplemental Reserve Pledge Agreement shall have been executed by the
Company and the Collateral Agent, and counterparts thereof as so
executed shall have been delivered to the Administrative Agent.
(D) CONSENT OF DEUTSCHE BANK. The Company and the Permanent Lender
shall have modified or permanently waived section 6.01(d) and/or other
applicable provisions of the Permanent Credit Agreement, in a manner
satisfactory to the Required Lenders, such that no Event of Default
under the Permanent Credit Agreement could reasonable be expected to
occur because of a Change
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of Control related to the acquisition or ownership of equity interests
in the Company by the purchasers of the Initial Securities.
(E) FEES. The Company shall have paid to the Administrative Agent,
in immediately available funds, for the pro rata account of the Lenders
who become a signatory hereto on or prior to the date established by
the Administrative Agent, such nonrefundable amendment fees as have
previously been agreed to by the Company and communicated to the
Lenders (the Administrative Agent shall promptly distribute to such
Lender its pro rata portion of such amendment fees).
(F) OPERATING DEFICITS. The Company shall have paid to the
Administrative Agent, in immediately available funds, to be held as
part of the Collateral, the amount of $200,000 allocable to the
so-called Galloway I Project in Galloway, New Jersey with such amount
to be disbursed from time to time, provided that no Event of Default
has occurred and is continuing, by the Administrative Agent pursuant to
Draw Requests in accordance with section 23(f) to fund actual operating
deficits which exceed the amount of operating deficits identified as
part of the estimated total Project costs included in the Project
Summary & Feasibility Report. Any undisbursed funds remaining after
application to fund operating deficits in accordance with section 23(f)
shall be released upon repayment or prepayment of the Loans for the
Galloway I Project, provided that no Event of Default has occurred and
is continuing.
Thereafter this Amendment shall be binding upon and inure to the benefit of the
Company, the Administrative Agent, and each Lender and their respective
permitted successors and assigns. After this Amendment becomes effective, the
Administrative Agent will promptly furnish a copy of this Amendment and
Amendment No. 2 to Supplemental Reserve Pledge Agreement to each Lender and the
Company and advise them of the Effective Date.
SECTION 5. MISCELLANEOUS.
5.1. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties made in this Amendment shall survive the execution and delivery
of this Amendment, and no investigation by the Administrative Agent or any
Lender or any subsequent Loan shall affect the representations and warranties or
the right of the Administrative Agent or any Lender to rely upon them.
5.2. REFERENCE TO CREDIT AGREEMENT. The Credit Agreement and any and
all other agreements, instruments or documentation now or hereafter executed and
delivered pursuant to the terms of the Credit Agreement as amended hereby, are
hereby amended so that any reference therein to the Credit Agreement shall mean
a reference to the Credit Agreement as amended hereby.
5.3. EXPENSES. As provided in the Credit Agreement, but without
limiting any terms or provisions thereof, the Company shall pay on demand all
reasonable costs and expenses incurred by the Administrative Agent in connection
with the preparation, negotiation, and execution of this Amendment, including
without limitation the reasonable costs and fees of the Administrative Agent's
special legal counsel, regardless of whether this Amendment becomes effective in
accordance with the terms hereof, and all reasonable costs and expenses incurred
by the Administrative Agent or any Lender in connection with the enforcement or
preservation of any rights under the Credit Agreement, as amended hereby.
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5.4. SEVERABILITY. Any term or provision of this Amendment held by a
court of competent jurisdiction to be invalid or unenforceable shall not impair
or invalidate the remainder of this Amendment and the effect thereof shall be
confined to the term or provision so held to be invalid or unenforceable.
5.5. APPLICABLE LAW. This Amendment shall be governed by and construed
in accordance with the laws of the State of Ohio.
5.6. HEADINGS. The headings, captions and arrangements used in this
Amendment are for convenience only and shall not affect the interpretation of
this Amendment.
5.7. ENTIRE AGREEMENT. This Amendment is specifically limited to the
matters expressly set forth herein. This Amendment and all other instruments,
agreements and documentation executed and delivered in connection with this
Amendment embody the final, entire agreement among the parties hereto with
respect to the subject matter hereof and supersede any and all prior
commitments, agreements, representations and understandings, whether written or
oral, relating to the matters covered by this Amendment, and may not be
contradicted or varied by evidence of prior, contemporaneous or subsequent oral
agreements or discussions of the parties hereto. There are no oral agreements
among the parties hereto relating to the subject matter hereof or any other
subject matter relating to the Credit Agreement.
5.8. JURY TRIAL WAIVER. EACH OF THE PARTIES TO THIS AMENDMENT HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AMENDMENT, THE OTHER CREDIT
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH PARTY HERETO
HEREBY (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER
PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT,
IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AMENDMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.
5.9. COUNTERPARTS. This Amendment may be executed by the parties hereto
separately in one or more counterparts, each of which when so executed shall be
deemed to be an original, but all of which when taken together shall constitute
one and the same agreement.
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IN WITNESS WHEREOF, this Amendment has been duly executed and delivered
as of the date first above written.
ALTERRA HEALTHCARE ALS NATIONAL, INC.
CORPORATION, FORMERLY KNOWN AS
ALTERNATIVE LIVING SERVICES, INC.
BY: /s/ Mark W. Ohlendorf BY: /s/ Mark W. Ohlendorf
------------------------------ -----------------------------
SENIOR VICE PRESIDENT VICE PRESIDENT
KEY CORPORATE CAPITAL INC., COMERICA BANK
INDIVIDUALLY AS A LENDER AND
AS ADMINISTRATIVE AGENT
BY: /s/ Charles L. Weddell
-----------------------------
VICE PRESIDENT
BY: /s/ David A. MacVicar
------------------------------
VICE PRESIDENT
BANK OF AMERICA, NATIONAL ASSOCIATION U.S. BANK, NATIONAL ASSOCIATION
AS SUCCESSOR TO BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION,
INDIVIDUALLY AS A LENDER AND AS CO AGENT BY: /s/ J. H. Lawrence
-----------------------------
VICE PRESIDENT
BY: /s/ Kent Horiuchi
------------------------------
VICE PRESIDENT
SOUTHTRUST BANK, NATIONAL BANK ONE, TEXAS, N. A.
ASSOCIATION,
INDIVIDUALLY AS A LENDER AND AS CO AGENT
BY: /s/ Jeffrey Etton
-----------------------------
BY: /s/ Leesa Lewis SENIOR VICE PRESIDENT
------------------------------
VICE PRESIDENT
FLEET NATIONAL BANK
BY: /s/ Dorene Conlon
------------------------------
VICE PRESIDENT