EXHIBIT 10.22
AMENDMENT AND MODIFICATION OF
REIMBURSEMENT AGREEMENTS
THIS AMENDMENT AND MODIFICATION OF REIMBURSEMENT AGREEMENTS (the
"Amendment") entered into as of the 18th day of August, 1999 by and between
ASSISTED LIVING CONCEPTS, INC., a Nevada corporation ("Borrower") and U.S. BANK
NATIONAL ASSOCIATION ("Bank") is made with reference to the following facts:
RECITALS
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A. Pursuant to Reimbursement Agreement dated as of November 1, 1996 by and
between Borrower and Bank (the "Washington Reimbursement Agreement"), Bank
issued a letter of credit on behalf of the Borrower in the total Stated Amount
of $8,667,671.20 (the "Washington Letter of Credit") to Norwest Bank Minnesota,
National Association, as Trustee under that certain Indenture of Trust dated as
of November 1, 1996, in connection with the issuance by the Washington State
Housing Finance Commission of $8,500,000 in aggregate principal amount of its
Variable Rate Demand Multifamily Revenue Bonds (Assisted Living Concepts, Inc.
Project), Series 1996 (the "Washington Bonds"). Borrower's obligations under
the Washington Reimbursement Agreement are secured, in part, by deeds of trust,
security agreements, assignments of leases and rents and fixture filings on 5
real properties located in the State of Washington legally described in Exhibit
B-1 through Exhibit B-5 to the Washington Reimbursement Agreement and by this
reference incorporated herein (collectively, "the Washington Properties") and
other security interests in other real and personal property owned by Borrower.
B. Pursuant to Reimbursement Agreement dated as of July 1, 1997 by and
between Borrower and Bank (the "Idaho Reimbursement Agreement"), Bank issued a
letter of credit on behalf of the Borrower in the total Stated Amount of
$7,494,987 (the "Idaho Letter of Credit") to First Security Bank, N.A., as
Trustee under that certain Indenture of Trust dated as of July 1, 1997, in
connection with the issuance by the Idaho Housing and Finance Association of
$7,350,000 in aggregate principal amount of its Variable Rate Demand Housing
Revenue Bonds (Assisted Living Concepts, Inc. Project), Series 1997 (the "Idaho
Bonds"). Borrower's obligations under the Idaho Reimbursement Agreement are
secured, in part, by deeds of trust, security agreements, assignments of leases
and rents and fixture filings on 4 real properties located in the State of Idaho
legally described in Exhibit B-1 through Exhibit B-4 to the Idaho Reimbursement
Agreement and by this reference incorporated herein (collectively, the "Idaho
Properties") and other security interests in other real and personal property
owned by Borrower.
C. Pursuant to Reimbursement Agreement dated as of July 1, 1998 by and
between Borrower and Bank (the "Ohio Reimbursement Agreement"), Bank issued a
letter of credit on behalf of the Borrower in the total Stated Amount of
$13,480,779 (the "Ohio Letter of Credit") to PNC Bank, National Association, as
Trustee under that certain Indenture of Trust dated as of July 1, 1998, in
connection with the issuance by the Ohio Housing Finance Agency of $12,690,000
in aggregate principal amount of its Variable Rate Demand Housing Revenue Bonds
(Assisted Living Concepts, Inc, Project) 1998 Series A-1 and $530,000 aggregate
principal
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amount of its Taxable Variable Rate Demand Housing Revenue Bonds (Assisted
Living Concepts, Inc. Project) 1998 Series A-2 (the "Taxable Bonds")
(collectively, the "Ohio Bonds"). Borrower's obligations under the Ohio
Reimbursement Agreement are secured, in part, by open-ended mortgages, security
agreements, assignment of leases and rents and fixture filings on 7 real
properties located in the State of Ohio legally described in Exhibit B-1 through
Exhibit B-7 to the Ohio Reimbursement Agreement and by this reference
incorporated herein (collectively, the "Ohio Properties") and other security
interests in other real and personal property owned by Borrower. The Washington
Reimbursement Agreement, the Idaho Reimbursement Agreement and the Ohio
Reimbursement Agreement are hereinafter referred to collectively as the
"Reimbursement Agreements." The Washington Properties, the Idaho Properties, the
Ohio Properties and all other facilities owned or leased by the Borrower that
are financed with the proceeds of a Bank credit enhanced bond issue, including,
but not limited to, all facilities financed by the Washington State Housing
Finance Commission's Variable Rate Demand Multifamily Revenue Bonds (LTC
Properties, Inc. Project), Series 1995 are hereinafter referred to collectively
as the "Bond Financed Properties."
D. The Borrower has requested that Bank forbear or waive certain defaults
under the Reimbursement Agreements and Related Documents (as defined in the
Reimbursement Agreements) and the Bank is willing to forbear or waive certain
defaults under the Reimbursement Agreements on the express condition that
Borrower agree to modify and restructure Borrower's obligations under the
Reimbursement Agreements and Related Documents (as defined in the Reimbursement
Agreements) on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing recitals and other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
AGREEMENT
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1. Incorporation of Recitals. Each recital set forth above is incorporated
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into this Amendment as though fully set forth herein.
2. Forbearance and Waiver of Certain Defaults. In exchange for the
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modification and restructure of the Borrower's obligations to the Bank under the
Reimbursement Agreements, on the terms and conditions hereinafter set forth, the
Bank will:
A. Forbear until September 30, 1999, the declaration by the Bank of an
Event of Default under the Reimbursement Agreements and Related Documents (as
defined in the Reimbursement Agreements) as a result of the Borrower's failure
to deliver to Bank its financial statements for fiscal year 1998, officer's
certificates from December 31, 1998 to date and its failure to file its Form 10-
K with the Securities and Exchange Commission for 1998 and its Form 10-Q for the
first two quarters of 1999 with the Securities and Exchange Commission, and its
failure to deliver to Bank any required operating budgets or officer's
certificates, each within the time period required under the Reimbursement
Agreements. Upon delivery to the Bank in Seattle, Washington of audited
financial statements to be included in the Borrower's Form 10-K
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for 1998 in the form attached to this Amendment as Exhibit 1, which audited
financial statements shall have received an unqualified opinion from the
Borrower's certified public accountants KPMG, officers' certificates and the
fiscal year 1999 operating budget including proposed Capital Expenditures for
the Borrower in the form required under the Reimbursement Agreements, together
with copies of the Form 10-K and Form 10-Q described above filed with the
Securities and Exchange Commission on or before the close of business September
30, 1999, the Bank will waive any Event of Default that would otherwise occur
under the Reimbursement Agreements or any of the Related Documents (as defined
in the Reimbursement Agreements) by reason of the Borrower's previous failure to
provide the financial statements, officer's certificates, operating budgets,
public filings and the other documents described above.
B. Waive the Bank's right to declare an Event of Default under Section
8.01(d) of the Reimbursement Agreements or any of the Related Documents (as
defined in the Reimbursement Agreements) resulting from the restatement of
Borrower's financial statements for 1996 and 1997 and resulting change in the
financial condition of the Borrower from the financial statements originally
delivered to the Bank that reported profitable operations for the Borrower as
set forth in its financial statements for fiscal years 1996, 1997, and the first
two quarters of 1998, assuming that the final restated financial statements of
the Borrower for fiscal years 1996, 1997, and the first three quarters of 1998
are materially consistent with the draft restated financial statements prepared
by the Borrower and delivered to the Bank August 3, 1999, copies of which are
attached to this Amendment as Exhibit 1; provided, however, such audited
financial statements included in the Borrower's Form 10-K for 1998 shall have
received an unqualified opinion from the Borrower's certified public accountants
KPMG.
C. Waive the Bank's right to declare an Event of Default under the
Reimbursement Agreements or any of the Related Documents (as defined in the
Reimbursement Agreements) by reason of the Borrower's anticipated first and
second quarter 1999 cash flow coverage covenant defaults under the cash flow
coverage covenant set forth in Section 7.01(G) of the Reimbursement Agreements
at both the corporate level and the Bond Financed Properties level,
respectively.
D. Waive the Bank's right to declare an Event of Default under the
Reimbursement Agreements or any of the Related Documents (as defined in the
Reimbursement Agreements) by reason of the Borrower's failure to notify the Bank
of the license suspension on the Vancouver Washington facility and the
Borrower's failure to notify the Bank of shareholder lawsuits filed against the
Borrower.
E. As of the date of this Amendment Bank has not received written notice
from any person of the occurrence of an event that would constitute an Event of
Default under the Reimbursement Agreements or any of the Related Documents (as
defined in the Reimbursement Agreements).
3. Deposit and Release of Additional Security for the Borrower's
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Obligations Under the Reimbursement Agreements. In exchange for the forbearance
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and waiver of certain defaults under the Reimbursement Agreements:
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A. Borrower shall deposit $8,300,0000 in cash collateral with the Bank on
or before the effective date of this Amendment, and shall execute such documents
as the Bank may request to perfect the Bank's security interest in the cash
collateral (the "Cash Collateral"). Each of the Reimbursement Agreements is
hereby amended to provide that the Cash Collateral constitutes additional
security for any and all indebtedness of Borrower to the Bank, including, but
not limited to, the Borrower's obligations under the Reimbursement Agreements
and the Related Documents.
B. The Bank will agree to release up to $4,000,000 of the Cash Collateral
to Borrower, provided there is no Event of Default under the Reimbursement
Agreements or any of the Related Documents (as defined in the Reimbursement
Agreements) and no event that with the giving of notice, the passage of time, or
both, would constitute an Event of Default, when each of the following
conditions has been satisfied: (i) The Washington Properties, the Idaho
Properties or the Ohio Properties independently meet the following cash flow
coverage ratio for two consecutive quarters, commencing with the fiscal quarter
ending June 30, 1999; and (ii) all other covenants under the Reimbursement
Agreements and each of the Related Documents (as defined in the Reimbursement
Agreements) remain in compliance. For purposes of this Section 3(B), cash flow
coverage ratio shall mean that for the actual quarter, the Washington
Properties, the Idaho Properties or the Ohio Properties, as applicable, shall
maintain a financial performance level such that the sum of their quarterly Net
Income + Interest Expense + Depreciation & Amortization shall exceed the sum of
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Interest Expense + pro rata (for the quarter) scheduled Washington Bonds, Idaho
Bonds or Ohio Bonds, as applicable, principal payments + pro rata (for the
quarter) annual fees relating to the Washington Bonds and the Washington Letter
of Credit, the Idaho Bonds and the Idaho Letter of Credit and the Ohio Bonds and
the Ohio Letter of Credit, as applicable, by 1.25 times, measured quarterly.
All cash flow coverage calculations shall be based solely upon the operating
performance of the Washington Properties, the Idaho Properties or the Ohio
Properties, as applicable, and shall not take into consideration any cash
collateral deposited with Bank including, but not limited to, the Cash
Collateral required under Section 3(A) above. If any of the Washington
Properties, the Idaho Properties or the Ohio Properties has satisfied the
conditions set forth above, the Bank shall consent to a pro rata release of up
to $4,000,000 of the Cash Collateral based on the following schedule:
Properties Percentage Pro Rata Share of $4,000,000 Cash Collateral
Washington 29.86% $1,194,400
Idaho 25.01% $1,000,400
Ohio 45.13% $1,805,200
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Total 100.00% $4,000,000
C. The Bank will agree to release the balance of the Cash Collateral to
Borrower, provided there is no event of default under the Reimbursement
Agreements or any of the Related Documents (as defined in the Reimbursement
Agreements) and no event that with the giving of notice, the passage of time, or
both, would constitute an Event of Default under the Reimbursement Agreements or
any Related Documents (as defined in the Reimbursement Agreements), when each of
the following conditions have been satisfied: (i) Each of the Bond
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Financed Properties independently meets the following cash flow coverage ratio
requirements for two consecutive quarters, commencing with the fiscal quarter
ending June 30, 1999; and (ii) the Borrower is in compliance with the following
corporate cash flow coverage ratio measured on Borrower-wide operations for two
consecutive quarters, commencing with the fiscal quarter ending June 30, 1999;
and (iii) all other covenants under the Reimbursement Agreements and each of the
Related Documents (as defined in the Reimbursement Agreements) remain in
compliance. For purposes of this Section 3(C) the cash flow coverage ratio will
be two independent tests and Borrower must comply with both tests and the other
requirements in this Section 3(C) in order to obtain a release of the remaining
Cash Collateral.
(a) For the actual quarter, the Borrower's ratio of Net Income (which
shall exclude any restructuring, extraordinary or changes in accounting charges)
+ Interest Expenses + Depreciation & Amortization divided by Interest Expense +
pro rata (for the quarter) scheduled principal payments on all Indebtedness +
pro rata (for the quarter) annual fees relating to the U.S. Bank Bonds and the
U.S. Bank Letters of Credit shall be greater than or equal to 1.25:1.00 measured
quarterly; and
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(b) For the actual quarter, all Bond Financed Properties shall maintain
a financial performance level such that the sum of their quarterly Net Income +
Interest Expense + pro rata (for the quarter) scheduled U.S. Bank Bonds
principal payments + pro rata (for the quarter) annual fees relating to the U.S.
Bank Bonds and the U.S. Bank Letters of Credit by 1.25 times, measured
quarterly.
All cash flow coverage calculations shall be based upon operating
performance of the Bond Financed Properties and shall not take into
consideration any cash collateral deposited with the Bank, including, but not
limited to, the remaining Cash Collateral.
4. Modification and Restructure of Reimbursement Agreements. In exchange
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for the forbearance and waiver of certain defaults under the Reimbursement
Agreements, and in addition to the deposit of the Cash Collateral with Bank as
additional security for the Borrower's obligations under the Reimbursement
Agreements and Related Documents (as defined in the Reimbursement Agreements) as
required under Section 3 of this Amendment, each of the Reimbursement Agreements
is hereby modified as follows:
A. Article I of each of the Reimbursement Agreements is amended to
add the following definitions:
"Bond Financed Properties" means, individually and collectively, the
Washington Properties, the Idaho Properties, the Ohio Properties and all other
facilities now or hereafter owned, leased or operated by the Borrower that are
financed with the proceeds of a Bank credit enhanced bond issue, including, but
not limited to, all facilities financed by the Washington State Housing Finance
Commission's Variable Rate Demand Multifamily Revenue Bonds (LTC Properties,
Inc. Project), Series 1995.
"Idaho Properties" means, individually and collectively, the 4 real
properties located in
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the State of Idaho which secure, in part, the Borrower's obligations to the
Bank under the Idaho Reimbursement Agreement and which are legally described in
Exhibit B-1 through Exhibit B-4 to the Idaho Reimbursement Agreement.
"Idaho Reimbursement Agreement" means that certain Reimbursement Agreement
dated as of July 1, 1997 by and between Borrower and Bank, as amended by the
Amendment, as the same may from time to time be further amended, modified or
supplemented.
"Ohio Properties" means, individually and collectively, the 7 real
properties located in the State of Ohio which secure, in part, the Borrower's
obligations to the Bank under the Ohio Reimbursement Agreement and which are
legally described in Exhibit B-1 through Exhibit B-7 to the Ohio Reimbursement
Agreement.
"Ohio Reimbursement Agreement" means that certain Reimbursement Agreement
dated as of July 1, 1998, by and between Borrower and Bank, as amended by the
Amendment, as the same may from time to time be further amended, modified or
supplemented.
"Washington Properties" means, individually and collectively, the 5 real
properties located in the State of Washington which secure, in part, the
Borrower's obligations to the Bank under the Washington Reimbursement Agreement
and which are legally described in Exhibit B-1 through Exhibit B-5 to the
Washington Reimbursement Agreement.
"Washington Reimbursement Agreement" means that certain Reimbursement
Agreement dated as of November 1, 1996 by and between Borrower and Bank, as
amended by the Amendment, as the same may from time to time be further amended,
modified or supplemented.
"U.S. Bank Bonds" means, individually and collectively, any bonds now or
hereafter issued by a political subdivision of any state or other entity
authorized to issue revenue bonds, on behalf of the Borrower or the proceeds of
which are loaned to the Borrower or to any Person who leases assisted living
facilities to, or which are operated by, Borrower, the principal and interest of
which is to be paid with the proceeds of drawings on a letter of credit now or
hereafter issued by U.S. Bank National Association, including, but not limited
to, the following bond issues: (a) Washington State Housing Finance
Commission's Variable Rate Demand Multifamily Revenue Bonds (LTC Project),
Series 1995; (b) Washington State Housing Finance Commission's Variable Rate
Demand Multifamily Revenue Bonds (Assisted Living Concepts, Inc. Project),
Series 1996; (c) Idaho Housing and Finance Association's Variable Rate Demand
Housing Revenue Bonds (Assisted Living Concepts, Inc. Project), Series 1997, and
(d) Ohio Housing Finance Agency's Variable Rate Demand Housing Revenue Bonds
(Assisted Living Concepts, Inc. Project), 1998 Series A-1 and Taxable Variable
Rate Demand Housing Revenue Bonds (Assisted Living Concepts, Inc. Project), 1998
Series A-2.
"U.S. Bank Letters of Credit" means, individually and collectively, any
letter of credit now or hereafter issued by Bank at the request of, on behalf
of, or for the direct or indirect benefit of the Borrower including, but not
limited to, the following letters of credit: (a) U.S. Bank of Washington,
National Association Letter of Credit No. S102742 issued December 13, 1995;
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(b) U.S. Bank of Washington, National Association Letter of Credit No. S000230
issued November 21, 1996; (c) United States National Bank of Oregon Letter of
Credit No. S001062 issued July 31, 1997; and (d) U.S. Bank National Association
Letter of Credit No. SLCSSEA00008 issued July 17, 1998.
"U.S. Bank Reimbursement Agreements" means, individually and collectively,
the Washington Reimbursement Agreement, the Idaho Reimbursement Agreement, the
Ohio Reimbursement Agreement and any other reimbursement agreement now or
hereafter entered into between Borrower and Bank in connection with the issuance
of U.S. Bank Letters of Credit, including, but not limited to, that certain
Reimbursement Agreement dated as of November 1, 1995 entered into between LTC
Properties, Inc. and Bank, as the same may from time to time be amended,
modified or supplemented.
B. Section 7.01(G)(iii) of each of the Reimbursement Agreements is amended
to read as follows:
The Cash Flow Coverage ratio will be two independent tests. Failure to
comply with either test shall constitute an Event of Default under this
Agreement:
(a) For the actual quarter, the Borrower's ratio of Net Income (which
shall exclude any restructuring, extraordinary or changes in accounting charges)
+ Interest Expenses + Depreciation & Amortization divided by Interest Expense +
pro rata (for the quarter) scheduled principal payments on all Indebtedness +
pro rata (for the quarter) annual fees relating to the U.S. Bank Bonds and the
U.S. Bank Letters of Credit shall be greater than or equal to 1.25:1.00 measured
quarterly commencing June 30, 2000; and
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(b) For the actual quarter, all Bond Financed Properties shall maintain
a financial performance level such that the sum of their quarterly Net Income +
Interest Expense + Depreciation & Amortization shall exceed the sum of Interest
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Expense + pro-rata (for the quarter) scheduled U.S. Bank Bonds principal
payments + pro rata for the quarter) annual fees relating to the U.S. Bank Bonds
and the U.S. Bank Letters of Credit by 1.25:1.00, measured quarterly commencing
June 30, 2000.
C. Section 8.01 of each of the Reimbursement Agreements is amended to add
the following new Section 8.01(k) immediately following Section 8.01(j):
(k) The commencement of any administrative or other proceeding seeking
license revocation or suspension or limitation on admission of residents to any
of the Bond Financed Properties (collectively, "Regulatory Action") by any
federal or state regulatory agency (collectively "Regulatory Agency") that is
not settled, dismissed or resolved to the satisfaction of such Regulatory Agency
within ninety (90) days shall constitute an Event of Default under the
Reimbursement Agreements; provided, however, that if such matter cannot be
resolved within ninety (90) days, the Borrower will not be in default under the
Reimbursement Agreements as a result of such Regulatory Action so long as
Borrower promptly and, in any event, within thirty (30) days following such
Regulatory Action, commences resolution of the matter and thereafter
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diligently and continuously prosecutes in good faith a settlement, dismissal or
resolution of such Regulatory Action.
5. Confirmation. The Reimbursement Agreements and each of the Related
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Documents (as defined in the Reimbursement Agreements) are each hereby modified
to provide that the term "Reimbursement Agreement" or "Reimbursement Agreements"
shall mean the Reimbursement Agreement or the Reimbursement Agreements, as
modified hereby. Borrower hereby confirms, subject to this Amendment, each of
the covenants, agreements and obligations of Borrower set forth in the
Reimbursement Agreements or any of the Related Documents (as defined in the
Reimbursement Agreements). Borrower acknowledges and agrees that, if and to the
extent that the Bank has not heretofore required strict compliance with the
performance by Borrower of such covenants, agreements and obligations, such
action or inaction shall not constitute a waiver of, or otherwise affect in any
manner, Bank's rights and remedies under any of the Reimbursement Agreements, as
amended hereby, or any of the Related Documents (as defined in the Reimbursement
Agreements), including the right to require performance of such covenants,
agreements and obligations strictly in accordance with the terms and provisions
thereof except as waived herein. Each Deed of Trust or, with respect to the
Ohio Properties, Mortgage which secures the Borrower's obligations under any
Reimbursement Agreement is hereby modified to provide that such Deed of Trust or
Mortgage secures such Reimbursement Agreement as modified hereby. Borrower
represents and warrants that (i) upon filing and/or delivery of the financial
statements and financial information described in Section 2 of this Amendment in
the form and within the time period therein set forth; (ii) the deposit of the
$8,300,000 Cash Collateral with Bank and execution of the documents described in
Section 3 of this Amendment, and (iii) upon the satisfaction of all of the terms
and conditions set forth in this Amendment, including, but not limited to,
payment of the restructuring fee and other costs and expenses set forth in
Section 15 of this Amendment, Borrower will not be in default in the performance
of any of the obligations, terms, covenants, conditions, representations,
warranties or other provisions set forth in the Reimbursement Agreements or any
of the Related Documents (as defined in the Reimbursement Agreements, as
amended), and (iv) Borrower has no knowledge of any defenses, offsets or claims
which may be asserted by Borrower, or by anyone claiming by or through Borrower,
to the indebtedness owned by Borrower to Bank under the Reimbursement Agreements
or any of the Related Documents (as defined in the Reimbursement Agreements) or
to the performance of any of the obligations, terms, covenants, conditions,
representations, warranties or other provisions set forth in the Reimbursement
Agreements or any of the Related Documents (as defined in the Reimbursement
Agreements).
6. Validity. Except as specifically modified and amended by this
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Amendment, all of the terms, covenants, conditions and provisions of the
Reimbursement Agreements and each of the Related Documents (as defined in the
Reimbursement Agreements) shall remain in full force and effect. Nothing herein
shall be deemed or construed to be an impairment of the lien of each Deed of
Trust or, with respect to the Ohio Properties, each Mortgage and the lien of
each Deed of Trust or each Mortgage shall remain a first lien against the
Washington Properties, the Idaho Properties or the Ohio Properties, as
applicable, described in such Deed of Trust or, with respect to the Ohio
Properties, such Mortgage.
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7. Bankruptcy. Borrower hereby represents and warrants that Borrower has
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not filed for relief under any chapter of Title 11 of the United States Code, as
amended (hereinafter referred to as the "Bankruptcy Code") at any time prior to
the date of this Amendment, and that it has not been subject to an involuntary
petition under the Bankruptcy Code. Borrower further represents and warrants
that as of the date of this Amendment (i) Borrower is and reasonably believes it
will continue to be able to pay all of its creditors in a timely manner; (ii)
Borrower will not be rendered insolvent as a result of entering into this
Amendment and reasonably believes it will continue to have assets which are
reasonable in relation to its business; and (iii) the agreements made and
obligations provided for herein and the cure periods provided to Borrower to
cure the Events of Default set forth in Section 2 above, were not made or
incurred with any intent, actual or otherwise, to hinder, delay or defraud any
person or entity. Borrower waives its right pursuant to Bankruptcy Code Section
1121(d) to seek any extension of the exclusive period in which it may file a
plan for reorganization and seek approval thereof. The foregoing
representations and warranties are a material inducement for Bank to agree to
enter into this Amendment. Nothing in this Section 7 shall be deemed in any way
to limit or restrict any of Bank's rights to seek in the bankruptcy court any
relief (or take any other action) that Bank, in Bank's sole discretion, may deem
appropriate in the event that a case under the Bankruptcy Code is commenced by
or against Borrower, and in particular, Bank shall be free to move for an
immediate vacation of the automatic stay under Section 362 of the Bankruptcy
Code, and Borrower agrees not to resist or oppose any such motion. Bank shall
also be free to move to terminate the exclusive period under Section 1121 of the
Bankruptcy Code and/or to dismiss the filed bankruptcy case.
8. Release of Claims.
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(a) Release of All Claims. Borrower, on behalf of itself, its
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affiliates and their respective successors and assigns (collectively, the
"Releasing Parties"), hereby release and forever discharge Bank and all of
Bank's officers, directors, employees, agents, attorneys, advisors, participants
and their respective successors and assigns (collectively, the "Released
Parties") from any and all claims, demands, debts, liabilities, contracts,
obligations, accounts, torts, causes of action or claims for relief of whatever
kind or nature, whether known or unknown, whether suspected or unsuspected,
which the Releasing Parties may have or which may hereafter be asserted or
accrue against Released Parties, or any of them, resulting from or in any way
relating to any act or omission done or committed by Released Parties, or any of
them, prior to the date hereof.
(b) Complete Defense. This release by Releasing Parties shall
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constitute a complete defense to any claim, cause of action, defense, contract,
liability, indebtedness or obligation released pursuant to this release. Nothing
in this release shall be construed as (or shall be admissible in any legal
action or proceeding as) an admission by Bank or any other Released Party that
any defense, indebtedness, obligation, liability, claim or cause of action
exists which is within the scope of those hereby released.
9. No Continuing Waiver. No waiver of any of the provisions of the
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Reimbursement Agreements or any of the Related Documents (as defined in the
Reimbursement Agreements)
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shall be deemed, or shall constitute, a continuing waiver of any of the
provisions of the Reimbursement Agreements or any of the Related Documents (as
defined in the Reimbursement Agreements) nor shall any provision of this
Amendment be deemed, or constitute, a waiver of any other provision, whether or
not similar, nor shall any waiver constitute a continuing waiver. No waiver of
any of the provisions of the Reimbursement Agreements shall be binding unless
executed in writing by the party making the waiver. Nothing contained in this
Amendment or in any ongoing discussions or negotiations between Borrower or Bank
shall directly or indirectly (i) create any obligation to make any further
extension of credit; (ii) create any obligation to make any further forbearance
or waiver or defer any enforcement action by Bank as a result of the occurrence
of an Event of Default under the Reimbursement Agreements or any of the Related
Documents (as defined in the Reimbursement Agreements) which is not described in
Section 2 of this Amendment or with respect to any Event of Default which is
described in Section 2 of this Amendment beyond the dates set forth in Section 2
of this Amendment; (iii) constitute a consent or waiver of any past, present or
future Event of Default or other violation of any provision of the Reimbursement
Agreements or any of the Related Documents (as defined in the Reimbursement
Agreements) except to the extent expressly set forth in Section 2 of this
Amendment; (iv) constitute a course of dealing or other basis for altering any
of Borrower's obligations to Bank under the Reimbursements Agreements or any of
the Related Documents (as defined in the Reimbursement Agreements). Bank
expressly reserves all of its rights, powers and remedies under the
Reimbursement Agreements and each of the Related Documents (as defined in the
Reimbursement Agreements).
10. Reaffirmation of Representations and Warranties. Borrower does hereby
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reaffirm to Bank each of the representations, warranties, covenants and
agreements made by Borrower set forth in each of the Reimbursement Agreements
with the same force and effect as if each were separately stated herein and made
again as of the date hereof. This reaffirmation shall not in any way limit,
derogate or abrogate the representations, warranties, covenants and agreements
made by Borrower as set forth in the Reimbursement Agreements. Borrower further
represents and warrants to Bank that with the exception of the Events of
Defaults set forth in Section 2 of this Amendment, Borrower is in compliance
with all of the terms, covenants, representations, warranties and agreements
made by Borrower in the Reimbursement Agreements and each of the Related
Documents (as defined in the Reimbursement Agreements). There is no Event of
Default under and no event that with the giving of notice, the passage of time,
or both, would constitute an Event of Default under any of the Reimbursement
Agreements, or any of the Related Documents (as defined in the Reimbursement
Agreements).
11. Time is of the Essence. Time is of the essence of this Amendment.
----------------------
12. Binding Effect. This Amendment shall be binding upon Borrower and its
--------------
successors and permitted assigns and shall inure to the benefit of Bank and its
successors and assigns.
13. Prior Agreements. The Reimbursement Agreements and each of the Related
----------------
Documents (as defined in the Reimbursement Agreements), including this Amendment
(i) integrate all the terms and conditions mentioned in or incidental to the
Reimbursement
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Agreements and each of the Related Documents (as defined in the Reimbursement
Agreements), (ii) supersede all oral negotiations and prior and other writings
with respect to the subject matter thereof, and (iii) are intended by the
parties as the final expression of the agreement with respect to the terms and
conditions set forth in this Amendment modifying and restructuring the
Reimbursement Agreements and each of the Related Documents (as defined in the
Reimbursement Agreements) and as the complete and exclusive statement of the
terms agreed to by the parties. If there is any conflict between the terms,
conditions and provisions of this Amendment and those of any of the
Reimbursement Agreements or any of the Related Documents (as defined in the
Reimbursement Agreements), the terms, conditions and provisions of this
Amendment shall prevail.
14. No Rights Conferred on Others. Nothing contained in this Amendment,
-----------------------------
the Reimbursement Agreements or any of the Related Documents (as defined in the
Reimbursement Agreements) shall be construed as giving any person, other than
the parties hereto, any right, remedy or claim under or in respect of this
Amendment except for the rights granted to the Released Parties in Section 8
hereof.
15. Costs and Expenses. Bank's agreement to forbear and waive certain
------------------
Events of Default under the Reimbursement Agreements is expressly conditioned
upon payment to Bank of a non-refundable restructuring fee of $71,162.00.
Borrower shall reimburse Bank for all fees, costs and expenses incurred by Bank
in the negotiation, preparation and administration of the modification and
restructuring of the Reimbursement Agreements and other Related Documents
contemplated by this Amendment. Such fees and costs include, but are not
limited to, outside counsel attorney fees and costs, inspection fees, filing and
recording fees, and the costs incurred to satisfy all terms of this Amendment.
All such costs and expenses shall be paid upon execution of this Amendment.
16. Governing Law. This Amendment and the rights and obligations of the
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parties hereunder shall in all respects be governed by, and construed and
enforced in accordance with the laws of the State of Washington. If any court
of competent jurisdiction determines any provision of this Amendment or any of
the Reimbursement Agreements or any of the Related Documents (as defined in the
Reimbursement Agreements) to be invalid, illegal or unenforceable, that portion
shall be deemed severed from the rest, which shall remain in full force and
effect as though the invalid, illegal or unenforceable portion had never been a
part hereof or of the Reimbursement Agreements or any of the Related Documents
(as defined in the Reimbursement Agreements).
17. Voluntary Agreement. The Borrower acknowledges that the Borrower is
-------------------
represented by legal counsel of the Borrower's choice, is fully aware of the
terms contained in this Amendment, and has voluntarily and without coercion or
duress of any kind entered into this Amendment and the documents executed in
connection with this Amendment.
18. Counterparts. This Amendment may be executed in any number of
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counterparts, and each such counterpart hereof shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
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19. Notice re Oral Commitments. Oral agreements or oral commitments to
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loan money, extend credit, or to forbear from enforcing repayment of a debt are
not enforceable under Washington law.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the day
and year first above written.
"Bank" "Borrower"
U.S. BANK NATIONAL ASSOCIATION ASSISTED LIVING CONCEPTS, INC., a
Nevada corporation
By /s/ Deborah S. Watson By /s/ James W. Cruckshank
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Deborah S. Watson Name James W. Cruckshank
Vice President Title Vice President, CFO
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