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EXHIBIT 10.120
LOAN AGREEMENT
THIS LOAN AGREEMENT (this "Agreement") made and entered into as of this
13th day of December, 1999 between ALTERRA HEALTHCARE CORPORATION, a Delaware
corporation, (the "Company"), and RDVEPCO, L.L.C., a Michigan limited liability
company ("Lender").
Recitals:
Company desires to borrow from Lender and Lender agrees to lend to
Company on the terms and conditions set forth herein the sum of Fourteen Million
Dollars ($14,000,000.00).
NOW, THEREFORE, the parties promise and agree as follows:
ARTICLE I
Definitions
In addition to terms defined elsewhere in this Agreement, the following
definitions shall apply for purposes of this Agreement:
"Bankruptcy Law" means Title 11, U.S. Code or any similar
federal or state law for the relief of debtors.
"Business Day" means a day other than a Saturday, a Sunday or
a day on which banking institutions in the City of Grand Rapids,
Michigan are authorized by law, regulation or executive order to remain
closed. If a payment date is not a Business Day, payment may be made on
the next succeeding day that is a Business Day.
"Collateral Real Estate" means the parcels of unimproved real
estate owned by the Company identified on Exhibit A hereto.
"Contract" means any contract, agreement, undertaking or
commitment (written or oral, formal or informal, firm or contingent) to
which the Company or any of its Subsidiaries is a party or by which the
Company, any of its Subsidiaries, or any of their respective assets are
bound, and which has current operative or executory effect.
"Default" means any event that is or with the passage of time
or the giving of notice or both would be an Event of Default.
"GAAP" means generally accepted accounting principles set
forth from time to time in the opinions and pronouncements of the
Accounting Principles Board and the American Institute of Certified
Public Accountants and statements and pronouncements
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of the Financial Accounting Standards Board (or agencies with similar
functions of comparable stature and authority within the U.S.
accounting profession), which are applicable to the circumstances as
of the date of determination.
"Governmental Authority" means the United States, any state or
municipality, the government of any foreign country, any subdivision of
any of the foregoing, or any authority, department, commission, board,
bureau, agency, court, or instrumentality of any of the foregoing.
"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under (i) currency exchange or interest rate
swap agreements, currency exchange or interest rate cap agreements and
currency exchange or interest rate collar agreements and (ii) other
agreements or arrangements designed to protect such Person against
fluctuations in currency exchange or interest rates.
"Holder" means the Lender and any subsequent holder of the
Note.
"Holding" means AHC Purchaser Holding, Inc., a Delaware
corporation.
"Indebtedness" means, with respect to any Person, any
indebtedness of such Person, whether or not contingent, in respect of
borrowed money or evidenced by bonds, notes, debentures or similar
instruments or letters of credit (or reimbursement agreements in
respect thereof) or banker's acceptances or representing obligations in
respect of a lease that would at such time be required to be
capitalized on a balance sheet in accordance with GAAP or the balance
deferred and unpaid of the purchase price of any property (other than
contingent or "earnout" payment obligations) or representing any
Hedging Obligations, except any such balance that constitutes an
accrued expense or trade payable, if and to the extent any of the
foregoing indebtedness (other than letters of credit and Hedging
Obligations) would appear as a liability upon a balance sheet of such
Person prepared in accordance with GAAP, as well as all indebtedness of
others secured by a Lien on any asset of such Person (whether or not
such indebtedness is assumed by such Person) and, to the extent not
otherwise included, the guarantee, whether or not conditional, by such
Person of any indebtedness of any other Person.
"Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect
of such asset, whether or not filed, recorded or otherwise perfected
under applicable law (including any conditional sale or other title
retention agreement, any lease in the nature thereof, any option or
other agreement to sell or give a security interest in and any filing
of or agreement to give any financing statement under the Uniform
Commercial Code (or equivalent statutes) of any jurisdiction).
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable
under the documentation governing any Indebtedness.
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"Permitted Liens" means (i) Liens for taxes and assessments
or governmental charges or levies not at the time due, and (ii)
easements that do not impair or restrict the Company's or Subsidiary's
use and enjoyment of the property affected thereby.
"Person" means any individual, corporation, partnership,
limited liability company, joint venture, association, joint-stock
company, trust, unincorporated organization, government or any agency
or political subdivision thereof or any other entity.
"Purchaser" means AHC Purchaser, Inc., a Delaware corporation.
"Subsidiary" means any corporation, partnership, limited
partnership, limited liability company, association or other business
entity of which securities or other ownership interests representing
more than fifty percent (50%) of the ordinary voting power are, at the
time as of which any determination is being made, owned or controlled
by the Company or one or more Subsidiaries of the Company.
"SEC" means the Securities and Exchange Commission.
"Subscription and Organizational Agreement" means the
Subscription and Organizational Agreement between Company, Lender and
Holding dated as of the date of this Agreement pursuant to which, among
other things, Lender has agreed to purchase from Holding and Holding
has agreed to issue and sell to Lender an aggregate of 1,000 shares of
the Convertible Preferred Stock of Holding.
"1934 Act" means the Securities Exchange Act of 1934, as
amended.
"1933 Act" means the Securities Act of 1933, as amended.
ARTICLE II
Loan; Note; Closing; Closing Date; and Commitment Fee
2.1. Tranche A Loan; Note. On the terms and conditions set forth in
this Agreement, Lender agrees to lend to Company on the Closing Date the sum of
Fourteen Million Dollars ($14,000,000.00) in principal amount (the "Tranche A
Loan Commitment"). The Fourteen Million Dollars ($14,000,000.00) borrowed by
Company pursuant to the Tranche A Loan Commitment (the "Tranche A Loan") shall
be evidenced by a note in the form of Exhibit B hereto payable to the order of
Lender and dated the Closing Date (the "Tranche A Note"), the terms and
conditions of which, are incorporated in and made a part of this Agreement.
2.2. Tranche B Loan Commitment. Lender agrees to make a loan to
Purchaser on or before December 30, 1999 (the "Tranche B Loan") substantially on
the terms and conditions set forth in Exhibit C, hereto, subject to (i) the
Closing of the Tranche A Loan occurring, (ii) no
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Default or Event of Default having occurred with respect to the Tranche A Loan,
(iii) GMAC shall be diligently pursuing completion of the Proposed GMAC
Financing, to the reasonable satisfaction of Lender and (iv) documentation of
the Tranche B Loan in form and substance reasonably satisfactory to Lender and
its counsel.
2.3. Closing; Closing Date. The closing of the Tranche A Loan (the
"Closing") shall occur at 10:00 a.m. at the offices of Company on or before
December 15, 1999 or such other time and place as the parties may agree in
writing (the "Closing Date") upon satisfaction of the terms and conditions to
Lender's obligations as set forth in Article IV, below.
2.4. Fees. On or before the Closing, the Company agrees to pay to the
Lender the following fees; (i) a Seventy Thousand Dollar ($70,000.00) loan fee
with respect to the Tranche A Loan, and (ii) on behalf of Purchaser One Hundred
and Fifty Thousand Dollar ($150,000.00) commitment fee with respect to the
Tranche B Loan. Neither of such fees shall be prorated in the event of
prepayment of the related loan and the commitment fee with respect to the
Tranche B Loan shall be deemed fully earned when paid and shall not be
non-refundable under any circumstances. If not paid prior to the Closing,
Company agrees that Lender may deduct such fees from the proceeds of the Tranche
A Loan and remit to Company the amount of the Tranche A Loan net of such fees.
ARTICLE III
Terms of Tranche A Loan and Note
3.1. Interest Rate; Payment; Usury.
(a) Provided that no Event of Default has occurred and is
continuing and subject to the other provisions of this Agreement (i)
during the period from and including the Closing Date to, but not
including, the third month anniversary of the Closing Date, the Tranche
A Loan shall bear interest at the rate of eight percent (8%) per annum;
(ii) from and including the third month anniversary of the Closing Date
through the sixth month anniversary of the Closing Date, the Tranche A
Loan shall bear interest at the rate of nine percent (9%) per annum;
and (iii) during each monthly period (or portion thereof) from and
after sixth month anniversary of the Closing Date until the principal
and all accrued interest on the Tranche A Loan have been paid, the
Tranche A Loan shall bear interest at a rate that is fifty basis points
(.5 of 1%) higher than the rate in effect immediately prior to the
commencement of such monthly period. During any period that an Event of
Default shall have occurred and be continuing, interest on the Tranche
A Loan shall accrue at a rate equal to the otherwise applicable
interest rate plus five hundred basis points (the "Default Interest
Rate"). Notwithstanding anything contained herein to the contrary, in
no event shall the interest rate on the Tranche A Loan, including the
Default Interest Rate, exceed the highest rate permitted by applicable
law. Interest on the Tranche A Loan, including interest at the Default
Rate, shall be based on a 360 day year and interest shall accrue and be
payable for the actual number of calendar days elapsed. Interest shall
be payable on the third month anniversary of the Closing Date and on
the
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same day of each subsequent month until the principal and all accrued
interest have been paid in full.
(b) It is the intention of the Company and Lender to conform
strictly to applicable usury laws now or hereafter in force, and any
interest payable under this Agreement or the Note shall be subject to
reduction to an amount not to exceed the maximum non-usurious amount
for commercial loans allowed under such applicable usury laws as now or
hereafter construed by the courts having jurisdiction over such
matters. In the event such interest (whether designated as interest,
service charges, points, or otherwise) does exceed the maximum legal
rate, it shall be (i) canceled automatically to the extent that such
interest exceeds the maximum legal rate; (ii) if already paid, at the
option of the Holder, either be rebated to the Company or credited on
the principal amount of the Tranche A Loan; or (iii) if the Tranche A
Loan has been prepaid in full, then such excess shall be rebated to the
Company. It is further agreed, without limitation of the foregoing,
that all calculations of the rate of interest contracted for, charged,
or received under this Agreement and the Note that are made for the
purpose of determining whether such rate exceeds the maximum legal
rate, shall be made, to the extent permitted by applicable law, by
amortizing, prorating, allocating, and spreading throughout the full
stated term of the Tranche A Loan (and any extensions of the term
thereof that may be hereafter granted) all such interest at any time
contracted for, charged, or received from the Company or otherwise by
the Holder so that the rate of interest on account of the Tranche A
Loan, as so calculated is uniform throughout the term thereof. If the
Company is exempt or hereafter becomes exempt from applicable usury
statutes or for any other reason the rate of interest to be charged on
the Tranche A Loan is not limited by law, none of the provisions of
this paragraph shall be construed so as to limit or reduce the interest
or other consideration payable under this Agreement or the Note or
under the instrument securing payment thereof. The terms and provisions
of this paragraph shall control and supersede every other provision of
all agreements between the parties hereto.
3.2. Maturity. Unless the same shall become due earlier as a result of
acceleration of the maturity, the Tranche A Loan shall mature on the first
anniversary of the Closing Date at which time the outstanding principal balance
of the Tranche A Loan and all accrued and unpaid interest shall become due and
payable.
3.3. Prepayments. The Company may from time to time prepay the Tranche
A Loan, in whole or in part, at any time. Any partial prepayment shall be
applied first to interest which is accrued and unpaid and then to principal.
3.4. Manner of Payment. The Company shall make payments in respect of
the Tranche A Loan (including principal and interest) by wire transfer of
immediately available funds to the account specified by the Holder.
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3.5. Events of Default. Each of the following constitutes an
"Event of Default":
(i) default for five (5) days in the payment when due of
interest on the Tranche A Loan;
(ii) default in payment when due of the principal of the
Tranche A Loan;
(iii) failure by the Company for 15 days after notice from the
Holder to comply with the provisions described under Article VI hereof;
provided, however, if the curing of such failure may not reasonably be
accomplished within such time frame, the Company shall have such
additional time as is necessary to effect such cure (not to exceed 30
days);
(iv) failure by the Company for 30 days after notice from the
Holder to comply with any of its other covenants or agreements in this
Agreement or the Note; provided, however, if the curing of such failure
may not reasonably be accomplished within such time frame, the Company
shall have such additional time as is necessary to effect such cure
(not to exceed 60 days);
(v) any of the representations or warranties of the Company
set forth in this Agreement or incorporated herein by reference or set
forth in any statement or schedule delivered pursuant to this Agreement
was untrue or incorrect in any material respect as of the date of
execution of this Agreement or as of the Closing Date as if made on
such date;
(vi) default by the Company or any of its Subsidiaries under
any mortgage, indenture or instrument under which there may be issued
or by which there may be secured or evidenced any Indebtedness of the
Company or any of its Subsidiaries, whether such Indebtedness now
exists, or is created after the date hereof, which default results in
the acceleration of such Indebtedness prior to its express maturity and
the principal amount of such Indebtedness, together with the principal
amount of any other such Indebtedness the maturity of which has been so
accelerated, aggregates $5,000,000 or more;
(vii) failure by the Company or any of its Subsidiaries to pay
final judgments aggregating in excess of $1,000,000, which judgments
are not paid, discharged or stayed for a period of 45 days;
(viii) the Company or any of its Subsidiaries pursuant to or
within the meaning of Bankruptcy Law:
(a) commences a voluntary case,
(b) consents to the entry of an order for relief
against it in an involuntary case,
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(c) consents to the appointment of a custodian of it
or for all or substantially all of its property,
(d) makes a general assignment for the benefit of its
creditors, or
(e) generally is not paying its debts as they become
due; or
(ix) a court of competent jurisdiction enters an order or
decree in an involuntary case or proceeding under any Bankruptcy Law
that:
(a) is for relief against the Company or any of its
Subsidiaries;
(b) appoints a custodian of the Company or any of its
Subsidiaries or for all or substantially all of the property
of the Company or any of its Subsidiaries; or
(c) orders the liquidation of the Company or any of
its Subsidiaries;
and the order or decree remains unstayed and in effect for 60
consecutive days.
3.6. Acceleration.
(a) Declaration of Acceleration. If any Event of Default
occurs and is continuing, the Holder may, upon notice to the Company,
declare the Tranche A Loan to be due and payable immediately; and upon
any such declaration all principal and interest on the Tranche A Loan
shall become immediately due and payable; provided, however, in the
case of an Event of Default arising from certain events of bankruptcy
or insolvency described in clauses (viii) and (ix) of Section 3.5
hereof, with respect to the Company or any Subsidiary, the Tranche A
Loan shall ipso facto become due and payable without further action or
notice on the part of the Holder.
(b) Rescission. At any time after a declaration of
acceleration with respect to the Tranche A Loan, the Holder may, in its
sole discretion, rescind and cancel such declaration and its
consequences. No such rescission shall affect any subsequent Default or
impair any right with respect thereto.
3.7. Other Remedies. If an Event of Default occurs and is continuing,
the Holder may pursue any available remedy to collect the payment of principal
and interest (including interest at the Default Interest Rate) on the Tranche A
Loan or to enforce the performance of any provision of the Note or this
Agreement. A delay or omission by the Holder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.
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3.8. Waiver Of Past Defaults. The Holder may waive any existing Default
or Event of Default and its consequences under this Agreement. Upon any such
waiver, such Default shall cease to exist, and any Event of Default arising
therefrom shall be deemed to have been cured for every purpose of this
Agreement; but no such waiver shall extend to any subsequent or other Default or
impair any right consequent thereon.
3.9. Priorities. Any sums collected by the Holder hereunder and under
the Note shall be applied first to all costs and expenses of collection,
including reasonable attorneys' fees, then to accrued and unpaid interest
(including at the Default Interest Rate to the extent applicable) and then to
principal.
ARTICLE IV
Conditions to Lender's Obligations
4.1. Conditions. Lender's obligation to make the Tranche A Loan shall
be subject to the prior satisfaction of the following conditions, except to the
extent waived by Lender in writing:
(a) Company shall have paid to the Lender the loan fee with
respect to the Tranche A Loan and the commitment fee with respect to
the Tranche B Loan required pursuant to Section 2.4, above, and shall
have reimbursed Lender for the fees and expenses for which Company is
liable pursuant to the terms of Section 7.4, below, to the extent
documented to Company as of the Closing.
(b) With respect to the Collateral Real Estate:
(i) Company shall have provided evidence reasonably
satisfactory to Lender that the purchase price paid by the
Company for the Collateral Real Estate aggregated not less
than Eleven Million Dollars ($11,000,000.00);
(ii) none of the parcels shall be subject to any Lien
unacceptable to Lender;
(iii) Lender shall have received the commitment for
the issuance by Chicago Title & Trust Company of an ALTA
lender's policy of title insurance (without standard
exceptions and with such endorsement as directed by Lender)
with respect to each parcel (collectively, the "Title
Commitments") and
(iv) Company shall have executed and caused to be
duly recorded mortgages in favor of Lender in forms reasonably
acceptable to Lender and its counsel encumbering each and have
shall provided evidence thereof to Lender.
(c) Holding shall have performed its obligations to issue and
sell shares of its convertible preferred stock to Lender pursuant to
the Subscription and Organizational Agreement.
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(d) Holding shall have guaranteed the Tranche A Loan in form
and substance satisfactory to Lender and its counsel and shall have
pledged to Lender as collateral security for the performance of its
obligations pursuant to such guaranty all of the issued and outstanding
shares of Purchaser in form and substance satisfactory to Lender and
its counsel.
(e) Company shall have entered into an agreement with
Meditrust Acquisition Company LLC, New Meditrust Company LLC and T and
F Properties, LP to purchase certain assisted living and dementia care
residences for an aggregate price of approximately $59.1 million in
form and substance reasonably satisfactory to Lender and its counsel
(the "Meditrust Agreement"), and the rights of "purchaser" under such
Meditrust Agreement shall have been assigned to Purchaser.
(f) Lender shall have received an opinion of Rogers & Hardin,
counsel to Company and Holding, in form and substance acceptable to the
Lender and its counsel.
(g) Each of the representations and warranties of the Company
set forth in this Agreement or incorporated herein by reference or set
forth in any statement or schedule delivered pursuant to this Agreement
are true and correct in all material respects as of the date of
execution of this Agreement and as of the date of the Closing Date as
if made on such date;
(h) The Company shall not be in default with respect to any of
its covenants and agreements set forth in Article VI of this Agreement
or set forth elsewhere in this Agreement;
(i) No Default or Event of Default shall have occurred and be
continuing;
(j) Lender shall have received a copy of the Company's
executed term sheet with GMAC Commercial Mortgage ("GMAC") relating to
mortgage financing for the purchase of 19 assisted living residences,
as described therein (such financing, the "Proposed GMAC Financing").
4.2. Waiver; Termination. Lender may waive in writing any of the
conditions to its obligations set forth in Section 4.1 in its sole discretion.
If the conditions to Lender's obligations set forth in Section 4.1, shall not
have been satisfied or waived by Lender on or before December 30, 1999, Lender
may, in its sole discretion, terminate this Agreement without any liability on
the part of the Lender to any other Person.
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ARTICLE V
Representations and Warranties
5.1. Representations and Warranties of the Company. In order to induce
the Lender to enter into this Agreement, the Company represents and warrants to
the Lender, which representation and warranties shall survive the Closing and be
independent of any investigation or lack of investigation of Company made by or
on behalf of Lender, as follows:
(a) Organization and Standing; Issued and Outstanding Shares.
Each of the Company, Holding and Purchaser is duly incorporated and
validly existing under the laws of the State of Delaware, and has all
requisite corporate power and authority to own or lease its properties
and assets and to conduct its business as it has been and is proposed
to be conducted. Each of the Company, Holding and Purchaser is
qualified to do business and in good standing in each jurisdiction in
which the failure to so qualify could have a material adverse effect
upon its assets, properties, liabilities, financial condition, results
of operations or business. Purchaser has no Subsidiaries and Holding
has no Subsidiaries other than Purchaser. The Certificate of
Incorporation of each of Holding and Purchaser is in the form
previously provided to Lender and the issued and outstanding capital
stock of each is as set forth in Schedule 5.1(a).
(b) Indebtedness and Contracts of Holding and Purchaser.
Except for the Subscription and Organizational Agreement, the Meditrust
Agreement, such Contracts or Indebtedness as are contemplated hereby or
thereby as set forth on Schedule 5.1(b), neither Holding nor Purchaser
has any Indebtedness or is a party to any Contracts (whether formal or
informal, written or oral, firm or contingent).
(c) Capacity of the Company; Consents; Execution of
Agreements. The Company has the requisite power, authority, and
capacity to enter into this Agreement, the Subscription and
Organizational Agreement and the agreements contemplated hereby and
thereby and to perform the transactions and obligations to be performed
by the Company hereunder and thereunder. Except as described on
Schedule 5.1(c) hereto, no consent, authorization, approval, license,
permit or order of, or filing with, any Person or Governmental
Authority is required in connection with the execution and delivery of
this Agreement, the Subscription and Organizational Agreement and
agreements contemplated thereby, or the performance by the Company of
the transactions and obligations to be performed by it hereunder and
thereunder, except as contemplated by said agreements. The failure to
obtain any of the consents described on Schedule 5.1(c) prior to the
Closing Date will not have a material adverse effect upon the Company's
assets, properties, liabilities, financial condition, results of
operations or business. The execution and delivery of this Agreement,
the Subscription and Organizational Agreement and agreements
contemplated thereby by the Company, and the performance of the
transactions and obligations contemplated hereby and thereby by the
Company have been duly authorized by all requisite action of the
Company and Holding, as applicable. This Agreement has been, and the
Subscription and Organizational Agreement and agreements contemplated
thereby will be, duly executed
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and delivered by a duly authorized officer of the Company and
constitutes, or when executed and delivered will constitute, a valid
and legally binding agreement of the Company, enforceable in accordance
with its terms, except as enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar
laws, both state and federal, affecting the enforcement of creditors'
rights or remedies in general from time to time in effect and the
exercise by courts of equity powers or their application of principles
of public policy.
(d) Status of Note. The Note to be issued hereunder, when
issued by the Company to the Lender pursuant to the terms of this
Agreement, will be duly authorized and validly issued.
(e) Conflicts; Defaults. The execution and delivery of this
Agreement, the Subscription and Organizational Agreement and agreements
contemplated thereby by the Company, the execution by Company of the
Meditrust Agreement and the execution by Holding of a guaranty of the
Tranche A Loan and a pledge of the shares of Purchaser to secure such
guaranty, and the performance by the Company and Purchaser of the
transactions and obligations contemplated hereby and thereby to be
performed by each will not (i) violate, conflict with, or constitute a
default under any of the terms or provisions of its certificate of
incorporation or bylaws, or any provisions of, or result in the
acceleration of any obligation under, any Contract, note, debt
instrument, security agreement, or other instrument to which the
Company, Purchaser or any other Subsidiary is a party or by which the
Company, Purchaser or any other Subsidiary or any of their respective
assets is bound; (ii) result in the creation or imposition of any Liens
or claims upon the assets of the Company, Purchaser or any other
Subsidiary or their issued and outstanding capital stock (except as
contemplated by this Agreement); (iii) constitute a violation of any
law, statute, judgment, decree, order, rule, or regulation of a
Governmental Authority applicable to the Company, Purchaser or any
other Subsidiary; or (iv) constitute an event which, after notice or
lapse of time or both, would result in any of the foregoing. The
Company is not presently in violation of any provision of its
certificate of incorporation or bylaws. Neither the Company nor any
Subsidiary is presently in default in any material respect under any of
the terms or provisions of any of its material Contracts, notes, debt
instruments, security agreements, or other instruments, or any order,
judgment, or decree relating to it or its business or by which it or
any of its assets is bound.
(f) Periodic Reports. The Company has timely filed with the
SEC all periodic reports heretofore required to be filed by it pursuant
to the 1934 Act and all such periodic reports (including the financial
statements or information forming a part thereof) are complete and
comply, in all material respects, with the requirements of the SEC
applicable to such periodic reports and financial statements.
(g) Compliance with Laws. The Company is not in violation of,
nor do any of its operations violate in any respect, any statute, law,
or regulation of any Governmental Authority applicable to the Company,
any of its assets, or the conduct of its business
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("Applicable Laws"), the violation of which reasonably could be
anticipated to have a material adverse effect upon the Company's
assets, properties, liabilities, financial condition, results of
operations or business, and no material expenditures are or, based on
present requirements, will be required of the Company in order for it
to comply or remain in compliance with any Applicable Laws.
(h) Litigation. The Company is not a party to any material
legal action, suit, claim, investigation or proceeding which is not
adequately described in a periodic report heretofore filed by the
Company with the SEC and, to the best of the Company's knowledge and
belief after due inquiry, there exist no facts or circumstances which
reasonably could be anticipated to result in any such action, suit,
claim, investigation, or proceeding.
(i) Taxes. The Company has prepared and duly and timely filed
with each appropriate Governmental Authority, all material federal,
state, municipal, local and foreign tax returns, information returns
and other reports required to be filed on or before the date of this
Agreement and has paid all material taxes required to be paid by the
Company prior to the date of this Agreement in respect of the periods
covered by such returns and reports, except such taxes as are being
contested in good faith.
(j) Environmental Compliance. The Company and its Subsidiaries
are in compliance with all applicable federal, state and local laws and
requirements (including permit requirements) relating to the protection
of health or the environment in connection with the ownership,
operation and condition of its properties and business, except where
failure to comply would not have material adverse effect.
(k) Securities Laws. No consent, authorization, approval,
permit, or order of or filing with any Governmental Authority is
required in order for the Company to execute and deliver this Agreement
or to offer, issue, sell, or deliver the Note. Based in part on the
representations of the Lender and under the circumstances contemplated
hereby and under current laws and regulations, the offer, issuance,
sale and delivery of the Note to the Lender is exempt from the
prospectus delivery and registration requirements of the 1933 Act.
(l) Hedging Obligations. Company and its Subsidiaries do not
have any outstanding Hedging Obligations except to the extent entered
into pursuant to and in compliance with any credit agreements to which
they may be a party.
(m) Disclosure. The Company has fully responded to all written
requests for information and has accurately answered, to the best of
the Company's knowledge and belief after due inquiry, all written
questions from the Lender concerning the assets, properties,
liabilities, financial condition, results of operations, business and
prospects of the Company, and has not knowingly withheld any facts
relating thereto which it reasonably believed to be material with
respect to the assets, properties, liabilities, financial condition,
results of operations, business or prospects of the Company. No
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information in this Agreement, or in any Schedule or Exhibit attached
to this Agreement or delivered to Lender in connection herewith,
contains any untrue statement of a material fact or when considered
together with all such information delivered to the Lender omits to
state any material fact necessary in order to make the statements made
in the light of the circumstances under which they were made, when
taken as a whole, not misleading. The disclosures made in writing by
the Company in connection with this Agreement do not contain any untrue
statement of a material fact nor omit to state a material fact
necessary to make the statements made therein not misleading. There is
no fact or circumstance relating to the Company which materially and
adversely affects or in the future may, in the reasonable business
judgment of the Company, be expected materially and adversely to affect
the same which has not been set forth in this Agreement or the
Schedules hereto.
(n) Changes in Circumstances. Since September 30, 1999, the
Company has not suffered any material adverse change in its assets,
properties, liabilities, financial condition, results of operations,
business or prospects except for (i) the previously announced charge to
be incurred in the fourth quarter of 1999 (the amount of which charge
has not yet been determined or disclosed) and (ii) the effect on future
periods of the Company's announced reduction in future new development
activities.
(o) Contracts. Except for this Agreement, the Subscription and
Organizational Agreement and the agreements contemplated hereby and
thereby, the Company has filed all material contracts required to be
filed by Item 601(b)(10) of Regulation S-K under the 1933 Act and the
1934 Act.
5.2 Representations and Warranties of the Lender. The Lender
represents and warrants to the Company that:
(a) Investment Intent. The Note is being acquired for its own
account and not with the view to, or for resale in connection with, any
distribution or public offering thereof within the meaning of the 1933
Act. The Lender understands that the Note has not been registered under
the 1933 Act by reason of its issuance in a transaction exempt from the
registration and prospectus delivery requirements of the 1933 Act
pursuant to Section 4(2) thereof. It further understands that the Note
will bear the following legend and agrees that it will hold the Note
subject thereto:
THIS NOTE HAS NOT BEEN REGISTERED PURSUANT TO THE SECURITIES
ACT OF 1933 OR ANY STATE SECURITIES LAW. NEITHER THIS NOTE NOR
ANY PORTION HEREOF OR INTEREST HEREIN MAY BE SOLD, ASSIGNED,
TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF UNLESS THE SAME
IS REGISTERED UNDER SAID ACT AND ANY APPLICABLE STATE
SECURITIES LAW, OR UNLESS AN EXEMPTION FROM SUCH REGISTRATION
IS AVAILABLE AND THE COMPANY SHALL HAVE RECEIVED, AT THE
EXPENSE OF THE HOLDER HEREOF, EVIDENCE OF SUCH EXEMPTION
REASONABLY
14
SATISFACTORY TO THE COMPANY (WHICH MAY INCLUDE, AMONG OTHER
THINGS, AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY).
(b) Capacity of the Lender; Execution of Agreement. Lender has
all requisite power, authority, and capacity to enter into this
Agreement, and to perform the transactions and obligations to be
performed by it hereunder. This Agreement has been duly authorized,
executed and delivered by it and constitutes its valid and legally
binding obligation, enforceable in accordance with its terms, except as
enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws, both state and
federal, affecting the enforcement of creditors' rights or remedies in
general from time to time in effect and the exercise by courts of
equity powers or their application of principles of public policy.
(c) Accredited Investor. The Lender and each member of Lender
is an "accredited investor" as defined in Rule 501 (a) of Regulation D
promulgated under the 1933 Act.
ARTICLE VI
Covenants and Agreements
6.1. Affirmative Covenants. So long as any Indebtedness remains
outstanding under this Agreement and the Note, the Company covenants and agrees
that it will and will cause each Subsidiary to:
(a) Certain Information and SEC Reports. Furnish to Lender in
form and substance satisfactory to Lender:
(i) within five (5) days after the Company learns of
the commencement or overtly threatened commencement of any
material claim or suit, legal or equitable, or of any
administrative, arbitration, or other similar proceeding
against the Company or any of its Subsidiaries, or any of
their respective businesses, assets, or properties which claim
or proceeding, if determined adversely to the Company or such
Subsidiary, would be likely to have a material adverse effect
on the Company and its Subsidiaries, taken as a whole, written
notice of the nature and extent of such suit or proceeding;
(ii) within five (5) days after the Company learns of
any circumstance or event which reasonably can be expected to
have a material adverse effect on the assets, properties,
liabilities, financial condition, results of operations,
business, or prospects of the Company, written notice of the
nature and extent of such circumstance or event;
15
(iii) simultaneous with the transmission thereof to
Company's shareholders, copies of (or notice from an EDGAR
watch service of) all financial statements, proxy statements,
reports and any other general written communications which the
Company sends to its shareholders and copies (or notice from
an EDGAR watch service of) of all registration statements and
all regular, special or periodic reports which it files with
the SEC or with any securities exchange on which any of its
securities are then listed, and copies of all press releases
and other statements made available generally by the Company
to the public concerning material developments in the
Company's businesses; and
(vii) within ten (10) days after the Holder makes a
reasonable request therefor, such other data relating to the
business, affairs and financial condition of the Company or
any of its Subsidiaries.
(b) Taxes. Pay and discharge all taxes and other governmental
charges before the same shall become overdue, unless and to the extent
only that such payment is being contested in good faith.
(c) Insurance. Maintain insurance coverage on its physical
assets and against other business risks in such amounts and of such
types as are customarily carried by companies similar in size and
nature, and in the event of acquisition of additional property, real or
personal, or of incurrence of additional risks of any nature, increase
such insurance coverage in such manner and to such extent as prudent
business judgment and present practice would dictate.
(d) Examination of Books. Permit the Lender, through its
authorized attorneys, accountants and representatives, to examine the
Company's books, accounts, records, ledgers and assets of every kind
and description at all reasonable times upon oral or written request of
the Lender, at the Company's cost and expense (provided that so long as
the Company shall not be in default, the Company shall be obligated to
pay for no more than one (1) such examination per year).
(e) Notification of Events of Default, Acceleration or
Material Adverse Effect. Promptly notify the Lender of any condition or
event which constitutes, or with the passage of time and/or the giving
of notice would constitute, an Event of Default under this Agreement or
of any acceleration of the maturity of any Indebtedness aggregating $5
million or more of the Company, and promptly inform Lender of the
existence or occurrence of any condition or event (other than
conditions having an effect on the economy in general) which could
reasonably be anticipated to have a material adverse effect upon the
Company's financial condition.
(f) Maintenance of Licenses. Maintain in good standing all
licenses required by any Governmental Authority that may be necessary
or required for the Company and its Subsidiaries to carry on their
respective businesses, where the failure to maintain such
16
licenses would have a material adverse effect on the Company and its
Subsidiaries taken as a whole.
(g) ERISA Compliance. Comply with all material requirements
imposed by ERISA as presently in effect or hereafter promulgated,
including but not limited to, the minimum funding requirements of any
defined contribution employee benefit plan ("Pension Plan").
(h) Compliance with Law. Comply in all material respects with
all applicable laws, rules, regulations and orders of any Governmental
Authority, such compliance to include, without limitation, paying
before the same become delinquent all taxes, assessments, and
governmental charges imposed upon it or upon its property, including
without limitation the Collateral Real Estate, except to the extent
that compliance with any of the foregoing is then being contested in
good faith by appropriate legal proceedings and with respect to which
adequate financial reserves have been established on the books and
records of the Company and except where the failure to comply would not
have a material adverse effect on the Company and its Subsidiaries,
taken as a whole.
(i) Right of Co-Investment. Prior to issuing any equity
securities (otherwise than upon the exercise of currently outstanding
stock options or upon the conversion of currently outstanding
convertible debentures) for aggregate proceeds of in excess of $25
million at any time prior to December 31, 2000 (an "Alterra Equity
Transaction"), the Company shall use reasonable efforts to afford
Lender the opportunity to co-invest in the Alterra Equity Transaction
by converting the outstanding Indebtedness under this Agreement and the
Note into an equity investment in the Company on the terms of the
Alterra Equity Investment; provided, however, that (i) such
co-investment right must be exercised by Lender at the time of
execution of the definitive purchase agreement for the Alterra Equity
Transaction, and (ii) as a minority participant in such Alterra Equity
Transaction, Lender acknowledges that its control and voting rights may
be substantially limited (in the manner required by the principal
investor in such Alterra Equity Investment).
(j) Title Insurance. At the request of Lender, the Company
shall purchase mortgagee title insurance for the Lender pursuant to the
Title Commitments.
6.2. Negative Covenants. The Company covenants and agrees that so long
as any Indebtedness remains outstanding under this Agreement and the Note,
without the prior written consent of Lender, Company will not:
(a) No Mergers, Etc. Enter into any merger or consolidation or
sell, lease, transfer or dispose of all, substantially all, or any
material part of its assets, except in the ordinary course of its
business.
(b) Limitations on Indebtedness. Become or remain obligated, or
suffer or permit any Subsidiary to become or remain obligated, for any
Indebtedness, except:
17
(i) Indebtedness arising pursuant to this Agreement;
and
(ii) other Indebtedness, whether now outstanding or
hereafter incurred, provided that the sum of all of the
Indebtedness of the Company and the Subsidiaries at any time
outstanding on a consolidated basis (excluding, however, any
Indebtedness arising as a result of acquisitions or business
combinations effected after the date of this Agreement) does
not exceed $1,850,000,000.00.
(c) Limitations on Mortgages. Create or permit to exist any
Lien on the Collateral Real Estate, other than Permitted Liens and
mortgages in favor of Lender.
ARTICLE VII
Miscellaneous
7.1. Waiver and Amendments. No failure or delay on the part of Lender
in the exercise of any power or right, and no course of dealing between Company
and Lender, shall operate as a waiver of such power or right, nor shall any
single or partial exercise of any power or right preclude other or further
exercise thereof or the exercise of any other power or right. Remedies provided
for herein are cumulative and not exclusive of any remedies which may be
available to the Lender at law or in equity. No notice to or demand on the
Company required hereunder or under the Note shall in any event entitle Company
to any other or further notice or demand in similar or other circumstances or
constitute a waiver of the right of Lender to any other or further action and
any circumstances without notice or demand. No amendment, modification or waiver
of, or consent with respect to, any provision of this Agreement or the Note
shall in any event be effective unless the same shall be in writing and signed
and delivered by Lender. Any waiver of any provision of this Agreement or the
Note, and any consent to any departure by Company from the terms of any
provision of this Agreement or the Note, shall be effective only in the specific
instance and for the specific purpose for which given.
7.2. Notices. All notices and other communications required or
permitted under this Agreement shall be in writing and, if mailed by prepaid
registered or certified mail, return receipt requested, shall be deemed to have
been received on the earlier of the date shown on the receipt or three (3)
Business Days after the post-mark date thereof. Notices may be given by
recognized overnight courier services and shall be deemed to have been received
as of the regularly scheduled time for delivery established by such courier
service. In addition, notices hereunder may be delivered by hand in which event
the notice shall be deemed effective when delivered or by telecopy in which case
it shall be deemed effective upon confirmation of transmission. All notices and
other communications under this Agreement shall be given to the parties hereto
at the following addresses:
18
If to Company:
Alterra Healthcare Corporation
450 N. Sunnyslope Rd., Suite 300
Brookfield, WI 53005
Attention: President
Fax: (414) 789-6182
With a copy to:
Rogers & Hardin
2700 International Tower
229 Peachtree Street, N.E.
Atlanta, Georgia, 30303
Attn: Alan Leet, Esq.
Fax: (404) 525-2224
If to Lender:
RDVEPCO, L.L.C.
c/o RDV Corporation
126 Ottawa Avenue, N.W.
500 Grand Bank Building
Grand Rapids, Michigan 49503
Attention: President
Fax: (616) 454-4654
With a copy to:
Mr. Robert Haveman
190 River Avenue
Suite 300
Holland, Michigan 49423
Fax: (616) 494-8110
and
Hecht & Lentz
333 Bridge, N.W., Suite 330
Grand Rapids, MI 49504
Attention: David M. Hecht, Esq.
Fax: (616) 776-7203
Any party hereto may change the address to which notices shall be directed under
this Section by giving written notice of such change to the other parties.
19
7.3. Restriction on Transfer. The Lender acknowledges that the Note has
not been registered under the Securities Act of 1933, as amended, (the "1933
Act") or the securities laws of any state. Accordingly, the Note may not be sold
or otherwise disposed of or transferred, unless such sale, disposition or
transfer is registered under the 1933 Act and applicable state securities laws
or unless the Company has received an opinion of counsel reasonably acceptable
to the Company that such sale, disposition or transfer is exempt from such
registration. The Note shall bear a restrictive legend to the foregoing effect.
7.4. Expenses. Company shall reimburse Lender for all of its reasonable
out-of-pocket expenses incurred in the negotiation, preparation, execution and
delivery of this Agreement, the Note, the Share Purchase Agreement and, if not
consummated the Tranche B loan documentation and related matters, and all
related due diligence, including, without limitation, the expenses of legal
counsel and accountants. Company shall also reimburse Holder for all of its
out-of-pocket expenses incurred in the administration, waiver, modification and
enforcement of any of its rights under this Agreement and the Note, including,
without limitation, the reasonable expenses of legal counsel and accountants. In
addition, Company shall be responsible for any documentary taxes incurred in
connection with the transactions contemplated by this Agreement and the Note.
7.5. Severability. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction, shall as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
7.6. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Michigan without giving effect to
any choice or conflict of law provision or rule (whether of the State of
Michigan or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of Michigan.
7.7. Successors and Assigns. This Agreement shall be binding upon
Company and Lender and their respective successors and assigns, and shall inure
to the benefit of Company and Lender and their successors and assigns.
7.8. Headings. Headings used in this Agreement are for convenience only
and shall not be used in connection with the interpretation of any provision
hereof.
7.9. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
separate counterparts shall together constitute one and the same instrument.
* * * * * * * * * * * * *
20
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by the undersigned thereunto duly authorized as of the date first
written above.
THE COMPANY:
ALTERRA HEALTHCARE CORPORATION
By: /s/ Mark W. Ohlendorf
-----------------------------------
Name: Mark W. Ohlendorf
Title: Senior Vice President
LENDER:
RDVEPCO, L.L.C.
By: EDP Assisted Living Properties, L.L.C.,
a member
By: Elsa D. Prince Living Trust u/a dated
January 27, 1976
By: /s/ Elsa D. Prince
-----------------------------------
Elsa D. Prince, Trustee