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EXHIBIT 99.1
LOAN AGREEMENT
THIS LOAN AGREEMENT (this "Agreement") made and entered into as of this
5th day of March, 2001, between ALTERRA HEALTHCARE CORPORATION, a Delaware
corporation, (the "Company"), and RDVEPCO, L.L.C., a Michigan limited liability
company, HOLIDAY RETIREMENT 2000, LLC, a Washington limited liability company,
THE TORONTO-DOMINION BANK, a Canadian chartered bank, and HBK MASTER FUND, L.P.,
a Cayman Islands limited partnership (each a "Lender" and, collectively, the
"Lenders").
Recitals:
Company desires to borrow from Lenders and Lenders agree to lend to
Company on the terms and conditions set forth herein the aggregate sum of Seven
Million Five Hundred Thousand Dollars ($7,500,000.00).
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 improved and
unimproved real estate owned by the Company identified on Exhibit A
hereto.
"Conditional Conversion Right" means each Holder's right to
convert a Note to convertible subordinated debentures as is more
particularly set forth in this Agreement.
"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.
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"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 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 a Lender and any subsequent holder of a Note.
"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).
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"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable
under the documentation governing any Indebtedness.
"Original Indenture" means that certain Indenture dated as
of May 31, 2000 made by the Company in favor of U.S. Trust Company of
Texas, N.A., as trustee.
"PIK Debentures" means the Series A 9.75% Convertible Senior
Pay-In-Kind Debentures due 2007, Series B 9.75% Convertible Senior
Pay-In-Kind Debentures due 2007 and Series C 9.75% Convertible Senior
Pay-In-Kind Debentures due 2007 issued by the Company pursuant to the
Original Indenture.
"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.
"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.
"Warrants" shall mean the warrants to purchase up to an
aggregate of 60,000 shares of the Company's Series B-1 Non-Voting
Participating Preferred Stock (the "Series B-1 Stock") in the form
attached hereto as Exhibit "C", the terms and conditions of which are
incorporated in and made a part of this Agreement.
"1934 Act" means the Securities Exchange Act of 1934, as
amended.
"1933 Act" means the Securities Act of 1933, as amended.
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ARTICLE II
Loan; Notes; Closing and Closing Date
2.1. Loans; Notes. On the terms and conditions set forth in this
Agreement, each of the Lenders agrees to lend to Company on the Closing Date the
following principal amount (each a "Loan Commitment"):
RDVEPCO, L.L.C. $4,388,000
Holiday Retirement 2000, LLC 231,000
The Toronto-Dominion Bank 1,533,000
HBK Master Fund, L.P. 1,348,000
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Total $7,500,000
The amounts borrowed by Company pursuant to each Loan Commitment (a "Loan" and,
collectively, the "Loans") shall be evidenced by notes of like tenor except as
to principal amount in the form of Exhibit B hereto payable to the order of the
respective Lenders and dated the Closing Date (each a "Note" and, collectively,
the "Notes"), the terms and conditions of which are incorporated in and made a
part of this Agreement.
2.2. Closing; Closing Date. The closing of the Loans (the
"Closing") shall occur at 10:00 a.m. at the offices of Company on or before
March 5, 2001 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.
ARTICLE III
Terms of Loans and Notes
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 Loan
shall bear interest at the rate of ten percent (10%) per annum; (ii)
from and including the third month anniversary of the Closing Date
through the sixth month anniversary of the Closing Date, the Loan shall
bear interest at the rate of eleven percent (11%) per annum; and (iii)
during each monthly period (or portion thereof) from and after the
sixth month anniversary of the Closing Date until the principal and all
accrued
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interest on the Loan have been paid, the 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 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 Loan,
including the Default Interest Rate, exceed the highest rate permitted
by applicable law. Interest on the 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 in arrears commencing on the third month
anniversary of the Closing Date and on the 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 Lenders to conform
strictly to applicable usury laws now or hereafter in force, and any
interest payable under this Agreement or the Notes 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 each Holder, either be rebated to the Company or credited on
the principal amount of the Loan evidenced by the Note held by such
Holder; or (iii) if the Loans have 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 Notes 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 Loans (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 Holders so that the rate of interest on
account of the Loans, 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 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
Notes 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.
(a) Maturity Date. Unless the same shall become due
earlier as a result of acceleration of the maturity, the Loans
shall mature on the six (6) month anniversary of the Closing
Date, at which time the outstanding principal balance of the
Loans and all accrued and unpaid interest shall become due and
payable.
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(b) Extension. At any time prior to the six month
anniversary date of the Closing Date and upon not less than
five (5) days prior written notice to the Holders and provided
that no Default or Event of Default then exists and is
continuing, the Company may extend the original maturity date
of all and not less than all of the Loans and Notes for one
(1) additional six (6) month period ending on the one year
anniversary of the Closing Date.
3.3. Prepayments. The Company may from time to time prepay the
Loans, 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; Pro Rata Payments. The Company shall make
payments in respect of the Loans (including principal and interest) by wire
transfer of immediately available funds to the account specified by the Holders.
Notwithstanding any other provision in this Agreement or the Notes, the Company
covenants and agrees and the Lenders among themselves agree that all payments
made by the Company of interest and principal, including any prepayments, shall
be made to and for the benefit of the Holders pro rata according the outstanding
principal balance of their respective Notes.
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 any of the Notes;
(ii) default in payment when due of the principal of on any
of the Notes;
(iii) failure of the Company to make payments to the Holders
of interest or principal due on the Notes or of any prepayments other
than pro rata according to the outstanding principal balance of their
respective Notes;
(iv) 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);
(v) 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 any Note or any of the Security Documents; 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);
(vi) any of the representations or warranties of the Company
set forth in this Agreement or Security Documents or incorporated
herein or therein by reference or set forth in any statement or
schedule delivered pursuant to this Agreement or any of the
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Security Documents 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;
(vii) 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 more than $10,000,000;
(viii) 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;
(ix) 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,
(c) consents to the appointment of a custodian of it
or for all or substantially all of its property, or
(d) makes a general assignment for the benefit of
its creditors; or
(x) 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.
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3.6. Acceleration.
(a) Declaration of Acceleration. If any Event of Default
occurs and is continuing, a Holder may, upon notice to the Company,
declare the Note held by it to be due and payable immediately; and upon
any such declaration all principal and interest on such Note shall
become immediately due and payable; provided, however, in the case of
an Event of Default arising from any event described in clauses (ix) or
(x) of Section 3.5 hereof, all of the Loans and Notes shall ipso facto
become due and payable without further action or notice on the part of
the Holders.
(b) Rescission. At any time after a declaration of
acceleration with respect to a Note, the Holder thereof 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, a
Holder may pursue any available remedy to collect the payment of principal and
interest (including interest at the Default Interest Rate) on the Note held by
it or to enforce the performance of any provision of such Note or this
Agreement. A delay or omission by a 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.
3.8. Waiver Of Past Defaults. A 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 a Holder hereunder or under a
Note held by it shall be applied first to all costs and expenses of collection,
including reasonable attorneys' fees, then, subject to the provisions of Section
3.4, to accrued and unpaid interest (including at the Default Interest Rate to
the extent applicable) and then to principal due on the Notes.
3.10. Conditional Conversion Right. In the event that the Company shall
extend the maturity date of the Loans pursuant to Section 3.2(b), above, or in
the event that on the six month anniversary date of the Closing Date the Company
shall fail to pay all Indebtedness owing under this Agreement and the Notes,
then, subject to the terms of this Section 3.10, each Holder of a Note shall
have right (the "Conditional Conversion Right") to convert the then-outstanding
principal amount of the Note held by it and the accrued and unpaid interest
thereon (in whole or in part) into convertible subordinated debentures of the
Company (the "Series B-1 Debentures") ranking pari passu with the Company's
Series B 9.75% Convertible Pay-In-Kind Debentures due 2007 (the "Series B
Debentures"), which Series B-1 Debentures shall be issued pursuant to the
Indenture (as hereinafter defined).
(a) Mechanics of Conversion. A Holder shall effect conversions
hereunder by delivering to the Company by facsimile to the attention of
the Company's Chief Financial
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Officer at (414) 918-5055 a completed conversion notice in the form
attached as Exhibit A to the Notes (a "Conversion Notice") and delivery
to the Company within two business days thereafter of the Note to be
converted in whole or in part. Each Conversion Notice shall specify the
date on which such conversion is to be effected, which date may not be
prior to the date such Conversion Notice is delivered hereunder (a
"Conversion Date") If no Conversion Date is specified in a Conversion
Notice, then the Conversion Date shall be the date that such Conversion
Notice is delivered hereunder. Each Conversion Notice, once given,
shall be irrevocable. If a Holder is converting less than all of the
principal amount represented by the Note tendered by such Holder with
the Conversion Notice, or if a conversion hereunder cannot be effected
in full for any reason, then the Company shall honor such conversion to
the extent permissible hereunder and shall promptly deliver to such
Holder a replacement Note in the same tenor for such principal amount
as has not been converted.
(b) Issuance of Series B-1 Debentures. The Company shall take
all actions necessary to permit the issuance of the Series B-1
Debentures upon any conversion that would be permitted by Section
3.10(a) above, including, without limitation, any action necessary to
amend the Original Indenture so as to permit the issuance of Series B-1
Debentures upon the exercise of the Conditional Conversion Right for
all of the Notes pursuant to this Agreement. Each Lender in its
capacity as a holder of PIK Debentures agrees to consent (or to cause
any subsequent holder of such PIK Debentures to consent) to the such
amendment to the Original Indenture and to the issuance of the Series
B-1 Debentures (including, without limitation, consenting to the Series
B-1 Debentures as "Permitted Indebtedness" under the Original Indenture
and consenting to a supplemental indenture to the Original Indenture in
order to permit the issuance of the Series B-1 Debentures thereunder in
accordance with Section 11.2 of the Original Indenture).
(c) Terms of Series B-1 Debentures. The Series B-1 Debentures
shall be identical to, and rank pari passu with, the Series B
Debentures except that (i) the Series B-1 Debentures shall be
convertible into Series B-1 Stock; and (ii) the Conversion Price (as
that term is used in the Indenture) of the Series B-1 Debentures shall
be equal to the greater of (1) $75 per share of Series B-1 Stock and
(2) (x) the lowest price per share (or the lowest conversion price of
any convertible security) of any shares of the Company's Series B
Non-Voting Participating Preferred Stock (the "Series B Stock") or
Series B-1 Stock (or other securities convertible into such Series B
Stock or Series B-1 Stock) sold by the Company during the first six (6)
months following the Closing Date or (y) 100 times the lowest price per
share of shares of the Company's common stock, $.01 par value per share
(the "Common Stock") (or the lowest conversion price of any other
securities convertible into Common Stock) sold by the Company during
the first six (6) months following the Closing Date; provided, however,
that clauses (x) and (y) above shall not apply to any sale of
securities unless the aggregate gross proceeds of such sale equals or
exceeds $5,000,000.
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ARTICLE IV
Conditions to Lenders' Obligations
4.1. Conditions. Each Lenders' obligation to make the Loans shall
be subject to the prior satisfaction of the following conditions, except to the
extent waived by such Lender in writing:
(a) Company shall have reimbursed Lenders 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 the Lenders that the purchase price paid by
the Company for the Collateral Real Estate and the project
costs incurred for improvements to the Collateral Real Estate
aggregate not less than Twenty Million Dollars
($20,000,000.00);
(ii) none of the parcels shall be subject to any Lien
unacceptable to the Lenders;
(iii) Lender shall have received title commitments
(the "Title Commitments") with respect to each parcel and the
commitment for the issuance by Chicago Title Insurance Company
of an ALTA lender's policy of title insurance (without
standard exceptions and with such endorsements as directed by
the Lenders);
(iv) Company shall have executed and caused to be
duly filed or recorded security agreements, pledge agreements,
collateral assignments, mortgages, deeds of trust and other
related agreements in favor of RDVEPCO, L.L.C. as collateral
agent for the Lenders (collectively the "Security Documents")
in forms reasonably acceptable to the Lenders and their
counsel encumbering each and have shall provided evidence
thereof to the Lenders.
(c) Company shall have issued the Warrants to Lenders pro rata
according to the amounts of their respective Loan Commitments.
(d) Lenders shall have received an opinion of Rogers & Hardin,
counsel to Company, in form and substance acceptable to the Lenders and
their counsel.
(e) 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;
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(f) 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;
(g) No Default or Event of Default shall have occurred and be
continuing; and
(h) None of the Lenders shall have defaulted on its obligation
to make its Loan to the Company.
4.2. Waiver; Termination. Each 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 a Lender's obligations set forth in Section 4.1 shall not
have been satisfied or waived by such Lender on or before March 5, 2001, such
Lender may, in its sole discretion, terminate its obligations pursuant and
benefits pursuant to this Agreement without any liability on the part of such
Lender to any other Person.
ARTICLE V
Representations and Warranties
5.1. Representations and Warranties of the Company. In order to induce
the Lenders to enter into this Agreement, the Company represents and warrants to
the Lenders, which representations and warranties shall survive the Closing and
be independent of any investigation or lack of investigation of Company made by
or on behalf of Lenders, as follows:
(a) Organization and Standing; Authorization of Series B-1
Stock. The Company 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. The
Company 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. The Company is duly
authorized to issue up to 300,000 shares of Series B-1 Stock in
accordance with the form of "Certificate of Designations, Rights and
Preferences of the Series B-1 Non-Voting Participating Preferred Stock"
previously furnished to the Lenders, which certificate has been duly
adopted by the Company's board of directors and duly filed by the
Company pursuant Section 151 of the General Corporation Law of the
State of Delaware.
(b) Capacity of the Company; Consents; Execution of
Agreements. The Company has the requisite power, authority, and
capacity to enter into this Agreement, the Notes, the Warrants, and the
agreements contemplated hereby and to perform the transactions and
obligations to be performed by the Company hereunder and thereunder.
Except as described on Schedule 5.1(b) hereto, no consent,
authorization, approval,
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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 Warrants 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(b) 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 Notes, the Warrants 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. This Agreement
has been, and the Warrants and agreements contemplated hereby will be,
duly executed 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.
(c) Valid Issuance. The Notes and the Warrants to be issued
hereunder, when issued by the Company to the Lenders pursuant to the
terms of this Agreement, will be duly authorized and validly issued.
(d) Conflicts; Defaults. The execution and delivery of this
Agreement, the Notes, the Warrants and agreements contemplated hereby
by the Company, and the performance by the Company of the transactions
and obligations contemplated hereby and thereby to be performed 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, or any Subsidiary is a party or
by which the Company, or any 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, or any Subsidiary or their
issued and outstanding capital stock; (iii) constitute a violation of
any law, statute, judgment, decree, order, rule, or regulation of a
Governmental Authority applicable to the Company, or any 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 except
with respect to the matters set forth on Schedule 5.1 (e).
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(e) 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.
(f) 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 ("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.
(g) 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 except for the matters described on Schedule 5.1
(h), which will be disclosed by the Company in its next filing 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.
(h) 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.
(i) 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.
(j) 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 Notes and the Warrants. Based
in part on the representations of the Lenders and under the
circumstances contemplated hereby and under current laws and
regulations, the offer, issuance, sale and delivery of the Notes and
the Warrants to the Lenders are exempt from the prospectus delivery and
registration requirements of the 1933 Act.
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(k) 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.
(l) 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 Lenders 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
information in this Agreement, or in any Schedule or Exhibit attached
to this Agreement or delivered to the Lenders in connection herewith,
contains any untrue statement of a material fact or when considered
together with all such information delivered to any 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.
(m) Contracts. Except for this 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 as of September 30, 2000.
(n) Schedule of Certain Payables. Company has furnished to
Lenders a schedule, which Borrower warrants and represents is true and
accurate in all material respects, which sets forth an aged accounts
payable schedule showing all amounts owing to Persons which have
furnished labor, material or services with respect to improvement of
the Collateral Real Estate or are otherwise owed amounts with respect
to which such Person has, or upon compliance with applicable law has
the right to obtain, a Lien on any of the Collateral Real Estate.
5.2 Representations and Warranties of the Lenders. Each Lender
(solely as to itself and not as to any other Lender) represents and warrants to
the Company that:
(a) Investment Intent. The Note to be issued to such Lender 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. Such Lender understands that such
Note has not been registered under the 1933 Act by reason of its
issuance in a transaction exempt from the registration and prospectus
delivery
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requirements of the 1933 Act pursuant to Section 4(2) thereof. It
further understands that such Note will bear the following legend and
agrees that it will hold such 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 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. Such
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. Such Lender and, if such Lender is a
limited partnership or limited liability company, each partner or
member of such 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 Notes, the Company covenants and agrees
that it will and will cause each Subsidiary to:
(a) Certain Information and SEC Reports. Furnish to each
Lender in form and substance satisfactory to such Lender:
(i) within five (5) days after the Company learns of
the commencement or overtly threatened commencement of any
material claim or
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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;
(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 any 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 each 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).
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(e) Notification of Events of Default, Acceleration or
Material Adverse Effect. Promptly notify each 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 payment defaults aggregating more than $10 million on
any Indebtedness of the Company and its Subsidiaries or of any
acceleration of the maturity of any Indebtedness of the Company and its
Subsidiaries aggregating more than $10 million, and promptly inform
each 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 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
Security, as hereinafter defined (otherwise than upon the exercise of
the Warrants or currently outstanding stock options or upon the
conversion or payment of pay-in-kind dividends or interest on currently
outstanding convertible debentures and preferred stock), at any time
prior to the Notes being repaid in full or converted pursuant to
exercise of the Conditional Conversion Right (an "Alterra Equity
Transaction"), the Company shall afford each Holder the opportunity, on
not less than ten (10) days prior written notice, to co-invest in the
Alterra Equity Transaction by converting the outstanding Indebtedness
to such Holder under this Agreement and the Note held by it into a
participation in such Alterra Equity Transaction on the same terms
afforded to other participants in such Alterra Equity Investment;
provided, however, that (i) such co-investment right must be exercised
by each Holder 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,
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the Holders acknowledge that their control and voting rights may be
substantially limited (in the manner required by the principal
investor in such Alterra Equity Investment). In the event that the
Equity Securities to which the Holders rights extend under the
provisions hereof consist of Securities having the right to vote on
the election of directors or granting to the Holder the right to
obtain Securities having the right to vote on the election of
directors, each Holder may require that, with respect to such Holder,
the Alterra Equity Transaction only consist of Securities which do not
contain such right to vote or to obtain Securities having such right
to vote but otherwise providing to such Holder substantially the same
economic benefits as it would have obtained if it had received
Securities having such right to vote or was granted the right to
obtain Securities having such right to vote, and which are convertible
into such Securities having the right to so vote on a share-for-share
or equivalent basis at such time(s) or upon the happening of such
event(s) as such Holder may reasonably request.
"Equity Security" shall mean any equity security of the
Company or Subsidiary (except for any securities issued by any
Subsidiary to the Company or to any Subsidiary that is 100% owned by
the Company), including, without limitation, common or preferred stock,
any profit sharing or similar arrangement giving any Person a right or
interest in the profits of the Company or any Subsidiary or in any
property owned by any one or more of them, any debt security of the
Company convertible, directly or indirectly, into an equity security of
the Company or any Subsidiary or into any such profit sharing or
similar arrangement, or any option, warrant or right to acquire,
directly or indirectly, any of the foregoing.
(j) Title Insurance. On the Closing Date, the Company shall
purchase mortgagee title insurance for the Lenders pursuant to the
Title Commitments.
(k) Rights Plan. Not less than 90 days after the Closing Date,
the Company shall take such action as reasonably required by the
Lenders funding not less that $5 million of the aggregate Loan
Commitment (including seeking the consent of Bank of America N.A., to
the extern required) so that: (i) the holders of the Series B-1 Stock
will have rights to acquire additional shares of Series B-1 Stock which
are substantially similar and proportionate to the rights distributed
to holders of Common Stock pursuant to the Rights Plan; and (ii) the
holders of Series B-1 Debentures will receive upon conversion of such
Series B-1 Debentures into Series B-1 Stock, respectively, rights or
additional shares, as the case may be, as necessary so that the
proportionate interests in the Company which they would have been
entitled to receive upon such conversion, but for the effect of the
distribution or exercise of rights distributed pursuant to the Rights
Plan or the immediately preceding clause (i), will not have been, or
thereafter be, diminished as a result of the distribution or exercise
of such rights granted to holders of the Company's Common Stock, Series
A 9.75% Cumulative Convertible Pay-In-Kind Preferred Stock or Series B
Stock. The "Rights Plan" means that certain plan implemented pursuant
to the Rights Agreement between the Company and American
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Stock Transfer & Trust Company, as rights agent, dated as of December
10, 1998, as the same may be amended.
6.2. Negative Covenants. The Company covenants and agrees that so
long as any Indebtedness remains outstanding under this Agreement and the Notes,
without the prior written consent of Holders holding not less than 80% in
outstanding principal amount of the Notes, 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 and except for sales of assets approved by the Board of
Directors of the Company in accordance with the provisions of the
Company's bylaws.
(b) Limitations on Indebtedness. Become or remain obligated,
or suffer or permit any Subsidiary to become or remain obligated, for
any Indebtedness, except:
(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 plus the outstanding Indebtedness
with respect to the PIK Debentures.
(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.
6.3. Reservation of Shares. The Company shall at all times have
reserved for issuance a sufficient number of shares of Series B-1 Stock to
permit the exercise in full of all Warrants and the conversion of any of the
Series B-1 Debentures as may be issued pursuant to the Conditional Conversion
Right of all of the Holders.
ARTICLE VII
Miscellaneous
7.1. Waiver and Amendments. No failure or delay on the part of a
Lender in the exercise of any power or right, and no course of dealing between
Company and such 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 Lenders at law or in equity. No notice to or demand on the
Company required hereunder or under the Notes 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 any Lender to any other or further action
and any circumstances without notice or demand. Except as may otherwise be
specifically provided
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in this Agreement, no amendment, modification or waiver of, or consent with
respect to, any provision of this Agreement or the Notes shall in any event be
effective with respect to any Lender unless the same shall be in writing and
signed and delivered by such Lender. Any waiver of any provision of this
Agreement or the Notes, and any consent to any departure by Company from the
terms of any provision of this Agreement or the Notes, shall be effective only
in the specific instance and for the specific purpose for which given. The
Company shall not enter into any amendment of this Agreement or of any Note with
any Holder, unless the Company shall have offered in writing to each other
Holder on not less than five (5) days notice to enter into an amendment with
each other Holder on the same terms and conditions.
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:
If to Company:
Alterra Healthcare Corporation
10000 Innovation Drive
Milwaukee, Wisconsin 53226
Attention: President
Fax: (414) 981-5055
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
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If to Lenders:
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
Holiday Retirement 2000, L.L.C.
c/o Emeritus Corporation
3131 Elliott Avenue
Suite 500
Seattle, Washington 98121
Attn: Dan Baty
Fax: (206) 378-4205
The Toronto-Dominion Bank
55 King Street West
Toronto, Ontario M5K-1A2
Attn: Natalie Townsend
Fax: (416) 982-5045
HBK Master Fund, L.P.
c/o HBK Investments, L.P.
300 Crescent Court, Suite 700
Dallas, Texas 75201
Attn: Jon L. Moale
Fax: (214) 758-1253
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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.
7.3. Restriction on Transfer. The Lenders acknowledge that the Notes
have not been registered under the Securities Act of 1933, as amended, (the
"1933 Act") or the securities laws of any state. Accordingly, the Notes 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 Notes shall bear a restrictive legend to the foregoing
effect.
7.4. Expenses. Company shall reimburse the Lenders for all of its
reasonable out-of-pocket expenses incurred in the negotiation, preparation,
execution and delivery of this Agreement, the Notes, the Warrants and related
matters, and all related due diligence, including, without limitation, the
expenses of legal counsel and accountants. Company shall also reimburse each
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 held by it, 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 Notes.
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 the Lenders and their respective successors and assigns, and shall
inure to the benefit of Company and the Lenders 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.
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7.10. Withholding Tax. Each Lender acknowledges that the Company will
be required to comply with the requirements of the Internal Revenue Service
relative to backup withholding and such Lender may be subject to backup
withholding depending on its status and compliance with applicable filing
requirements of the Internal Revenue Service.
* * * * * * * * * * * * *
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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
LENDERS:
RDVEPCO, L.L.C.
By: RDV Altco, L.L.C., a member
By: RDV Corporation, a member
By: /s/ Jerry L. Tubergen
---------------------------------------------
Its: President
---------------------------------------------
HOLIDAY RETIREMENT 2000, L.L.C.
By: /s/ Daniel R. Baty
---------------------------------------------
Its: Chairman
---------------------------------------------
THE TORONTO-DOMINION BANK
By: /s/ Richard W. Greene
---------------------------------------------
Its: ASO
--------------------------------------------
HBK MASTER FUND, L.P.
By: HBK Investments, L.P., its investment manager
By: /s/ William Rose
--------------------------------------------
Its: Authorized Signatory
--------------------------------------------
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