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EXHIBIT 10.1
$10,000,000
TERM LOAN AGREEMENT
DATED AS OF APRIL 24, 2000
AMONG
ARV ASSISTED LIVING, INC.
AS BORROWER
AND
LFSRI II ASSISTED LIVING LLC
AS LENDER
WEIL, GOTSHAL & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
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Article I Definitions, Interpretation And Accounting Terms................................. 1
Section 1.1. Defined Terms................................................................. 1
Section 1.2. Computation of Time Periods................................................... 13
Section 1.3. Accounting Terms and Principles............................................... 13
Section 1.4. Certain Terms................................................................. 13
Article II The Term Loan Facility........................................................... 14
Section 2.1. The Term Loan Commitment...................................................... 14
Section 2.2. Borrowing Procedures.......................................................... 14
Section 2.3. Repayment of Term Loan, Extension of Maturity Date............................ 14
Section 2.4. Evidence of Debt.............................................................. 14
Section 2.5. Optional Prepayments.......................................................... 15
Section 2.6. Mandatory Prepayments......................................................... 15
Section 2.7. Reduction of Commitment; Extension of Commitment
Termination Date.......................................................... 16
Section 2.8. Interest...................................................................... 16
Section 2.10. Payments and Computations..................................................... 17
Section 2.11. Special Provisions Governing Term Loans....................................... 17
Section 2.12. Taxes......................................................................... 18
Article III Conditions To Term Loans......................................................... 18
Section 3.1. Conditions Precedent to Initial Loans......................................... 18
Section 3.2. Conditions Precedent to Each Term Loan........................................ 20
Article IV Representations and Warranties................................................... 20
Section 4.1. Corporate Existence; Compliance with Law...................................... 20
Section 4.2. Corporate Power; Authorization; Enforceable Obligations....................... 21
Section 4.3. Ownership of Borrower; Subsidiaries........................................... 21
Section 4.4. Financial Statements.......................................................... 22
Section 4.5. Material Adverse Change....................................................... 22
Section 4.6. Solvency...................................................................... 22
Section 4.7. Litigation.................................................................... 22
Section 4.8. Taxes......................................................................... 22
Section 4.9. Full Disclosure............................................................... 23
Section 4.10. Margin Regulations............................................................ 23
Section 4.11. No Burdensome Restrictions; No Defaults....................................... 23
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Section 4.12. Investment Company Act; Public Utility Holding Company Act.................... 24
Section 4.13. Use of Proceeds............................................................... 24
Section 4.14. Insurance..................................................................... 24
Section 4.15. Labor Matters................................................................. 24
Section 4.16. ERISA......................................................................... 25
Section 4.17. Environmental Matters......................................................... 25
Section 4.18. Intellectual Property......................................................... 26
Section 4.19. Properties.................................................................... 26
Section 4.20. Ranking....................................................................... 27
Article V Reporting Covenants.............................................................. 27
Section 5.1. Financial Statements.......................................................... 27
Section 5.2. Default Notices............................................................... 28
Section 5.3. Litigation.................................................................... 28
Section 5.4. SEC Filings; Press Releases................................................... 28
Section 5.5. Labor Relations............................................................... 29
Section 5.6. Tax Returns................................................................... 29
Section 5.7. ERISA Matters................................................................. 29
Section 5.8. Environmental Matters......................................................... 29
Section 5.9. Other Information............................................................. 30
Article VI Affirmative Covenants............................................................ 30
Section 6.1. Preservation of Corporate Existence, Etc...................................... 30
Section 6.2. Compliance with Laws, Etc..................................................... 30
Section 6.3. Conduct of Business........................................................... 31
Section 6.4. Payment of Taxes, Etc......................................................... 31
Section 6.5. Maintenance of Insurance...................................................... 31
Section 6.6. Access........................................................................ 31
Section 6.7. Keeping of Books.............................................................. 31
Section 6.8. Maintenance of Properties, Etc................................................ 31
Section 6.9. Application of Proceeds....................................................... 32
Section 6.10. Environmental................................................................. 32
Article VII Negative Covenants............................................................... 32
Section 7.1. Indebtedness.................................................................. 32
Section 7.2. Limitation on Liens........................................................... 33
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Section 7.3. Limitation on Restricted Payments............................................. 34
Section 7.4. Limitation on Transactions with Affiliates.................................... 34
Section 7.5. Limitation on Dividends and Other Payment Restrictions Affecting Subsidiaries. 34
Section 7.6. Limitation on Issuance of Preferred Stock by Subsidiaries..................... 35
Section 7.7. Waiver of Stay, Extension or Usury Laws....................................... 35
Section 7.8. Limitation on Investments, Loans and Advances................................. 35
Section 7.9. Certain Changes............................................................... 35
Section 7.10. Compliance with ERISA......................................................... 35
Section 7.11. Environmental................................................................. 35
Article VIII Events of Default................................................................ 36
Section 8.1. Events of Default............................................................. 36
Section 8.2. Remedies...................................................................... 37
Section 8.3. Rescission.................................................................... 38
Article IX Miscellaneous.................................................................... 38
Section 9.1. Amendments, Waivers, Etc...................................................... 38
Section 9.2. Assignments and Participations................................................ 38
Section 9.3. Costs and Expenses............................................................ 38
Section 9.4. Indemnities................................................................... 39
Section 9.5. Right of Set-off.............................................................. 39
Section 9.6. Notices, Etc.................................................................. 40
Section 9.7. Binding Effect................................................................ 41
Section 9.8. Governing Law................................................................. 41
Section 9.9. Submission to Jurisdiction; Service of Process................................ 41
Section 9.10. Waiver of Jury Trial.......................................................... 42
Section 9.11. Marshaling; Payments Set Aside................................................ 42
Section 9.12. Section Titles................................................................ 42
Section 9.13. Execution in Counterparts..................................................... 42
Section 9.14. Entire Agreement.............................................................. 42
Section 9.15. Confidentiality............................................................... 42
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SCHEDULES
Schedule 4.2 - Consents
Schedule 4.3 - Options, Warrants; Ownership of Subsidiaries
Schedule 4.11 - Defaults
Schedule 4.15 - Labor Matters
Schedule 4.16 - List of Plans
Schedule 4.17 - Environmental Matters
Schedule 7.1 - Existing Indebtedness
Schedule 7.2 - Liens
Schedule 7.8 - Existing Obligations and Investments
EXHIBITS
Exhibit A - Form of Term Note
Exhibit B - Form of Legal Opinion
Exhibit C - Form of Warrant
Exhibit D Form of Payment Direction Letter
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TERM LOAN AGREEMENT, dated as of April 24, 2000, among ARV Assisted Living,
Inc., a Delaware corporation (the "Borrower"), and LFSRI II Assisted Living,
LLC, a Delaware limited liability company (the "Lender").
W I T N E S S E T H:
WHEREAS, the Borrower has requested that the Lender make available term loans
for the purposes specified in this Agreement; and
WHEREAS, the Lender is willing to make available to the Borrower such term loans
upon the terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the covenants and
agreements contained herein, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS, INTERPRETATION AND ACCOUNTING TERMS
SECTION 1.1. DEFINED TERMS. As used in this Agreement, the
following terms have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"Affiliate" means, with respect to any Person, any other Person which, directly
or indirectly, controls, is controlled by or is under common control with such
Person, each officer, director, general partner or joint-venturer of such
Person, and each Person who is the beneficial owner of 10% or more of any class
of Voting Stock of such Person. For the purposes of this definition, "control"
means the possession of the power to direct or cause the direction of management
and policies of such Person, whether through the ownership of voting securities,
by contract or otherwise.
"Agreement" means this Term Loan Agreement as amended, supplemented or otherwise
modified from time to time.
"Applicable Margin" means 10% per annum.
"Asset Sale" has the meaning specified in clause (a) of the definition of "Net
Cash Proceeds."
"Borrowing" means Term Loans made on the same day by the Lender. "Borrowing
Extension Fee" means an amount equal to 0.5% of the aggregate unutilized
Commitment extended by the Borrower in accordance with Section 2.7(a).
"Business Day" means any day other than (i) a Saturday or Sunday or (ii) a day
on which federally insured depository institutions in New York City or
California are authorized or obligated by law, regulation, governmental decree
or executive order to be closed.
"Capital Lease" means, with respect to any Person, any lease of property by such
Person as lessee which would be accounted for as a capital lease on a balance
sheet of such Person prepared in conformity with GAAP.
"Capital Lease Obligations" means, with respect to any Person, the capitalized
amount of all obligations of such Person or any of its Subsidiaries under
Capital Leases, as determined on a consolidated basis in conformity with GAAP.
"Cash Equivalents" means (a) securities issued or fully guaranteed or insured by
the United States government or any agency thereof, (b) certificates of deposit,
eurodollar time deposits, overnight bank deposits and bankers' acceptances of
any commercial bank organized under the laws of the United States, any state
thereof, the District of Columbia, any foreign bank, or its branches or agencies
(fully protected against currency fluctuations) which, at the time of
acquisition, are rated at least "A-1" by Standard & Poor's Rating Services
("S&P") or "P-1" by ▇▇▇▇▇'▇ Investors Services, Inc. ("Moody's"), (c) commercial
paper of an issuer rated at least "A-1" by S&P or "P-1" by Moody's, and (d)
shares of any money market fund that (i) has at least 95% of its assets invested
continuously in the types of investments referred to in clauses (a) through (c)
above, (ii) has net assets of not less than $500,000,000 and (iii) is rated at
least "A-1" by S&P or "P-1" by Moody's; provided, however, that the maturities
of all obligations of the type specified in clauses (a) through (c) above shall
not exceed 180 days.
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"Change of Control" means any of the following: (a) any person or group of
persons (within the meaning of the Securities Exchange Act of 1934, as amended)
shall have acquired beneficial ownership (within the meaning of Rule 13d-3
promulgated by the Securities and Exchange Commission under the Securities
Exchange Act of 1934, as amended) of 50% or more of the issued and outstanding
Voting Stock of the Borrower, excluding however any such Change of Control where
the Lender's open market purchases of the outstanding Voting Stock of the
Borrower are the immediate cause of the Change of Control; or (b) during any
period of twelve consecutive calendar months, individuals who at the beginning
of such period constituted the board of directors of the Borrower (together with
any new directors whose election by the board of directors of the Borrower or
whose nomination for election by the stockholders of the Borrower was approved
by a vote of at least two-thirds of the directors then still in office who
either were directors at the beginning of such period or whose elections or
nomination for election was previously so approved) cease for any reason other
than death or disability to constitute a majority of the directors then in
office; or (c) any person or two or more persons acting in concert shall have
acquired by contract or otherwise, or shall have entered into a contract or
arrangement that, upon consummation, will result in its or their acquisition of
the power to exercise, directly or indirectly, a controlling influence over the
management or policies of the Borrower; or (d) the sale, transfer, conveyance or
disposal of all or substantially all the assets, property or business of the
Borrower; or (e) the Borrower shall enter into any merger, consolidation or
amalgamation other than any such merger, consolidation or amalgamation permitted
pursuant to Section 7.9.
"Closing Date" means April 24, 2000.
"Code" means the Internal Revenue Code of 1986 (or any successor legislation
thereto), as amended from time to time.
"Commitment" means the Commitment of the Lender to make Term Loans to the
Borrower in the aggregate principal amount not to exceed $10,000,000, subject to
reduction as provided in Section 2.7(b).
"Commitment Fee" has the meaning specified in Section 2.9(a).
"Commitment Termination Date" means the Initial Commitment Termination Date
unless the Commitment Termination Date is extended in accordance with Section
2.7(a), in which event "Commitment Termination Date" means the 90th day
following the Initial Commitment Termination Date.
"Compliance Certificate" has the meaning specified in Section 5.1(h).
"Constituent Documents" means, with respect to any Person, (i) the
articles/certificate of incorporation (or the equivalent organizational
documents) of such Person, (ii) the by-laws (or the equivalent governing
documents) of such Person and (iii) any document setting forth the manner of
election and duties of the directors or managing members of such Person (if any)
and the designation, amount and/or relative rights, limitations and preferences
of any class or series of such Person's Stock.
"Contaminant" means any material, substance or waste that is classified,
regulated or otherwise characterized under any Environmental Law as hazardous,
toxic, a contaminant or a pollutant or by other words of similar meaning or
regulatory effect, including any petroleum or petroleum-derived substance or
waste, asbestos and polychlorinated biphenyls, but excludes any medical products
or devices customarily used in the operation of senior housing facilities to the
extent such products or devices are used in compliance with all Requirements of
Law.
"Contractual Obligation" of any Person means any obligation, agreement,
undertaking or similar provision of any Security issued by such Person or of any
agreement, undertaking, contract, lease, indenture, mortgage, deed of trust or
other instrument (excluding a Loan Document) to which such Person is a party or
by which it or any of its property is bound or to which any of its properties is
subject.
"Debt Issuance" means the incurrence of Indebtedness of the type specified in
clause (a) and (b) of the definition of "Indebtedness" by the Borrower or any of
its Subsidiaries.
"Default" means any event which with the passing of time or the giving of notice
or both would become an Event of Default.
"Determination Date" means with respect to any Interest Period, the date which
is two (2) Eurodollar Business Days before the commencement of such Interest
Period. "Disqualified Capital Stock" means that portion of any Capital Stock
which, by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable), or upon the happening of any event
(other than upon the occurrence of a Change of Control), matures or is
mandatorily redeemable, pursuant to
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a sinking fund obligation or otherwise, or is redeemable at the sole option of
the holder thereof on or prior to the Maturity Date.
"Dollars" and the sign "$" each mean the lawful money of the United States of
America.
"Environmental Laws" means all applicable Requirements of Law now or hereafter
in effect, as amended or supplemented from time to time, relating to pollution
or the regulation and protection of human health, safety, the environment or
natural resources, including the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended (42 U.S.C. Section 9601 et
seq.); the Hazardous Material Transportation Act, as amended (49 U.S.C. Section
180 et seq.); the Federal Insecticide, Fungicide, and Rodenticide Act, as
amended (7 U.S.C. Section 136 et seq.); the Resource Conservation and Recovery
Act, as amended (42 U.S.C. Section 6901 et seq.); the Toxic Substance Control
Act, as amended (42 U.S.C. Section 7401 et seq.); the Clean Air Act, as amended
(42 U.S.C. Section 740 et seq.); the Federal Water Pollution Control Act, as
amended (33 U.S.C. Section 1251 et seq.); the Occupational Safety and Health
Act, as amended (29 U.S.C. Section 651 et seq.); the Safe Drinking Water Act, as
amended (42 U.S.C. Section 300f et seq.); and their state and local counterparts
or equivalents and any transfer of ownership notification or approval statute.
"Environmental Liabilities and Costs" means, with respect to any Person, all
liabilities, obligations, responsibilities, Remedial Actions, losses, damages,
punitive damages, consequential damages, treble damages, costs and expenses
(including all fees, disbursements and expenses of counsel, experts and
consultants and costs of investigation and feasibility studies), fines,
penalties, sanctions and interest incurred as a result of any claim or demand by
any other Person, whether based in contract, tort, implied or express warranty,
strict liability, criminal or civil statute, including any thereof arising under
any Environmental Law, Permit, order or agreement with any Governmental
Authority or other Person, which relate to any environmental, health or safety
condition or a Release or threatened Release, and result from the past, present
or future operations of, or ownership of property by, such Person or any of its
Subsidiaries.
"Environmental Lien" means any Lien in favor of any Governmental Authority for
Environmental Liabilities and Costs.
"ERISA" means the Employee Retirement Income Security Act of 1974 (or any
successor legislation thereto), as amended from time to time.
"ERISA Affiliate" means any trade or business (whether or not incorporated)
under common control or treated as a single employer with the Borrower or any of
its Subsidiaries within the meaning of Section 414 (b), (c), (m) or (o) of the
Code.
"ERISA Event" means (i) a reportable event described in Section 4043(b) or
4043(c)(1), (2), (3), (5), (6), (8) or (9) of ERISA with respect to a Title IV
Plan or a Multiemployer Plan; (ii) the withdrawal of the Borrower, any of its
Subsidiaries or any ERISA Affiliate from a Title IV Plan subject to Section 4063
of ERISA during a plan year in which it was a substantial employer, as defined
in Section 4001(a)(2) of ERISA; (iii) the complete or partial withdrawal of the
Borrower, any of its Subsidiaries or any ERISA Affiliate from any Multiemployer
Plan; (iv) notice of reorganization or insolvency of a Multiemployer Plan; (v)
the filing of a notice of intent to terminate a Title IV Plan or the treatment
of a plan amendment as a termination under Section 4041 of ERISA; (vi) the
institution of proceedings to terminate a Title IV Plan or Multiemployer Plan by
the PBGC; (vii) the failure to make any required contribution to a Title IV Plan
or Multiemployer Plan; (viii) the imposition of a lien under Section 412 of the
Code or Section 302 of ERISA on the Borrower or any of its Subsidiaries or any
ERISA Affiliate; or (ix) any other event or condition which might reasonably be
expected to constitute grounds under Section 4042 of ERISA for the termination
of, or the appointment of a trustee to administer, any Title IV Plan or
Multiemployer Plan or the imposition of any liability under Title IV of ERISA,
other than for PBGC premiums due but not delinquent under Section 4007 of ERISA.
"Eurodollar Business Day" means a Business Day on which banks in the City of
London, England are open for interbank or foreign exchange transactions.
"Event of Default" has the meaning specified in Section 8.1.
"Existing Indebtedness" has the meaning specified in Section 7.1(d).
"Federal Reserve Board" means the Board of Governors of the Federal Reserve
System, or any successor thereto.
"Financial Statements" means the financial statements of the Borrower and its
Subsidiaries delivered in accordance with Sections 4.4 and 5.1.
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"Fiscal Quarter" means each of the three-month periods ending on March 31, June
30, September 30 and December 31.
"Fiscal Year" means the twelve-month period ending on December 31.
"GAAP" means generally accepted accounting principles in the United States of
America as in effect from time to time set forth in the opinions and
pronouncements of the Accounting Principles Board and the American Institute of
Certified Public Accountants and the statements and pronouncements of the
Financial Accounting Standards Board, or in such other statements by such other
entity as may be in general use by significant segments of the accounting
profession, which are applicable to the circumstances as of the date of
determination.
"Governmental Authority" means any nation or government, any state or other
political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.
"Guaranty Obligation" means, as applied to any Person, any direct or indirect
liability, contingent or otherwise, of such Person with respect to any
Indebtedness of another Person, including (a) the direct or indirect guaranty,
endorsement (other than for collection or deposit in the ordinary course of
business), co-making, discounting with recourse or sale with recourse by such
Person of Indebtedness of another Person and (b) any liability of such Person
for Indebtedness of another Person through any agreement (contingent or
otherwise) (i) to purchase, repurchase or otherwise acquire such Indebtedness or
any security therefor, or to provide funds for the payment or discharge of such
Indebtedness (whether in the form of a loan, advance, stock purchase, capital
contribution or otherwise), (ii) to maintain the solvency or any balance sheet
item, level of income or financial condition of another Person, (iii) to make
take-or-pay or similar payments, if required, regardless of non-performance by
any other party or parties to an agreement, (iv) to purchase, sell or lease (as
lessor or lessee) property, or to purchase or sell services, primarily for the
purpose of enabling the debtor to make payment of such Indebtedness or to assure
the holder of such Indebtedness against loss, or (v) to supply funds to or in
any other manner invest in such other Person (including to pay for property or
services irrespective of whether such property is received or such services are
rendered). The amount of any Guaranty Obligation shall be equal to the amount of
the Indebtedness so guaranteed or otherwise supported.
"Hedging Contracts" means all Interest Rate Contracts, foreign exchange
contracts, currency swap or option agreements, forward contracts, commodity
swap, purchase or option agreements, other commodity price hedging arrangements,
and all other similar agreements or arrangements designed to alter the risks of
any Person arising from fluctuations in interest rates, currency values or
commodity prices.
"Indebtedness" of any Person means without duplication (a) all indebtedness of
such Person for borrowed money, (b) all obligations of such Person evidenced by
notes, bonds, debentures or similar instruments or which bear interest, (c) all
reimbursement and all obligations with respect to letters of credit, bankers'
acceptances, surety bonds and performance bonds, whether or not matured, (d) all
indebtedness for the deferred purchase price of property or services, other than
trade payables and accruals for expenses incurred in the ordinary course of
business and obligations for post-retirement benefits, (e) all indebtedness of
such Person created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such property but
excluding consignments to the extent that such Person's only obligation with
respect to unused consigned property is the return of such property to the
consignor), (f) all Capital Lease Obligations of such Person and the present
value of future rental payments under all synthetic leases, (g) all Guaranty
Obligations of such Person, (h) all obligations of such Person to purchase,
redeem, retire, defease or otherwise acquire for value any Stock or Stock
Equivalents of such Person, valued, in the case of redeemable preferred stock,
at the greater of its voluntary or involuntary liquidation preference plus
accrued and unpaid dividends, (i) all payments that such Person would have to
make in the event of an early termination on the date Indebtedness of such
Person is being determined in respect of Hedging Contracts of such Person and
(j) all Indebtedness of the type referred to above of another Person secured by
(or for which the holder of such Indebtedness has an existing right, contingent
or otherwise, to be secured by) any Lien upon or in property (including accounts
and general intangibles) owned by such Person, even though such Person has not
assumed or become liable for the payment of such Indebtedness.
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"Indemnified Party" has the meaning specified in Section 9.4.
"Indenture" means the Indenture dated as of April 3, 1996 between the Borrower
and The Chase Manhattan Bank N.A., as Trustee providing for the issuance of
6 3/4% Convertible Subordinated Notes Due 2006.
"Initial Commitment Termination Date" means July 24, 2000.
"Initial Maturity Date" means April 24, 2002.
"Interest Period" means, in connection with the calculation of interest payable
on any Payment Date, the period from and including the immediately preceding
Payment Date to but excluding such Payment Date; provided, however, that the
first Interest Period shall be the period from and including the Closing Date to
but excluding May 15, 2000.
"Interest Rate Contracts" means all interest rate swap agreements, interest rate
cap agreements, interest rate collar agreements and interest rate insurance.
"Investment" means, with respect to any Person, (a) any purchase or other
acquisition by that Person of (i) any Security issued by, (ii) a beneficial
interest in any Security issued by, or (iii) any other equity ownership interest
in, any other Person, (b) any purchase by that Person of all or a significant
part of the assets of a business conducted by another Person, and (c) any loan,
advance (other than deposits with financial institutions available for
withdrawal on demand, prepaid expenses, accounts receivable, advances to
employees and similar items made or incurred in the ordinary course of business
as presently conducted), or capital contribution by that Person to any other
Person, including all Indebtedness to such Person arising from a sale of
property by such Person other than in the ordinary course of its business.
"IRS" means the Internal Revenue Service of the United States or any successor
thereto.
"Leases" means, with respect to any Person, all of those leasehold estates in
real property of such Person, as lessee, as such may be amended, supplemented or
otherwise modified from time to time.
"Lender" has the meaning specified in the preamble to this Agreement.
"LIBOR Rate" means with respect to each Interest Period, the rate (expressed as
a percentage per annum, rounded to the nearest 100th) for deposits in U.S.
dollars for a one-month period that appears on Telerate Page 3750 (or the
successor thereto) as of 11:00 a.m., London, England time, on the related
Determination Date. If such rate does not appear on Telerate Page 3750 as of
11:00 a.m., London, England time, on such Determination Date, LIBOR shall be the
arithmetic mean of the offered rates expressed as a percentage per annum) for
deposits in U.S. dollars for a one-month period that appear on the Reuters
Screen LIBOR Page as of 11:00 a.m., London, England time, on such Determination
Date, if at least two such offered rates so appear. If fewer than two such
offered rates appear on the Reuters Screen LIBOR Page as of 11:00 a.m., London,
England time, on such Determination Date, the Lender shall request the principal
London, England office of any four major reference banks in the London interbank
market selected by the Lender to provide such bank's offered quotation
(expressed as a percentage per annum) to prime banks in the London interbank
market for deposits in U.S. Dollars for a one-month period as of 11:00 a.m.,
London, England time, on such Determination Date for amounts of not less than
One Million U.S. Dollars (U.S. $1,000,000.00). If at least two such offered
quotations are so provided, LIBOR shall be the arithmetic mean of such
quotations. If fewer than two such quotations are so provided, the Lender shall
request any three major banks in New York City selected by the Lender to provide
such bank's rate (expressed as a percentage per annum) for loans in U.S. Dollars
to leading European banks for a one month period as of approximately 11:00 a.m.,
New York City time on the applicable Determination Date for amounts of not less
than One Million U.S. Dollars (U.S. $1,000,000.00). If at least two such rates
are so provided, LIBOR shall be the arithmetic mean of such rates. If fewer than
two rates are so provided, then LIBOR for the applicable Interest Period shall
be LIBOR that was in effect for the next preceding Interest Period.
"Lien" means any mortgage, deed of trust, pledge, hypothecation, assignment,
charge, deposit arrangement, encumbrance, lien (statutory or other), security
interest or preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever intended to assure payment of any
Indebtedness or other obligation, including any conditional sale or other title
retention agreement, the interest of a lessor under a Capital Lease, any
financing lease having substantially the same economic effect as any of the
foregoing, and the filing of any financing statement under the Uniform
Commercial Code or comparable law of any jurisdiction naming the owner of the
asset to which such Lien relates as debtor.
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"Loan Documents" means, collectively, this Agreement, the Note, the Warrant
Documents, the Second Amendment to Rights Agreement and each certificate,
agreement or document executed by the Borrower and delivered to the Lender in
connection with or pursuant to any of the foregoing.
"Material Adverse Change" means a material adverse change in any of (a) the
condition (financial or otherwise), business, performance, prospects,
operations, assets, liabilities (contingent or otherwise) or properties of the
Borrower or the Borrower and its Subsidiaries taken as a whole, (b) the
legality, validity or enforceability of any Loan Document, (c) the ability of
the Borrower to repay the Obligations or perform its obligations under the Loan
Documents, or (d) the rights and remedies of the Lender under the Loan
Documents.
"Material Adverse Effect" means an effect that results in or causes, or could
reasonably be expected to result in or cause, a Material Adverse Change.
"Maturity Date" means the Initial Maturity Date, unless the Maturity Date is
extended in accordance with Section 2.3(b), in which event the Maturity Date
means the third anniversary of the Closing Date.
"Maturity Date Extension Fee" means an amount equal to 2.50% of the aggregate
principal amount of the Term Loans outstanding on the Initial Maturity Date.
"Multiemployer Plan" means a multiemployer plan, as defined in Section
4001(a)(3) of ERISA, to which the Borrower, any of its Subsidiaries or any ERISA
Affiliate has any obligation or liability, contingent or otherwise.
"Net Cash Proceeds" means (a) proceeds received by the Borrower after the
Closing Date in cash or Cash Equivalents from any sale, lease, transfer or other
disposition of any of its assets (an "Asset Sale"), net of (x) the reasonable
cash costs of sale, assignment or other disposition, (y) taxes paid or payable
as a result thereof and (z) any amount required to be paid or prepaid on
Indebtedness (other than the Obligations) secured by the assets subject to such
Asset Sale; provided, however, that the evidence of each of (x), (y) and (z) are
provided to the Lender in form and substance satisfactory to it; (b) proceeds of
property insurance on account of the loss of or damage to any such assets or
property, and payments of compensation for any such assets or property taken by
condemnation or eminent domain, to the extent that within 360 days after the
receipt thereof, replacement or repair of such asset or property has not
commenced or, in the event that at any time such replacement or repair is
abandoned or otherwise discontinued or is not diligently pursued, the remaining
award or proceeds, as the case may be, net of taxes paid or payable as a result
thereof evidence of which is provided to the Lender, shall constitute Net Cash
Proceeds at such time; and (c) proceeds received after the Closing Date by the
Borrower in cash or Cash Equivalents from any Debt Issuance under Section 7.1,
in each case net of brokers' and advisors' fees and other costs incurred in
connection with such transaction; provided, however, that evidence of such costs
is provided to the Lender.
"Non-Recourse Indebtedness" means Indebtedness as to which (a) neither the
Borrower nor any of its Subsidiaries (i) provides credit support (including any
undertaking, agreement or instrument which would constitute Indebtedness) or
(ii) is directly or indirectly liable (except for any such liability if and to
the extent customarily included in non-recourse real estate loan documentation
entered into by the Borrower and its Subsidiaries in the ordinary course of
business) and (b) no default with respect to such Indebtedness (including any
rights which the holders thereof may have to take enforcement action against the
relevant Non-Recourse Subsidiary or its assets) would permit (upon notice, lapse
of time or both) any holder of any other Indebtedness of the Borrower to declare
a default on such other Indebtedness or cause the payment thereof to be
accelerated or payable prior to its stated maturity.
"Non-Recourse Subsidiary" means a Subsidiary of the Borrower (a) whose
properties and assets, to the extent they secure Indebtedness, secure only
Non-Recourse Indebtedness and (b) which has no Indebtedness other than
Non-Recourse Indebtedness and (c) the Investment in such Subsidiary is permitted
hereunder.
"Note" means the promissory note of the Borrower payable to the order of the
Lender in a principal amount equal to $10,000,000.
"Obligations" means the Term Loans and all other advances, debts, liabilities,
obligations, covenants and duties owing by the Borrower to the Lender, any
Affiliate of the Lender or any Indemnitee, of every type and description,
present or future, arising under this Agreement or under any other Loan
Document, by reason of an extension of credit, loan, guaranty, indemnification
or otherwise, whether direct or indirect (including those acquired by
assignment), absolute or contingent, due or to become due, now existing or
hereafter arising and however acquired and whether or not evidenced by any note,
guaranty or other
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instrument or for the payment of money. The term "Obligations" includes all fees
and all interest, charges, expenses, fees, attorneys' fees and disbursements and
other sums chargeable to the Borrower under this Agreement or any other Loan
Document, but excludes any obligations under the promissory note of the Borrower
to the Lender dated October 1, 1999 in the principal amount of $1,500,000 and
delivered pursuant to the terms of the Settlement Agreement.
"Payment Date" means the 15th day of each calendar month or if in any calendar
month the 15th day is not a Business Day, the Payment Date for such month shall
be the first Business Day immediately preceding such day.
"PBGC" means the Pension Benefit Guaranty Corporation or any successor thereto.
"Permit" means any permit, approval, authorization, license, variance or
permission required from a Governmental Authority under an applicable
Requirement of Law.
"Permitted Encumbrances" means the following types of Liens (excluding any such
Lien imposed pursuant to Section 401(a)(29) or Section 412(n) of the Code or by
ERISA, any Environmental Lien, and any such Lien expressly prohibited by any
applicable terms of any of the Loan Documents): (i) Liens for taxes, assessments
or governmental charges or claims the payment of which is not, at the time,
required by Section 6.4; (ii) statutory Liens of landlords, statutory Liens and
rights of set-off of banks, statutory Liens of carriers, warehousemen,
mechanics, repairmen, workmen and materialmen, and other Liens imposed by law,
in each case incurred in the ordinary course of business (a) for amounts not yet
overdue or (b) for amounts that are overdue and that (in the case of any such
amounts overdue for a period in excess of 5 days) are being contested in good
faith by appropriate proceedings, so long as such reserves or other appropriate
provisions, if any, as shall be required by GAAP shall have been made for any
such contested amounts; (iii) Liens incurred or deposits made in the ordinary
course of business in connection with workers' compensation, unemployment
insurance and other types of social security, or to secure the performance of
tenders, statutory obligations, surety and appeal bonds, bids, leases,
government contracts, trade contracts, performance and return-of-money bonds and
other similar obligations (exclusive of obligations for the payment of borrowed
money); (iv) any attachment or judgment Lien not constituting an Event of
Default under Section 8.1; (v) leases or subleases granted to third parties in
accordance with any applicable terms of the Loan Documents and not interfering
in any material respect with the ordinary conduct of the business of the
Borrower or any of its Subsidiaries or resulting in a material diminution in the
value of the assets of the Borrower and its Subsidiaries taken as a whole; (vi)
easements, rights-of-way, restrictions, encroachments, and other minor defects
or irregularities in title, in each case which do not and will not interfere in
any material respect with the ordinary conduct of the business of the Borrower
or any of its Subsidiaries or result in a material diminution in value of the
assets of the Borrower and its Subsidiaries taken as a whole; (vii) any (a)
interest or title of a lessor or sublessor under any lease not prohibited by
this Agreement, (b) restriction or encumbrance that the interest or title of
such lessor or sublessor may be subject to, or (c) subordination of the interest
of the lessee or sublessee under such lease to any restriction or encumbrance
referred to in the preceding clause (b), so long as the holder of such
restriction or encumbrance agrees to recognize the rights of such lessee or
sublessee under such lease; (viii) Liens arising from filing Uniform Commercial
Code financing statements relating solely to leases not prohibited by this
Agreement; (ix) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods; (x) any zoning or similar law or right reserved to or
vested in any governmental office or agency to control or regulate the use of
any real property; (xi) Liens securing obligations (other than obligations
representing Indebtedness for borrowed money) under operating, reciprocal
easement or similar agreements entered into in the ordinary course of business
of the Borrower and its Subsidiaries; and (xii) licenses of intellectual
property (including, but not limited to, permits, patents, patent applications,
trademarks, trademark applications, service marks, trade names, copyrights,
copyright applications, franchises and authorizations) granted by the Borrower
or any of its Subsidiaries in the ordinary course of
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business and not interfering in any material respect with the ordinary conduct
of the business of the Borrower or such Subsidiary.
"Person" means an individual, partnership, corporation (including a business
trust), joint stock company, estate, trust, limited liability company,
unincorporated association, joint venture or other entity, or a Governmental
Authority.
"Preferred Stock" means, with respect to any Person, capital stock that has
preferential rights to any other capital stock of such Person with respect to
dividends, redemptions or upon liquidations.
"Release" means, with respect to any Person, any release, spill, emission,
leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching
or migration, in each case, of any Contaminant into the indoor or outdoor
environment or into or out of any property owned by such Person, including the
movement of Contaminants through or in the air, soil, surface water, ground
water or property.
"Remedial Action" means all actions required to (a) clean up, remove, treat or
in any other way address any Contaminant in the indoor or outdoor environment,
(b) prevent the Release or threat of Release or minimize the further Release so
that a Contaminant does not migrate or endanger or threaten to endanger public
health or welfare or the indoor or outdoor environment or (c) perform
pre-remedial studies and investigations and post-remedial monitoring and care.
"Requirement of Law" means, with respect to any Person, all federal, state,
local and foreign laws, rules and regulations, orders, judgments, decrees and
other determinations of any Governmental Authority or arbitrator, applicable to
or binding upon such Person or any of its property or to which such Person or
any of its property is subject, including ERISA, labor and benefit laws and
Environmental Laws.
"Responsible Officer" means, with respect to any Person, any of the principal
executive officers, including chief financial officer, treasurer and controller
of such Person, but in any event, with respect to financial matters generally or
Section 5.1, the chief financial officer of such Person.
"Restricted Payment" means (a) any dividend or other distribution, direct or
indirect, on account of any Stock or Stock Equivalents of the Borrower or any
Subsidiary now or hereafter outstanding, except a dividend payable solely in
Stock or Stock Equivalents (other than Disqualified Capital Stock) or a dividend
or distribution payable solely to the Borrower, (b) any redemption, retirement,
sinking fund or similar payment, purchase or other acquisition for value, direct
or indirect, of any Stock or Stock Equivalents of the Borrower or any Subsidiary
now or hereafter outstanding other than one payable solely in other Stock or
Stock Equivalents of such Person (other than Disqualified Capital Stock) or
solely to the Borrower, or (c) any payment or prepayment of principal or premium
(if any), fees on, or redemption, purchase, retirement, defeasance, sinking fund
or similar payment with respect to, any Indebtedness of the Borrower or any
Subsidiary which is subordinate or junior in right of payment to the Term Loans,
other than one payable solely in Stock or Stock Equivalents of such Person
(other than Disqualified Capital Stock).
"Rights Agreement" means the Rights Agreement dated as of May 14, 1998 between
the Borrower and ChaseMellon Shareholder Services, LLC, as amended.
"Second Amendment to Rights Agreement" means the Second Amendment to Rights
Agreement dated as of April 24, 2000.
"Security" means any Stock, Stock Equivalent, voting trust certificate, bond,
debenture, note or other evidence of Indebtedness, whether secured, unsecured,
convertible or subordinated, or any certificate of interest, share or
participation in, or any temporary or interim certificate for the purchase or
acquisition of, or any right to subscribe to, purchase or acquire, any of the
foregoing, but shall not include any evidence of the Obligations.
"Settlement Agreement" means the Settlement Agreement dated as of September 29,
1999 among the Borrower, the Lender and the other parties named therein.
"Solvent" means, with respect to any Person, that the value of the assets of
such Person (both at fair value and present fair saleable value) is, on the date
of determination, greater than the total amount of liabilities (including
contingent and unliquidated liabilities) of such Person as of such date and
that, as of such date, such Person is able to pay all liabilities of such Person
as such liabilities mature and does not have unreasonably small capital. In
computing the amount of contingent or unliquidated liabilities at any time, such
liabilities will be computed at the amount which, in light of all the facts and
circumstances existing at such time, represents the amount that can reasonably
be expected to become an actual or matured liability.
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"Stock" means shares of capital stock (whether denominated as common stock or
preferred stock), beneficial, partnership or membership interests,
participations or other equivalents (regardless of how designated) of or in a
corporation, partnership, limited liability company or equivalent entity,
whether voting or non-voting.
"Stock Equivalent" means any security convertible into or exchangeable for Stock
and any warrant, option or other right to purchase or subscribe for any Stock,
whether or not presently convertible, exchangeable or exercisable.
"Subsidiary" means, with respect to any Person, any corporation, partnership,
limited liability company or other business entity of which (i) an aggregate of
50% or more of the outstanding Voting Stock or interest in participation rights
in profits or capital contribution is, at the time, directly or indirectly,
owned or controlled by such Person and/or one or more Subsidiaries of such
Person or (ii) any such Person is a general partner or manager or may exercise
the powers of a general partner or manager.
"Tax Affiliate" means, with respect to any Person, (a) any Subsidiary of such
Person, and (b) any Affiliate of such Person with which such Person files or is
eligible to file consolidated, combined or unitary tax returns.
"Taxes" has the meaning specified in Section 2.12(a).
"Tax Returns" has the meaning specified in Section 4.8
"Telerate Page 3750" means the display designated as "Page 3750 on the Dow ▇▇▇▇▇
Telerate Service (or such other page as may replace Page 3750 on that service or
such other service as may be nominated by the British Banker's Association as
the information vendor for the purpose of displaying British Bankers'
Association Interest Settlement Rates for the U.S. Dollar deposits).
"Term Loans" has the meaning specified in Section 2.1
"Title IV Plan" means a pension plan, other than a Multiemployer Plan, which is
covered by Title IV of ERISA to which the Borrower any of its Subsidiaries or
any ERISA Affiliate has any obligation or liability (contingent or otherwise).
"Voting Stock" means Stock of any Person having ordinary power to vote in the
election of members of the board of directors, managers, trustees or other
controlling Persons, of such Person (irrespective of whether, at the time, Stock
of any other class or classes of such entity shall have or might have voting
power by reason of the happening of any contingency) and, in the case of any
partnership, any interest of a general partner.
"Warrants" shall mean the warrant to purchase from the Borrower 750,000 shares
of common stock of ARV Assisted Living, Inc. in the form set forth on Exhibit C
and all warrants issued upon transfer, division or combination of, or in
substitution for, any thereof. All Warrants shall at all times be identical as
to terms and conditions and date, except as to the number of shares of common
stock of the Borrower for which they may be exercised.
"Warrant Documents" means, collectively, the Warrants, and each certificate,
agreement or document executed by the Borrower in connection with or pursuant to
any of the foregoing.
"Withdrawal Liability" means, with respect to the Borrower at any time, the
aggregate liability incurred (whether or not assessed) with respect to all
Multiemployer Plans pursuant to Section 4201 of ERISA or for increases in
contributions required to be made pursuant to Section 4243 of ERISA.
SECTION 1.2. COMPUTATION OF TIME PERIODS. In this Agreement,
in the computation of periods of time from a specified date to a later specified
date, the word "from" means "from and including" and the words "to" and "until"
each mean "to but excluding" and the word "through" means "to and including."
SECTION 1.3. ACCOUNTING TERMS AND PRINCIPLES. All accounting
terms not specifically defined herein shall be construed in conformity with GAAP
and all accounting determinations required to be made pursuant hereto shall,
unless expressly otherwise provided herein, be made in conformity with GAAP.
SECTION 1.4. CERTAIN TERMS.
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(a) The words "herein," "hereof" and "hereunder" and similar
words refer to this Agreement as a whole, and not to any particular Article,
Section, subsection or clause in, this Agreement.
(b) References in this Agreement to an Exhibit, Schedule,
Article, Section, subsection or clause refer to the appropriate Exhibit or
Schedule to, or Article, Section, subsection or clause in this Agreement.
(c) Each agreement defined in this Article I shall include all
appendices, exhibits and schedules thereto. Unless the prior written consent of
the Lender is required hereunder for an amendment, restatement, supplement or
other modification to any such agreement and such consent is not obtained,
references in this Agreement to such agreement shall be to such agreement as so
amended, restated, supplemented or modified.
(d) References in this Agreement to any statute shall be to
such statute as amended or modified and in effect at the time any such reference
is operative.
(e) The term "including" when used in any Loan Document means
"including without limitation" except when used in the computation of time
periods.
(f) The term "Lender" includes its successors, assigns and
transferees.
ARTICLE II
THE TERM LOAN FACILITY
SECTION 2.1. THE TERM LOAN COMMITMENT.
On the terms and subject to the conditions contained in this Agreement, the
Lender agrees to make available to the Borrower from time to time during the
period from the Closing Date to the Commitment Termination Date each term loan
(each, a "Term Loan" and collectively, the "Term Loans"), requested by the
Borrower in accordance with Section 2.2. All Term Loans made hereunder shall not
exceed at any time outstanding the Lender's Commitment. Amounts repaid or
prepaid may not be reborrowed under this Agreement.
SECTION 2.2. BORROWING PROCEDURES.
(a) Except for the Borrowing made on the Closing Date, each
Borrowing shall be made on notice given by the Borrower to the Lender not later
than 11:00 A.M. (New York City time) three Business Days prior to the proposed
date of such Borrowing. Each such notice shall be in writing identified as a
borrowing notice hereunder and specifying (A) the proposed date of such
Borrowing and (B) the aggregate amount of such Borrowing. Each Borrowing shall
be made in an aggregate amount of not less than $1,000,000 and in increments of
$1,000,000 with a minimum initial aggregate amount of not less than $5,000,000
on the Closing Date. No Borrowing may be made after the Commitment Termination
Date.
(b) On the date of any proposed Borrowing, subject to the
fulfillment of the applicable conditions set forth in Sections 3.1 and 3.2, the
Lender will make available, in immediately available funds, the Term Loans for
such Borrowing to the Borrower.
SECTION 2.3. REPAYMENT OF TERM LOAN, EXTENSION OF MATURITY
DATE.
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(a) The Borrower shall repay the entire outstanding principal
amount of the Term Loans, together with any accrued and unpaid interest thereon,
on the Maturity Date.
(b) So long as no Default shall have occurred, the Borrower
may, by prior written notice to the Lender not later than 10 Business Days prior
to the Initial Maturity Date extend the Maturity Date to the third anniversary
of the Closing Date, provided that the Borrower shall, if it makes such
election, pay the Maturity Date Extension Fee on the Initial Maturity Date to
the Lender.
SECTION 2.4. EVIDENCE OF DEBT. The Term Loans shall be
evidenced by a promissory note of the Borrower substantially in the form of
Exhibit A, with appropriate insertions as to payee, date and principal amount
and payable to the order of the Lender. The Lender is authorized to record the
date and amount of each Term Loan made by the Lender on the schedule annexed
thereto and any such recordation shall constitute prima facie evidence of the
accuracy of the information so recorded, absent manifest error; provided that
neither the failure to so record nor any error in such recordation shall affect
the Borrower's obligations under the Note.
SECTION 2.5. OPTIONAL PREPAYMENTS.
(a) At any time to but excluding the Initial Maturity Date,
the Borrower may, upon at least ten Business Days' prior notice to the Lender
stating the proposed date and aggregate principal amount of the prepayment,
prepay the outstanding principal amount of the Term Loans, in whole or in part,
together with accrued and unpaid interest to the date of such prepayment on the
principal amount prepaid; provided, however, that on the date of such prepayment
the Borrower shall pay to the Lender an amount calculated to compensate the
Lender on the same basis as if the prepaid amount of the Term Loan was
outstanding through the Initial Maturity Date and bearing interest from the date
of prepayment to the Initial Maturity Date at a rate of 10% per annum. If the
Borrower has exercised its right to extend the Maturity Date to the third
anniversary of the Closing Date under Section 2.3(b), it may at any time after
the Initial Maturity Date, upon at least 10 Business Days' prior notice to the
Lender, prepay in full or in part, without any premium or penalty (other than
amounts owing pursuant to Section 2.11(b)), the Term Loans. Any prepayment shall
be made ratably in respect of the Term Loans. The Borrower shall also pay any
amounts owing pursuant to Section 2.11(b) as a result of exercising any of its
rights under this Section 2.5. Upon the giving of such notice of prepayment, the
principal amount of the Term Loans specified to be prepaid shall become due and
payable on the date specified for such prepayment.
(b) The Borrower shall have no right to optionally prepay the
principal amount of any Term Loan other than as provided in this Section 2.5.
Amounts of any Term Loan prepaid, may not be reborrowed.
SECTION 2.6. MANDATORY PREPAYMENTS.
(a) Upon any Change of Control, the Borrower shall make a
mandatory prepayment in an amount equal to the aggregate principal amount of all
Term Loans then outstanding, together with, all accrued but unpaid interest
thereon and all applicable breakage costs owing under Section 2.11(b). In the
event the Borrower is required to make such
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mandatory prepayment prior to the Initial Maturity Date, there shall also be due
and owing to the Lender on the date of any such mandatory prepayment an amount
calculated to compensate the Lender on the same basis as if the prepaid amount
of the Term Loan was outstanding through the Initial Maturity Date and bearing
interest from the date of prepayment until the Initial Maturity Date at a rate
of 10% per annum; provided, however, that no such amount shall be required to be
paid if the Change of Control is caused solely by the Lender selling the issued
and outstanding Voting Stock of the Borrower owned by the Lender in a
transaction where Lender is the only seller of Voting Stock of the Borrower to
the purchaser of such Voting Stock of Borrower.
(b) Any prepayments made by the Borrower required to be
applied in accordance with this Section 2.6 shall be applied to the outstanding
principal balance of the Term Loans ratably. Amounts of any Term Loan prepaid
may not be reborrowed.
SECTION 2.7. REDUCTION OF COMMITMENT; EXTENSION OF COMMITMENT
TERMINATION DATE.
(a) The Borrower may, upon notice to the Lender at least 10
Business Days prior to the Initial Commitment Termination Date, extend the
Commitment Termination Date for all or any portion of the Commitment which has
not been borrowed as of the Initial Commitment Termination Date to a date that
is 90 days following the Initial Commitment Termination Date, provided that the
Borrower shall pay to the Lender the Borrowing Extension Fee on the Initial
Commitment Termination Date and provided further that the portion of the
Commitment so extended equals or exceeds $1,000,000 and is in increments of
$1,000,000. Such notice shall set forth (i) the date of such extension and (ii)
the amount of the unutilized Commitment that shall be extended. Any unutilized
Commitment not extended shall terminate on the Initial Commitment Termination
Date.
(b) The Borrower may without penalty cancel the unutilized
Commitment, in whole or in part upon not less than 10 Business Days' prior
notice to the Lender or upon the extension of the Commitment Termination Date
provided that the unutilized Commitment not subject to such cancellation, if
any, shall be in increments of $1,000,000. Any unutilized Commitment shall
terminate on the Commitment Termination Date.
SECTION 2.8. INTEREST.
(a) Rate of Interest. All Term Loans and the outstanding
amount of all other Obligations shall bear interest, in the case of Term Loans,
on the unpaid principal amount thereof from and including the date such Term
Loans are made and, in the case of such other Obligations, from and including
the date such other Obligations are due and payable until, in all cases, paid in
full, except as otherwise provided in Section 2.8(c), at a rate per annum equal
to the sum of (I) the LIBOR Rate determined for the applicable Interest Period,
plus (II) the Applicable Margin.
(b) Interest Payments. Interest accrued on each Term Loan
during any Interest Period shall be payable on the Payment Date relating to such
Interest Period and if not previously paid in full, on the Maturity Date.
Interest accrued on the amount of all other Obligations shall be payable on
demand from and after the time such Obligation becomes due and payable (whether
by acceleration or otherwise).
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(c) Default Interest. Notwithstanding the rates of interest
specified in Section 2.8(a) or elsewhere herein, effective immediately upon the
occurrence of an Event of Default, and for as long thereafter as such Event of
Default shall be continuing, the principal balance of all Term Loans and the
amount of all other Obligations shall bear interest at a rate which is five
percent per annum in excess of the rate of interest applicable to such
Obligations from time to time.
SECTION 2.9. COMMITMENT FEES.
The Borrower agrees to pay to the Lender a commitment fee in an amount equal to
$200,000 on the Closing Date. Such fee shall be fully earned when paid and not
refundable.
SECTION 2.10. PAYMENTS AND COMPUTATIONS.
(a) The Borrower shall make each payment hereunder (including
fees and expenses) not later than 11:00 A.M. (New York City time) on the day
when due, in Dollars, to the Lender in immediately available funds without
set-off or counterclaim. Payments received by the Lender after 11:00 A.M. (New
York City time) shall be deemed to be received on the next Business Day.
(b) All computations of interest and of fees shall be made by
the Lender on the basis of a year of 360 days, in each case for the actual
number of days (including the first day but excluding the last day) occurring in
the period for which such interest and fees are payable. Each determination by
the Lender of an interest rate hereunder shall be conclusive and binding for all
purposes, absent manifest error.
(c) Whenever any payment hereunder shall be stated to be due
on a day other than a Business Day, such payment shall be made on the next
succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest or fees, as the case may be,
unless otherwise provided in the definition of Payment Date.
(d) All payments and any other amounts received by the Lender
from or for the benefit of the Borrower shall be applied first, to pay all
Obligations then due and payable; and second, as the Borrower so designates.
SECTION 2.11. SPECIAL PROVISIONS GOVERNING TERM LOANS.
(a) Determination of Interest Rate. The LIBOR Rate for each
Interest Period for Term Loans shall be determined by the Lender pursuant to the
procedures set forth in the definition of "LIBOR Rate." The Lender's
determination shall be presumed to be correct, absent manifest error, and shall
be binding on the Borrower.
(b) Breakage Costs. In addition to all amounts required to be
paid by the Borrower pursuant to Section 2.5 and Section 2.6, the Borrower shall
compensate the Lender, upon demand, for all losses, expenses and liabilities
(including any loss or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by the Lender to fund or
maintain the Lender's Term Loans to the Borrower but excluding any loss of the
Applicable Margin on the relevant Term Loans) which the Lender may sustain (i)
if for any reason (other than a default by the Lender) a proposed Borrowing does
not occur on a date specified therefor in a notice of borrowing given by the
Borrower or in a request by it transmitted
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by it by facsimile for borrowing does not commence after notice therefor is
given, (ii) if for any reason any Term Loan is prepaid (including mandatorily
pursuant to Section 2.6) on a date which is not the last day of the applicable
Interest Period, or (iii) as a consequence of any failure by the Borrower to
repay Term Loans when required by the terms hereof. The Lender shall deliver to
the Borrower concurrently with such demand a written statement as to such
losses, expenses and liabilities, and this statement shall be conclusive as to
the amount of compensation due to the Lender, absent manifest error.
SECTION 2.12. TAXES.
(a) Any and all payments by the Borrower under each Loan
Document shall be made free and clear of and without deduction for any and all
present or future taxes, levies, imposts, deductions, charges or withholdings,
and all liabilities with respect thereto (all such taxes (other than those taxes
on or measured by the income of the Lender), levies, imposts, deductions,
charges, withholdings and liabilities being hereinafter referred to as "Taxes").
If any Taxes shall be required by law to be deducted from or in respect of any
sum payable under any Loan Document to the Lender (i) the sum payable shall be
increased as may be necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section
2.12) the Lender receives an amount equal to the sum it would have received had
no such deductions been made, (ii) the Borrower shall make such deductions,
(iii) the Borrower shall pay the full amount deducted to the relevant taxing
authority or other authority in accordance with applicable law, and (iv) the
Borrower shall deliver to the Lender evidence of such payment.
(b) In addition, the Borrower agrees to pay any present or
future stamp or documentary taxes or any other excise or property taxes, charges
or similar levies of the United States or any political subdivision thereof or
any applicable foreign jurisdiction, and all liabilities with respect thereto,
which arise from any payment made under any Loan Document or from the execution,
delivery or registration of, or otherwise with respect to, any Loan Document
(collectively, "Other Taxes").
(c) Without prejudice to the survival of any other agreement
of the Borrower hereunder, the agreements and obligations of the Borrower
contained in this Section 2.12 shall survive the payment in full of the
Obligations.
ARTICLE III
CONDITIONS TO TERM LOANS
SECTION 3.1. CONDITIONS PRECEDENT TO INITIAL LOANS. The
obligation of the Lender to make the Term Loans requested to be made by it on
the Closing Date is subject to the satisfaction of all of the following
conditions precedent:
(a) Certain Documents. The Lender shall have received on the
Closing Date each of the following, each dated the Closing Date unless otherwise
indicated or agreed to by the Lender, in form and substance satisfactory to the
Lender and its counsel:
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(i) this Agreement, duly executed and delivered by
the Borrower and a Note of the Borrower conforming to the requirements set forth
herein;
(ii) the Warrant, duly executed and delivered by the
Borrower;
(iii) favorable opinion of O'Melveny & ▇▇▇▇▇ LLP,
counsel to the Borrower, which shall be to the effect set forth in Exhibit B
addressed to the Lender and addressing such other matters as the Lender may
reasonably request, including without limitation, the enforceability of the Loan
Documents;
(iv) evidence of the waiver of compliance with the
requirements set forth in Section 3.01 of the Settlement Agreement;
(v) the Second Amendment to Rights Agreement
executed by the parties thereto and delivered by the Borrower to the Lender;
(vi) a copy of the articles or certificate of
incorporation (or equivalent organizational documents) of the Borrower,
certified as of a recent date by the Secretary of State of the state of
incorporation of the Borrower, together with certificates of such official
attesting to the good standing of the Borrower;
(vii) a certificate of the Secretary or an Assistant
Secretary of the Borrower certifying (A) the names and true signatures of each
officer of the Borrower who has been authorized to execute and deliver any Loan
Document or other document required hereunder to be executed and delivered by or
on behalf of the Borrower, (B) the by-laws (or equivalent Constituent Document)
of the Borrower as in effect on the date of such certification, (C) the
resolutions of the Borrower's Board of Directors (or equivalent governing body)
approving and authorizing the execution, delivery and performance of this
Agreement and the other Loan Documents to which it is a party and (D) that there
have been no changes in the certificate of incorporation (or equivalent
Constituent Document) of the Borrower from the certificate of incorporation (or
equivalent Constituent Document) delivered pursuant to the immediately preceding
clause;
(viii) a letter from the Borrower to the Lender
reaffirming as of the Closing Date those matters set forth in the letter of the
Borrower to its accountants dated as of March 2, 2000;
(ix) a certificate of a Responsible Officer to the
effect that the conditions set forth in Sections 3.1(b), (c), (d) and 3.2(b)
have been satisfied;
(x) a payment direction letter in the form of
Exhibit D executed by the Lender and duly acknowledged by the Borrower; and
(xi) such other certificates, documents, agreements
and information respecting the Borrower as the Lender may reasonably request.
(b) Issuance of Warrants. The Borrower shall have issued to
the Lender Warrants in accordance with the terms of the Warrant.
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(c) Fees and Expenses Paid. There shall have been paid to the
Lender all fees due and payable on or before the Closing Date (including all
such fees described in Sections 2.9 and 9.3), and all expenses due and payable
on or before the Closing Date (including all such expenses described in Section
9.3).
(d) Consents, Etc. All consents and authorizations required
pursuant to any material Contractual Obligation with any other Person and all
consents and authorizations of, and effected all notices to and filings with,
any Governmental Authority, in each case, as may be necessary to allow the
Borrower to execute, deliver and perform, in all material respects, its
obligations hereunder, the Loan Documents and each other agreement or instrument
to be executed and delivered by it, pursuant thereto or in connection therewith.
SECTION 3.2. CONDITIONS PRECEDENT TO EACH TERM LOAN. The
obligation of the Lender on any date (including the Closing Date) to make any
Term Loan is subject to the satisfaction of all of the following conditions
precedent:
(a) Request for Borrowing. With respect to any Term Loan, the
Lender shall have received a duly executed notice of borrowing.
(b) Representations and Warranties; No Defaults. The following
statements shall be true on the date of such Term Loan, both before and after
giving effect thereto and to the application of the proceeds from any such Term
Loan:
(i) The representations and warranties set forth in
Article IV and in the other Loan Documents shall be true and correct in all
material respects on and as of any such date with the same effect as though made
on and as of such date.
(ii) No Default or Event of Default has occurred and
is continuing.
(c) No Legal Impediments. The making of the Term Loans on such
date does not violate any Requirement of Law with respect to the Borrower, its
Subsidiaries or the Lender on the date of or immediately following such Term
Loan and is not enjoined, temporarily, preliminarily or permanently.
(d) No Material Adverse Change. Since December 31, 1999, there
has been no Material Adverse Change and there have been no events or
developments that in the aggregate has had a Material Adverse Effect.
(e) Additional Matters. The Lender shall have received such
additional documents, information and materials as the Lender may reasonably
request.
Each submission by the Borrower to the Lender of a notice of borrowing and the
acceptance by the Borrower of the proceeds of each Term Loan requested therein,
shall be deemed to constitute a representation and warranty by the Borrower as
to the matters specified in Section 3.2(b) on the date of the making of such
Term Loan.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
To induce the Lender to enter into this Agreement, the Borrower represents and
warrants to the Lender that, on and as of the Closing Date, after giving effect
to the making of the Term Loans on the Closing Date and on and as of each date
as required by Section 3.2(b)(i):
SECTION 4.1. CORPORATE EXISTENCE; COMPLIANCE WITH LAW. Each of
the Borrower and its Subsidiaries (a) is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation or
organization; (b) is duly qualified as a foreign corporation or organization and
in good standing under the laws of each jurisdiction where such qualification is
necessary, except where the failure to be so qualified or in good standing would
not have a Material Adverse Effect; (c) has all requisite power and authority
and the legal right to own, and operate its properties, to lease the property it
operates under lease and to conduct its business as now or currently proposed to
be conducted; (d) is in compliance with its Constituent Documents; (e) except as
disclosed in Schedule 4.11, is in compliance with all applicable Contractual
Obligations and Requirements of Law except where the failure to be in compliance
would not in the aggregate have a Material Adverse Effect; and (f) has all
necessary licenses, permits, consents or approvals from or by, has made all
necessary filings with, and has given all necessary notices to, each
Governmental Authority having jurisdiction, to the extent required for such
ownership, operation and conduct, except for licenses, permits, consents,
approvals or filings which can be obtained or made by the taking of ministerial
action to secure the grant or transfer thereof or the failure to obtain or make
would not in the aggregate have a Material Adverse Effect.
SECTION 4.2. CORPORATE POWER; AUTHORIZATION; ENFORCEABLE
OBLIGATIONS.
(a) The execution, delivery and performance by the Borrower of
the Loan Documents and the consummation of the transactions contemplated
thereby:
(i) are within the Borrower's corporate powers;
(ii) have been duly authorized by all necessary
corporate action, including the consent of shareholders where required;
(iii) do not and will not (A) contravene the
Borrower's Constituent Documents, (B) violate any other applicable Requirement
of Law applicable to the Borrower or any of its Subsidiaries (including
Regulations T, U and X of the Federal Reserve Board), or any order or decree of
any Governmental Authority or arbitrator applicable to the Borrower or any of
its Subsidiaries, (C) conflict with or result in the breach of, or constitute a
default under, or result in or permit the termination or acceleration of, any
Contractual Obligation of the Borrower or any of its Subsidiaries, or (D) result
in the creation or imposition of any Lien upon any of the property of the
Borrower or any of its Subsidiaries; and
(iv) do not require the consent of, authorization
by, approval of, notice to, or filing or registration with, any Governmental
Authority or any other Person, other than those listed on Schedule 4.2 and which
have been or will be, prior to the Closing Date, obtained or made, copies of
which have been or will be delivered to the Lender pursuant to Section 3.1, and
each of which on the Closing Date will be in full force and effect.
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(b) This Agreement has been, and each of the other Loan
Documents will have been upon delivery thereof pursuant to the terms of this
Agreement, duly executed and delivered by the Borrower. This Agreement is, and
the other Loan Documents will be, when delivered hereunder, the legal, valid and
binding obligation of the Borrower party thereto, enforceable against the
Borrower in accordance with its terms.
SECTION 4.3. OWNERSHIP OF BORROWER; SUBSIDIARIES.
(a) All of the outstanding capital stock of the Borrower has
been validly issued, is fully paid and non assessable. No Stock of the Borrower
is subject to any option, warrant, right of conversion or purchase or any
similar right other than as set forth on Schedule 4.3, as such Schedule may be
amended from time to time by the Borrower during the period from the Closing
Date to the Commitment Termination Date.
(b) Set forth on Schedule 4.3 hereto is a complete and
accurate list showing, as of the Closing Date, all Subsidiaries of the Borrower
and, as to each such Subsidiary, the jurisdiction of its incorporation, the
number of shares of each class of Stock authorized (if applicable), the number
outstanding on the Closing Date and the number and percentage of the outstanding
shares of each such class owned (directly or indirectly) by the Borrower.
SECTION 4.4. FINANCIAL STATEMENTS.
(a) The consolidated balance sheets of the Borrower and its
Subsidiaries as at December 31, 1999 and the related consolidated statements of
income, retained earnings and cash flows of the Borrower and its Subsidiaries
for the fiscal year then ended, and the balance sheets of the Borrower and its
Subsidiaries as at February 29, 2000, and the related consolidated statements of
income, retained earnings and cash flows of the Borrower and its Subsidiaries
for the two months then ended, copies of which have been furnished to each
Lender, fairly present, subject, in the case of said balance sheets as at
February 29, 2000, and said statements of income, retained earnings and cash
flows for the two months then ended, to the absence of footnote disclosure and
normal recurring year-end audit adjustments, the consolidated financial
condition of the Borrower and its Subsidiaries as at such dates and the
consolidated results of the operations of the Borrower and its Subsidiaries for
the period ended on such dates, all in conformity with GAAP.
(b) Neither the Borrower nor any of its Subsidiaries has any
material obligation, contingent liability or liability for taxes, long-term
leases or unusual forward or long-term commitment which is not reflected in the
Financial Statements referred to in clause (a) above or in the notes thereto or
permitted by this Agreement.
SECTION 4.5. MATERIAL ADVERSE CHANGE. Since December 31, 1999,
there has been no Material Adverse Change and there have been no events or
developments that in the aggregate have had a Material Adverse Effect.
SECTION 4.6. SOLVENCY. After giving effect to the Term Loans
to be made on the Closing Date and before and after each other date as Term
Loans requested hereunder are made, the disbursement of the proceeds of such
Term Loans pursuant to the instructions of the Borrower, the consummation of the
other financing transactions contemplated hereby and the
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payment and accrual of all transaction costs in connection with the foregoing,
the Borrower is Solvent.
SECTION 4.7. LITIGATION. There are no pending or, to the
knowledge of the Borrower, threatened actions, investigations, litigation or
proceedings affecting the Borrower, or any of its Subsidiaries before any court,
Governmental Authority or arbitrator other than those that in the aggregate
could not have a Material Adverse Effect. The performance of any action by the
Borrower required or contemplated by any of the Loan Documents is not restrained
or enjoined (either temporarily, preliminarily or permanently).
SECTION 4.8. TAXES.
(a) All federal, state, local and foreign income and franchise
and other material tax returns, reports and statements (collectively, the "Tax
Returns") required to be filed by the Borrower or any of its Tax Affiliates have
been filed with the appropriate Governmental Authorities in all jurisdictions in
which such Tax Returns are required to be filed, all such Tax Returns are true
and correct in all material respects, and all taxes, charges and other
impositions reflected therein or otherwise due and payable have been paid prior
to the date on which any fine, penalty, interest, late charge or loss may be
added thereto for non-payment thereof except where contested in good faith and
by appropriate proceedings if adequate reserves therefor have been established
on the books of the Borrower or such Tax Affiliate in conformity with GAAP.
Proper and accurate amounts have been withheld by the Borrower and each of its
Tax Affiliates from their respective employees for all periods in full and
complete compliance with the tax, social security and unemployment withholding
provisions of applicable Requirements of Law and such withholdings have been
timely paid to the respective Governmental Authorities.
(b) None of the Borrower or any of its Tax Affiliates has (i)
any obligation under any tax sharing agreement or arrangement other than that to
which the Lender has a copy prior to the date hereof or (ii) been a member of an
affiliated, combined or unitary group other than the group of which the Borrower
is the common parent.
SECTION 4.9. FULL DISCLOSURE. The information prepared or
furnished by or on behalf of the Borrower in connection with this Agreement or
any Loan Document, or the consummation of the financing taken as a whole does
not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements contained therein or herein not
misleading. All facts known to the Borrower which are material to an
understanding of the financial condition, business, properties or prospects of
the Borrower and the Borrower and the Subsidiaries taken as one enterprise have
been disclosed to the Lender.
SECTION 4.10. MARGIN REGULATIONS. The Borrower is not engaged
in the business of extending credit for the purpose of purchasing or carrying
margin stock (within the meaning of Regulation U of the Federal Reserve Board),
and no proceeds of any Borrowing will be used to purchase or carry any margin
stock or to extend credit to others for the purpose of purchasing or carrying
any margin stock in contravention of Regulation T, U or X of the Federal Reserve
Board.
SECTION 4.11. NO BURDENSOME RESTRICTIONS; NO DEFAULTS.
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(a) Neither the Borrower nor any of its Subsidiaries (i) is a
party to any Contractual Obligation the compliance with which would have a
Material Adverse Effect or the performance of which by any thereof, either
unconditionally or upon the happening of an event, will result in the creation
of a Lien on the property or assets of any thereof or (ii) is subject to any
charter or corporate restriction which could reasonably be expected to have a
Material Adverse Effect.
(b) Except as disclosed in Schedule 4.11, neither the Borrower
nor any of its Subsidiaries is in default under or with respect to any
Requirement of Law or Contractual Obligation owed by it and, to the knowledge of
the Borrower, no other party is in default under or with respect to any
Contractual Obligation owed to the Borrower or to any Subsidiary, other than, in
either case, those defaults which in the aggregate could not have a Material
Adverse Effect.
(c) No Default or Event of Default has occurred and is
continuing.
(d) To the best knowledge of the Borrower, there is no
Requirement of Law applicable to the Borrower the compliance with which by such
Borrower could reasonably be expected to have a Material Adverse Effect.
(e) Except as disclosed in Schedule 4.11, the Borrower is not
delinquent in the payment of any Indebtedness owed by the Borrower to the
federal government of the United States.
SECTION 4.12. INVESTMENT COMPANY ACT; PUBLIC UTILITY HOLDING
COMPANY ACT. Neither the Borrower nor any of its Subsidiaries is (a) an
"investment company" or an "affiliated person" of, or "promoter" or "principal
underwriter" for, an "investment company," as such terms are defined in the
Investment Company Act of 1940, as amended or (b) a "holding company," or an
"affiliate" or a "holding company" or a "subsidiary company" of a "holding
company," as each such term is defined and used in the Public Utility Holding
Act of 1935, as amended.
SECTION 4.13. USE OF PROCEEDS. The proceeds of the Term Loans
are being used by the Borrower solely as follows: (a) to refinance existing
Indebtedness of the Borrower and its Subsidiaries, and for the payment of
related transaction costs, fees and expenses and (b) for working capital and
general corporate purposes.
SECTION 4.14. INSURANCE. All policies of insurance of any kind
or nature of the Borrower or any of its Subsidiaries, including policies of
life, fire, theft, product liability, public liability, property damage, other
casualty, employee fidelity, workers' compensation and employee health and
welfare insurance, are in full force and effect and are of a nature and provide
such coverage as is sufficient and as is customarily carried by businesses of
the size and character of such Person. None of the Borrower or any of its
Subsidiaries has been refused insurance for any material coverage which it had
applied or had any policy of insurance terminated in the past year (other than
at its request).
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SECTION 4.15. LABOR MATTERS.
(a) There are no strikes, work stoppages, slowdowns or
lockouts pending or threatened against or involving the Borrower or any of its
Subsidiaries, other than those which in the aggregate could not reasonably be
expected to have a Material Adverse Effect.
(b) Except as disclosed in Schedule 4.15, there are no unfair
labor practices, grievances or complaints pending, or, to the Borrower's
knowledge, threatened against or involving the Borrower or any of its
Subsidiaries, nor are there any arbitrations or grievances threatened involving
the Borrower or any of its Subsidiaries, other than those which, in the
aggregate, if resolved adversely to the Borrower or such Subsidiary, could not
reasonably be expected to have a Material Adverse Effect.
(c) Except as set forth on Schedule 4.15, as of the Closing
Date, there is no collective bargaining agreement covering any of the employees
of the Borrower or the Subsidiaries.
(d) Schedule 4.15 sets forth as of the date hereof, all
material consulting agreements, executive employment agreements, executive
compensation plans, deferred compensation agreements, employee stock purchase
and stock option plans and severance plans of the Borrower and any of its
Subsidiaries.
SECTION 4.16. ERISA.
(a) Schedule 4.16 separately identifies as of the date hereof
all Title IV Plans, all Multiemployer Plans and all of the employee benefit
plans within the meaning of Section 3(3) of ERISA (except those already listed
on Schedule 4.15) to which the Borrower or any of its Subsidiaries has any
obligation or liability, contingent or otherwise.
(b) Each employee benefit plan of the Borrower or any of its
Subsidiaries which is intended to qualify under Section 401 of the Code does so
qualify, and any trust created thereunder is exempt from tax under the
provisions of Section 501 of the Code, except where all such failures have no
Material Adverse Effect.
(c) Each Title IV Plan is in compliance in all material
respects with applicable provisions of ERISA, the Code and other Requirements of
Law except for any non-compliance that in the aggregate with all other
non-compliance would not have a Material Adverse Effect.
(d) There has been no, nor is there reasonably expected to
occur, any ERISA Event which could reasonably be expected to have a Material
Adverse Effect.
(e) Except to the extent set forth on Schedule 4.16, none of
the Borrower, any Subsidiary or any ERISA Affiliate would have any Withdrawal
Liability as a result of a complete withdrawal as of the date hereof from any
Multiemployer Plan.
SECTION 4.17. ENVIRONMENTAL MATTERS.
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(a) The operations of the Borrower and each of its
Subsidiaries have been and are in compliance with all Environmental Laws,
including obtaining and complying with all required environmental, health and
safety Permits, other than non-compliances that in the aggregate with all
matters covered by this Section 4.17 have (i) no reasonable likelihood of
causing total Environmental Liabilities and Costs to exceed $500,000 in cash in
any twelve-month period and (ii) no Material Adverse Effect.
(b) The Borrower and its Subsidiaries have obtained and
currently possess all environmental, health and safety Permits necessary for
their operations, all such Permits are in full force and effect and the Borrower
and each of its Subsidiaries is in compliance with the terms and conditions of
such Permits except for failures that in the aggregate with all matters covered
by this Section 4.17 have (i) no reasonable likelihood of causing total
Environmental Liabilities and Costs to exceed $500,000 in cash in any
twelve-month period and (ii) no Material Adverse Effect.
(c) None of the currently (or, to the knowledge of the
Borrower, previously at the time it was owned) owned or leased property or
operations of the Borrower or any of its Subsidiaries is subject to any
threatened or outstanding claim, order, agreement, notice of violation or
potential liability or is subject to any pending or, to its knowledge,
threatened judicial or docketed administrative proceeding or governmental
investigation (each an "Environmental Contingency") with respect to (i)
Environmental Law, (ii) a Remedial Action or (iii) Environmental Liabilities and
Costs arising from a Release or threatened Release, other than those that in the
aggregate with all matters covered by this Section 4.17 have (A) no reasonable
likelihood of causing total Environmental Liabilities and Costs to exceed
$500,000 in cash in any twelve-month period and (B) no Material Adverse Effect.
Schedule 4.17 lists all Environmental Contingencies as of the date hereof that,
if adversely determined, would in the aggregate with all matters covered by this
Section 4.17 cause (x) total Environmental Liabilities and Costs to exceed
$500,000 in cash in any twelve-month period or (y) a Material Adverse Effect.
(d) Except as disclosed on Schedule 4.17 none of the Borrower
or any of its Subsidiaries is a treatment, storage or disposal facility
requiring a permit under the Resource Conservation and Recovery Act, 42 U.S.C.
Section 6901 et seq., the regulations thereunder or any state analog.
(e) There are no facts, circumstances or conditions arising
out of or relating to the operations or ownership of real property owned or
operated by the Borrower or any of its Subsidiaries which are not specifically
included in the financial information furnished to the Lender other than those
that in the aggregate have (i) no reasonable likelihood of causing the Borrower
and its Subsidiaries to incur Environmental Liabilities and Costs in excess of
$500,000 in cash in any twelve-month period and (ii) no Material Adverse Affect.
SECTION 4.18. INTELLECTUAL PROPERTY. The Borrower and its
Subsidiaries own or license or otherwise have the right to use all licenses,
permits, patents, patent applications, trademarks, trademark applications,
service marks, trade names, copyrights, copyright applications, franchises,
authorizations and other intellectual property rights that are necessary for the
operations of their respective businesses, without infringement upon or conflict
with the rights of any other Person with respect thereto, including all trade
names associated with any private label brands of the Borrower or any of the
Subsidiaries. To the Borrower's knowledge,
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no slogan or other advertising device, product, process, method, substance, part
or component, or other material now employed, or now contemplated to be
employed, by the Borrower or any of its Subsidiaries infringes upon or conflicts
with any rights owned by any other Person, and no claim or litigation regarding
any of the foregoing is pending or threatened.
SECTION 4.19. PROPERTIES.
(a) Each of the Borrower and its Subsidiaries has good and
marketable title to, or valid leasehold interests in, all real property and good
title to all personal property purported to be owned by it, including those
reflected on the most recent Financial Statements delivered by the Borrower, and
none of such properties and assets is subject to any Lien, except Liens
permitted under Section 7.2. The Borrower and its Subsidiaries have received all
deeds, assignments, waivers, consents, non-disturbance and recognition or
similar agreements, bills of sale and other documents, and have duly effected
all recordings, filings and other actions necessary to establish, protect and
perfect the Borrower's and its Subsidiaries' right, title and interest in and to
all such property.
(b) All Permits required to have been issued or appropriate to
enable all real property owned or leased by the Borrower or any of its
Subsidiaries to be lawfully occupied and used for all of the purposes for which
they are currently occupied and used have been lawfully issued and are in full
force and effect, other than those which in the aggregate would not have a
Material Adverse Effect.
(c) None of the Borrower or any of its Subsidiaries has
received any notice, or has any knowledge, of any pending, threatened or
contemplated condemnation proceeding affecting any real property owned or leased
by the Borrower or any of its Subsidiaries or any part thereof, except those
which, in the aggregate, would not have a Material Adverse Effect.
SECTION 4.20. RANKING. The Obligations do and will rank pari
passu in priority of payment with the Borrower's obligations under the
Indenture. No Indebtedness of the Borrower issued directly or indirectly by the
Borrower or any of its Subsidiaries will at any time rank senior in priority to
the Term Loans or the Obligations.
ARTICLE V
REPORTING COVENANTS
As long as any of the Obligations or the Commitment remains outstanding, the
Borrower agrees with the Lender that:
SECTION 5.1. FINANCIAL STATEMENTS. The Borrower shall furnish
to the Lender the following:
(a) Monthly Reports. Within 30 days after the end of each
month commencing with the month ending April 30, 2000 (i) a consolidated income
statement and balance sheet of the Borrower and its Subsidiaries, and (ii)
income statements for each of the Borrower's properties, in each case for such
month and for the portion of the year ending on the last day of such month and
in the case of each income statement with a comparison of each item to the
budget delivered pursuant to Section 5.1(e).
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(b) Quarterly Reports. Within 45 days after the end of each
fiscal quarter of the Borrower, (i) quarterly consolidated financial statements,
including balance sheet, income statement and cash flow statement, for the
Borrower and its Subsidiaries, (ii) quarterly balance sheets, income statements
and cash flow statements for each of the Borrower's Subsidiaries and (iii)
quarterly balance sheets for each of the Borrower's properties.
(c) Annual Reports. Within 90 days after the end of each
Fiscal Year, the Borrower's 10-K filed with the Securities and Exchange
Commission, or if the Borrower is no longer subject to the reporting
requirements of the Securities Exchange Act of 1934, as amended, the annual
audited consolidated financial statements of the Borrower and its Subsidiaries,
certified with respect to such consolidated statements by independent certified
public accountants acceptable to the Lender.
(d) Occupancy Reports. Within 5 Business Days after each
Sunday (or if the Borrower changes the end of its week to another day of the
week, such day of the week), occupancy reports for each of the Borrower's
properties for the preceding week, detailing the number of residents and units
occupied.
(e) Budgets. No later than November 30 of the year immediately
preceding the year that is the subject of the budget, annual budgets, including
separate capital expenditure budgets, for the Borrower and each of its
properties
(f) Other. Within 30 days after the end of each month, monthly
updates of the capital expenditure budgets delivered to the Lender for each
property of the Borrower with a comparison to the respective original budget
previously delivered to the Lender.
(g) Management Letters etc. Within five Business Days after
receipt thereof by the Borrower, copies of each management letter, exception
report or similar letter or report received by the Borrower from its independent
certified public accountants.
(h) Compliance Certificate. Together with each delivery of any
financial statement pursuant to clauses (a) and (b) of this Section 5.1, a
certificate of a Responsible Officer of the Borrower (each, a "Compliance
Certificate") stating that no Default or Event of Default has occurred and is
continuing or, if a Default or an Event of Default has occurred or is
continuing, stating the nature thereof and the action which the Borrower
proposes to take with respect thereto.
(i) Additional Information. Promptly, from time to time, such
other information regarding the operations, including information regarding
specific product categories and lines of business of the Borrower and it
Subsidiaries, business affairs and financial condition of the Borrower or any of
its Subsidiaries, or compliance with the terms of any Loan Document, as the
Lender may reasonably request.
SECTION 5.2. DEFAULT NOTICES. As soon as practicable, and in
any event within five Business Days after a Responsible Officer of the Borrower
has knowledge of the existence of any Default, Event of Default or other event
which has had a Material Adverse Effect or which has any reasonable likelihood
of causing or resulting in a Material Adverse Change, the Borrower shall give
the Lender notice specifying the nature of such Default or Event
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of Default or other event, including the anticipated effect thereof, which
notice, if given by telephone, shall be promptly confirmed in writing on the
next Business Day.
SECTION 5.3. LITIGATION. Promptly after the commencement
thereof, the Borrower shall give the Lender written notice of the commencement
of any action, suit and proceedings before any domestic or foreign Governmental
Authority or arbitrator, affecting the Borrower or any of its Subsidiaries,
which in the reasonable judgment of the Borrower or such Subsidiary, expose the
Borrower or such Subsidiary to liability ("Potential Liability") in an amount of
$500,000 or more (or any similar or related action, suits or proceedings that
involve Potential Liability aggregating $500,000 or more in cash in any twelve
month period) and which, if adversely determined, would have a Material Adverse
Effect; provided, however, that claims for which an insurer of the Borrower or
such Subsidiary, as the case may be, has acknowledged coverage shall not be
included in such aggregate amounts to the extent of such coverage.
SECTION 5.4. SEC FILINGS; PRESS RELEASES. Promptly after the
sending or filing thereof, the Borrower shall send the Lender copies of (a) all
reports which the Borrower sends to its security holders generally, (b) all
reports and registration statements which the Borrower or any of its
Subsidiaries files with the Securities and Exchange Commission or any national
securities exchange or the National Association of Securities Dealers, Inc., (c)
all press releases and (d) all other statements concerning material changes or
developments in the business of the Borrower made available by the Borrower to
the public.
SECTION 5.5. LABOR RELATIONS. Promptly after becoming aware of
the same, the Borrower shall give the Lender written notice of (a) any material
labor dispute to which the Borrower or any of its Subsidiaries is or may become
a party, including any strikes, lockouts or other disputes relating to any of
such Person's facilities, and (b) any Worker Adjustment and Retraining
Notification Act or related liability incurred with respect to the closing of
any facility of any of such Person.
SECTION 5.6. TAX RETURNS. Upon the request of the Lender, the
Borrower will provide copies of all federal, state, local tax returns and
reports filed by the Borrower or any of its Subsidiaries in respect of taxes
measured by income (excluding sales, use and like taxes).
SECTION 5.7. ERISA MATTERS. The Borrower shall notify the
Lender:
(a) promptly and in any event within 30 days after the
Borrower, any of its Subsidiaries or any ERISA Affiliate knows or has reason to
know that any ERISA Event has occurred;
(b) promptly and in any event within 10 days after the
Borrower, any of its Subsidiaries or any ERISA Affiliate knows or has reason to
know that a request for a minimum funding waiver under Section 412 of the Code
has been filed with respect to any Title IV Plan or Multiemployer Plan, a
written statement of a Responsible Officer of the Borrower describing such ERISA
Event or waiver request and the action, if any, which the Borrower, its
Subsidiaries and ERISA Affiliates propose to take with respect thereto and a
copy of any notice filed with the PBGC or the IRS pertaining thereto;
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(c) simultaneously with the date that the Borrower, any of its
Subsidiaries or any ERISA Affiliate files a notice of intent to terminate any
Title IV Plan, if such termination would require material additional
contributions in order to be considered a standard termination within the
meaning of Section 4041(b) of ERISA, a copy of each notice.
SECTION 5.8. ENVIRONMENTAL MATTERS. The Borrower shall provide
the Lender promptly and in any event within 10 days of the Borrower or any
Subsidiary learning of any of the following, written notice of any of the
following:
(a) that the Borrower or any Subsidiary is or may be liable to
any Person as a result of a Release or threatened Release which could reasonably
be expected to subject the Borrower and any Subsidiary in the aggregate for all
matters covered by this Section 5.8 to total Environmental Liabilities and Costs
of $500,000 or more in cash in any twelve-month period;
(b) the receipt by the Borrower or any Subsidiary of
notification that any real or personal property of such Person is subject to any
Environmental Lien;
(c) the receipt by the Borrower or any Subsidiary of any
notice of violation of or potential liability under, or knowledge by a
Responsible Officer of the Borrower or such Subsidiary that there exists a
condition which could reasonably be expected to result in a violation of or
liability under any Environmental Law, except for violations and liabilities the
consequence of which in the aggregate would have no reasonable likelihood of
subjecting the Borrower and the Subsidiaries in the aggregate for all matters
covered by this Section 5.8 to total Environmental Liabilities and Costs of
$500,000 or more in cash in any twelve-month period;
(d) the commencement of any judicial or administrative
proceeding or investigation alleging a violation of or liability under any
Environmental Law, which in the aggregate, if adversely determined, would have a
reasonable likelihood of subjecting the Borrower and its Subsidiaries
collectively in the aggregate for all matters covered by this Section 5.8 to
total Environmental Liabilities and Costs of $500,000 or more in cash in any
twelve-month period;
(e) any proposed acquisition of stock, assets or real estate,
or any proposed leasing of property, or any other action by the Borrower or any
Subsidiary other than those the consequences of which in the aggregate have
reasonable likelihood of subjecting the Borrower and its Subsidiaries in the
aggregate for all matters covered by this Section 5.8 to total Environmental
Liabilities and Costs of $500,000 or less in cash in any twelve-month period;
(f) any proposed action by the Borrower or any Subsidiary in
response to any proposed change in Environmental Laws, either of which, in the
aggregate, have a reasonable likelihood of requiring the Borrower or any
Subsidiary to obtain additional environmental, health or safety Permits or make
additional capital improvements to obtain compliance with Environmental Laws
that in the aggregate would cost $500,000 or more in cash in any twelve-month
period or subject the Borrower and the Subsidiaries in the aggregate for all
matters covered by this Section 5.8 to additional total Environmental
Liabilities and Costs of $500,000 or more in cash in any twelve-month period;
and
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(g) upon written request by the Lender, a report providing an
update of the status of any environmental, health or safety compliance, hazard
or liability issue identified in any notice or report delivered pursuant to this
Agreement.
SECTION 5.9. OTHER INFORMATION. The Borrower will provide the
Lender with such other information respecting the business, properties,
condition, financial or otherwise, or operations of the Borrower or any of its
Subsidiaries as the Lender may from time to time reasonably request.
ARTICLE VI
AFFIRMATIVE COVENANTS
As long as any of the Obligations or the Commitment remains outstanding, the
Borrower agrees with the Lender that:
SECTION 6.1. PRESERVATION OF CORPORATE EXISTENCE, ETC. The
Borrower shall, and shall cause each Subsidiary to, preserve and maintain its
corporate existence, rights (charter and statutory) and franchises, unless the
Borrower in good faith determines only with respect to any Subsidiary, that such
preservation of such Subsidiary is no longer desirable in the conduct of its
business.
SECTION 6.2. COMPLIANCE WITH LAWS, ETC. The Borrower shall,
and shall cause each of its Subsidiaries to, comply with all applicable
Requirements of Law, Contractual Obligations and Permits, except where the
failure so to comply would not in the aggregate have a Material Adverse Effect.
SECTION 6.3. CONDUCT OF BUSINESS. The Borrower shall, and
shall cause each of its Subsidiaries to, (a) conduct its business in the
ordinary course and (b) use its reasonable efforts, in the ordinary course and
consistent with past practice, to preserve its business and the goodwill and
business of the customers, advertisers, suppliers and others having business
relations with the Borrower or any of its Subsidiaries, except in each case
where the failure to comply with the covenants in each of clauses (a) and (b)
above would not in the aggregate have a Material Adverse Effect.
SECTION 6.4. PAYMENT OF TAXES, ETC. The Borrower shall, and
shall cause each of its Subsidiaries to, pay and discharge before the same shall
become delinquent, all lawful governmental claims, taxes, assessments, charges,
levies and judgments, except where contested in good faith, by proper
proceedings and adequate reserves therefor have been established on the books of
the Borrower or the appropriate Subsidiary in conformity with GAAP.
SECTION 6.5. MAINTENANCE OF INSURANCE. The Borrower shall (i)
maintain, and cause to be maintained for each of its Subsidiaries insurance with
responsible and reputable insurance companies or associations in such amounts
and covering such risks as is usually carried by companies engaged in similar
businesses and owning similar properties in the same general areas in which the
Borrower or such Subsidiary operates (provided that the Borrower shall be
entitled to implement a self-insurance program consistent with industry
standards for similarly situated companies), and such other insurance as may be
reasonably requested by the Lender.
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SECTION 6.6. ACCESS. The Borrower shall from time to time,
permit the Lender, or any agents or representatives thereof, within five
Business Days after written notification of the same (except that during the
continuance of an Event of Default, no such notice shall be required) to (a)
examine and make copies of and abstracts from the records and books of account
of the Borrower and each of its Subsidiaries, (b) visit the properties of the
Borrower and each of its Subsidiaries, (c) discuss the affairs, finances and
accounts of the Borrower and each of its Subsidiaries with any of their
respective officers or directors, and (d) communicate directly with the
Borrower's independent certified public accountants, except where any such
communication as contemplated by this Section 6.6 would cause the Borrower to
waive any accountant-client privilege under Section 7527 of the Code. The
Borrower shall authorize its independent certified public accountants to
disclose to the Lender any and all financial statements and other information of
any kind, as the Lender reasonably requests from the Borrower and which such
accountants may have with respect to the business, financial condition, results
of operations or other affairs of the Borrower or any of its Subsidiaries,
except where any such disclosure as contemplated by this Section 6.6 would cause
the Borrower to waive any accountant-client privilege under Section 7527 of the
Code.
SECTION 6.7. KEEPING OF BOOKS. The Borrower shall, and shall
cause each of its Subsidiaries to keep, proper books of record and account, in
which full and correct entries shall be made in conformity with GAAP of all
financial transactions and the assets and business of the Borrower and each such
Subsidiary.
SECTION 6.8. MAINTENANCE OF PROPERTIES, ETC. The Borrower
shall, and shall cause each of its Subsidiaries to, maintain and preserve, (a)
all of its properties which are necessary in the conduct of its business in good
working order and condition, (b) all rights, permits, licenses, approvals and
privileges (including all Permits) which are used or useful or necessary in the
conduct of its business, and (c) all registered patents, trademarks, trade
names, copyrights and service marks with respect to its business; except where
the failure to so maintain and preserve in the aggregate would have no Material
Adverse Effect.
SECTION 6.9. APPLICATION OF PROCEEDS. The Borrower shall use
the entire amount of the proceeds of the Term Loans as provided in Section 4.13.
SECTION 6.10. ENVIRONMENTAL. The Borrower shall, and shall
cause each of its Subsidiaries to, comply in all material respects with
Environmental Laws and, without limiting the foregoing, the Borrower shall, at
its sole cost and expense, upon receipt of any notification or otherwise
obtaining knowledge of any Release or other event that has any reasonable
likelihood of causing the Borrower and its Subsidiaries to incur Environmental
Liabilities and Costs in excess of $500,000 in cash in any twelve-month period,
(i) conduct or pay for consultants to conduct, tests or assessments of
environmental conditions at such operations or properties, including the
investigation and testing of subsurface conditions and (ii) take such Remedial
Action, investigational or other action as required by Environmental Laws or as
any Governmental Authority requires or as is appropriate and consistent with
good business practice to address the Release or event.
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ARTICLE VII
NEGATIVE COVENANTS
As long as any of the Obligations or the Commitment remains outstanding, the
Borrower agrees with the Lender that:
SECTION 7.1. INDEBTEDNESS. The Borrower shall not, and shall
not permit any Subsidiary to, create, incur, assume or issue, directly or
indirectly, guarantee or in any manner become, directly or indirectly, liable
for or with respect to the payment of any Indebtedness except for (each of which
shall be given independent effect):
(a) Indebtedness under this Agreement;
(b) Indebtedness of the Borrower in respect of the Indenture;
(c) Non-Recourse Indebtedness;
(d) Unsecured Indebtedness existing on the date hereof as set
forth on Schedule 7.1 (the "Existing Indebtedness");
(e) Indebtedness secured directly or indirectly by the assets
or properties of the Borrower or any of its Subsidiaries;
(f) Indebtedness of a Subsidiary to the Borrower or a
wholly-owned Subsidiary of the Borrower so long as such Indebtedness is held by
the Borrower or a wholly-owned Subsidiary of the Borrower and is subject to no
Lien (other than any Lien permitted by Section 7.2) held by any Person other
than the Borrower or a wholly-owned Subsidiary of the Borrower; provided that if
as of any date any Person other than the Borrower or a wholly-owned Subsidiary
of the Borrower owns or holds any such Indebtedness or holds a Lien (other than
any Lien permitted by Section 7.2) in respect of such Indebtedness such date
shall be deemed an incurrence of Indebtedness not permitted under this Agreement
unless such Indebtedness is otherwise permitted under Section 7.1(c) or (h);
(g) Indebtedness of the Borrower to a wholly-owned Subsidiary
of the Borrower for so long as such Indebtedness is held by a wholly-owned
Subsidiary of the Borrower, provided that (a) such Indebtedness is unsecured and
subordinated, pursuant to a written agreement, to Borrower's obligations under
this Agreement and the Note and (b) if as of any date any Person other than a
wholly-owned Subsidiary of the Borrower owns or holds any such Indebtedness or
any Person holds a Lien (other than Liens permitted under Section 7.2) in
respect of such Indebtedness, such debt shall be deemed an incurrence of
Indebtedness not permitted under this Agreement unless such Indebtedness is
otherwise permitted under Section 7.1(c) or (h);
(h) Indebtedness in respect of performance, completion, surety
or appeal bonds provided in the ordinary course of business of the Borrower or
any Subsidiary;
(i) Refinancing of Indebtedness permitted by clause (d) or (e)
of this Section 7.1; provided, however, that any such refinancing of Existing
Indebtedness is in an aggregate principal amount not greater than the principal
amount of, and is on terms no less
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favorable to the Borrower or such Subsidiary than, the Existing Indebtedness
being refinanced; and
(j) All Capital Lease Obligations.
SECTION 7.2. LIMITATION ON LIENS. Neither the Borrower or any
Subsidiary shall create, incur, assume or suffer to exist any Lien of any kind
upon any of its property or assets now owned or hereafter acquired by it, except
for:
(a) Liens existing on the Closing Date and disclosed on
Schedule 7.2;
(b) Liens securing Indebtedness to the extent such
Indebtedness is permitted under Section 7.1 other than (i) Existing Indebtedness
or (ii) Indebtedness permitted under Section 7.1(f) or (g);
(c) Liens to secure the payment of all or a part of the
purchase price of assets or property acquired after the Closing Date, provided
that (i) the aggregate principal amount of Indebtedness secured by such Liens
shall not exceed the fair market value (or, if less, the cost) of the assets or
property so acquired; (ii) the incurrence of Indebtedness secured by such Liens
shall be permitted by this Agreement; and (iii) such Liens do not encumber any
other assets or property of the Borrower (other than additions thereof) or any
Subsidiary and shall attach to such assets or property within 60 days of the
acquisition of such assets or property;
(d) Liens securing Indebtedness which is incurred to refinance
Indebtedness which has been secured by a Lien permitted under this Agreement and
is permitted to be refinanced under this Agreement, provided that such Liens do
not extend to or cover any property or assets of the Borrower or any of its
Subsidiaries not securing the Indebtedness so refinanced;
(e) Liens securing Indebtedness of a Subsidiary to the
Borrower or a wholly-owned Subsidiary of the Borrower provided such Lien is held
by the Borrower or a wholly-owned Subsidiary of the Borrower; and
(f) Permitted Encumbrances.
SECTION 7.3. LIMITATION ON RESTRICTED PAYMENTS.
(a) Subject to Section 7.3(b), the Borrower shall not make,
and shall not permit any Subsidiary to directly or indirectly, make, any
Restricted Payment.
(b) The provisions of Section 7.3(a) shall not prohibit:
(i) the retirement of any shares of Stock of the
Borrower or subordinated Indebtedness by conversion into, or by an exchange for,
shares of Stock of the Borrower that are not Disqualified Capital Stock or out
of the Net Cash Proceeds of the substantially concurrent sale (other than to a
Subsidiary of the Borrower) of Stock (other than Disqualified Capital Stock) of
the Borrower; and
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(ii) the redemption or retirement of subordinated
Indebtedness of the Borrower in exchange for, by conversion into, or out of the
Net Cash Proceeds of, a substantially concurrent sale of subordinated
Indebtedness of the Borrower (other than to a Subsidiary) that is contractually
subordinated in right of payment to the Term Loans and that is permitted to be
incurred under Section 7.1.
SECTION 7.4. LIMITATION ON TRANSACTIONS WITH AFFILIATES. The
Borrower shall not, and shall not permit, cause or suffer any Subsidiary to,
conduct any business or enter into any transaction or series of transactions
with or for the benefit of any of their respective Affiliates (each an
"Affiliate Transaction"), except in good faith and on terms that are no less
favorable to the Borrower or such Subsidiary, as the case may be, than those
that could have been obtained in a comparable transaction on an arms' length
basis from a Person not an Affiliate of the Borrower of such Subsidiary.
Notwithstanding the foregoing, the restrictions set forth in this Section 7.4
shall not apply (a) to any customary directors' fees and consulting fees,
collective bargaining agreements and compensation paid to the Borrower's
employees, (b) to the transactions contemplated by the Warrant Documents or (c)
to any transaction between the Borrower and any Subsidiary or between
Subsidiaries, in the ordinary course of business.
SECTION 7.5. LIMITATION ON DIVIDENDS AND OTHER PAYMENT
RESTRICTIONS AFFECTING SUBSIDIARIES. The Borrower shall not, and shall not
permit any Subsidiary to, directly or indirectly, create or otherwise cause or
suffer to exist or become effective or enter into any agreement with any Person
that would cause, any consensual encumbrance or restriction of any kind on the
ability of any Subsidiary to (a) pay dividends, in cash or otherwise, or make
any other distributions on its Stock or any other interest or participation in,
or measured by, its profits owed by, or pay any Indebtedness owed to, the
Borrower or a Subsidiary, (b) make any loans or advances to the Borrower or any
Subsidiary or (c) transfer any of its properties or assets to the Borrower or to
any Subsidiary, except, in each case, for such encumbrances or restrictions
existing under or contemplated by or by reason of (i) this Agreement, (ii) any
restrictions existing under or contemplated by agreements in effect on the
Closing Date, (iii) any restrictions, with respect to a Subsidiary that is not a
Subsidiary of the Borrower on the Closing Date, in existence at the time such
Person becomes a Subsidiary of the Borrower (but not created in contemplation of
such Person becoming a Subsidiary), or (iv) any restrictions existing under any
agreement that refinances or replaces an agreement containing a restriction
permitted by clause (i), (ii) or (iii) above, provided, however, that the terms
and conditions of any such restrictions under this clause (iv) are not
materially less favorable to the Lender than those under or pursuant to the
agreement being replaced or the agreement evidencing the Indebtedness
refinanced.
SECTION 7.6. LIMITATION ON ISSUANCE OF PREFERRED STOCK BY
SUBSIDIARIES. The Borrower shall not cause or permit any Subsidiary, directly or
indirectly, to issue shares of such Subsidiary's Preferred Stock or warrants,
rights or options to acquire shares of such Subsidiary's Preferred Stock, except
to the Borrower or a Subsidiary.
SECTION 7.7. WAIVER OF STAY, EXTENSION OR USURY LAWS. The
Borrower covenants (to the extent permitted by law) that it will not at any time
insist upon, plead, or in any manner whatsoever claim or take the benefit or
advantage of, any stay or extension law or any usury law or other law that would
prohibit or forgive the Borrower from paying all or any portion of the principal
of or interest on the Term Loans as contemplated herein, wherever enacted, now
or at any time hereafter in force, or that may affect the covenants or the
performance of this
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Agreement, and (to the extent permitted by law) the Borrower hereby expressly
waives all benefit or advantage of any such law, and covenants that it will not
hinder, delay or impede the execution of any power herein granted to the Lender,
but will suffer and permit the execution of every such power as though no such
law had been enacted.
SECTION 7.8. LIMITATION ON INVESTMENTS, LOANS AND ADVANCES.
The Borrower shall not, and shall not permit any Subsidiary to, make any
Investments in any Person, except: (i) Investments by the Borrower in any
Subsidiary and Investments in the Borrower or any Subsidiary by a Subsidiary;
(ii) Investments by the Borrower or any Subsidiary in any joint venture or
partnership, the sole purpose of which is to own or hold real property located
in the United States; (iii) Cash Equivalents; and (iv) in accordance with
obligations and agreements in existence on the Closing Date and set forth on
Schedule 7.8.
SECTION 7.9. CERTAIN CHANGES. The Borrower will not, and will
not permit any Subsidiary to, (i) materially change its accounting treatment and
reporting practices or tax reporting treatment, except as required by GAAP or
any Requirement of Law and disclosed to the Lender, (ii) enter into or engage in
any business except as conducted on the Closing Date, (iii) enter into any
disposition of any substantial amount of unearned revenues or any substantial
forward sale or (iv) merge or consolidate with any Persons other than a
Subsidiary, except that (A) any Subsidiary may merge or consolidate with or into
any other Subsidiary and (B) any wholly owned Subsidiary may merge or
consolidate with the Borrower, provided however that the Borrower is the
surviving corporation of such merger or consolidation.
SECTION 7.10. COMPLIANCE WITH ERISA. The Borrower will not,
and will not permit any of its Subsidiaries to, or cause or permit any ERISA
Affiliate to, cause or permit to occur (a) an event which could result in the
imposition of a Lien under Section 412 of the Code or Section 302 or 4068 of
ERISA or (b) an ERISA Event that would have a Material Adverse Effect.
SECTION 7.11. ENVIRONMENTAL. The Borrower will not, and will
not permit any of its Subsidiaries to, dispose of any Contaminant in violation
of any Environmental Law; provided, however, that the Borrower shall not be
deemed in violation of this Section 7.11 if, as the consequence of all such
Releases, the Borrower and the Subsidiaries would not incur Environmental
Liabilities and Costs in excess of $500,000 in cash in any twelve-month period.
ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.1. EVENTS OF DEFAULT. Each of the following events
shall be an Event of Default:
(a) the Borrower shall fail to pay any principal of any Term
Loan when the same becomes due and payable; or
(b) the Borrower shall fail to pay any interest on any Term
Loan, any fee under any of the Loan Documents or any other Obligation (other
than one referred to in clause
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(a) above) and such non-payment continues for a period of three Business Days
after the due date therefor; or
(c) any representation or warranty contained herein or in any
Loan Document shall have been inaccurate or untrue in any material respect when
made; or
(d) the Borrower shall fail to perform or observe (i) any
term, covenant or agreement contained in Section 5.2, 6.1, 6.6, 7.1, 7.2, 7.3,
7.4, 7.5, 7.6, 7.7, 7.8 or 7.9 of this Agreement or any material term, covenant
or agreement in the Warrant; or (ii) any other term, covenant or agreement
contained in this Agreement or in any other Loan Document if such failure under
this clause (ii) shall remain unremedied for 30 days after the earlier of the
date on which (A) a Responsible Officer of the Borrower becomes aware of such
failure or (B) written notice thereof shall have been given to the Borrower by
the Lender; or
(e) (i) the Borrower or any of its Subsidiaries shall fail to
make any payment or payments on any Indebtedness (other than the Obligations) of
the Borrower or any such Subsidiary (or any Guaranty Obligation in respect of
Indebtedness of any other Person) having an aggregate principal amount for all
such Indebtedness of $5,000,000 or more, when the same becomes due and payable
(whether by scheduled maturity, required prepayment, acceleration, demand or
otherwise) or (ii) any such Indebtedness shall become or be declared to be due
and payable, or required to be prepaid or repurchased (other than by a regularly
scheduled required prepayment), prior to the stated maturity thereof; or
(f) the Borrower or any of its Subsidiaries shall generally
not pay its debts as such debts become due, or shall admit in writing its
inability to pay its debts generally, or shall make a general assignment for the
benefit of creditors, or any proceeding shall be instituted by or against the
Borrower or any of its Subsidiaries seeking to adjudicate it a bankrupt or
insolvent, or seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of debtors, or
seeking the entry of an order for relief or the appointment of a custodian,
receiver, trustee or other similar official for it or for any substantial part
of its property and, in the case of any such proceedings instituted against the
Borrower or any of its Subsidiaries (but not instituted by it), either such
proceedings shall remain undismissed or unstayed for a period of 30 days or any
of the actions sought in such proceedings shall occur; or the Borrower or any of
its Subsidiaries shall take any corporate action to authorize any of the actions
set forth above in this subsection (f); or
(g) one or more judgments or orders (or other similar process)
involving, in any single case or in the aggregate, an amount in excess of
$500,000 in the case of a money judgment, to the extent not covered by insurance
shall be rendered against one or more of the Borrower or any of its Subsidiaries
unless enforcement of such judgment shall have been stayed by reason of a
pending appeal or otherwise; or
(h) an ERISA Event shall occur and the amount of all
liabilities and deficiencies resulting therefrom, whether or not assessed,
exceeds $500,000 in the aggregate; or
(i) one or more of the Borrower and the Subsidiaries shall
have entered into one or more consent or settlement decrees or agreements or
similar arrangements with a Governmental Authority or one or more judgments,
orders, decrees or similar actions shall have
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been entered against one or more of the Borrower and its Subsidiaries based on
or arising from the violation of or pursuant to any Environmental Law, or the
generation, storage, transportation, treatment, disposal or Release of any
Contaminant and, in connection with all the foregoing, the Borrower and the
Subsidiaries are likely to incur Environmental Liabilities and Costs in excess
of $500,000 in the aggregate in cash in any twelve-month period that were not
reflected in the Financial Statements delivered pursuant to Section 4.4; or
(j) an event that results in a Material Adverse Change shall
occur.
SECTION 8.2. REMEDIES. (a) Upon the occurrence of any Event of
Default, all or any one or more of the rights, powers and other remedies
available to the Lender against the Borrower under this Agreement or any other
Loan Document, or at law or in equity may be exercised by the Lender at any
time, including without limitation, the Lender may (i) by notice to the Borrower
declare that all or any portion of the Commitment be terminated, whereupon the
obligation of the Lender to make any Term Loan shall immediately terminate,
and/or (ii) by notice to the Borrower, declare the Term Loans, all interest
thereon and all other amounts and Obligations payable under this Agreement to be
forthwith due and payable, whereupon the Term Loans, all such interest and all
such amounts and Obligations shall become and be forthwith due and payable,
without presentment, demand, protest or further notice of any kind, all of which
are hereby expressly waived by the Borrower; provided, however, that upon the
occurrence of the Event of Default specified in Section 8.1(f), (A) the
Commitment of the Lender to make Term Loans shall automatically be terminated
and (B) the Term Loans, all such interest and all such amounts and Obligations
shall automatically become and be due and payable, without presentment, demand,
protest or any notice of any kind, all of which are hereby expressly waived by
the Borrower.
(a) The rights, powers and remedies of the Lender under this
Agreement shall be cumulative and not exclusive of any other right, power or a
remedy which the Lender may have against the Borrower or any other Person
pursuant to this Agreement or the other Loan Documents or existing at law or in
equity or otherwise. The Lender's rights, powers and remedies may be pursued
singly, concurrently or otherwise, at such time and in such order as the Lender
may determine in the Lender's discretion. No delay or omission to exercise any
remedy, right or power accruing upon an Event of Default shall impair any such
remedy, right or power or shall be construed as a waiver thereof, but any such
remedy, right or power may be exercised from time to time and as often as may be
deemed expedient. A waiver of any Default or Event of Default shall not be
construed to be a waiver of any subsequent Default or Event of Default or to
impair any remedy, right or power consequent thereon.
SECTION 8.3. RESCISSION. If at any time after acceleration of
the maturity of the Loans, the Borrower shall pay all arrears of interest and
all payments on account of principal of the Term Loans which shall have become
due otherwise than by acceleration (with interest on principal and, to the
extent permitted by law, on overdue interest, at the rates specified herein) and
all Events of Default and Defaults (other than non-payment of principal of and
accrued interest on the Term Loans due and payable solely by virtue of
acceleration) shall be remedied or waived pursuant to Section 9.1, then upon the
written consent of the Lender and written notice to the Borrower, the
termination of the Commitment and/or the acceleration and its consequences may
be rescinded and annulled; but such action shall not affect any subsequent Event
of Default or Default or impair any right or remedy consequent thereon. The
provisions of the preceding
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sentence are intended merely to bind the Lender to a decision which may be made
at the election of the Lender; they are not intended to benefit the Borrower and
do not give the Borrower the right to require the Lender to rescind or annul any
acceleration hereunder, even if the conditions set forth herein are met.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1. AMENDMENTS, WAIVERS, ETC. No amendment or waiver
of any provision of this Agreement or any other Loan Document nor consent to any
departure by the Borrower therefrom shall in any event be effective unless the
same shall be in writing and signed by the parties hereto, and then any such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given.
SECTION 9.2. ASSIGNMENTS AND PARTICIPATIONS. The Lender may
sell, transfer, negotiate or assign all or any portion of its rights and
obligations hereunder (including all of its rights and obligations with respect
to the Term Loans). In addition to the foregoing, the Lender may assign, as
collateral or otherwise, any of its rights under this Agreement (including
rights to payments of principal or interest on the Term Loans) to any Person.
SECTION 9.3. COSTS AND EXPENSES.
The Borrower agrees upon demand to pay, or reimburse the
Lender for, all of the Lender's reasonable internal and external audit, legal,
filing, document duplication and reproduction and investigation expenses and for
all other reasonable out-of-pocket costs and expenses of every type and nature
(including, without limitation, the reasonable fees, expenses and disbursements
of the Lender's counsel, Weil, Gotshal & ▇▇▇▇▇▇ LLP, local legal counsel,
auditors, accountants, appraisers, printers, insurance and environmental
advisers, and other consultants and agents) incurred by the Lender in connection
with (i) the preparation, negotiation, execution and interpretation of this
Agreement (including, without limitation, the satisfaction or attempted
satisfaction of any of the conditions set forth in Article III), the Loan
Documents, and any proposal letter or commitment letter issued in connection
therewith and the making of the Term Loans hereunder; (ii) the ongoing
administration of this Agreement and the Term Loans and with respect to the
Lender's rights and responsibilities hereunder and under the other Loan
Documents; (iii) the protection, collection or enforcement of any of the
Obligations or the enforcement of any of the Loan Documents; (iv) the
commencement, defense or intervention in any court proceeding relating in any
way to the Obligations, this Agreement or any of the other Loan Documents; (v)
the response to, and preparation for, any subpoena or request for document
production with which the Lender is served or deposition or other proceeding in
which the Lender is called to testify, in each case, relating in any way to the
Obligations, this Agreement or any of the other Loan Documents; (vi) any
amendments, consents, waivers, assignments, restatements, or supplements to any
of the Loan Documents and the preparation, negotiation, and execution of the
same; (vii) in connection with any refinancing or restructuring of the credit
arrangements provided hereunder in the nature of a "work-out" or in any
insolvency or bankruptcy proceeding; and (viii) in taking any other action in or
with respect to any suit or proceeding (bankruptcy or otherwise) described
above.
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SECTION 9.4. INDEMNITIES.
(a) The Borrower shall indemnify and hold harmless the Lender
and its affiliates and each of the respective officers, directors, employees,
agents, advisors, attorneys and representatives of each (each, an "Indemnified
Party") from and against any and all claims, damages, losses liabilities and
expenses (including, without limitation, reasonable fees and disbursements of
counsel), joint or several, that may be incurred by or asserted or awarded
against any Indemnified Party, in each case arising out of or in connection with
or relating to any investigation, litigation or proceeding or the preparation of
any defense with respect thereto, arising out of or in connection with or
relating to the Term Loans, the Loan Documents (excluding the Warrants) or the
transactions contemplated thereby, or any use made or proposed to be made with
the proceeds of the Term Loans, whether or not such investigation, litigation or
proceeding is brought by the Borrower, any of its shareholders or creditors, an
Indemnified Party or any other person, or an Indemnified Party is otherwise a
party thereto and whether or not the transactions contemplated hereby are
consummated, except to the extent such claim, damage loss, liability or expense
is found in a final non-appealable judgment by a court of competent jurisdiction
to have resulted from such Indemnified Party's gross negligence or willful
misconduct. No Indemnified Party shall have any liability (whether direct or
indirect, in contract, tort or otherwise) to the Borrower or any of its
shareholders or creditors for or in connection with the transactions
contemplated hereby, except to the extent such liability is found in a final
non-appealable judgement by a court of competent jurisdiction to have resulted
from such Indemnified Party's gross negligence or willful misconduct. In no
event, however, shall any Indemnified Party be liable on any theory of liability
for any special, indirect, consequential or punitive damages and the Borrower
hereby waives, releases and agrees (for itself and on behalf of its
Subsidiaries) not to ▇▇▇ upon any such claim for any such damages, whether or
not accrued and whether or not known or suspected to exist in its favor.
(b) The Borrower agrees that any indemnification or other
protection provided to any Indemnitee pursuant to this Agreement (including
pursuant to this Section 9.4) or any other Loan Document shall (i) survive
payment in full of the Obligations and (ii) inure to the benefit of any Person
who was at any time an Indemnitee under this Agreement or any other Loan
Document.
SECTION 9.5. RIGHT OF SET-OFF. Upon the occurrence and during
the continuance of any Event of Default each of the Lender, Prometheus Assisted
Living L.L.C., LF Strategic Realty Investors II L.P., LFSRI II Alternative
Partnership L.P., LFSRI II-CADIM Alternative Partnership L.P. and Lazard Freres
Real Estate Investors L.L.C. is hereby authorized at any time and from time to
time, to the fullest extent permitted by law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by the Lender or its Affiliates to
or for the credit or the account of the Borrower against any and all of the
Obligations now or hereafter existing whether or not the Lender shall have made
any demand under this Agreement or any other Loan Document and although such
Obligations may be unmatured. The Lender agrees promptly to notify the Borrower
after any such set-off and application made by the Lender or its Affiliates;
provided, however, that the failure to give such notice shall not affect the
validity of such set-off and application. The rights of the Lender under this
Section 9.5 are in addition to the other rights and remedies (including other
rights of set-off) which such Lender may have.
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SECTION 9.6. NOTICES, ETC. All notices, demands, requests and
other communications provided for in this Agreement shall be given in writing,
or by any telecommunication device capable of creating a written record, and
addressed to the party to be notified as follows:
(a) if to the Borrower:
ARV Assisted Living, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇-▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Senior Vice President and Secretary
Telecopy no: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
O'Melveny & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇, Esq.
Telecopy no: (▇▇▇) ▇▇▇-▇▇▇▇
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(b) if to the Lender:
LFSRI II Assisted Living LLC
c/o Lazard Freres Real Estate Investors L.L.C.
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer and General Counsel
Telecopy no: (▇▇▇) ▇▇▇-▇▇▇▇ and (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Weil, Gotshal & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
Telecopy no: (▇▇▇) ▇▇▇-▇▇▇▇
OR AT SUCH OTHER ADDRESS AS SHALL BE NOTIFIED IN WRITING (i) IN THE CASE OF THE
BORROWER, TO THE OTHER PARTIES AND (ii) IN THE CASE OF ALL OTHER PARTIES, TO THE
BORROWER AND THE LENDER. ALL SUCH NOTICES AND COMMUNICATIONS SHALL BE EFFECTIVE
UPON PERSONAL DELIVERY (IF DELIVERED BY HAND, INCLUDING ANY OVERNIGHT COURIER
SERVICE), WHEN DEPOSITED IN THE MAILS (IF SENT BY MAIL), OR WHEN PROPERLY
TRANSMITTED (IF SENT BY A TELECOMMUNICATIONS DEVICE).
SECTION 9.7. BINDING EFFECT. This Agreement shall become
effective when it shall have been executed by the Borrower and the Lender, and
thereafter shall be binding upon and inure to the benefit of the Borrower, the
Lender and their respective successors and assigns, except that the Borrower
shall not have the right to assign its rights hereunder or any interest herein
without the prior written consent of the Lender.
SECTION 9.8. GOVERNING LAW. This Agreement and the rights and
obligations of the parties hereto shall be governed by, and construed and
interpreted in accordance with, the law of the State of New York without regard
to the principles of conflict of laws thereof.
SECTION 9.9. SUBMISSION TO JURISDICTION; SERVICE OF PROCESS.
(a) Any legal action or proceeding with respect to this
Agreement or any other Loan Document may be brought in the courts of the State
of New York or of the United States of America for the Southern District of New
York, and, by execution and delivery of this Agreement, the Borrower hereby
accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts. The parties hereto
hereby irrevocably waive any objection, including any objection to the laying of
venue or based on the grounds of forum non conveniens, which of them may now or
hereafter have to the bringing of any such action or proceeding in such
respective jurisdictions.
(b) The Borrower hereby irrevocably consents to the service of
any and all legal process, summons, notices and documents in any suit, action or
proceeding brought in the United States of America arising out of or in
connection with this Agreement or any of the other
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Loan Documents by mail (by registered or certified mail, postage prepaid) or
delivery of a copy of such process to the Borrower at its address specified in
Section 9.6. The Borrower agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law.
(c) Nothing contained in this Section 9.9 shall affect the
right of the Lender to serve process in any other manner permitted by law or
commence legal proceedings or otherwise proceed against the Borrower in any
other jurisdiction.
SECTION 9.10. WAIVER OF JURY TRIAL. Each of the Lender and the
Borrower irrevocably waives trial by jury in any action or proceeding with
respect to this Agreement or any other Loan Document.
SECTION 9.11. MARSHALING; PAYMENTS SET ASIDE. The Lender shall
not be under any obligation to marshal any assets in favor of the Borrower or
any other party or against or in payment of any or all of the Obligations. To
the extent that the Borrower makes a payment or payments to the Lender or the
Lender exercises its rights of setoff, and such payment or payments or the
proceeds of such enforcement or setoff or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside or required to
be repaid to a trustee, receiver or any other party, then to the extent of such
recovery, the obligation or part thereof originally intended to be satisfied,
and all right and remedies therefor, shall be revived and continued in full
force and effect as if such payment had not been made or such enforcement or
setoff had not occurred.
SECTION 9.12. SECTION TITLES. The Section titles contained in
this Agreement are and shall be without substantive meaning or content of any
kind whatsoever and are not a part of the agreement between the parties hereto.
SECTION 9.13. EXECUTION IN COUNTERPARTS. This Agreement may be
executed in any number of counterparts and by different parties in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
Signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are attached to the same
document. Delivery of an executed signature page of this Agreement by facsimile
transmission shall be as effective as delivery of a manually executed
counterpart hereof. A set of copies of this Agreement signed by all parties
shall be lodged with the Borrower and the Lender.
SECTION 9.14. ENTIRE AGREEMENT. This Agreement, together with
all of the other Loan Documents and all certificates and documents delivered
hereunder or thereunder, embodies the entire agreement of the parties and
supersedes all prior agreements and understandings relating to the subject
matter hereof.
SECTION 9.15. CONFIDENTIALITY. The Lender agrees to keep
information obtained by it pursuant hereto and the other Loan Documents
confidential in accordance with the Lender's customary practices and agrees that
it will only use such information in connection with the transactions
contemplated by this Agreement and not disclose any of such information other
than (a) to the Lender's employees, representatives and agents who are or are
expected to be involved in the evaluation of such information in connection with
the transactions contemplated
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by this Agreement and who are advised of the confidential nature of such
information, (b) to the extent such information presently is or hereafter
becomes available to the Lender on a non-confidential basis from a source other
than the Borrower, (c) to the extent disclosure is required by law, regulation
or judicial order or requested or required by bank regulators or auditors, or
(d) to assignees or pledgees or potential pledgees who agree to be bound by the
provisions of this Section 9.15.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective officers thereunto duly authorized, as of the date first
above written.
ARV Assisted Living, Inc.
By:
------------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
LFSRI II Assisted Living LLC
By LF Strategic Realty Investors II L.P.
Its Managing Member
By Lazard Freres Real Estate Investors L.L.C.
Its General Partner
By:
------------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
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