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EXHIBIT 10.11
BRIDGE LOAN AGREEMENT
(PHASE II)
This Agreement, dated as of March 31, 1999, is entered into among Third
Party Investors I, L.L.C., a Delaware limited liability company ("Borrower"),
and Alternative Living Services, Inc., a Delaware corporation ("Lender").
W I T N E S S E T H:
WHEREAS, Borrower has requested that Lender make loans to Borrower
in the aggregate amount of up to $35,000,000.00; and
WHEREAS, Lender is willing to make the loans to Borrower on the terms
and subject to the conditions set forth below.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
In addition to the terms defined elsewhere in this Agreement, the
following terms shall have the meanings indicated for purposes of this Agreement
(such meanings to be equally applicable to both the singular and plural forms of
the terms defined).
"Agreement" shall mean this Loan Agreement.
"Borrower" shall mean Third Party Investors I, LLC, a Delaware limited
liability company.
"Business Day" shall mean a day on which national banks are open for
the transaction of business required for this Agreement in Milwaukee, Wisconsin.
"Closing Date" shall mean the date of this Agreement.
"Development Agreement" shall mean any Development Agreement entered
into by Lender and Borrower as of the date hereof (excluding any Development
Agreement entered into prior to such date, even if amended or restated on or as
of such date), as contemplated by Section 5.5 of the Operating Agreement of
Borrower dated as of December 31, 1998, as amended as of the date hereof.
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"Equity Pledge Agreement" shall mean that certain Equity Pledge
Agreement dated as of the date hereof between the holders of all member
interests in the Borrower (other than the Lender), as Pledgor, and Lender, as
Pledgee.
"Event of Default" shall mean any of the events specified in Section
7.1 hereof, provided that any requirement for notice or passage of time has been
satisfied.
"Lender" shall mean Alternative Living Services, Inc., a Delaware
corporation.
"Loan" and "Loans" shall have the meanings set forth in Section 2.1
hereof.
"Loan Documents" shall mean the Note, the Equity Pledge Agreement and
any other documents executed by Borrower or its members with or for the benefit
of Lender in connection with this Agreement or the Loans.
"Management Agreement" shall mean any assisted living consultant and
management services agreement entered into by Lender and Borrower as of the date
hereof (excluding any Assisted Living Consultant and Management Services
Agreement entered into prior to such date, even if amended or restated on or as
of such date), as contemplated by Section 5.6 of the Operating Agreement of
Borrower dated as of December 31, 1998, as amended as of the date hereof.
"Material Adverse Effect" shall mean any act, omission or undertaking
which would, singly or in the aggregate, have (or reasonably be expected to
have) a material adverse effect upon the business, assets, liabilities,
financial condition or results of operations of a Person.
"Mortgage Financing Date" shall have the meaning set forth in Section
2.1(d).
"Note" shall mean the Bridge Loan Note, dated as of the date hereof, in
the aggregate principal amount of $35,000,000.00, made by Borrower to the order
of Lender and delivered to Lender pursuant to Section 2.1(c) hereof.
"Person" shall mean an individual, corporation, limited liability
company, partnership, trust or unincorporated organization, or a government or
any agency or political subdivision thereof.
"Taxes" shall mean, with respect to any Person, taxes, assessments or
other governmental charges or levies imposed upon such Person, its income or any
of its properties or assets.
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"Unmatured Event of Default" shall mean any event or condition which,
with the lapse of time or giving of notice to Borrower contemplated hereby,
would constitute an Event of Default.
ARTICLE II
COMMITMENT TO LEND, BORROWING PROCEDURES, ETC.
Section 2.1 Loans
(a) Amount. Lender agrees, from the Closing Date until the Maturity
Date described in Section 2.1(d) below and upon the terms and conditions herein
set forth (including, without limitation, in Section 2.6 hereof), to make a loan
or loans to Borrower in the aggregate principal amount of up to Thirty Five
Million Dollars ($35,000,000.00) (the "Commitment") (each such loan in herein
referred to as the "Loan," all such loans are herein referred to as "Loans," and
the aggregate amount of all such Loans outstanding from time to time, the "Loan
Amount"). Borrower shall repay all outstanding Loans on the Maturity Date, or
such earlier date if payment of the Loans are accelerated in accordance
herewith.
(b) Borrowings. In the event that Borrower shall elect to borrow
pursuant hereto, the Borrower shall give written notice to the Lender not later
than three (3) Business Days prior to the proposed date of such borrowing. Each
such notice of borrowing shall be by telecopy, promptly confirmed by letter, and
shall specify therein: (i) the date of such proposed borrowing, which shall be a
Business Day; (ii) the amount of such proposed borrowing which, when aggregated
together with the amount of all Loans made prior to such borrowing, shall not
exceed the Commitment; and (iii) the bank account or accounts to which the
proceeds of such Loan should be paid by Lender; provided, however, that in the
event that any amounts are due and owing to the Lender or any of its
subsidiaries pursuant to any such Management Agreements or Development
Agreements, then Lender shall be entitled (with the consent of the Lender, not
to be unreasonably withheld) to effect borrowings hereunder, upon Borrower's
behalf, in order to make payments of such amounts due from Borrower under any
such Management Agreements or Development Agreements, in which event Lender
shall give notice to Borrower of such Loan having been made pursuant to this
proviso of Section 2.1(b).
(c) Bridge Loan Note. The obligations of Borrower to repay the Loans
shall be evidenced by Borrower's promissory note in the form attached hereto as
Exhibit A, dated the Closing Date and payable to the order of Lender for the
principal sum of $35,000,000.00, or such Loan Amount as shall be outstanding
hereunder from time to time, with interest as therein provided. Absent manifest
error, the Lender's records with respect to Loans and the aggregate outstanding
Loan Amount shall be conclusive as to amounts owed Lender under the Note and
this Agreement.
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(d) Payments. Unless payment of the Loans are accelerated upon
occurrence of an Event of Default pursuant to Section 7.2 hereof, the aggregate
outstanding principal amount of the Loans, together with all accrued interest
thereon, shall be due and payable on the first to occur of (i) the date upon
which the Borrower shall first incur any mortgage indebtedness (such date, the
"Mortgage Financing Date") or (ii) September 30, 1999 (such first to occur date,
the "Maturity Date").
(e) Interest Rate. The Loans shall bear interest, during the period
from and including the date of funding to (but not including) the date the Loans
are paid in full, at the per annum rates set forth in the Note.
Section 2.2 Prepayment.
The principal amount of the Loan may be repaid or prepaid in full or in
part at any time prior to the Maturity Date, without premium or penalty.
Section 2.3 Manner of Payment.
(a) Each payment (including prepayments) by Borrower on account of the
principal or interest on the Loan shall be made on the dates specified for
payment under this Agreement to the Lender in lawful money of the United States
of America in immediately available funds. Any prepayment by Borrower shall set
forth in writing whether the payment is a prepayment of principal under the
Loan.
(b) If any payment under this Agreement shall be specified to be made
upon a day which is not a Business Day, it shall be made on the next succeeding
day which is a Business Day, and such extension of time shall in such case be
included in computing interest, if any, in connection with such payment.
(c) If some or less than all amounts due from Borrower are received by
Lender, Lender shall distribute such amounts in the following order of priority:
(i) to the payment of all amounts then due and payable under this Agreement
other than interest or principal; (ii) to the payment of interest then due and
payable on the Loan; and (iii) to the repayment or prepayment of the principal
balance of the Loans.
Section 2.4 Basis of Calculation of Interest.
All interest payable hereunder shall be calculated on the basis of the
360/365 method, which computes a daily amount of interest for a hypothetical
year of 360 days, then multiplies such amount by the actual number of days
elapsed in an interest calculation period.
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Section 2.5 Maximum Interest Rate.
In no event shall the amount of interest due or payable under the Note
exceed the maximum rate of interest allowed by applicable law, and in the event
that any such payment is inadvertently paid by Borrower or inadvertently
received by Lender, then such excess sum shall be credited as a payment of
principal, unless Borrower shall notify Lender, in writing, that Borrower elects
to have such excess sum returned to it forthwith. It is the express intent
hereof that Borrower not pay, and that Lender not receive, directly or
indirectly, in any manner whatsoever, interest in excess of that which would
lawfully be paid by Borrower under applicable law.
Section 2.6 Condition to Funding.
Lender shall have no obligation to fund any portion of the Commitment
on any date to the extent that such funding would cause the sum of the
outstanding Loan Amount as of such date plus the outstanding loan amount of
indebtedness of Borrower pursuant to the Bridge Loan Agreement between the
parties dated December 31, 1998, to exceed the product of three (3) times the
aggregate amount of Capital Contributions that have been made to Borrower (as
such term is defined in the Operating Agreement of Borrower of even date
herewith as amended as of the date hereof) through and including such date.
ARTICLE III
CLOSING DELIVERIES
The following deliveries shall be made simultaneously with the
execution of this Agreement:
Section 3.1 The Note.
Borrower shall deliver to Lender the Note duly executed and dated as of
the Closing Date.
Section 3.2 Equity Pledge Agreement.
The holders of all of the outstanding member interests in the Borrower
(other than the Lender) shall execute and deliver to Lender the Equity Pledge
Agreement dated as of the Closing Date, such agreement to be in form and
substance satisfactory to the Lender. The Borrower, by its execution of the
Equity Pledge Agreement, shall acknowledge the terms and provisions of such
agreement.
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Section 3.3 Evidence of Approvals.
Lender shall have received from the Borrower copies of all such
documents and other evidence that it may reasonably request to confirm the
Borrower's authority to enter into the Agreement and the transactions
contemplated hereby, and to fully perform its obligations hereunder and
thereunder.
Section 3.4 Loan Amount.
Lender shall make the initial disbursement of the Loan Amount to the
extent that any request therefor has been made pursuant to Section 2.2 of this
Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1 Representations and Warranties.
Borrower hereby represents and warrants that:
(a) Organization; Power; Qualification. Borrower is a Delaware limited
liability company duly organized, validly existing and in good standing under
the laws of the state of Delaware, has the power and authority, to own or lease
and operate its properties and to carry on its businesses as now being and
hereafter proposed to be conducted and is duly qualified and is in good standing
as foreign limited liability company, and is authorized to do business, in each
jurisdiction in which the character of its properties or the nature of its
business requires such qualification or authorization, and on which failure to
so qualify would have a Material Adverse Effect on Borrower.
(b) Execution and Enforceability. This Agreement has been duly executed
and delivered by Borrower, and is, and each of the Loan Documents to which
Borrower is a party is, a legal, valid and binding obligation of Borrower,
enforceable in accordance with its terms, subject, as to enforcement of
remedies, to the following qualifications: (i) an order of specific performance
and an injunction are discretionary remedies, and in particular, may not be
available where damages are considered an adequate remedy at law, and (ii) may
be limited by bankruptcy, insolvency, liquidation, reorganization,
reconstruction and other similar laws effecting enforcement of creditors' rights
generally (insofar as any such law relates to the bankruptcy, insolvency or
similar event of the Borrower).
(c) Authorization. Borrower is duly authorized to execute, deliver and
perform its obligations under this Agreement and the Loan Documents. The
execution, delivery and
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performance by Borrower of this Agreement and the Loan Documents do not and will
not require any consent or approval of any governmental agency or authority.
(d) No Conflicts. The execution, delivery and performance by the
Borrower of this Agreement and the Loan Documents (i) do not and will not
conflict with: (A) any provision of law, (B) the Borrower's operating agreement
or the Delaware Limited Liability Company Act, (C) any material agreement
binding upon Borrower, or (D) any court or administrative order or decree
applicable to Borrower, and (ii) do not and will not require, or result in, the
creation or imposition of any lien on any asset of Borrower.
ARTICLE V
AFFIRMATIVE COVENANTS
From the date of this Agreement and thereafter until all Loans pursuant
to this Agreement, and all interest thereon, are paid in full, and unless Lender
shall otherwise consent in writing:
Section 5.1 Notices.
Borrower shall notify the Lender in writing of any of the following
immediately upon learning of the occurrence thereof, describing the same and, if
applicable, the steps being taken with respect thereto:
(a) Default. The occurrence of an Event of Default or Unmatured
Event of Default;
(b) Litigation. The institution of any litigation, arbitration
proceeding or governmental proceeding which would constitute a Material Adverse
Effect on the Borrower;
(c) Material Adverse Change. The occurrence of a material adverse
change in the business, operations or financial condition of Borrower; or
(d) Other Events. The occurrence of such other events as the Lender may
from time to time reasonably specify regarding the financial condition of
Borrower.
Section 5.2 Existence.
Borrower shall maintain and preserve its existence as a limited
liability company, and all rights, privileges, licenses, patents, patent rights,
copyrights, trademarks, tradenames, and other authority to the extent material
and necessary for the conduct of its business in the ordinary course as
conducted from time to time.
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Section 5.3 Books, Records and Access.
Borrower shall maintain accurate books and records in conformance with
its method of income tax accounting. Within 15 days after receiving written
notice from Lender, Borrower shall permit reasonable access by the Lender to the
books and records of Borrower during normal business hours and permit the Lender
to make reasonable copies of such books and records.
Section 5.4 Insurance.
Borrower shall maintain insurance to such extent and against such
hazards and liabilities as is commonly maintained by companies similarly
situated.
Section 5.5 Repair.
Borrower shall maintain, preserve and keep its properties in good
repair, working order and condition, and from time to time make all necessary
and proper repairs, renewals, replacements, additions, betterments and
improvements thereto so that at all times the efficiency thereof shall be fully
preserved and maintained except for where the failure to comply with this
Section 5.5, individually or in the aggregate, does not have a Material Adverse
Effect on Borrower.
Section 5.6 Taxes.
Borrower shall pay when due, all of its Taxes, unless and only to the
extent that Borrower is contesting such Taxes in good faith and by appropriate
proceedings and Borrower has set aside in its books reasonable reserves
therefor.
Section 5.7 Compliance.
Borrower shall comply with all statutes and governmental rules and
regulations applicable to it, except where the failure to comply with this
Section 5.7, individually or in the aggregate, does not have a Material Adverse
Effect on the Borrower.
ARTICLE VI
NEGATIVE COVENANTS
From the date of this Agreement and thereafter until the Loan Amount,
and all interest thereon, is paid in full, and unless Lender shall otherwise
consent in writing:
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Section 6.1 Liquidation, Merger or Sale.
Borrower shall not, without the prior written consent of Lender:
(a) liquidate or dissolve itself (or suffer any liquidation or
dissolution) or otherwise windup its affairs;
(b) sell, lease, abandon, transfer or otherwise dispose of any real
property or of any personal property having a value of in excess of $25,000; or
(c) be party to any merger or consolidation.
Section 6.2 Liens.
Borrower shall not create, incur or suffer to exist, any lien
(including, without limitation, any pledge, assignment, mortgage, title
retaining contract or other type of security interest) to exist on any of the
assets or property (real, personal or mixed, tangible or intangible) of the
Borrower, other than:
(i) Liens for Taxes not delinquent or for Taxes being contested
in good faith by appropriate proceedings and as to which adequate
financial reserves have been established on Borrower's books and
records;
(ii) Liens created in connection with workmen's compensation,
unemployment insurance, and social security, or to secure the
performance of bids, tenders or contracts (other than for the repayment
of borrowed money), leases, statutory obligations, surety and appeal
bonds, and other obligations of like nature made in the ordinary course
of business;
(iii) Each lien existing on the date hereof; or
(iv) Liens created in connection with purchase money mortgages or
security interests granted to secure the purchase price of assets, the
purchase of which does not violate this Agreement or any instrument
required hereunder.
Section 6.3 Distributions.
Borrower shall not make any distribution, directly or indirectly,
whether in cash or in other property, on account of or for the benefit of its
members, other than payments or distributions to Lender pursuant to this
Agreement, the other Loan Documents, or any other loans made to Borrower by
Lender.
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ARTICLE VII
EVENTS OF DEFAULT & REMEDIES
Section 7.1 Events of Default.
An Event of Default shall have occurred under this Agreement:
(a) Non-payment. If Borrower shall default in the payment when due of
any principal of, or interest on, the Loan, and such default shall not be cured
within three (3) Business Days following notice thereof from Lender.
(b) Insolvency. If Borrower becomes insolvent, or generally fails to
pay, or admits in writing its inability to pay, its debts as they mature, or
applies for, consents to, or acquiesces in, the appointment of a trustee,
receiver or other custodian for Borrower or for a substantial part of the
property of Borrower, or makes a general assignment for the benefit of
creditors; or, in the absence of such application, consent or acquiescence, a
trustee, receiver or other custodian is appointed for Borrower or for a
substantial part of the property of the Borrower and is not discharged within
sixty days; or any bankruptcy, reorganization, debt arrangement or other
proceeding under any bankruptcy or insolvency law, or any dissolution or
liquidation proceeding, is instituted by or against Borrower and, if instituted
against Borrower, is consented to or acquiesced in by Borrower or remains for
sixty days undismissed; or any warrant of attachment or similarly legal process
is issued against any substantial part of the property of Borrower which is not
released within sixty days of service.
(c) Representations and Warranties. If any representation or warranty
made under this Agreement or any statement in any certificate given by Borrower
hereunder shall be untrue, incorrect or misleading in any material respect when
made or given.
(d) Covenants. If Borrower shall default in the performance or
observance of any covenant set forth in Article V or Article VI hereof and, with
respect to any covenant set forth in Section 5.1, 5.3, 5.4, 5.5, 5.6, or 5.7,
such default shall not be cured within thirty (30) days following notice thereof
from Lender to Borrower.
(e) If there is an event of default under any of the Loan Documents,
subject to any applicable period of grace.
(f) Other Obligations. If, subject to any applicable grace period,
Borrower (i) fails to pay any indebtedness or other obligations, direct or
indirect, for borrowed money in an amount in excess of $25,000.00 (other than as
evidenced by this Agreement or the Note) owing by Borrower when due, whether at
maturity, by acceleration or otherwise, or (ii) fails to perform any term,
covenant or agreement on its part to be performed under any agreement or
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instrument (other than this Agreement or under the Loan Documents) evidencing or
securing or relating to such indebtedness or other obligations, when required to
be performed, and, if as the result of such failure, the maturity date of such
indebtedness or other obligations has been accelerated.
(g) Judgments. If Borrower fails to satisfy or stay the execution by
appropriate proceedings of any judgment rendered against it in excess of
$25,000.
Section 7.2 Remedies.
If an Event of Default shall have occurred and shall be continuing,
Lender shall have the right at its option, and in its sole discretion, to
declare all amounts outstanding under the Note and this Agreement to be
immediately due and payable (except that if an event described in Section 7.1(b)
occurs, all amounts outstanding under the Note and this Agreement shall
automatically become immediately due and payable). Lender shall promptly advise
Borrower, in writing, of any such declaration, but failure to do so shall not
impair the effect of such declaration. Lender shall also be entitled to exercise
any and all remedies available to it, at law or equity.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Waiver and Amendments.
No failure or delay on the part of Lender in the exercise of any power
or right, and no course of dealing between Borrower and Lender, shall operate as
a waiver of such power or right, nor shall any single or partial exercise of any
power or right preclude other or further exercise thereof or the exercise of any
other power or right. Remedies provided for herein are cumulative and not
exclusive of any remedies which may be available to the Lender at law or in
equity. No notice to or demand on the Borrower required hereunder or under the
Note shall in any event entitle Borrower to any other or further notice or
demand in similar or other circumstances or constitute a waiver of the right of
Lender to any other or further action and any circumstances without notice or
demand. No amendment, modification or waiver of, or consent with respect to, any
provision of this Agreement or the Note shall in any event be effective unless
the same shall be in writing and signed and delivered by Lender. Any waiver of
any provision of this Agreement or the Note, and any consent to any departure by
Borrower from the terms of any provision of this Agreement or the Note, shall be
effective only in the specific instance and for the specific purpose for which
given.
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Section 8.2 Notices
All notices and other communications required or permitted under this
Agreement shall be in writing and, if mailed by prepaid first-class mail, or
certified mail, return receipt requested, shall be deemed to have been received
on the earlier of the date shown on the receipt or three (3) Business Days after
the post-xxxx date thereof and, if by telecopy, shall be followed forthwith by
letter and shall be deemed to have been received upon dispatch and
acknowledgment of receipt by the recipient's telecopier machine. In addition,
notices hereunder may be delivered by hand in which event the notice shall be
deemed effective when delivered or by overnight courier, in which event the
Notice shall be deemed delivered the day after it is accepted by the courier for
next day delivery. All notices and other communications under this Agreement
shall be given to the parties hereto at the following addresses:
(i) If to Borrower:
Third Party Investors I, L.L.C.
c/x XxXxxxxx Investments, Inc.
000 Xxxxx Xxxxxx, X.X.
Xxxxx Xxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxx
Fax: (000) 000-0000
with a copy to (which shall not constitute notice):
Xxxxx & Xxxxx
000 Xxxxxx, X.X., Xxxxx 000
Xxxxx Xxxxxx, Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxx, Esq.
Fax: (000) 000-0000
(ii) If to Lender:
Alternative Living Services, Inc.
000 X. Xxxxxxxxxx Xxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxxxx 00000
Attn: President and CEO
Fax: 000-000-0000
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with a copy to (which shall not constitute notice):
Xxxxxx & Xxxxxx LLP
000 Xxxxxxxxx Xxxxxx, X.X.
0000 Xxxxxxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxx X. Xxxx, Esq.
Fax: 000-000-0000
Any party hereto may change the address to which notices shall be
directed under this Section by giving written notice of such change to the other
parties.
Section 8.3 Severability.
Any provision of this Agreement which is prohibited or unenforceable in
any jurisdiction, shall as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof or affecting the validity or enforceability of such provision
in any other jurisdiction.
Section 8.4 Governing Law.
This Agreement shall be construed under and governed by the laws of the
state of Wisconsin, without giving effect to its principles of conflicts of
laws.
Section 8.5 Successors and Assigns.
This Agreement shall be binding upon Borrower and Lender and their
respective successors and assigns, and shall inure to the benefit of Borrower
and Lender and their successors and assigns. Neither Borrower nor Lender shall
assign its rights or delegate its duties hereunder without the consent of the
other party.
Section 8.6 Headings.
Headings used in this Agreement are for convenience only and shall not
be used in connection with the interpretation of any provision hereof.
Section 8.7 Counterparts.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which counterparts shall
together constitute one and the same instrument.
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Section 8.8 Expenses.
Borrower agrees to pay, and hold Lender harmless from liability for the
payment of, all reasonable costs and expenses of Lender (including reasonable
fees and expenses of counsel) in connection with any Event of Default or the
enforcement of this Agreement.
[Signature Page Follows.]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by the undersigned thereunto duly authorized as of the date first
written above.
ALTERNATIVE LIVING SERVICES, INC.,
a Delaware corporation
By: /s/ Xxxx X. Xxxxxxxxx
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Title: Senior Vice President
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THIRD PARTY INVESTORS I, L.L.C.
a Delaware limited liability company
By: /s/ Xxxx Xxxxxxx
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Title: Authorized Agent
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