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EXHIBIT 10.3
SECOND AMENDMENT TO RIGHTS AGREEMENT
THIS SECOND AMENDMENT TO RIGHTS AGREEMENT (this "Amendment"), dated as of April
24, 2000, is made by and between ARV ASSISTED LIVING, INC., a Delaware
corporation (the "Company"), and CHASEMELLON SHAREHOLDER SERVICES, L.L.C. (the
"Rights Agent").
RECITALS
A. WHEREAS, the Company and the Rights Agent are parties to
that certain Rights Agreement dated as of May 14, 1998, as amended as of October
21, 1998 (the "Rights Agreement"); and
B. WHEREAS, pursuant to Section 26 of the Rights Agreement,
the Company and the Rights Agent desire to amend the Rights Agreement as set
forth below;
NOW, THEREFORE, the Rights Agreement is hereby amended as
follows:
Amendment of Section 1.1. Section 1.1 of the Rights
Agreement is hereby amended and restated to read in its entirety as follows:
"1.1 "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates and Associates
(as such terms are hereinafter defined) of such Person, shall be the Beneficial
Owner (as such term is hereinafter defined) of 10% or more of the Common Shares
of the Company then outstanding but shall not include (i) an Exempt Person or
(ii) any Approved Holder (as defined below), unless and until such time as such
Approved Holder shall become the Beneficial Owner of 50% or more of the Common
Shares of the Company then outstanding; provided, however, that (x) no Person
(including but not limited to the Approved Holder) shall be deemed to
Beneficially Own any Common Shares held by any other person that is a party to
that certain Stockholders' Voting Agreement dated October 29, 1997 by and among
Prometheus Assisted Living LLC ("Prometheus"), Lazard Freres Real Estate
Investors L.L.C. ("LFREI"), and certain stockholders of the Company; and
provided further that (y) if at any time (A) any Approved Holder shall be deemed
to be the Beneficial Owner of more than 750,000 Common Shares solely by reason
of its ownership of or rights in the Warrant and (B) such beneficial ownership
of such greater number of shares would otherwise cause such Approved Holder to
become the Beneficial Owner of 50% or more of the Common Shares of the Company
then outstanding, then for purposes of this Rights Agreement such Approved
Holder shall not be deemed to beneficially own or be the Beneficial Owner of
such greater number of shares to the extent such beneficial ownership would
otherwise cause such Approved Holder to become the Beneficial Owner of 50% or
more of the Common Shares of the Company then outstanding. "Warrant" shall mean
that certain Warrant, dated April 24, 2000, to purchase 750,000 Common Shares,
subject to adjustment, issued by the Company to LFSRI II Assisted Living LLC
(the "Warrant"). "Approved Holder" shall mean LFREI and Prometheus, together
with all of their Controlled Affiliates (as such term is defined in that certain
Settlement Agreement dated September 29, 1999, among the Company, Prometheus,
and certain entities affiliated with Prometheus) and any other Affiliate of
LFREI and Prometheus, but solely to the extent of such other Affiliate's
beneficial ownership of Common Shares also Beneficially Owned by LFREI and
Prometheus and their Controlled Affiliates. Notwithstanding the foregoing, no
Person shall become an "Acquiring Person" as the
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result of an acquisition of Common Shares by the Company which, by reducing the
number of shares outstanding, increases the proportionate number of shares
beneficially owned by such Person to 10% (or, in the case of the Approved
Holder, 50%) or more of the Common Shares of the Company then outstanding;
provided, however, that if a Person shall become the Beneficial Owner of 10%
(or, in the case of the Approved Holder, 50%) or more of the Common Shares of
the Company then outstanding solely by reason of share purchases by the Company
and shall, after such share purchases by the Company, become the Beneficial
Owner of any additional Common Shares of the Company (other than, in the case of
an Approved Holder, by reason of the full or partial exercise of the Warrant),
then such Person shall be deemed to be an "Acquiring Person." Notwithstanding
the foregoing, if the Board of Directors of the Company determines in good faith
that a Person who would otherwise be an "Acquiring Person", as defined pursuant
to the foregoing provisions of this Section 1.1, has become such inadvertently,
and without any intention of changing or influencing control of the Company, and
such Person divests as promptly as practicable a sufficient number of Common
Shares so that such Person would no longer be an Acquiring Person, as defined
pursuant to the foregoing provisions of this Section 1.1, then such Person shall
not be deemed to be or have become an "Acquiring Person" for any purposes of
this Agreement (so long as such Person does not become an Acquiring Person after
such divestiture)."
Effectiveness. This Amendment shall be deemed effective as of
April 24, 2000 as if executed by both parties on such date. Except as amended
hereby, the Rights Agreement shall remain in full force and effect and shall be
otherwise unaffected hereby.
Miscellaneous. This Amendment shall be deemed to be a contract
made under the laws of the State of Delaware and for all purposes shall be
governed by and construed in accordance with the laws of such state applicable
to contracts to be made and performed entirely within such state, without giving
effect to the choice of law provisions thereof. This Amendment may be executed
in any number of counterparts, each of such counterparts shall for all purposes
be deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument. If any term, provision, covenant or restriction
of this Amendment is held by a court of competent jurisdiction or other
authority to be invalid, illegal, or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Amendment shall remain in full
force and effect and shall in no way be affected, impaired or invalidated.
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IN WITNESS WHEREOF, the parties hereto have caused this Second
Amendment to Rights Agreement to be duly executed as of the date first above
written.
ARV ASSISTED LIVING, INC.
By: _____________________________________
Name: ____________________________________
Its:______________________________________
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
By: _____________________________________
Name:_____________________________________
Its:______________________________________
