1
EXECUTION COPY
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REGISTRATION RIGHTS AGREEMENT
by and among
ARV ASSISTED LIVING, INC.
and
PROMETHEUS ASSISTED LIVING LLC
dated as of
July 14, 1997
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TABLE OF CONTENTS
Page
Section 1. Definitions............................................1
(a) "Agreement"..............................................1
(b) "Buyer"..................................................1
(c) "Commencement Date"......................................1
(d) "Commission".............................................1
(e) "Company"................................................1
(f) "Company Registration Expenses"..........................1
(g) "Demand Registration"....................................1
(h) "Exchange Act"...........................................1
(i) "NASD"...................................................2
(j) "Registrable Securities".................................2
(k) "Registration Expenses"..................................2
(l) "Registration Suspension Period".........................2
(m) "Securities Act".........................................2
(n) "Stock Purchase Agreement"...............................2
(o) "Suspension Notice"......................................2
(p) "Underwritten/Placed Offering"...........................2
Section 2. Demand Registration....................................2
(a) Obligation to File.......................................2
(b) Black-Out Periods of Buyer...............................3
(c) Number of Demand Registrations...........................4
(d) Size of Demand Registration..............................4
(e) Notice...................................................4
(f) Expenses.................................................4
(g) Selection of Underwriters................................4
Section 3. Incidental Registrations...............................5
(a) Notification and Inclusion...............................5
(b) Cut-back Provisions......................................5
(c) Expenses.................................................6
(d) Duration of Effectiveness................................6
(e) Limitation on Availability...............................6
Section 4. Registration Procedures................................6
Section 5. Requested Underwritten Offerings.......................9
Section 6. Preparation; Reasonable Investigation..................9
Section 7. Indemnification.........................................9
(a) Indemnification by the Company...........................9
(b) Indemnification by Buyer................................10
(c) Notices of Claims, etc..................................10
(d) Other Indemnification...................................11
(e) Indemnification Payments................................11
(f) Contribution............................................11
Section 8. Covenants Relating to Rule 144........................11
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Page
Section 9. Miscellaneous.........................................12
(a) Counterparts............................................12
(b) Governing Law...........................................12
(c) Entire Agreement........................................12
(d) Notices.................................................12
(e) Successors and Assigns..................................13
(f) Headings................................................13
(g) Amendments and Waivers..................................13
(h) Interpretation; Absence of Presumption..................13
(i) Severability............................................14
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REGISTRATION RIGHTS AGREEMENT (the
"Agreement") dated as of July 14, 1997, by and
among ARV Assisted Living, Inc., a California
corporation (the "Company"), and Prometheus
Assisted Living LLC, a Delaware limited liability
company ("Buyer"). Capitalized terms not otherwise
defined herein have the meaning ascribed to them
in the Stock Purchase Agreement (as hereinafter
defined).
RECITALS:
WHEREAS, the Company, the Advancing Party and Buyer have
entered into a Stock Purchase Agreement, dated as of July 14, 1997
(the "Stock Purchase Agreement") that provides for the purchase by
Buyer and sale by the Company to Buyer of shares of Company Common
Stock; and
WHEREAS, in order to induce Buyer to enter into the Stock
Purchase Agreement, the Company has agreed to provide the registration
rights set forth herein;
NOW, THEREFORE, in consideration of the premises and the
covenants and agreements contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and intending to be legally bound hereby, the
parties hereto hereby agree as follows:
Section 1. Definitions. As used herein, the following terms
shall have the following meanings:
(a) "Agreement" shall have the meaning set forth in the
first paragraph hereof.
(b) "Buyer" shall mean Buyer together with any other
Investor as defined in the Stockholders Agreement.
(c) "Commencement Date" shall mean the second anniversary of
the date of this Agreement.
(d) "Commission" shall mean the Securities and Exchange
Commission, and any successor thereto.
(e) "Company" shall have the meaning set forth in the first
paragraph hereof.
(f) "Company Registration Expenses" shall mean the fees and
disbursements of counsel and independent public accountants for
the Company incurred in connection with the Company's performance
of or compliance with this Agreement, including the expenses of
any special audits or "cold comfort" letters required by or
incident to such performance and compliance, and any premiums and
other costs of policies of insurance obtained by the Company
against liabilities arising out of the sale of any securities.
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(g) "Demand Registration" shall have the meaning set forth
in Section 2(a).
(h) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended, and any successor thereto, and the rules and
regulations thereunder.
(i) "NASD" shall mean the National Association of Securities
Dealers, Inc.
(j) "Registrable Securities" shall mean (i) any and all
shares of Company Common Stock acquired by Buyer pursuant to the
Stock Purchase Agreement, (ii) any and all securities acquired by
Buyer pursuant to Section 3.2 of the Stockholders Agreement, and
(iii) any securities issued or issuable with respect to any
Company Common Stock or other securities referred to in clause
(i) or (ii) by way of conversion, exchange, stock dividend or
stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization
or otherwise. As to any particular Registrable Securities, once
issued such securities shall cease to be Registrable Securities
when (A) a registration statement with respect to the sale of
such securities shall have become effective under the Securities
Act and such securities shall have been disposed of in accordance
with such registration statement, (B) such securities shall have
been sold in accordance with Rule 144 (or any successor
provision) under the Securities Act or (C) such securities are
eligible to be resold pursuant to Rule 144(k).
(k) "Registration Expenses" shall mean all registration,
filing and stock exchange or NASD fees, all fees and expenses of
complying with securities or blue sky laws, all printing
expenses, messenger and delivery expenses, any fees and
disbursements of any separate counsel retained by Buyer, and
transfer taxes, if any, and any premiums and other costs of
policies of insurance obtained by Buyer against liabilities
arising out of the public offering of securities, including
Company Registration expenses, but specifically excludes any fees
and disbursements of underwriters customarily paid by sellers of
securities who are not the issuers of such securities and all
underwriting discounts and commissions.
(l) "Registration Suspension Period" shall have the meaning
set forth in Section 2(b).
(m) "Securities Act" shall mean the Securities Act of 1933,
as amended, and any successor thereto, and the rules and
regulations thereunder.
(n) "Stock Purchase Agreement" shall have the meaning set
forth in the second paragraph hereof.
(o) "Suspension Notice" shall have the meaning set forth in
Section 2(b).
(p) "Underwritten/Placed Offering" shall mean a sale of
securities of the Company to an underwriter or underwriters for
reoffering to the public or on behalf of a person other than the
Company through an agent for sale to the public.
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Section 2. Demand Registration
(a) Obligation to File. At any time following the
Commencement Date, promptly upon the written request of Buyer,
the Company will use its reasonable best efforts to file with the
Commission a registration statement under the Securities Act for
the offering of all of the Registrable Securities which Buyer
requests to be registered (the "Demand Registration"). The Demand
Registration shall be on an appropriate form and the Demand
Registration and any form of prospectus included therein shall
reflect such plan of distribution or method of sale as Buyer
notifies the Company, including the sale of some or all of the
Registrable Securities in a public offering or, if requested by
Buyer, subject to receipt by the Company of such information
(including information relating to purchasers) as the Company
reasonably may require, (i) in a transaction constituting an
offering outside the United States which is exempt from the
registration requirements of the Securities Act in which the
seller undertakes to effect registration after the completion of
such offering in order to permit such shares to be freely
tradeable in the United States, (ii) in a transaction
constituting a private placement under Section 4(2) of the
Securities Act in connection with which the seller undertakes to
effect a registration after the conclusion of such placement to
permit such shares to be freely tradeable by the purchasers
thereof, or (iii) in a transaction under Rule 144A of the
Securities Act, if available, in connection with which the seller
undertakes to effect a registration after the conclusion of such
transaction to permit such shares to be freely tradeable by the
purchasers thereof. The Company shall use its reasonable best
efforts to cause the Demand Registration to become effective,
and, upon the request of Buyer, keep the Demand Registration
effective for up to 90 days, unless the distribution of
securities registered thereunder has been earlier completed;
provided, however, that if such Demand Registration will require
the Company to prepare or file audited financial statements with
respect to any fiscal year by a date prior to the date on which
the Company would otherwise be required to prepare and file such
audited financial statements, then Buyer must notify the Company
at least thirty days in advance of the date upon which such
audited financial statements will be required to be filed. During
the period during which the Demand Registration is effective, the
Company shall supplement or make amendments to the Demand
Registration, if required by the Securities Act or if reasonably
requested by Buyer or an underwriter of Registrable Securities,
including to reflect any specific plan of distribution or method
of sale, and shall use its reasonable best efforts to have such
supplements and amendments declared effective, if required, as
soon as practicable after filing.
(b) Black-Out Periods of Buyer. Notwithstanding anything
herein to the contrary, (i) the Company shall have the right from
time to time to require Buyer not to sell under the Demand
Registration or to suspend the effectiveness thereof during the
period starting with the date 30 days prior to the Company's good
faith estimate, as certified in writing by an executive officer
of the Company to Buyer, of the proposed date of filing of a
registration statement or a preliminary prospectus supplement
relating to an existing shelf registration statement, in either
case, pertaining to an underwritten public offering of equity
securities of the Company for the account of the Company, and
ending on the date 75 days following the effective date of such
registration statement or the date of filing of the final
prospectus supplement, and (ii) the Company shall be
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entitled to require Buyer not to sell under the Demand
Registration or to suspend the effectiveness thereof (but not for
a period exceeding 75 days in any calendar year) if the Company
determines, in its good faith judgment, that such offering or
continued effectiveness would interfere with any material
financing, acquisition, disposition, corporate reorganization or
other material transaction involving the Company or any of its
subsidiaries or public disclosure thereof would be required prior
to the time such disclosure might otherwise be required, or when
the Company is in possession of material information that it
deems advisable not to disclose in a registration statement.
Once any registration statement filed pursuant to this
Section 2 or in which Registrable Securities are included
pursuant to Section 3 has been declared effective, any period
during which the Company fails to keep such registration
statement effective and usable for resale of Registrable
Securities for the period required by Section 4(b) shall be
referred to as a "Registration Suspension Period". A Registration
Suspension Period shall commence on and include the date that the
Company gives written notice to Buyer of its determination that
such registration statement is no longer effective or usable for
resale of Registrable Securities (the "Suspension Notice") to and
including the date when the Company notifies Buyer that the use
of the prospectus included in such registration statement may be
resumed for the disposition of Registrable Securities.
(c) Number of Demand Registrations. The Company shall be
obligated to effect, under this Section 2, only six Demand
Registrations (no more than two of which may be requested in any
two-year period). A Demand Registration shall not be deemed to
have been effected, nor shall it be sufficient to reduce the
number of Demand Registrations available to Buyer under this
Section 2, if such registration cannot be used by Buyer for more
than 60 days as a result of any stop order, injunction or other
order of the Commission or other Government Authority for any
reason other than an act or omission of Buyer and all the
Registerable Securities registered thereunder are not sold.
(d) Size of Demand Registration. The Company shall not be
required to effect a Demand Registration of less than a fair
market value, based on the closing market price on the trading
day immediately prior to the date of notice (as reported in the
Wall Street Journal), of $10,000,000, except that if the fair
market value, based on the closing market price on the trading
day immediately prior to the date of notice (as reported in the
Wall Street Journal), of the Registrable Securities outstanding
is less than $10,000,000, then the Company shall be required to
effect a Demand Registration of all of the remaining Registrable
Securities outstanding.
(e) Notice. The Company shall give Buyer prompt notice in
the event that the Company has suspended sales of Registrable
Securities under Section 2(b).
(f) Expenses. All Registration Expenses incurred in
connection with the first four Demand Registrations which may be
requested under this Section 2 shall be borne by the Company,
with Buyer only paying underwriting fees and discounts. All
Registration Expenses and underwriting fees and discounts
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incurred in connection with any further Demand Registrations
which may be requested under this Section 2 shall be borne by
Buyer.
(g) Selection of Underwriters. Any and all underwriters or
other agents involved in any sale of Registrable Securities
pursuant to a registration statement contemplated by this Section
2 shall include such underwriter(s) or other agent(s) as selected
by Buyer and approved by the Company, which approval shall not be
unreasonably withheld; provided that any Affiliate of Buyer shall
in all events be approved by the Company.
Section 3. Incidental Registrations
(a) Notification and Inclusion. If the Company proposes to
register for its own account any common equity securities of the
Company or any securities convertible into common equity
securities of the Company under the Securities Act (other than a
registration relating solely to the sale of securities to
participants in a dividend reinvestment plan, a registration on
Form S-4 relating to a business combination or similar
transaction permitted to be registered on such Form S-4, a
registration on Form S-8 relating solely to the sale of
securities to participants in a stock or employee benefit plan, a
registration permitted under Rule 462 under the Securities Act
registering additional securities of the same class as were
included in an earlier registration statement for the same
offering, and declared effective) the Company shall, at each such
time after the Commencement Date until Buyer no longer holds
Registerable Securities, promptly give written notice of such
registration to Buyer. Upon the written request of Buyer given
within 10 days after receipt of such notice by Buyer, the Company
shall seek to include in such proposed registration such
Registrable Securities as Buyer shall request be so included and
shall use its reasonable best efforts to cause a registration
statement covering all of the Registrable Securities that Buyer
has requested to be registered to become effective under the
Securities Act. The Company shall be under no obligation to
complete any offering of securities it proposes to make under
this Section 3 and shall incur no liability to Buyer for its
failure to do so. If, at any time after giving written notice of
its intention to register any securities and prior to the
effective date of the registration statement filed in connection
with such registration, the Company shall determine for any
reason not to register or to delay registration of such
securities, the Company may, at its election, give written notice
of such determination to Buyer and, thereupon, (i) in the case of
a determination not to register, the Company shall be relieved of
its obligation to register any Registrable Securities in
connection with such registration (but not from its obligation to
pay the Registration Expenses incurred in connection therewith)
and (ii) in the case of a determination to delay registering, the
Company shall be permitted to delay registering any Registrable
Securities for the same period as the delay in registering such
other securities.
(b) Cut-back Provisions. If a registration pursuant to this
Section 3 involves an Underwritten/Placed Offering of the
securities so being registered, whether or not solely for sale
for the account of the Company, which securities are to be
distributed by or through one or more underwriters of recognized
standing under underwriting terms customary for such transaction,
and the underwriter or the managing underwriter, as the case may
be, of such
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Underwritten/Placed Offering shall inform the Company of its
belief that the amount of securities requested to be included in
such registration or offering exceeds the amount which can be
sold in (or during the time of) such offering without delaying or
jeopardizing the success of the offering (including the price per
share of the securities to be sold), then the Company will
include in such registration (i) first, all the securities of the
Company which the Company proposes to sell for its own account or
the account of others (other than Buyer) requesting inclusion in
such registration pursuant to rights to registration on request,
and (ii) second, to the extent of the amount which the Company is
so advised can be sold in (or during the time of) such offering,
Registrable Securities and other securities requested to be
included in such registration, pro rata among Buyer and others
exercising incidental registration rights, on the basis of the
shares of Company Common Stock owned by all such persons.
(c) Expenses. The Company shall bear and pay all Company
Registration Expenses incurred in connection with any
registration of Registrable Securities pursuant to this Section 3
for Buyer and all Registration Expenses incurred in connection
with any registration of any securities for the Company's own
account referred to in the first sentence of Section 3(a), and
Buyer shall bear and pay all Registration Expenses (other than
Company Registration Expenses) and all underwriting fees and
discounts incurred in connection with any registration of
Registrable Securities pursuant to this Section 3 for Buyer.
(d) Duration of Effectiveness. At the request of Buyer, the
Company shall, subject to Section 2(b), use its reasonable best
efforts to keep any registration statement for which Registrable
Securities are included under this Section 3 effective and usable
for up to 90 days (subject to extension for the length of any
Registration Suspension Period), unless the distribution of
securities registered thereunder has been earlier completed;
provided, however, that in no event will the Company be required
to prepare or file audited financial statements with respect to
any fiscal year by a date prior to the date on which the Company
would be so required to prepare and file such audited financial
statements if such registration statement were no longer
effective and usable.
(e) Limitation on Availability. The registration rights set
forth in Section 2 shall not be exercisable unless Buyer is at
the time permitted to sell Registrable Securities pursuant to
Section 4.3 of the Stockholders Agreement and the registration
rights set forth in this Section 3 shall not be exercisable
unless Buyer is at the time permitted to sell Registrable
Securities pursuant to Section 4.3 or 5.2 of the Stockholders
Agreement.
Section 4. Registration Procedures. In connection with the
filing of any registration statement as provided in Section 2 or 3,
the Company shall use its reasonable best efforts to, as expeditiously
as reasonably practicable:
(a) prepare and file with the Commission the requisite
registration statement (including a prospectus therein) to effect
such registration and use its reasonable best efforts to cause
such registration statement to become effective, provided that
before filing such registration statement or any amendments or
supplements thereto, the Company will furnish to the counsel
selected by Buyer copies of all such documents proposed to be
filed, which documents will be
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subject to the review of such counsel before any such filing is
made, and the Company will comply with any reasonable request
made by such counsel to make changes in any information contained
in such documents relating to Buyer;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus
used in connection therewith as may be necessary to maintain the
effectiveness of such registration and to comply with the
provisions of the Securities Act with respect to the disposition
of all securities covered by such registration statement until
the earlier of such time as all of such securities have been
disposed of and the date which is 90 days after the date of
initial effectiveness of such registration statement;
(c) furnish to Buyer such number of conformed copies of such
registration statement and of each such amendment and supplement
thereto (in each case including all exhibits), such number of
copies of the prospectus contained in such registration
statements (including each complete prospectus and any summary
prospectus) and any other prospectus filed under Rule 424 under
the Securities Act, in conformity with the requirements of the
Securities Act, and such other documents, including documents
incorporated by reference, as Buyer may reasonably request;
(d) register or qualify all Registrable Securities under
such other securities or blue sky laws of such jurisdictions as
Buyer shall reasonably request, to keep such registration or
qualification in effect for so long as such registration
statement remains in effect, and take any other action which may
be reasonably necessary or advisable to enable Buyer to
consummate the disposition in such jurisdictions of the
securities owned by Buyer, except that the Company shall not for
any such purpose be required to qualify generally to do business
as a foreign corporation in any jurisdiction wherein it would not
but for the requirements of this paragraph be obligated to be so
qualified, or to consent to general service of process in any
such jurisdiction, or to subject the Company to any material tax
in any such jurisdiction where it is not then so subject;
(e) cause all Registrable Securities covered by such
registration statement to be registered with or approved by such
other Government Authority as may be reasonably necessary to
enable Buyer to consummate the disposition of such Registrable
Securities;
(f) furnish to Buyer a signed counterpart, addressed to
Buyer (and the underwriters, if any), of
(i) an opinion of counsel for the Company, dated the
effective date of such registration statement (and, if such
registration includes an underwritten public offering, dated
the date of the closing under the underwriting agreement),
reasonably satisfactory in form and substance to Buyer, and
(ii) to the extent permitted by then applicable rules
of professional conduct, a "comfort" letter, dated the
effective date of such registration statement (and, if such
registration includes an underwritten public offering, dated
the date of the closing under the underwriting
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agreement), signed by the independent public accountants who
have certified the Company's financial statements included
in such registration statement, covering substantially the
same matters with respect to such registration statement
(and the prospectus included therein) and, in the case of
the accountants' letter, with respect to events subsequent
to the date of such financial statements, all as are
customarily covered in opinions of issuer's counsel and in
accountants' letters delivered to the underwriters in
underwritten public offerings of securities;
(g) immediately notify Buyer at any time when the Company
becomes aware that a prospectus relating thereto is required to
be delivered under the Securities Act, of the happening of any
event as a result of which the prospectus included in such
registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances under
which they were made, and at the request of Buyer promptly
prepare and furnish to Buyer a reasonable number of copies of a
supplement to or an amendment of such prospectus as may be
necessary so that, as thereafter delivered to the purchasers of
such securities, such prospectus shall not include an untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances under
which they were made;
(h) comply or continue to comply in all material respects
with the Securities Act and the Exchange Act and with all
applicable rules and regulations of the Commission, and make
available to its security holders, as soon as reasonably
practicable, an earnings statement covering the period of at
least 12 months, but not more than 18 months, beginning with the
first full calendar month after the effective date of such
registration statement, which earnings statement shall satisfy
the provisions of Section 11 (a) of the Securities Act, and not
file any amendment or supplement to such registration statement
or prospectus to which Buyer shall have reasonably objected on
the grounds that such amendment or supplement does not comply in
all material respects with the requirements of the Securities
Act, having been furnished with a copy thereof at least five
Business Days prior to the filing thereof;
(i) provide a transfer agent and registrar for all
Registrable Securities covered by such registration statement not
later than the effective date of such registration statement; and
(j) list all Company Common Stock covered by such
registration statement on any securities exchange on which any of
the Company Common Stock is then listed.
Buyer shall furnish in writing to the Company such information
regarding Buyer (and any of its affiliates), the Registrable
Securities to be sold, the intended method of distribution of such
Registrable Securities, and such other information requested by the
Company as is necessary for inclusion in the registration statement
relating to such offering pursuant to the Securities Act and the rules
of the Commission thereunder. Such writing shall expressly state that
it is being furnished to the Company for use in the
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preparation of a registration statement, preliminary prospectus,
supplementary prospectus, final prospectus or amendment or supplement
thereto, as the case may be.
Buyer agrees by acquisition of the Registrable Securities that
upon receipt of any notice from the Company of the happening of any
event of the kind described in paragraph (g) of this Section 4, Buyer
will forthwith discontinue its disposition of Registrable Securities
pursuant to the registration statement relating to such Registrable
Securities until Buyer's receipt of the copies of the supplemented or
amended prospectus contemplated by paragraph (g) of this Section 4.
Section 5. Requested Underwritten Offerings. If requested by
the underwriters for any underwritten offerings by Buyer, under a
registration requested pursuant to Section 2(a), the Company will
enter into a customary underwriting agreement with such underwriters
for such offering, to contain such representations and warranties by
the Company and such other terms as are customarily contained in
agreements of this type, including indemnities to the effect and to
the extent provided in Section 7. Buyer shall be a party to such
underwriting agreement and may, at its option, require that any or all
of the conditions precedent to the obligations of such underwriters
under such underwriting agreement be conditions precedent to the
obligations of Buyer. Buyer shall not be required to make any
representations or warranties to or agreement with the Company or the
underwriters other than representations, warranties or agreements
regarding Buyer and Buyer's intended method of distribution and any
other representation or warranty required by law.
Section 6. Preparation; Reasonable Investigation. In
connection with the preparation and filing of the registration
statement under the Securities Act, the Company will give Buyer, its
underwriters, if any, and their respective counsel, the opportunity to
participate in the preparation of such registration statement, each
prospectus included therein or filed with the Commission, and each
amendment thereof or supplement thereto, and will give each of them
such access to its books and records and such opportunities to discuss
the business of the Company with its officers, its counsel and the
independent public accountants who have certified its financial
statements as shall be necessary, in the opinion of Buyer's and such
underwriters' respective counsel, to conduct a reasonable
investigation within the meaning of the Securities Act.
Section 7. Indemnification
(a) Indemnification by the Company. In the event of any
registration of any Registrable Securities of the Company under
the Securities Act, the Company will, and hereby does, indemnify
and hold harmless Buyer, each other person who participates as an
underwriter in the offering or sale of such securities and each
other person who controls any such underwriter within the meaning
of the Securities Act, against any losses, claims, damages or
liabilities, joint or several, to which Buyer or any such
underwriter or controlling person may become subject under the
Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of
any material fact contained in the registration statement under
which such Registrable Securities were registered under the
Securities Act, any preliminary prospectus, final prospectus or
summary prospectus contained therein, or any amendment or
supplement thereto, or any
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omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were
made, not misleading, and the Company will reimburse Buyer and
each such underwriter and controlling person for any reasonable
legal or any other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim,
liability, action or proceedings; provided, however, that the
Company shall not be liable in any such case to the extent that
any such loss, claim, damage, liability (or action or proceeding
in respect thereof) or expense arises out of or is based upon an
untrue statement or alleged untrue statement or omission or
alleged omission made in such registration statement, any such
preliminary prospectus, final prospectus, summary prospectus,
amendment or supplement in reliance upon and in conformity with
written information furnished to the Company by Buyer or any
other person who participates as an underwriter in the offering
or sale of such securities, in either case, specifically stating
that it is for use in the preparation thereof, and provided,
further, that the Company shall not be liable to any person who
participates as an underwriter in the offering or sale of
Registrable Securities or any other person, if any, who controls
such underwriter within the meaning of the Securities Act in any
such case to the extent that any such loss, claim, damage,
liability (or action or proceeding in respect thereof) or expense
arises out of such person's failure to send or give a copy of the
final prospectus or supplement to the persons asserting an untrue
statement or alleged untrue statement or omission or alleged
omission at or prior to the written confirmation of the sale of
Registrable Securities to such person if such statement or
omission was corrected in such final prospectus or supplement.
Such indemnity shall remain in full force and effect regardless
of any investigation made by or on behalf of Buyer or any such
underwriter or controlling person and shall survive the transfer
of such securities by Buyer.
(b) Indemnification by Buyer. The Buyer will, and hereby
does, indemnify, and hold harmless (in the same manner and to the
same extent as set forth in paragraph (a) of this Section 7) the
Company, each director of the Company, each officer of the
Company and each other person, if any, who controls the Company
within the meaning of the Securities Act, and each other person
who participates as an underwriter in the offering or sale of
such securities and each other person who controls any such
underwriter within the meaning of the Securities Act, with
respect to any untrue statement or alleged untrue statement of a
material fact in or omission or alleged omission to state a
material fact from such registration statement, any preliminary
prospectus, final prospectus or summary prospectus contained
therein, or any amendment or supplement thereto, if such untrue
statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written
information furnished to the Company by Buyer specifically
stating that it is for use in the preparation of such
registration statement, preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement. Such indemnity shall
remain in full force and effect regardless of any investigation
made by or on behalf of the Company or any such director,
officer, or controlling person and shall survive the transfer of
such securities by Buyer.
(c) Notices of Claims, etc. Promptly after receipt by an
indemnified party of notice of the commencement of any action or
proceeding involving a
14
claim referred to in the preceding paragraphs of this Section 7,
such indemnified party will, if a claim in respect thereof is to
be made against an indemnifying party, give written notice to the
latter of the commencement of such action; provided, however,
that the failure of any indemnified party to give notice as
provided herein shall not relieve the indemnifying party of its
obligations under the preceding paragraphs of this Section 7,
except to the extent that the indemnifying party is actually
prejudiced by such failure to give notice. In case any such
action is brought against an indemnified party, unless in such
indemnified party's reasonable judgment a conflict of interest
between such indemnified and indemnifying parties may exist in
respect of such claim, the indemnifying party shall be entitled
to participate in and to assume the defense thereof, jointly with
any other indemnifying party similarly notified to the extent
that it may wish, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party
to such indemnified party of its election so to assume the
defense thereof, the indemnifying party shall not be liable to
the indemnified party for any legal or other expenses
subsequently incurred by the latter in connection with the
defense thereof other than reasonable costs of investigation.
(d) Other Indemnification. Indemnification similar to that
specified in the preceding paragraphs of this Section 7 (with
appropriate modifications) shall be given by the Company and
Buyer with respect to any required registration or other
qualification of securities under any federal or state law or
regulation of Governmental Authority other than the Securities
Act.
(e) Indemnification Payments. The Indemnification required
by this Section 7 shall be made by periodic payments of the
amount thereof during the course of the investigation or defense,
as and when bills are received or expense, loss, damage or
liability is incurred.
(f) Contribution. If, for any reason, the foregoing
indemnity is unavailable, or is insufficient to hold harmless an
indemnified party, then the indemnifying party shall contribute
to the amount paid or payable by the indemnified party as a
result of the expense, loss, damage or liability, (i) in such
proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and the indemnified party on
the other (determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact
or omission relates to information supplied by the indemnifying
party or the indemnified party and the parties' relative intent,
knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission), or (ii) if the
allocation provided by clause (i) above is not permitted by
applicable law or provides a lesser sum to the indemnified party
than the amount hereinafter calculated, in the proportion as is
appropriate to reflect not only the relative fault of the
indemnifying party and the indemnified party, but also the
relative benefits received by the indemnifying party on the one
hand and the indemnified party on the other, as well as any other
relevant equitable considerations. No indemnified party guilty of
fraudulent misrepresentation (within the meaning of Section 11(f)
of the Securities Act) shall be entitled to contribution from any
indemnifying party who was not guilty of such fraudulent
misrepresentation.
15
Section 8. Covenants Relating to Rule 144. The Company will
file in a timely manner (taking into account any extensions granted by
the Commission), information, documents and reports in compliance with
the Exchange Act and will, at its expense, forthwith upon the request
of Buyer, deliver to Buyer a certificate, signed by the Company's
principal financial officer, stating (a) the Company's name, address
and telephone number (including area code), (b) the Company's Internal
Revenue Service identification number, (c) the Company's Commission
file number, (d) the number of shares of Company Common Stock and the
number of shares of Company Preferred Stock outstanding as shown by
the most recent report or statement published by the Company, and (e)
whether the Company has filed the reports required to be filed under
the Exchange Act for a period of at least 90 days prior to the date of
such certificate and in addition has filed the most recent annual
report required to be filed thereunder. If at any time the Company is
not required to file reports in compliance with either Section 13 or
Section 15(d) of the Exchange Act, the Company will, at its expense,
forthwith upon the written request of Buyer, make available adequate
current public information with respect to the Company within the
meaning of paragraph (c)(2) of Rule 144 of the General Rules and
Regulations promulgated under the Securities Act.
Section 9. Miscellaneous
(a) Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the
same agreement, and shall become effective when one or more
counterparts have been signed by each of the parties and
delivered to the other party. Copies of executed counterparts
transmitted by telecopy, telefax or other electronic transmission
service shall be considered original executed counterparts for
purposes of this Section 9, provided receipt of copies of such
counterparts is confirmed.
(b) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA
WITHOUT REFERENCE TO THE CHOICE OF LAW PRINCIPLES THEREOF.
(c) Entire Agreement. This Agreement (including agreements
incorporated herein) contains the entire agreement between the
parties with respect to the subject matter hereof and there are
no agreements or understandings between the parties other than
those set forth or referred to herein. This Agreement is not
intended to confer upon any person not a party hereto (and their
successors and assigns) any rights or remedies hereunder.
(d) Notices. All notices and other communications hereunder
shall be sufficiently given for all purposes hereunder if in
writing and delivered personally, sent by documented overnight
delivery service or, to the extent receipt
16
is confirmed, telecopy, telefax or other electronic transmission
service to the appropriate address or number as set forth below.
Notices to the Company shall be addressed to:
ARV Assisted Living, Inc.
000 Xxxxxxx Xxxxxx, X-0
Xxxxx Xxxx, XX 00000
Attention: Xxxx X. Xxxxxxxx and
Xxxxxx Xxxxxxx
Telecopy Number: (000) 000-0000
with a copy to:
Xxxxxx & Xxxxxxx
000 Xxxx Xxxxxx Xxxxx
00xx Xxxxx
Xxxxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx
Telecopy: (000) 000-0000
or at such other address and to the attention of such other person as
the Company may designate by written notice to Buyer. Notices to Buyer
shall be addressed to:
Prometheus Assisted Living LLC
c/o Lazard Freres Real Estate Investors L.L.C.
00 Xxxxxxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx, Xxxxx X. Xxxxx and
Xxxxx Xxxxxxxxxxx
Telecopy Number: (000) 000-0000
with a copy to:
Cravath, Swaine & Xxxxx
000 Xxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxx, Esq.
Telecopy Number: (000) 000-0000
(e) Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their
respective successors. Neither party shall be permitted to assign
any of its rights hereunder to any third party, except that if
(i) Buyer transfers or pledges any or all Registrable Securities
to a bona fide financial institution as security for any bona
fide indebtedness of any Buyer and such financial institution
agrees to be bound by the Stockholders Agreement, the pledgee of
the Registrable Securities shall be considered an intended
beneficiary hereof and may exercise all rights of Buyer
hereunder, and (ii) any person included within the definition of
the term Buyer shall be permitted to assign its rights hereunder
to any other person included within such definition.
17
(f) Headings. The Section and other headings contained in
this Agreement are inserted for convenience of reference only and will
not affect the meaning or interpretation of this Agreement. All
references to Sections or other headings contained herein mean
Sections or other headings of this Agreement unless otherwise stated.
(g) Amendments and Waivers. This Agreement may not be
modified or amended except by an instrument or instruments in
writing signed by the party against whom enforcement of any such
modification or amendment is sought. Either party hereto may,
only by an instrument in writing, waive compliance by the other
party hereto with any term or provision hereof on the part of
such other party hereto to be performed or complied with. The
waiver by any party hereto of a breach of any term or provision
hereof shall not be construed as a waiver of any subsequent
breach.
(h) Interpretation; Absence of Presumption. For the purposes
hereof, (i) words in the singular shall be held to include the
plural and vice versa and words of one gender shall be held to
include the other gender as the context requires, (ii) the terms
"hereof", "herein", and "herewith" and words of similar import
shall, unless otherwise stated, be construed to refer to this
Agreement as a whole and not to any particular provision of this
Agreement, and Section, paragraph or other references are to the
Sections, paragraphs, or other references to this Agreement
unless otherwise specified, (iii) the word "including" and words
of similar import when used in this Agreement shall mean
"including, without limitation," unless the context otherwise
requires or unless otherwise specified, (iv) the word "or" shall
not be exclusive, and (v) provisions shall apply, when
appropriate, to successive events and transactions.
This Agreement shall be construed without regard to any
presumption or rule requiring construction or interpretation
against the party drafting or causing any instrument to be
drafted.
(i) Severability. Any provision hereof which is invalid or
unenforceable shall be ineffective to the extent of such
invalidity or unenforceability, without affecting in any way the
remaining provisions hereof.
IN WITNESS WHEREOF, this Agreement has been signed by or on
behalf of each of the parties hereto as of the day first above
written.
ARV ASSISTED LIVING, INC.
by /s/ Xxxx X. Xxxxxxxx
-----------------------
Name: Xxxx X. Xxxxxxxx
Title: Chairman & Chief
Executive Officer
PROMETHEUS ASSISTED LIVING LLC
by /s/ Xxxxxx X. Xxxxxxx
-----------------------
Name: Xxxxxx X. Xxxxxxx
Title: President
