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EXHIBIT 10.1 BRIDGE LOAN AGREEMENT
This Agreement, dated as of April 28, 1997, is entered into among
Alternative Living Services, Inc., a Delaware corporation ("Borrower"), and RDV
Capital Management L.P., a Delaware limited partnership ("Lender").
W I T N E S S E T H:
WHEREAS, Borrower has requested that Lender make a loan to Borrower in the
aggregate amount of $15,000,000.00; and
WHEREAS, Lender is willing to make the loan to Borrower on such 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 Alternative Living Services, Inc., a Delaware
corporation.
"Business Day" shall mean a day on which national banks are open for the
transaction of business required for this Agreement in Grand Rapids, Michigan.
"Closing" shall mean the closing of Loan in accordance herewith.
"Closing Date" shall mean the date of this Agreement.
"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.
"GAAP" shall mean generally accepted accounting principles, as in effect
from time to time, consistently applied.
"Lender" shall mean RDV Capital Management L.P., a Delaware limited
partnership.
"Loan" shall have the meaning set forth in Section 2.1 hereof.
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"Loan Documents" shall mean the Note and any other documents executed by
Borrower with or for the benefit of Lender in connection with this Agreement or
the Loan.
"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 and its Subsidiaries,
taken as a whole.
"Net Income" shall mean, as applied to any Person for any fiscal period,
the aggregate amount of net income (or net loss) of such Person, after taxes,
for such period as determined in accordance with GAAP.
"Person" shall mean an individual, corporation, limited liability company,
partnership, trust or unincorporated organization, or a government or any
agency or political subdivision thereof.
"Subsidiary" of any Person (the "Parent") shall mean any other Person of
which or in which the Parent owns, directly or indirectly, 50% or more of (i)
the combined voting power of all classes of stock having general voting power,
if it is a corporation, (ii) the capital interest or profits interest of such
Person, if it is a partnership, limited liability company, joint venture or
similar entity, or (iii) the beneficial interest of such Person, if it is a
trust, association or other incorporated organization.
"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.
"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.
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ARTICLE II
COMMITMENT TO LEND, BORROWING PROCEDURES, ETC.
Section 2.1
The Loan
(a) Amount. Lender agrees, upon the terms and conditions hereinafter set
forth, to make a loan to Borrower in the principal amount of $15,000,000.00
(said loan being hereinafter referred to as the "Loan" and said amount, or any
portion thereof outstanding, the "Loan Amount").
(b) Promissory Note. The obligations of Borrower to repay the Loan 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 $15,000,000.00 with interest as therein provided (said
promissory note being referred to herein as the "Note").
(c) Payments. Unless payment of the Loan is accelerated upon occurrence
of an Event of Default pursuant to Section 7.2 hereof, the principal amount of
the Loan, together with all accrued and unpaid interest thereon, shall be due
and payable on the first anniversary of the Closing Date (such date, the
"Maturity Date") and interest shall be due and payable, at the rates set forth
below, monthly in arrears (through and including the date immediately preceding
the Maturity Date) on the 15th day of each calendar month commencing with May
1997, with a final interest payment due when the principal amount of the Loan
is paid in full.
(d) Interest Rate. The Loan shall bear interest, during the period from
and including the Closing Date to (but not including) the date the Loan is paid
in full, at the per annum rate set forth in the Note.
Section 2.2 Manner of Disbursement.
Prior to Closing, Borrower shall provide Lender with instructions as to
the bank account(s) to which the Loan Amount is to be disbursed at Closing. On
the Closing Date, the Lender shall disburse the Loan Amount by transferring the
Loan Amount by wire transfer pursuant to Borrower's instructions.
Section 2.3 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 2.4 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
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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 Loan.
Section 2.5 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.
Section 2.6 Fees.
Borrower agrees to pay to RDV Corporation, a Michigan corporation
("RDVC"), two (2%) percent of the Loan Amount for arranging and administering
the loan on behalf of the Lender. Borrower and Lender acknowledge that Lender
may deduct on RDVC's behalf such fee from the Loan prior to disbursing the Loan
Amount on the Closing Date. Borrower also agrees to reimburse Lender for the
reasonable attorneys' fees and expenses of Lender's counsel, Xxxxx & Xxxxx,
incurred in connection with the making of the Loan.
Section 2.7 Maximum Interest Rate.
In no event shall the amount of interest due or payable hereunder
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.
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ARTICLE III
DELIVERIES AT CLOSING
The following deliveries shall be made at the Closing:
Section 3.1 The Note.
Borrower shall deliver to Lender the Note duly executed and
dated as of the Closing Date.
Section 3.2 Legal Opinion.
Xxxxxx & Xxxxxx, counsel to Borrower, shall deliver to Lender
an opinion, dated as of the Closing Date, in a form reasonably satisfactory to
Lender.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1 Representations and Warranties.
Borrower hereby represents and warrants that:
(a) Organization; Power; Qualification. Borrower and its
Subsidiaries are corporations duly organized, validly existing and in good
standing under the laws of the states of their respective incorporation, have
the power and authority, corporate and otherwise, to own or lease and operate
their respective properties and to carry on their respective businesses as now
being and hereafter proposed to be conducted and are duly qualified and have
good standing as foreign corporations, and are authorized to do business, in
each jurisdiction in which the character of their respective properties or the
nature of their respective businesses 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 respective obligations under this Agreement and the Loan
Documents. The execution,
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delivery and 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 certificate of incorporation
or bylaws of Borrower, (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.
(e) No Default. Borrower and its Subsidiaries are not in
default under any agreement or instrument to which they are a party or by which
any of their respective properties or assets is bound or affected, which
default would have a Material Adverse Effect on Borrower. No Event of Default
or Unmatured Event of Default has occurred and is continuing.
(f) Financial Statements. Borrower has furnished, or caused
to be furnished, to Lender the consolidated financial statements of Borrower as
of and for the periods ended December 31, 1996 which are correct and complete
in all material respects and present fairly in accordance with GAAP the
financial position and the results of the operations of Borrower and its
Subsidiaries. Except as disclosed in such financial statements, neither
Borrower nor any of its Subsidiaries have any material liabilities, contingent
or otherwise, and there are no material unrealized or anticipated losses by
Borrower or any of its Subsidiaries.
(g) No Adverse Change. Since December 31, 1996, there has
occurred no event which would have a Material Adverse Effect on Borrower.
(h) Litigation. No claims, litigation, arbitration
proceedings or governmental proceedings are pending or threatened against or
are affecting Borrower or its Subsidiaries, the results of which, if decided
adversely to Borrower or any of its Subsidiaries, would have a Material Adverse
Effect on Borrower.
(i) Taxes. All federal, state and local tax returns required
by law to be filed by Borrower have been properly prepared and filed, and all
taxes shown thereon to be due, including interest and penalties, have been
made, except for such taxes as are being contested by Borrower in good faith
and by appropriate proceedings.
ARTICLE V
AFFIRMATIVE COVENANTS
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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 5.1 Financial Statements and Other Reports.
Borrower shall furnish or cause to be furnished to Lender:
(a) Annual Audit Report. Within 90 days after each fiscal year of
Borrower, a copy of the annual audited consolidated financial statements of
Borrower prepared in conformity with GAAP and certified by KPMG Peat Marwick or
another independent certified public accountant who shall be reasonably
satisfactory to Lender;
(b) Quarterly Financial Statements. Within 45 days after each
quarter (except the last quarter) of each fiscal year of Borrower, a copy of the
unaudited consolidated financial statements of Borrower, prepared in the same
manner as the financial statements referred to in preceding clause (a) hereof
except that certain footnotes and other financial information may be omitted in
accordance with Borrower's current practices, and consisting of at least a
balance sheet as of the close of such quarter and statements of operations and
cashflows for such quarter and for the period from the beginning of such fiscal
year to the close of such quarter;
(c) Requested Information. Promptly from time to time, such other
reports or information regarding Borrower's financial condition as the Lender
may reasonably request.
Section 5.2 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 is reasonably expected to have 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 and its Subsidiaries, taken as a whole.
Section 5.3 Existence.
Borrower shall maintain and preserve its existence as a
corporation, 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 5.4 Nature of Business.
Borrower and its Subsidiaries shall engage in substantially the same
fields of business they are engaged in on the date hereof.
Section 5.5 Books, Records and Access.
Borrower shall maintain, and cause its Subsidiaries to maintain, complete
and accurate books and records in which full and correct entries in conformance
with GAAP shall be made of all dealings and transactions in relation to their
respective businesses and activities. Within 15 days after receiving written
notice from Lender, Borrower shall permit, and cause its Subsidiaries to
permit, reasonable access by the Lender to the books and records of Borrower
and its Subsidiaries during normal business hours and permit, and cause its
Subsidiaries to permit, the Lender to make reasonable copies of such books and
records.
Section 5.6 Insurance.
Borrower shall maintain, and cause its Subsidiaries to maintain, insurance
to such extent and against such hazards and liabilities as is commonly
maintained by companies similarly situated.
Section 5.7 Repair.
Borrower shall maintain, preserve and keep, and cause its Subsidiaries to
maintain, preserve and keep, their respective properties in good repair,
working order and condition, and from time to time make, and cause its
Subsidiaries to 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 5.7, individually or in the aggregate, does
not have a Material Adverse Effect on Borrower.
Section 5.8 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 such reserves or other
appropriate provisions therefor as may be required by GAAP.
Section 5.9 Compliance.
Borrower shall comply, and shall cause its Subsidiaries to comply, with
all statutes and governmental rules and regulations applicable to them, except
where the failure to comply with this Section 5.9, individually or in the
aggregate, does not have a Material Adverse Effect on the business, financial
condition, or operations of Borrower.
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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:
Section 6.1 Liquidation, Merger or Sale
Borrower shall not:
(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 all or
substantially all its assets;
(c) be party to any merger or consolidation, unless after giving
effect thereto, no Event of Default or Unmatured Event of Default has
occurred and is continuing and (i) it is the surviving entity thereto or (ii)
such merger is with a wholly-owned subsidiary of Borrower for the purpose of
reincorporating the Borrower in another state or (iii) the holders of the
voting capital stock of the Company prior to such merger or consolidation are
the holders of at least 51% of the voting power of the outstanding voting
capital stock of the surviving entity immediately following such transaction.
ARTICLE VII
EVENTS OF DEFAULT & REMEDIES
Section 7.1 Events of Default.
Each of the following shall constitute an Event of Default under
this Agreement:
(a) Non-payment. 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. 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
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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. 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. 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, 5.2, 5.5, 5.6, 5.7 or
5.8, such default shall not be cured within thirty (30) days following notice
thereof from Lender to Borrower.
(e) There is an event of default under the Loan Documents.
(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 $250,000.00 (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
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 or any
Subsidiary of Borrower in excess of $250,000.
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
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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 Notes 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.
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 on
the next Business Day following 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:
Alternative Living Services, Inc.
000 X. Xxxxxxxxxx Xxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxxxx 00000
Attn: President
and a copy to:
Xxxxxx & Hardin
000 Xxxxxxxxx Xxxxxx, X.X.
0000 Xxxxxxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxx X. Xxxx, Esq.
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(ii) If to Lender:
RDV Capital Management L.P.
c/o RDV Corporation
500 Grand Bank Building
000 Xxxxxx Xxxxxx, X.X.
Xxxxx Xxxxxx, Xxxxxxxx 00000
Attn: Xx. Xxxxx X. Xxxxxxxx
With a copy to:
Xxxxx & Xxxxx
000 Xxxxxxxxxxxx, X.X.
Xxxxx 000
Xxxxx Xxxxxx, Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxx, Esq.
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 Michigan, 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 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.
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Section 8.7 Counterparts.
This Agreement may be executed in counterparts, each of which
shall be deemed to be an original, but both of which counterparts shall
together constitute one and the same instrument.
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.
By: /s/ XXXXXX X. XXXXXX
---------------------------------
Xxxxxx X. Xxxxxx
Title: Vice President
RDV CAPITAL MANAGEMENT L.P., a
Delaware Limited Partnership
By: RDV Corporation, a Michigan corporation
Its: General Partner
By: /s/ XXXXX X. XXXXXXXX
---------------------------------
Xxxxx X. Xxxxxxxx
Title: President
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