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EXHIBIT 99.4
LOAN NO. 20-365
FORM OF SECOND AMENDMENT TO LOAN DOCUMENTS
THIS SECOND AMENDMENT TO LOAN DOCUMENTS (this "AMENDMENT") is
made as of the ___ day of October, 2001, between ALC OHIO, INC., a Nevada
corporation, ALC PENNSYLVANIA, INC., a Nevada corporation, ALC IOWA, INC., a
Nevada corporation, ALC NEBRASKA, INC., a Nevada corporation and ALC NEW JERSEY,
INC., a Nevada corporation (collectively, the "ORIGINAL BORROWER") and ALC
INDIANA, INC., a Nevada corporation ("ALC INDIANA") (Original Borrower and ALC
Indiana are sometimes hereinafter collectively referred to as "BORROWER"),
ASSISTED LIVING CONCEPTS, INC., a Nevada corporation and Chapter 11
debtor-in-possession ("ALC"), the financial institutions who are or hereafter
become parties to the Loan Agreement (as defined below) as Lenders, and XXXXXX
HEALTHCARE FINANCE, INC., a Delaware corporation ("XXXXXX"), as Agent and a
Lender.
RECITALS
A. Original Borrower, Agent and Lenders have entered into that
certain Loan Agreement dated as of February 20, 2001 (the "ORIGINAL LOAN
AGREEMENT"). The Original Loan Agreement was amended by that certain First
Amendment to Loan Documents dated as of June 29, 2001 among Original Borrower,
ALC Indiana, ALC, Agent and Lenders (the "FIRST AMENDMENT"; the Original Loan
Agreement, as amended by the First Amendment, is hereinafter referred to as the
"LOAN AGREEMENT"), pursuant to which Lenders agreed to make loans to Borrower in
the aggregate principal amount of Twenty Million and No/100 Dollars
($20,000,000.00), subject to the terms and conditions set forth in the Loan
Agreement. The Loan is evidenced by the Notes. As of the date hereof, Xxxxxx is
the only Lender. All capitalized terms used but not defined herein shall have
the meanings ascribed thereto in the Loan Agreement.
B. Concurrently with the execution of this Amendment, ALC and
Carriage House Assisted Living, Inc., a Delaware corporation and Chapter 11
debtor-in-possession ("CARRIAGE HOUSE"; ALC and Carriage House are collectively
referred to as "DIP BORROWER") and Xxxxxx (as a lender only and not an agent)
will enter into a new and separate Loan Agreement (the "DIP LOAN AGREEMENT")
pursuant to which Xxxxxx will agree to lend DIP Borrower the sum of Four Million
Four Hundred Thousand and No/100 Dollars ($4,400,000.00), subject to the terms
and conditions of the DIP Loan Agreement (the "DIP LOAN"). In connection with
the DIP Loan, DIP Borrower will execute a promissory note or notes, first
priority mortgages or deeds of trust encumbering properties owned by DIP
Borrower (the "DIP PROPERTIES"), assignments of leases encumbering such
properties, a hazardous materials indemnity agreement, such Uniform Commercial
Code financing statements as Xxxxxx may require pursuant to the terms of the DIP
Loan Agreement, the Pledge and the Subsidiary Note Assignment (each as defined
in the DIP Loan Agreement), the DIP Loan Agreement and such other documents as
Xxxxxx may require (collectively, the "DIP LOAN DOCUMENTS").
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C. ALC and Borrower have requested that the Loan Agreement be
amended to increase the amount of the Loan, extend the Term and address other
matters set forth herein.
D. ALC and Borrower have requested, and ALC, Borrower, Agent and
Lenders hereby agree, to modify the Loan Documents pursuant to the terms of this
Amendment.
NOW, THEREFORE, in consideration of the Recitals, which are
hereby incorporated into and shall be deemed a part of this Amendment, of the
covenants and agreements hereinafter set forth and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged by
all parties, it is agreed by and among the parties hereto as follows:
1. AMENDMENTS TO LOAN DOCUMENTS.
(a) Notwithstanding anything to the contrary contained in the
Loan Documents, Lenders shall have no obligation to make any disbursement of any
proceeds of the Loan except as explicitly set forth in this Amendment. Lenders
will make disbursements with respect to the Pool 2 Properties strictly subject
to the conditions precedent that (i) Borrower shall have satisfied all of the
conditions to the Pool 2 Properties becoming Included Properties, (ii) the Final
Financing Order (as defined in the DIP Loan Agreement) shall have been entered,
(iii) with respect to the Pool 1 Properties and Pool 3 Properties, Borrower
shall have delivered to Agent date down endorsements to the Title Policies,
legal opinions regarding the Loan Documents executed by Borrower in connection
with the First Amendment or this Amendment, and any other documents which Agent
may reasonably require, (iv) Borrower shall execute and deliver to Agent such
documents as Agent may reasonably require in connection with the Pool 2
Properties and the funding thereof (including without limitation, an amendment
to the Notes), (v) the Collateral (as defined in the DIP Loan Agreement) shall
also secure the Loan, (vi) Xxxxxx'x credit committee shall have granted all
required approvals with respect to such disbursements for the Pool 2 Properties
and Xxxxxx shall have provided written notice thereof to Borrower, and (vii)
Texas ALC Partners, L.P., a Texas limited partnership ("ALC TEXAS") shall be
joined to the Loan Agreement as a Borrower pursuant to a Joinder (in the form
attached to the Loan Agreement) substantially simultaneously with the
disbursement for the Pool 2 Properties . Borrower also authorizes Agent to file
amendments to any UCC financing statements as Agent may reasonably require with
respect to the Pool 1 Properties and Pool 3 Properties.
(b) Upon the Effective Date, subsection 1.1.4 of the Loan
Agreement shall automatically (and without further action) be deleted in its
entirety and the following inserted in lieu thereof:
"1.1.4. INTEREST RESERVE. A portion of the proceeds of the Loan in the
amount of One Million Two Hundred Thousand and No/100 Dollars
($1,200,000.00) shall be retained by Lenders to fund an interest reserve
(the "INTEREST RESERVE"). The Interest Reserve shall be advanced by
Lenders, at Agent's sole discretion, during the
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continuance of any monetary default under any of the Loan Documents in
order to pay the interest due on the Loan. Lenders shall not be required
to make any other disbursements from the Interest Reserve except as set
forth above. Any disbursement by Lenders of any portion of the Interest
Reserve shall not constitute a cure or waiver of such default. No
portion of the Interest Reserve shall bear interest hereunder unless and
until such portion is advanced by Lenders.
(c) Upon the Effective Date, Section 1.2 of the Loan Agreement
shall automatically (and without further action) be deleted in its entirety and
the following inserted in lieu thereof: "1.2. LOAN TERM. The Loan shall mature
upon the earliest of (i) the date on which Agent demands payment of Borrower's
obligations to it following the occurrence of an Event of Default, (ii) the date
on which the DIP Loan is paid in full or required to be paid in full, whether by
acceleration or otherwise or (iii) the date which is one (1) year after the
Effective Date (such earliest date being referred to as the "MATURITY DATE")."
Any reference to Maturity Date contained in the Loan Documents shall be deemed a
reference to the Maturity Date as modified by this Amendment. The "EFFECTIVE
DATE" shall mean the date on which the Interim Financing Order (as defined in
the DIP Loan Agreement) is entered.
(d) Upon the Effective Date, the first sentence of Section 1.3 of
the Loan Agreement shall automatically (and without further action) be deleted
and the following inserted in lieu thereof:
"Borrower shall pay interest on the outstanding principal
balance of the Loan at a floating rate per annum equal to the
Base Rate plus five percent (5.00%) (the aggregate rate referred
to as the "INTEREST Rate")."
(e) Upon the Effective Date, Section 1.5 of the Loan Agreement
shall automatically (and without further action) be deleted in its entirety and
the following inserted in lieu thereof:
SOURCES USES
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Loan : $39,540,000 Acquisition of Pool 2
Interest Reserve: $ 1,200,000 Properties: $23,500,000
Amounts Previously
Funded Prior to
this Amendment: $15,000,000
Interest Reserve: $ 1,200,000
Commitment Fee: $ 440,000
Restructuring Fee: $ 577,500
Estimated Closing Costs: $ 22,500
Total: $40,740,000 Total: $40,740,000
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Borrower shall deliver such information and documentation as
Agent shall reasonably request to verify that the sources and uses are as
indicated above. A reduction in the amounts necessary for any of the uses
indicated above shall result in an equal reduction in the amount of the Loan. In
the event that (i) Borrower does not purchase the Pool 2 Properties before the
Maturity Date and (ii) Borrower is not in default under the terms of any of the
Loan Documents, Agent shall refund to Borrower a portion of the Restructuring
Fee equal to $352,500.00.
(f) Upon the Effective Date, Borrower shall pay Agent a
restructuring fee of $577,500.00 (the "RESTRUCTURING FEE"). Borrower and DIP
Borrower have previously deposited with Agent a good faith deposit in the amount
of $300,000 relating to this Amendment. After a portion of such deposit is
applied towards the loan fee and closing costs under the DIP Loan Agreement, any
remaining portion of such deposit shall be applied towards the Restructuring Fee
pursuant to this subsection 1(f).
(g) Upon the Effective Date, Section 2.1 of the Loan Agreement
shall automatically (and without further action) be deleted in its entirety and
the following inserted in lieu thereof:
"2.1 COLLATERAL. The Loan and all other indebtedness and
obligations under the Loan Documents, as well as the DIP Loan
and all of the indebtedness and obligations of DIP Borrower
under the DIP Loan Documents, shall be secured by the following
(collectively, the "COLLATERAL"): (a) the Mortgages, (b) the
Assignments of Leases, and (c) any other collateral or security
described in this Agreement or the other Loan Documents."
(h) Upon the Effective Date, Section 7.1(a) of the Loan Agreement
shall automatically (and without further action) be amended by adding the phrase
"or the other Loan Documents" after the word "Agreement" on the fifth line.
(i) Upon the Effective Date, Section 7.1(c) of the Loan Agreement
shall automatically (and without further action) be amended by adding the phrase
", whether in this Agreement or in any other Loan Document," after the word
"warranty" on the first line.
(j) Upon the Effective Date, Section 7.1 of the Loan Agreement
shall automatically (and without further action) be amended by adding the
following new subsection: "(k) The occurrence of a default by DIP Borrower under
any of the DIP Loan Documents and the expiration of any cure period applicable
thereto."
(k) Upon the Effective Date, Section 1(a) of the First Amendment
shall automatically (and without further action) be deleted in its entirety.
(l) Agent shall use reasonable efforts to cooperate with
Borrower, at Borrower's sole expense, in connection with Borrower's efforts to
cause the Pool 2 Properties to become Included Properties as soon as reasonably
practicable.
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(m) Upon the Effective Date, Borrower shall execute and deliver
to Agent (i) an Amended and Restated Promissory Note A in the original principal
amount of $26,481,000.00, (ii) an Amended and Restated Subordinated Promissory
Note B in the original principal amount of $14,259,000.00, and (iii) a First
Amendment to each of the Mortgages, which shall be recorded at Borrower's
expense.
(n) This Amendment and each of the documents executed in
connection herewith shall be deemed to be Loan Documents. Any and all references
in the Loan Documents to the "Loan", the "Loan Agreement" or the "Loan
Documents" shall mean the Loan, the Loan Agreement, or the Loan Documents,
respectively, as amended hereby. Any and all references in the Loan Documents to
the "Mortgages" shall mean the Mortgages as amended by the First Amendments to
such Mortgages referenced in subsection 1(m) above. Any and all references in
the Loan Documents to the "Notes" shall mean the Amended and Restated Notes
referenced in subsection 1(m) above.
2. TAKEOUT LOAN TERMS AND CONDITIONS. Provided that Borrower has
satisfied all of the Takeout Loan Conditions (defined below), the Loan shall be
automatically (and without further action) amended on the Maturity Date pursuant
to the terms and conditions provided below (such amended Loan is hereinafter
referred to as the "TAKEOUT LOAN").
(a) Takeout Loan Conditions. The "TAKEOUT LOAN CONDITIONS" shall
mean each of the following conditions: (i) DIP Borrower shall not be in default
under any of the terms and conditions of the DIP Loan Agreement and the DIP Loan
shall have been paid in full concurrently with the funding of the Takeout Loan,
(ii) Borrower shall not be in default under any of the terms and conditions of
the Loan Agreement (as amended by this Amendment), (iii) the reorganization plan
for DIP Borrower shall not be materially different than the reorganization plan
described in the documents referenced in Exhibit A attached hereto (the
"REORGANIZATION PLAN"), (iv) no material adverse change shall have occurred with
respect to the Project or Takeout Borrower, (v) Xxxxxx'x credit committee shall
have granted all required approvals with respect to the Takeout Loan (the
"COMMITTEE APPROVAL") and Xxxxxx shall have provided written notice thereof to
Takeout Borrower, (vi) the funding of the Takeout Loan shall occur no later than
six (6) months after the date on which the Committee Approval was obtained, and
(vii) as of the Maturity Date, the Pool 1 Properties and Pool 2 Properties shall
provide a Loan Multiple, as determined by Agent, of not greater than 5.5. "LOAN
MULTIPLE" shall mean the principal amount of the Takeout Loan divided by the Net
Operating Income of the Pool 1 Properties and Pool 2 Properties. For purposes of
this Section 2(a), "NET OPERATING INCOME" shall have the meaning given to such
term in the Loan Agreement, except that it shall be calculated using (i)
expenses for the trailing 12 months (as reasonably adjusted by Agent),
incorporating a 5% management fee, a $300 per unit annual replacement reserve
and increases in Medicare and Medicaid rates and increases in costs of vendor
services, and (ii) annualized revenues for the trailing 3 months incorporating
an occupancy factor of the lesser of (A) actual occupancy and (B) an assumed 93%
occupancy rate. Net Operating Income shall be verified by an independent audit
at Takeout Borrower's expense.
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(b) Takeout Loan. The "TAKEOUT LOAN" shall be a refinance of the
DIP Loan and the Loan in the original principal amount of $44,000,000.00 made to
Original Borrower and ALC Texas (collectively, the "TAKEOUT BORROWER"). ALC
acknowledges and agrees that the Guaranty executed by ALC shall remain in full
force and effect with respect to the Takeout Loan.
(c) Takeout Term. The term of the Takeout Loan shall commence on
the Maturity Date (as defined in Section 1(b) of this Amendment) and terminate
thirty-six (36) months thereafter, unless sooner terminated pursuant to the
terms hereof (the "TAKEOUT TERM").
(d) Interest Rate. Takeout Borrower shall pay interest on the
outstanding principal balance of the Takeout Loan at a floating rate per annum
equal to the Base Rate plus four and one-half percent (4.50%) (the aggregate
rate referred to as the "INTEREST Rate"). "BASE RATE" shall mean the rate
published each day in The Wall Street Journal for notes maturing three (3)
months after issuance under the caption "Money Rates, London Interbank Offered
Rates (LIBOR)". The Interest Rate for each calendar month shall be fixed based
upon the Base Rate published prior to and in effect on the first (1st) business
day of such month; provided, however, the Interest Rate for the remainder of the
calendar month in which the Closing Date occurs shall be fixed based upon the
Base Rate published prior to and in effect on the first (1st) business day prior
to the Closing Date. Interest shall be calculated based on a 360 day year and
charged for the actual number of days elapsed. Notwithstanding the foregoing, in
no event shall the Interest Rate be less than eight percent (8.00%).
(e) Payments. Takeout Borrower shall make interest payments
monthly in arrears on the first (1st) day of each calendar month, commencing on
the first (1st) day of the calendar month immediately following the commencement
of the Takeout Term, computed on the outstanding principal balance of the Loan
at the Interest Rate. Takeout Borrower shall also make monthly principal
payments to Agent on the first (1st) day of each calendar month of the Takeout
Term in the following amounts during the following periods:
First Loan Year $50,000 per month
Second Loan Year $65,000 per month
Third Loan Year $80,000 per month
"LOAN YEAR" shall mean a consecutive twelve (12) month period
during the Takeout Term, commencing with the first full calendar month thereof.
(f) Sources and Uses. The sources and uses of funds for the
Takeout Loan are as follows:
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SOURCES USES
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Takeout Loan: $44,000,000 Payoff of Loan
and DIP Loan: $43,940,000
Closing Costs: $ 60,000
Total: $44,000,000 Total: $44,000,000
Takeout Borrower shall deliver such information and documentation
as Agent shall reasonably request to verify that the sources and uses are as
indicated above. A reduction in the amounts necessary for any of the uses shall
result in an equal reduction in the amount of the Takeout Loan.
(g) Commitment Fee. Takeout Borrower shall pay Agent a commitment
fee of $440,000, which fee shall be deemed fully earned by Agent upon Committee
Approval regardless of whether the Takeout Loan is funded or not. Upon Committee
Approval, such commitment fee may be disbursed to Lenders by Agent as part of
the Loan made pursuant to subsection 1(e) of this Amendment.
(h) Prepayments of Takeout Loan. Takeout Borrower may not prepay
any of the outstanding principal balance of the Takeout Loan during the first
Loan Year (the "LOCKOUT PERIOD"). Thereafter, Takeout Borrower may prepay the
outstanding principal balance of the Takeout Loan in full at any time together
with all other amounts owing under any of the Loan Documents; provided Takeout
Borrower gives Agent at least ten (10) business days prior written notice and
pays Agent, for the benefit of Lenders, the Exit Fee then due. After the Lockout
Period, Takeout Borrower may prepay the outstanding principal balance of the
Takeout Loan in part at any time upon at least ten (10) business days prior
written notice thereof to Agent. So long as no default then exists hereunder or
under any of the other Loan Documents, in connection with the sale by Takeout
Borrower of one or more of the Properties to a party that is not an Affiliate of
ALC or Borrower or the refinancing by Takeout Borrower of one or more of the
Properties, Agent shall release such Properties upon Takeout Borrower's
satisfaction of each of the following conditions precedent, each as reasonably
determined by Agent:
1. Takeout Borrower shall pay Agent, for the benefit of Lenders,
as a payment of a portion of the Indebtedness, an amount equal to the greater of
(i) the portion of the Takeout Loan reasonably allocated by Agent to each
Property to be released (which allocation shall be made by Agent upon the
funding of the Pool 2 Properties), and (ii) the net sales or refinancing
proceeds from each such Property;
2. The remaining Properties shall have achieved a Debt Coverage
Ratio (as determined by Agent) of at least 1.75 for the immediately preceding
three (3) months;
3. The remaining Properties shall have a Project Yield (as
determined by Agent) of at least 20% for the immediately preceding three (3)
months;
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4. The outstanding principal balance of the Takeout Loan after
the proposed prepayment would not be less than $10,000,000.00; and
5. Takeout Borrower shall pay Agent, for the benefit of Lenders,
the Exit Fee with respect to the Properties being released as set forth below,
together with all costs and expenses of Agent in connection with such release.
(i) Exit Fee. As additional consideration for Lenders' entering
into this Agreement and making the Takeout Loan, Takeout Borrower shall, on the
date any payment of principal under the Takeout Loan is made (whether as a
partial or full repayment of the Takeout Loan, and whether before, at or after
maturity, and whether or not as a result of a casualty or condemnation,
acceleration or otherwise), pay to Agent for the benefit of Lenders, an amount
(the "EXIT FEE") equal to (A) one percent (1%) of the principal amount being
repaid on such date plus (B) if all or any portion of the Takeout Loan is repaid
during the Lockout Period, the amount of interest Agent estimates would have
been payable under this Agreement with respect to such prepayment of the Takeout
Loan from and after the date of such prepayment through the end of the Lockout
Period.
(j) Defaults. The occurrence of any of the following events shall
constitute an Event of Default under the Loan Agreement (in addition to the
other Events of Default set forth in the Loan Agreement): (A) if at any time the
Debt Coverage Ratio for the Project (which ratio shall be determined by Agent
and calculated without consideration for any principal payments made by Takeout
Borrower) for the immediately preceding three (3) months shall fall below
1.70:1.00; or (B) if at any time the Project Yield (as determined by Agent) for
the immediately preceding three (3) months shall fall below 15%.
(k) Release of Pool 3 Properties and DIP Properties. Upon the
funding of the Takeout Loan, Agent shall release the Mortgages encumbering the
Pool 3 Properties and the DIP Properties, upon which event the Pool 3 Properties
shall no longer be deemed to be part of the Project.
(l) Secured Bondholders. Concurrently with the funding of the
Takeout Loan, ALC may encumber or cause to be encumbered properties of ALC or
its direct or indirect subsidiaries that are not then encumbered (collectively,
the "BONDHOLDER PROPERTIES") in favor of a trustee to be determined (the
"TRUSTEE") for the benefit of the holders (the "BONDHOLDERS") of the senior
notes of ALC described in the Reorganization Plan. ALC and Takeout Borrower
acknowledge and agree that the Bondholder Properties shall have an aggregate
Property Value of no more than $75,000,000.00. The "PROPERTY VALUE" of a
Bondholder Property shall mean the product of 6.50 multiplied by the EBITDA of
such Bondholder Property over the six (6) months immediately preceding the
Maturity Date multiplied by two (2); provided however, if any Bondholder
Property has an EBITDA of less than zero, it shall be deemed to have a Property
Value equal to $10,000.00 per unit. The "EBITDA" of a Bondholder Property shall
have the meaning set forth on Exhibit B attached hereto. Provided that the
aggregate Property Value of all of the then-unencumbered properties of ALC and
its direct and indirect subsidiaries is less than $75,000,000 (such difference
being referred to as the "DEFICIENCY"), the Trustee, for the benefit of the
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Bondholders, may take a second mortgage (collectively, the "JUNIOR Mortgages"),
to secure the obligations of ALC and certain of its Affiliates under the senior
notes held by the Bondholders, encumbering certain of the Properties which have
an aggregate Property Value of no more than the Deficiency; provided, however,
such Junior Mortgages shall be in an aggregate amount not greater than the
Deficiency and shall be subordinated to the Mortgages on such Properties
pursuant to a "flat-on-your-back" subordination agreement acceptable to Agent in
its sole discretion. The Property Value of a Property shall be calculated in the
same manner as that of a Bondholder Property, less the then outstanding
principal balance of the amount of the Takeout Loan previously allocated by
Agent to such Property.
(m) Other Terms. Unless explicitly provided to the contrary in
this Amendment, all of the provisions of the Loan Agreement shall apply to the
Takeout Loan.
3. ACKNOWLEDGMENT AND AGREEMENT OF BORROWER AND ALC. Borrower and
ALC hereby acknowledge and agree that: (a) Neither ALC nor Borrower has any
defense, offset or counterclaim with respect to the payment of any sum owed to
Lenders, or with respect to the performance or observance of any warranty or
covenant contained in any of the other Loan Documents; and (b) Lenders have
performed all obligations and duties owed to Borrower through the date hereof.
In consideration of the mutual covenants herein contained, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, each of Borrower and ALC, for itself and on behalf of all present
and former officers, directors, stockholders, agents, employees, predecessors,
subsidiaries, affiliates, successors and assigns (all of the foregoing hereafter
collectively referred to as "RELEASORS") have fully and forever remised,
released and discharged and do hereby fully and forever remise, release and
discharge Agent and Lenders, and each and all of their respective subsidiaries
and affiliated corporations, companies, divisions, predecessors, successors and
assigns, and each and all of their respective directors, officers, employees,
attorneys, accountants, consultants, and other agents, of and from all manner of
actions, cause and causes of action, suits, debts, sums of money, accounts,
reckonings, bonds, bills, specialties, covenants, contracts, controversies,
agreements, promises, judgments, executions, claims and demands of whatsoever,
whether or not concealed or hidden, arising out of or relating to any matter,
cause or thing whatsoever, which the Releasors, jointly or severally, have had,
may have had, or now have, or which the Releasors, jointly or severally,
hereafter can, shall or may have, for or by reason of any matter, cause or thing
whatsoever, whenever arising, to and including the date of this Amendment.
4. REPRESENTATIONS AND WARRANTIES. To induce Lenders to amend the
Loan Documents, Borrower and ALC represent and warrant to Lender that:
(a) Representations and Warranties. On the date hereof, the
representations and warranties set forth in the Loan Documents are true and
correct with the same effect as through such representations and warranties had
been made on the date hereof, except to the extent that such representations and
warranties expressly relate to an earlier date, or, in the case of ALC or
Carriage House, to the extent such representations and warranties are rendered
untrue as a result of, or in connection with, the Bankruptcy Case (as defined in
the DIP Loan Agreement).
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(b) Authority. Subject to any required approval by the Bankruptcy
Court (as defined in the DIP Loan Agreement), Borrower and ALC have full power
and authority to consummate this Amendment, and have full power and authority to
incur and perform the obligations provided for under this Amendment, all of
which have been duly authorized by all proper and necessary corporate action. No
consent or approval of shareholders or of any public authority or regulatory
body (other than the Bankruptcy Court) which has not been obtained is required
as a condition to the validity or enforceability of this Amendment.
(c) Amendment as Binding Agreement. This Amendment constitutes
the valid and legally binding obligation of Borrower and ALC respectively, fully
enforceable against Borrower and ALC respectively, in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting creditor's
rights generally or by equitable principles relating to enforceability.
(d) No Conflicting Agreements. The execution and performance by
Borrower and ALC of this Amendment, will not (i) to the best of Borrower's and
ALC's knowledge, violate any provision of law or any order of any court or other
agency of government; or (ii) violate the Incorporation Documents or any
material indenture, contract, agreement or other instrument to which Borrower or
ALC is a party, or by which any of their respective property is bound, or be in
conflict with, result in a breach of or constitute (with due notice and or lapse
of time) a default under, any such material indenture, contract, agreement or
other instrument; or (iii) result in the creation or imposition of any lien,
charge or encumbrance of any nature whatsoever upon any of the property or
assets of Borrower or ALC, other than in favor of Lenders.
(e) Solvency; No Change. No Borrower is insolvent, and there has
been no (i) assignment for the benefit of creditors of any of them, (ii)
appointment of a receiver for any of them or their property, or (iii)
bankruptcy, reorganization, or liquidation proceeding instituted by or against
any of them. Since the filing with the Securities Exchange Commission of ALC's
10-Q Report for the three months ended March 31, 2001, there has been no
material adverse change in the structure, business operations, credit prospects
or financial condition of Borrower or the Project, except for the filing of the
Bankruptcy Case.
5. EFFECTIVENESS OF THIS AMENDMENT. In the event of any conflict
between the terms of any Loan Document and this Amendment, this Amendment shall
prevail.
6. EFFECT ON LOAN DOCUMENTS. Except as specifically amended
hereby, the terms and provisions of the Loan Documents are in all other respects
ratified and confirmed and remain in full force and effect. No reference to this
Amendment need be made in any notice, writing or other communication relating to
the Loan Documents, any reference to a Loan Document shall be deemed to be a
reference thereto as amended by this Amendment.
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7. FEES AND EXPENSES. Borrower hereby agrees to pay all
reasonable expenses incurred by Agent and/or Lenders in connection with the
preparation, negotiation and consummation of this Amendment (including without
limitation, the funding of the Pool 2 Properties and the Takeout Loan), and all
other documents related hereto, including, without limitation, the reasonable
fees and expenses of Agent and/or Lenders' counsel and paralegals, and any
filing fees, title insurance premiums, and recordation tax required in
connection with the filing of any documents necessary to consummate the
provisions of this Amendment (including without limitation, the funding of the
Pool 2 Properties and the Takeout Loan). Without limiting the foregoing in any
way, in the event that the amount of closing costs in connection with this
Amendment exceeds amounts paid through proceeds of the Loan pursuant to Section
1(d) above, Borrower shall promptly pay such excess to Agent upon demand
therefor by Agent.
8. NO CUSTOM. This Agreement shall not establish a custom or
course of dealing or waive, limit or condition the rights and remedies of Agent
and/or Lenders under the Loan Documents, all of which are expressly reserved.
9. GOVERNING LAW. This Amendment shall be construed in accordance
with and governed by the laws of the State of Illinois, without regard to the
conflict of laws principles thereof.
10. COUNTERPARTS. This Amendment may be executed in any number of
counterparts, each of which shall be deemed original and all of which taken
together shall constitute one and the same Amendment.
11. SEVERABILITY. If any provision of this Amendment or the
application thereof to any party or circumstance is held to be invalid or
unenforceable, the remainder of this Amendment and the application of such
provision to other parties and circumstances will not be affected thereby, the
provisions of this Amendment being severable in any such instance.
12. MODIFICATIONS. This Amendment may not be modified, amended,
waived, changed or terminated orally, but only by an agreement in writing signed
by the party against whom the enforcement of the modification, amendment,
waiver, change or termination is sought.
13. PRINCIPAL'S AGREEMENTS. In connection with the Loan, ALC has
made, executed and delivered to Agent that certain Guaranty dated February 20,
2001 and that certain Hazardous Materials Indemnity Agreement dated February 20,
2001 (as amended, collectively, the "PRINCIPAL'S AGREEMENTS"). ALC expressly
reaffirms and ratifies its continuing obligations made under all of the
Principal's Agreements. All of the waivers set forth in the Principal's
Agreements are hereby incorporated herein by reference.
[SIGNATURES APPEAR ON NEXT PAGE]
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12
IN WITNESS WHEREOF, the parties hereto have executed this
Amendment or have caused the same to be executed by their duly authorized
representatives as of the date first above written.
BORROWER:
ALC OHIO, INC., a Nevada corporation
By:
-------------------------------
Xxxx X. Xxxxxx, Treasurer
ALC PENNSYLVANIA, INC.,
a Nevada corporation
By:
-------------------------------
Xxxx X. Xxxxxx, Treasurer
ALC IOWA, INC.,
a Nevada corporation
By:
-------------------------------
Xxxx X. Xxxxxx, Treasurer
ALC NEBRASKA, INC.,
a Nevada corporation
By:
-------------------------------
Xxxx X. Xxxxxx, Treasurer
ALC NEW JERSEY, INC.,
a Nevada corporation
By:
-------------------------------
Xxxx X. Xxxxxx, Treasurer
ALC INDIANA, INC.,
a Nevada corporation
By:
-------------------------------
Xxxx X. Xxxxxx, Treasurer
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ALC:
ASSISTED LIVING CONCEPTS, INC., a Nevada
corporation and Chapter 11 debtor-in-possession
By:
---------------------------------------------
Name:
-------------------------------------------
Its:
--------------------------------------------
AGENT AND LENDER:
XXXXXX HEALTHCARE FINANCE, INC., a Delaware
corporation, as Agent and a Lender
By:
---------------------------------------------
Name:
-------------------------------------------
Its:
--------------------------------------------
14
EXHIBIT B
EBITDA
"EBITDA" for any period for a particular assisted living facility means the net
income (as calculated in accordance with generally accepted accounting
principles) for such period attributable to that facility of the entity owning
such facility plus the following to the extent deducted in calculating such net
income:
(1) income tax expense;
(2) the consolidated interest expense of the entity that owns such
facility or, if such entity owns more than one facility or has
subsidiaries or other assets, the proportion of consolidated interest
expense equal to the proportion of the fair market value of the assets
of such entity represented by such facility;
(3) depreciation expense related to such facility;
(4) amortization expense related to such facility; and
(5) any management fee paid with respect to such facility to ALC or any
wholly owned subsidiary of ALC.
