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Exhibit 99.2
EXHIBIT 99.2 - PAGE 1
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Exhibit 99.2
PLAN SUPPORT AGREEMENT
This Plan Support Agreement ("Agreement"), dated as of September
28, 2001, is entered into by and among Assisted Living Concepts, Inc. ("ALC"),
Carriage House Assisted Living, Inc. ("Carriage House, and together with ALC,
the "Company"), the undersigned subsidiaries and affiliates of ALC (the
"Non-Filing Subsidiaries") and the undersigned holders ("Consenting Holders") of
the Company's $86,250,000, 6% Convertible Subordinated Debentures due 2002 (the
"6% Notes") and $75,000,000, 5.625% Convertible Subordinated Debentures due 2003
(the "5.625% Notes," and collectively with the 6% Notes, the "Notes").
WHEREAS, pursuant to an Indenture dated as of October 24, 1997
(the "6% Notes Indenture"), ALC issued the 6% Notes;
WHEREAS, pursuant to an Indenture dated as of April 13, 1998 (the
"5.625% Notes Indenture," and collectively with the "6% Notes Indenture," the
"Indentures"), ALC issued the 6% Notes;
WHEREAS each Consenting Holder is a direct holder of the Notes or
is an investment manager or advisor for certain discretionary accounts that are
holders or beneficial owners of the Notes, in either case in the principal
amount set forth on the signature page hereto with respect to such Consenting
Holder;
WHEREAS, certain of the Consenting Holders have formed an ad hoc
committee for the purpose of negotiating with the Company (the "Noteholders
Committee") and have engaged Milbank, Tweed, Xxxxxx & XxXxxx LLP ("Milbank") as
legal counsel and Xxxxxx Capital Partners ("Xxxxxx") as financial advisors;
WHEREAS, the Company and the Noteholders Committee have engaged
in good faith negotiations with the objective of reaching an agreement with
regard to a financial reorganization of the Company;
WHEREAS, the Company and the Consenting Holders now desire to
implement a financial restructuring of the Company on the terms set forth in
this Agreement and in the Term Sheet ("Term Sheet") attached hereto as Schedule
1 (the "Financial Restructuring");
WHEREAS, in order to implement the Financial Restructuring, the
Company has determined: (i) to commence cases for the Company (collectively, the
"Chapter 11 Cases") under chapter 11 of the United States Bankruptcy Code (the
"Bankruptcy Code") in the United States Bankruptcy Court for the District of
Delaware or another district acceptable to the Company and the Committee (the
"Bankruptcy Court"); (ii) to prepare and file in the Chapter 11 Cases
concurrently with their commencement a plan of reorganization (the "Plan") and
accompanying disclosure statement (the "Disclosure Statement") for the purpose
of implementing the Financial Restructuring in accordance with this Agreement
and the Term
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Sheet; and (iii) to have the Disclosure Statement approved and Plan confirmed by
the Bankruptcy Court in accordance with the timetable provided herein; and
WHEREAS, ALC has (or, as of the date the Chapter 11 Cases are
commenced (the "Petition Date") will have) obtained from T and F Properties,
L.P., Health Care Properties, Inc., Transatlantic Capital LLC and Xxxxxx
Healthcare Financial waivers with respect to any defaults that will exist as of
the Petition Date under their contracts or leases with the Non-Filing
Subsidiaries, or that will arise as a result of the commencement of the Chapter
11 Cases, and the Company represents and warrants that no other material
defaults will arise under contracts or leases of the Non-Filing Subsidiaries as
a result of the commencement of the Chapter 11 Cases;
WHEREAS, as a result of having obtained said waivers or releases,
the Non-Filing Subsidiaries will not commence chapter 11 cases;
WHEREAS, each of the Consenting Holders is prepared to commit to
vote its claims (as defined in the Bankruptcy Code) arising under the Notes held
by such Consenting Holder (for each such Consenting Holder, the "Note Claims")
and the amount of any other claim(s) against the Company that any Consenting
Holder may hold, as of the Petition Date, in a capacity other than as a holder
of Notes, to accept the Plan, subject to the terms and conditions of this
Agreement and the Term Sheet;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Company, the Non-Filing Subsidiaries and the Consenting Holders agree as
follows:
1. Restriction on Transfer. Each Consenting Holder agrees that, so
long as this Agreement has not been terminated in accordance with Paragraph 7
hereof, it will not sell, transfer or assign any of its Notes or Note Claims
unless the transferee thereof agrees in writing to be bound by all the terms of
this Agreement (the "Transferee Agreement"). The Consenting Holder shall deliver
the Transferee Agreement to the Company within five business days after the
sale, transfer or assignment, as appropriate, of any of its Notes or Note
Claims. The provisions of this paragraph are for the benefit of the Company and
each Consenting Holder. Any failure by LTC Healthcare, Inc., LTC Properties,
Inc., or National Health Investors, Inc. to obtain and deliver to the Company a
Transferee Agreement in connection with any transfer of Notes or Note Claims by
such entity shall render such transfer null and void.
2. Preparation of Restructuring Documents. As set forth in the Term
Sheet, the Company shall deliver to the Consenting Holders for their review and
approval the Plan, the Disclosure Statement, any motions that the Company
intends to file and have heard by the Bankruptcy Court within the first days
following the commencement of the Chapter 11 Cases, the Bankruptcy Court orders
to be prepared in connection therewith, and all other documents or agreements to
be executed or implemented in connection therewith, or otherwise contemplated
by, the Financial Restructuring, each of which documents and agreements shall be
consistent in all material respects with this Agreement and the Term Sheet
(collectively, the "Restructuring Documents"). The Company shall coordinate with
the Consenting Holders in preparing the Restructuring Documents and shall afford
Milbank a reasonable opportunity to review and
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comment upon the Restructuring Documents prior to their filing with the
Bankruptcy Court (as further described in the Term Sheet). The Company and the
Consenting Holders agree that (a) the negotiation of this Agreement and the
attached Term Sheet, and (b) the delivery of any information by the Company to
the Consenting Holders in connection with this Agreement and the attached Term
Sheet are not intended by the Company to be a solicitation of the Consenting
Holders' approval of any plan of reorganization within the meaning of Section
1125 of the Bankruptcy Code. The Company and the Consenting Holders further
agree that this Agreement is not a financial accommodation contract that would
be unenforceable under Section 365(c)(2) of the Bankruptcy Code, and each agrees
not to take any contrary position in the Chapter 11 Cases.
3. Covenants Regarding Timetable. The Company and the Consenting
Holders, as applicable, each agree that it will take all reasonable steps
necessary and desirable to adhere to the timetable set forth in the Term Sheet
for the delivery of documents, the commencement of the Chapter 11 Cases, the
filing of the Plan and Disclosure Statement, the scheduling of hearings to
approve the Disclosure Statement and confirm the Plan and the occurrence of the
Effective Date of the Plan.
4. Certain Other Covenants. The Company and the Non-Filing
Subsidiaries agree that they shall take all reasonable steps necessary and
desirable to obtain any and all required regulatory and/or third party approvals
for the Financial Restructuring.
5. Voting. Provided that no Agreement Termination Event (as defined
below) has occurred each Consenting Holder agrees that it shall timely vote (or
shall cause or instruct any custodial agent to so vote) its Note Claims, and any
other claims against the Company that it might possess, to accept the Plan and
shall not revoke or withdraw such vote.
6. Support of the Financial Restructuring; Additional Covenants. As
long as this Agreement has not been terminated in accordance with Paragraph 7
hereof, the Company will take all necessary and appropriate actions to achieve
confirmation of the Plan, including, upon approval of the Disclosure Statement
by the Bankruptcy Court, recommending to the holders of claims and interests
impaired under the Plan that they vote to approve the Plan. As long as this
Agreement has not been terminated in accordance with Paragraph 7 hereof, neither
the Company nor any Consenting Holder will (a) object to confirmation of the
Plan or otherwise commence or support in any way any proceeding to oppose or
alter the Plan or any of the Restructuring Documents in any way inconsistent
with this Agreement or the Term Sheet; (b) vote for, support or participate in
the formulation of any plan of reorganization or liquidation for the Company or
any of the Non-Filing Subsidiaries other than the Plan; (c) seek, solicit,
support or encourage any plan other than the Plan, or any sale, proposal or
offer of dissolution, winding up, liquidation, reorganization, merger or
restructuring of the Company or any of the Non-Filing Subsidiaries; (d) object
to the Disclosure Statement or the solicitation of consents to the Plan; or (e)
take any other action that is inconsistent with or be in derogation of this
Agreement, the Term Sheet or the Plan or that would delay confirmation of the
Plan. Notwithstanding the foregoing or anything else in this Agreement to the
contrary, no Consenting Holder shall be barred from objecting to (x) approval of
the Disclosure Statement if such Disclosure Statement contains a material
misstatement or omission or fails to contain adequate information for the
purposes of Bankruptcy Code Section 1125 or other applicable law, or (y)
confirmation of the Plan, or approval,
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execution or implementation of any Restructuring Document, if such Plan or
Restructuring Document contains terms that are materially inconsistent with this
Agreement or the Term Sheet. In addition, except as expressly provided herein,
nothing herein is intended to, or does, in any manner, waive, limit, impair, or
restrict the ability of any Consenting Holder to take steps to preserve and
assert its claims against the Company.
7. Termination of Agreement. This Agreement shall terminate
automatically upon the occurrence of any "Agreement Termination Event" (as
hereinafter defined), unless the occurrence of such Agreement Termination Event
is waived in writing by the Consenting Holders. If any Agreement Termination
Event occurs (and has not been so waived) at the time when permission of the
Bankruptcy Court shall be required for the Consenting Holders to change or
withdraw (or cause to be changed or withdrawn ) their votes to accept the Plan,
neither the Company or the Non-Filing Subsidiaries shall oppose any attempt by
any of the Consenting Holders to change or withdraw (or cause to be changed or
withdrawn) such votes at such time. Upon the occurrence of an Agreement
Termination Event, each Consenting Holder, the Company and each Non-Filing
Subsidiary shall have all rights that are available to it under the Notes, the
Indentures, applicable law or otherwise, including, without limitation, the
right to take action on account of any then existing default under the Notes or
Indentures.
An "Agreement Termination Event" shall mean any of the following:
(a) The Chapter 11 Cases to implement the Financial
Restructuring are not commenced in accordance with the timetable
contained in the Term Sheet;
(b) The Company does not, upon commencement of the Chapter 11
Cases, request that the Bankruptcy Court schedule hearings to: (1)
approve the disclosure statement by no later than 30 days after the
Petition Date; and (2) confirm the plan by no later than 75 days after
the Petition Date;
(c) All of the members of the Noteholders Committee as of the
date of this Agreement (the "Initial Consenting Holders") provide
written notice (a "Termination Notice") to the Company that the Plan or
any of the Restructuring Documents as filed by the Company or approved
in the Chapter 11 Cases contains any term that is inconsistent in any
material respect with the Financial Restructuring contemplated by and
provided for in this Agreement or the Term Sheet, or has been modified,
amended or replaced in any respect that makes it inconsistent in any
material respect with this Agreement or the Term Sheet; provided,
however, that no Agreement Termination Event shall occur if, within 5
business days of delivery of a Termination Notice, the Company cures any
such inconsistencies to the satisfaction of the Initial Consenting
Holders;
(d) The Effective Date of the Plan has not occurred on or before
February 28, 2002;
(e) The Company or any Initial Consenting Holder breaches any
other provision of this Agreement;
(f) The Chapter 11 Case of the Company is converted to a case
under chapter 7 of the Bankruptcy Code;
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(g) A chapter 11 trustee is appointed in the Chapter 11 Case;
(h) The Company suffers an Event of Default under the DIP
Facility and such Event of Default has not been waived or cured in
accordance with the terms of the DIP Facility;
(i) Any (a) written representation or warranty by the Company or
its advisors, (b) representation or warranty by Xxx Xxxxx, Xxxx Xxxxxx
or Xxxxxx Xxxxxxxx, or (c) representation or warranty by any members of
the Company's Board of Directors in meetings between the Company, the
Board of Directors and the Noteholders Committee, in all cases made to
the Noteholders Committee or its representatives, or in connection with
this Agreement or the Term Sheet (including without limitation
representations relating to the Company's financial performance), is
false or misleading in any material respect when made; or
(j) A material adverse change occurs or is discovered with
respect to the assets, liabilities, business operations or financial
condition of the Company or any of the Non-Filing Subsidiaries after the
date of this Agreement, but not including, however, any material adverse
change that occurs solely by reason of the filing of the Chapter 11
Case.
8. Specific Performance. It is understood and agreed by each of the
parties hereto that money damages would not be a sufficient remedy for any
breach of this Agreement by any party and each non-breaching party shall be
entitled, in addition to any other remedies, to the remedy of specific
performance and injunctive or other equitable relief as a remedy for any such
breach, without the necessity of securing or posting a bond or other security in
connection with such equitable relief.
9. Good Faith Negotiation of Restructuring Documents. The Company
and each Consenting Holder covenants and agrees to negotiate in good faith the
Restructuring Documents, which the Company covenants will be, in all material
respects, consistent with this Agreement and the Term Sheet.
10. Representations and Warranties. The Company and each Non-Filing
Subsidiary, on the one hand, and each of the Consenting Holders, on the other,
represents and warrants to the other that the following statements are true,
correct and complete as of the date hereof:
(a) Corporate Power and Authority. It has all requisite power and
authority to enter into this Agreement and to carry out the transactions
contemplated by, and perform its respective obligations under, this Agreement;
(b) Authorization. The execution and delivery of this Agreement
and the performance of its obligations hereunder have been duly authorized by
all necessary action on its part, and the Company and each of the Non-Filing
Subsidiaries further represents that the Financial Restructuring, this Agreement
and the attached Term Sheet have been approved in writing by the Boards of
Directors or similar governing bodies of the Company and the Non-Filing
Subsidiaries;
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(c) No Conflicts. The execution, delivery and performance by it
of this Agreement do not and shall not (i) violate any provision of law, rule or
regulation applicable to it or any of its subsidiaries or its certificate of
incorporation or by-laws or partnership agreements or those of any of its
subsidiaries or (ii) conflict with, result in a breach of or constitute (with
due notice or lapse of time or both) a default under any material contractual
obligation to which it or any of its subsidiaries is a party or under its
certificate of incorporation or by-laws and which has not been waived as of the
date hereof; except however that the filing of the Chapter 11 Cases, and the
implementation of the Financial Restructuring, may constitute events of default
under certain of the Company's contracts.
(d) Governmental Consents. The execution, delivery and
performance by it of this Agreement do not and shall not require any
registration or filing with, consent or approval of, or notice to, or other
action to, with or by, any Federal, state or other governmental authority or
regulatory body, except such filings as may be necessary and/or required for
disclosure by the Securities and Exchange Commission, in connection with the
commencement of the Chapter 11 Cases and the approval of the Disclosure
Statement and confirmation of the Plan; and
(e) Binding Obligation. This Agreement is the legally valid and
binding obligation of it, enforceable against it in accordance with its terms,
except as enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or limiting creditors' rights
generally or by equitable principles relating to enforceability.
11. Employment, Consulting and Other Contracts. The Company shall
not enter into or assume (as that term is used in Section 365 of the Bankruptcy
Code) any employment, consulting or similar contracts ("Employment Contracts")
without the prior agreement of the Noteholders Committee; provided, however,
that the Company shall be permitted to enter into or assume any Employment
Contract the term of which is not more than six months and that provides for
aggregate compensation of not more than $50,000.
12. Further Acquisition of Securities. This Agreement shall in no
way be construed to preclude any of the Consenting Holders from acquiring
additional Notes. However, any and all rights and claims obtained by a
Consenting Holder with respect to, on account of or pursuant to any subsequently
acquired Notes shall automatically be deemed to be Note Claims and to be subject
to the terms of, and the obligations of such Consenting Holder under, this
Agreement and the Term Sheet.
13. Effectiveness; Amendments. This Agreement shall not become
effective and binding on the parties hereto unless and until counterpart
signature pages to this Agreement have been executed and delivered by the
Company, the Non-Filing Subsidiaries and the undersigned Consenting Holders.
Once effective, this Agreement may not be modified, amended or supplemented
except in writing signed by the Company, the Non-Filing Subsidiaries and the
undersigned Consenting Holder.
14. Disclosure of Individual Holdings. Prior to the commencement by
the Company of the Chapter 11 Cases, and unless required by applicable law or
regulation, neither the Company nor the Non-Filing Subsidiaries or their
respective representatives shall disclose the holdings of Note Claims of any of
the Consenting Holders without the prior written consent of
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such Consenting Holder. If disclosure is so required by law or regulation, the
Company and the Non-Filing Subsidiaries shall afford each of the Consenting
Holders a reasonable opportunity to review and comment upon any such disclosure
prior to the making such disclosure. The foregoing shall not prohibit the
Company from disclosing the approximate aggregate holdings of Notes of all
Consenting Holders.
15. Accredited Investors. Each Consenting Holder represents that (a)
it is a sophisticated investor with respect to the transactions described herein
with sufficient knowledge and experience in owning and investing in securities
similar to the Notes held by such Consenting Holder to evaluate properly the
transactions contemplated by this Agreement and it has made its own analysis and
decision to enter in this Agreement; and (b) it is an "accredited investor"
within the meaning of Section 2(a)(15) of the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
16. Impact of Appointment to Creditors Committee. Notwithstanding
anything herein to the contrary, in the event that any Consenting Holder is
appointed to and serves on a committee of creditors in the Company's Chapter 11
Cases, the terms of this Agreement shall not be construed so as to limit such
Consenting Holder's exercise, in its sole discretion, of its fiduciary duties,
if any, to any person or entity arising from its service on such committee, and
any such exercise of such fiduciary duties shall not be deemed to constitute a
breach of the terms of this Agreement; provided, however, that the fact of such
service on such committee (a) shall not otherwise affect the continuing validity
or enforceability of this Agreement and (b) shall not modify or limit the
obligations of such individual Consenting Holder to vote its Subject Claims to
accept the Plan, provided that no Agreement Termination Event has occurred and
this Agreement remains in effect.
17. Official Unsecured Creditors Committee. In conjunction with the
Chapter 11 Case and pursuant to either Sections 1102(a)(1) or (a)(2) of the
Bankruptcy Code, the Company shall support the appointment of an official
committee comprised of Consenting Holders and such other holders of unsecured
claims as may be appointed by the Office of United States Trustee (the "Official
Committee"). The Official Committee shall, subject to compliance with the
applicable provisions of the Bankruptcy Code, be entitled to retain Milbank and
Xxxxxx to represent the Official Committee and assist in the prosecution of the
Plan and related matters. In the event that the Official Committee does not
retain Milbank or Xxxxxx, the Company shall actively support the approval, under
Section 503(b) of the Bankruptcy Code, of the payment of the reasonable costs
and fees incurred by Milbank and Xxxxxx on behalf of the Noteholders Committee.
18. Governing Law; Jurisdiction. This Agreement shall be governed by
and construed in accordance with the internal laws of the State of Oregon
without regard to any conflicts of law provision that would require the
application of the law of any other jurisdiction. By its execution and delivery
of this Agreement, each of the parties hereto hereby irrevocably and
unconditionally agrees for itself that any legal action, suit or proceeding
against it with respect to any matter under or arising out of or in connection
with this Agreement or for recognition or enforcement of any judgment rendered
in any such action, suit or proceeding, may be brought in the U. S. District
Court sitting in Portland Oregon. By execution and delivery of this Agreement,
each of the parties hereto hereby irrevocably accepts and submits itself to the
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nonexclusive jurisdiction of such court, generally and unconditionally, with
respect to any such action, suit or proceeding. Notwithstanding the foregoing
consent to jurisdiction, upon the commencement of the Company's Chapter 11 Case,
each of the parties hereto hereby agrees that the Bankruptcy Court shall have
exclusive jurisdiction of all matters arising out of or in connection with this
Agreement.
19. Fees and Expenses. The Company shall perform and shall not
terminate its fee agreements with Milbank and Xxxxxx except as otherwise
provided in the applicable engagement agreements. Five (5) business days prior
to the date that the Company commences the Chapter 11 Cases, the Company shall
pay in full any outstanding bills, plus an estimate of unbilled fees and costs
up to the filing of the voluntary chapter 11 petition, of Milbank and Xxxxxx;
provided that Milbank's invoice(s) shall be accompanied by a written (or
electronic) confirmation from Milbank that the Consenting Holders have approved
payment of such invoice. Such confirmation shall simultaneously be delivered to
the Consenting Holders. If any party brings an action against any other party
based upon a breach by such other party of its obligations under this paragraph,
the prevailing party shall be entitled to all reasonable expenses incurred,
including reasonable attorneys', accountants' and financial advisors' fees in
connection with such action.
20. Notices. All notices and consents hereunder shall be in writing
and shall be deemed to have been duly given if personally delivered by courier
service, messenger, or telecopy, or initially deposited in the mails, by
certified or registered mail, postage prepaid return receipt requested, to the
following addresses, or such other addresses as may be furnished hereafter by
notice in writing, to the following parties:
(a) if to the Company, to:
Assisted Living Concepts, Inc.
00000 XX XxxxxXxxxxx Xxxxx, Xxxxxxxx X
Xxxxxxxx, Xxxxxx 00000-0000
Fax: (000) 000-0000
Attention: Wm. Xxxxx Xxxxx
With a copy (which shall not constitute service) to:
Xxxxxx & Xxxxxxx
000 Xxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx
(b) if to any Consenting Holder, to such Consenting Holder at
the address and fax number shown for such holder on the
applicable signature page hereto, to the attention of the
person who has signed this Agreement on behalf of such
holder,
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With a copy to:
Milbank, Tweed, Xxxxxx & XxXxxx LLP
000 X. Xxxxxxxx Xx., 00xx Xxxxx
Xxx Xxxxxxx, XX 00000
Fax: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Attention: Xxxxx X. Xxxxxx, Esq.
21. Survival. Notwithstanding the sale of its Note Claims in
accordance with Paragraph 1 hereof or the termination of the Consenting Holders'
obligations hereunder in accordance with Paragraph 7 hereof, the Company and the
Non-Filing Subsidiaries' obligations and agreements set forth in Paragraphs 8,
14, 18, 19, 22 and 32 hereof shall survive such termination and shall continue
in full force and effect.
22. Reservation of Rights. This Agreement and the Term Sheet are
part of a proposed settlement of a dispute among the parties hereto. Except as
expressly provided in this Agreement and the Term Sheet: (a) nothing herein is
intended to, or does, in any manner waive, limit, impair or restrict the ability
of the Company, the Non-Filing Subsidiaries each Consenting Holder and any
trustee under the Notes and Indentures to protect and preserve its rights,
remedies and interests, including without limitation, its claims against the
other; and (b) nothing contained herein effects a modification of the rights of
the Company, the Non-Filing Subsidiaries and the Consenting Holders or any
trustee under the Notes and Indentures, unless and until the Plan is confirmed
and the Financial Restructuring becomes effective. If the transactions
contemplated herein are not consummated, or if this Agreement is terminated for
any reason, the parties hereto fully reserve any and all of their rights.
Pursuant to Federal Rule of Evidence 408 and any applicable state rules of
evidence, this Agreement and all negotiations relating thereto shall not be
admissible into evidence in any proceeding other than a proceeding to enforce
its terms.
23. Representation by Counsel. Each party hereto acknowledges that
it has been represented by counsel in connection with this Agreement and the
transactions contemplated by this Agreement. Accordingly, any rule of law or any
legal decision that would provide any party hereto with a defense to the
enforcement of the terms of this Agreement against such party based upon lack of
legal counsel, shall have no application and is expressly waived.
24. Consideration. It is hereby acknowledged by the parties hereto
that, other than the Company's and the Non-Filing Subsidiaries' agreements,
covenants, representations and warranties, as more particularly set forth herein
and in the Term Sheet, no consideration shall be due or paid to the Consenting
Holders for their agreement to vote to accept the Plan in accordance with the
terms and conditions of this Agreement.
25. Acknowledgment. This Agreement is not and shall not be deemed to
be a solicitation for the tender or exchange of the Notes, a solicitation for
waivers to the Notes or the Indenture, or a solicitation for consents to the
Plan. The acceptance of the Consenting Holders will not be solicited until such
Parties have received the Disclosure Statement and related ballots, as approved
by the Bankruptcy Court.
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26. Headings. The headings of the paragraphs and subparagraphs of
this Agreement are inserted for convenience only and shall not affect the
interpretation hereof.
27. Successors and Assigns. This Agreement is intended to bind and
inure to the benefit of the parties and their respective successors, assigns,
heirs, executors, administrators and representatives.
28. Several, Not Joint, Obligations. The agreements, representations
and obligations of the Consenting Holders under this Agreement and the Term
Sheet are, in all respects, several and not joint.
29. Prior Negotiations. This Agreement and the Term Sheet constitute
the entire agreement and understanding between the parties hereto and supersede
all prior discussions, agreements and undertakings, written or oral, of any kind
and every nature, with respect to the subject matter hereof. Each party to this
Agreement represents that it has read this Agreement and the Term Sheet and has
had the terms used herein and the consequences hereof explained to it by legal
counsel.
30. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which shall
constitute one and the same
31. Agreement. Delivery of an executed counterpart of a signature
page to this Agreement by facsimile transmission shall be effective as delivery
of a manually executed counterpart thereof.
32. No Third-Party Beneficiaries. Unless expressly stated herein,
this Agreement shall be solely for the benefit of the parties hereto, and no
other person or entity shall be a third party beneficiary hereof.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed and delivered by its duly authorized officer as of the
date first above written.
THE COMPANY
ASSISTED LIVING CONCEPTS, INC. CARRIAGE HOUSE ASSISTED LIVING,
INC.
By: /s/ Wm. Xxxxx Xxxxx By: /s/ Wm. Xxxxx Xxxxx
------------------------------- -------------------------------
Name: Wm. Xxxxx Xxxxx Name: Wm. Xxxxx Xxxxx
Title: President Title: President
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THE NON-FILING SUBSIDIARIES
ALC IOWA, INC. ALC XXXXXXXX PARTNERS, LP, A
TEXAS LIMITED PARTNERSHIP
By : ALC Texas XxXxxxxx, Inc.
By: /s/ Wm. Xxxxx Xxxxx Its: General Partner
-------------------------------
Name: Wm. Xxxxx Xxxxx
Title: President By: /s/ Wm. Xxxxx Xxxxx
-------------------------------
Name: Wm. Xxxxx Xxxxx
Title: President
ALC NEBRASKA, INC. ALC NEW JERSEY, INC.
By: /s/ Wm. Xxxxx Xxxxx By: /s/ Wm. Xxxxx Xxxxx
------------------------------- -------------------------------
Name: Wm. Xxxxx Xxxxx Name: Wm. Xxxxx Xxxxx
Title: President Title: President
ALC OHIO, INC. ALC PARIS PARTNERS, LP, A
TEXAS LIMITED PARTNERSHIP
By : ALC Texas Paris, Inc.
By: /s/ Wm. Xxxxx Xxxxx Its: General Partner
-------------------------------
Name: Wm. Xxxxx Xxxxx
Title: President By: /s/ Wm. Xxxxx Xxxxx
-------------------------------
Name: Wm. Xxxxx Xxxxx
Title: President
ALC PENNSYLVANIA, INC. ALC PLANO PARTNERS, LP, A
TEXAS LIMITED PARTNERSHIP
By : ALC Texas Plano, Inc.
By: /s/ Wm. Xxxxx Xxxxx Its: General Partner
-------------------------------
Name: Wm. Xxxxx Xxxxx
Title: President By: /s/ Wm. Xxxxx Xxxxx
-------------------------------
Name: Wm. Xxxxx Xxxxx
Title: President
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ASSISTED LIVING CONCEPTS SERVICES, INC. DMG NEW JERSEY ALC, INC.
By: /s/ Wm. Xxxxx Xxxxx By: /s/ Wm. Xxxxx Xxxxx
------------------------------- -------------------------------
Name: Wm. Xxxxx Xxxxx Name: Wm. Xxxxx Xxxxx
Title: President Title: President
DMG OREGON ALC, INC. DMG TEXAS ALC PARTNERS, LP, A
TEXAS LIMITED PARTNERSHIP
By : DMG Texas ALC, Inc.
By: /s/ Wm. Xxxxx Xxxxx Its: General Partner
-------------------------------
Name: Wm. Xxxxx Xxxxx
Title: President By: /s/ Wm. Xxxxx Xxxxx
-------------------------------
Name: Wm. Xxxxx Xxxxx
Title: President
HOME AND COMMUNITY CARE, INC. TEXAS ALC PARTNERS, LP, A
TEXAS LIMITED PARTNERSHIP
By : Texas ALC, Inc.
By: /s/ Wm. Xxxxx Xxxxx Its: General Partner
-------------------------------
Name: Wm. Xxxxx Xxxxx
Title: President By: /s/ Wm. Xxxxx Xxxxx
-------------------------------
Name: Wm. Xxxxx Xxxxx
Title: President
ALC FLORIDA, INC. ALC NEVADA XXXXXXXX, INC.
By: /s/ Wm. Xxxxx Xxxxx By: /s/ Wm. Xxxxx Xxxxx
------------------------------- -------------------------------
Name: Wm. Xxxxx Xxxxx Name: Wm. Xxxxx Xxxxx
Title: President Title: President
ALC NEVADA PARIS, INC. ALC NEVADA PLANO, INC.
By: /s/ Wm. Xxxxx Xxxxx By: /s/ Wm. Xxxxx Xxxxx
------------------------------- -------------------------------
Name: Wm. Xxxxx Xxxxx Name: Wm. Xxxxx Xxxxx
Title: President Title: President
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ALC TEXAS PARIS, INC.
ALC TEXAS XXXXXXXX, INC.
By: /s/ Wm. Xxxxx Xxxxx By: /s/ Wm. Xxxxx Xxxxx
------------------------------- -------------------------------
Name: Wm. Xxxxx Xxxxx Name: Wm. Xxxxx Xxxxx
Title: President Title: President
ALC TEXAS PLANO, INC. ALCH NEVADA, INC.
By: /s/ Wm. Xxxxx Xxxxx By: /s/ Wm. Xxxxx Xxxxx
------------------------------- -------------------------------
Name: Wm. Xxxxx Xxxxx Name: Wm. Xxxxx Xxxxx
Title: President Title: President
ALCH TEXAS, INC. ALCH TEXAS PARTNERS, LP, A
TEXAS LIMITED PARTNERSHIP
By : ALCH Texas, Inc.
By: /s/ Wm. Xxxxx Xxxxx Its: General Partner
-------------------------------
Name: Wm. Xxxxx Xxxxx
Title: President By: /s/ Wm. Xxxxx Xxxxx
-------------------------------
Name: Wm. Xxxxx Xxxxx
Title: President
ALFH NEVADA, INC. ALFH TEXAS, INC.
By: /s/ Wm. Xxxxx Xxxxx By: /s/ Wm. Xxxxx Xxxxx
------------------------------- -------------------------------
Name: Wm. Xxxxx Xxxxx Name: Wm. Xxxxx Xxxxx
Title: President Title: President
ALFH TEXAS PARTNERS, LP, A DMG NEVADA ALC, INC.
TEXAS LIMITED PARTNERSHIP
By : ALFH Texas, Inc.
Its: General Partner By: /s/ Wm. Xxxxx Xxxxx
-------------------------------
Name: Wm. Xxxxx Xxxxx
By: /s/ Wm. Xxxxx Xxxxx Title: President
-------------------------------
Name: Wm. Xxxxx Xxxxx
Title: President
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DMG TEXAS ALC, INC. ELDER CARE HOME HEALTH
SERVICES INC.
By: /s/ Wm. Xxxxx Xxxxx By: /s/ Wm. Xxxxx Xxxxx
------------------------------- -------------------------------
Name: Wm. Xxxxx Xxxxx Name: Wm. Xxxxx Xxxxx
Title: President Title: President
NEVADA ALC, INC. NEVADA ALF, INC.
By: /s/ Wm. Xxxxx Xxxxx By: /s/ Wm. Xxxxx Xxxxx
------------------------------- -------------------------------
Name: Wm. Xxxxx Xxxxx Name: Wm. Xxxxx Xxxxx
Title: President Title: President
PACESETTER CAPITAL, INC. PACESETTER HOME CARE GROUP, INC.
By: /s/ Wm. Xxxxx Xxxxx By: /s/ Wm. Xxxxx Xxxxx
------------------------------- -------------------------------
Name: Wm. Xxxxx Xxxxx Name: Wm. Xxxxx Xxxxx
Title: President Title: President
PACESETTER HOME HEALTH CARE, INC. PACESETTER HOME HEALTH CARE OF
BLOOMINGTON, INC.
By: /s/ Wm. Xxxxx Xxxxx By: /s/ Wm. Xxxxx Xxxxx
------------------------------- -------------------------------
Name: Wm. Xxxxx Xxxxx Name: Wm. Xxxxx Xxxxx
Title: President Title: President
PACESETTER HOME HEALTH CARE OF PACESETTER HOSPICE, INC.
MADISON, INC.
By: /s/ Wm. Xxxxx Xxxxx By: /s/ Wm. Xxxxx Xxxxx
------------------------------- -------------------------------
Name: Wm. Xxxxx Xxxxx Name: Wm. Xxxxx Xxxxx
Title: President Title: President
PRIME HOME CARE, INC. TEXAS ALC, INC.
By: /s/ Wm. Xxxxx Xxxxx By: /s/ Wm. Xxxxx Xxxxx
------------------------------- -------------------------------
Name: Wm. Xxxxx Xxxxx Name: Wm. Xxxxx Xxxxx
Title: President Title: President
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ALF PARTNERS, LP, A
TEXAS ALF, INC. TEXAS LIMITED PARTNERSHIP
By : Texas ALF, Inc.
Its: General Partner
By: /s/ Wm. Xxxxx Xxxxx By: /s/ Wm. Xxxxx Xxxxx
------------------------------- -------------------------------
Name: Wm. Xxxxx Xxxxx Name: Wm. Xxxxx Xxxxx
Title: President Title: President
THE CONSENTING HOLDERS
LTC HEALTHCARE, INC. LTC PROPERTIES, INC.
By: /s/Xxxxx X. Xxxxxxxxxxx By: /s/ Xxxxx X. Xxxxxxxxxxx
------------------------------- -------------------------------
Xxxxx X. Xxxxxxxxxxx Xxxxx X. Xxxxxxxxxxx
Chairman and Chief Chairman and Chief
Executive Officer Executive Officer
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SUN TRUST EQUITABLE SECURITIES
FOR THE ACCOUNT OF NATIONAL HEALTH INVESTORS,
INC.
By: /s/ W. Xxxxxx Xxxxx
-------------------------------
W. Xxxxxx Xxxxx
President & CEO
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DEEPHAVEN CAPITAL MANAGEMENT
By: /s/ Xxxxx Xxxxxxxxx
-------------------------------
Xxxxx Xxxxxxxxx
Senior Vice President
JMG CAPITAL PARTNERS TRITON CAPITAL INVESTMENTS, LTD
By: /s/ Xxxxxxxx Xxxxxx By: /s/ Xxxxxxxx Xxxxxx
------------------------------- -------------------------------
Xxxxxxxx Xxxxxx Xxxxxxxx Xxxxxx
Managing Member Managing Member
JMG CAPITAL MANAGEMENT MONEY
PURCHASE PENSION PLAN
By: /s/ Xxxxxxxx Xxxxxx
-------------------------------
Xxxxxxxx Xxxxxx
Managing Member
INSIDER HOLDERS
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SCHEDULE 1
TERM SHEET
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TERM SHEET
September 28, 2001
INTRODUCTION
The members (the "Noteholders") of the unofficial committee (the "Committee") of
holders of the $86,250,000, 6% Convertible Subordinated Debentures due 2002 (the
"6% Notes") issued by Assisted Living Concepts, Inc. ("Company" or the "Debtor")
pursuant to that Indenture dated as of October 24, 1997 (the "6% Notes
Indenture"), and the $75,000,000, 5.625% Convertible Subordinated Debentures due
2003 (the "5.625% Notes," and collectively with the 6% Notes, "Notes") issued by
the Company pursuant to that Indenture dated as of April 13, 1998 (the "5.625%
Notes Indenture," and collectively with the "6% Notes Indenture," the
"Indentures"), as identified in Exhibit 1 hereto, will agree to support a
restructuring transaction (the "Transaction") for Company and those subsidiaries
identified below ("Subsidiaries"; from time to time referred to collectively
with the Company as the "Debtors") that incorporates the terms set forth below.
The terms discussed herein are part of a comprehensive compromise, each element
of which is consideration for the other elements and an integral aspect of the
proposed restructuring. This Term Sheet is proffered in the nature of a
settlement proposal in furtherance of settlement discussions, and is intended to
be entitled to protection from any use or disclosure to any party or person
pursuant to Federal Rule of Evidence 408, California Evidence Code Section 1152,
and any other applicable statutes or doctrines protecting the use or disclosure
of confidential information and information exchanged in the context of
settlement discussions. Notwithstanding the foregoing, should Company, its
Subsidiaries and the Noteholders successfully negotiate a formal Lock-Up
Agreement (the "Agreement") , this Term Sheet shall be incorporated in, form a
part of and be subject to the terms and conditions set forth in the Agreement.
TREATMENT OF CLAIMS AND INTERESTS
The Transaction will be consummated by means of the filing of chapter 11
bankruptcy cases before a bankruptcy court in the District of Delaware or other
district acceptable to the Company and the Committee, and the confirmation of a
plan of reorganization that sets forth the Transaction. The Transaction will
provide treatment for claims against and interests in Company and Subsidiaries,
including the issuance of new securities, and certain other terms generally as
described below. Unless otherwise set forth herein, each class of claims will be
satisfied in full by the delivery of the consideration described below upon
consummation of the Transaction (the "Effective Date").
The Company will commence chapter 11 cases by filing or by causing the filing of
voluntary petitions for relief under chapter 11 of the Bankruptcy Code for at
least the following entities by no later than October 1, 2001 (the "Petition
Date"): (1) the Company, (2) Carriage House Assisting Living, Inc., and (3) any
other Subsidiary whose creditors have not waived all defaults existing as of the
Petition Date under contracts or leases or that will arise as a result of the
bankruptcy of the Company or a Subsidiary . The bankruptcy petitions shall be
filed with a draft disclosure statement and a draft plan of reorganization that
are acceptable to the Committee. Upon filing, the Company shall promptly request
that the bankruptcy court schedule hearings to: (1) approve the disclosure
statement no later than 30 days after the Petition Date, and (2) confirm the
plan by no later than 75 days after the Petition Date. The parties will use
their best efforts to ensure that the Effective Date occurs on or before January
31, 2002.
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TREATMENT OF CLAIMS
MORTGAGE DEBT The Company and Committee shall jointly
examine the existing mortgage debt on a case
by case basis. The Company shall consult with
the Committee to determine which mortgage debt
should be impaired, unimpaired or refinanced.
XXXXXX DEBT Subject to the terms set forth below, the debt
owed to Xxxxxx Healthcare Financing Inc.
("Xxxxxx") shall be either (a) refinanced upon
exit from bankruptcy pursuant to terms
agreeable to the Committee or (b) amended or
modified, in a manner agreeable to the
Committee, through a plan of reorganization.
The Committee agrees that such post-petition
DIP financing shall not exceed $43.5 million,
with $23.5 million to be earmarked to finance
the Company's acquisition of the Meditrust
properties; provided, however that if the
Company does not acquire the Meditrust
properties, the DIP financing shall not exceed
$20 million.
In addition, this Term Sheet and the Agreement
are expressly conditioned on the execution of
a term sheet agreement between the Company and
Xxxxxx for the provision by Xxxxxx of DIP
financing on terms no less favorable to the
Company as those terms contained in the Xxxxxx
draft term sheet dated September 28, 2001.
OREGON TRUST DEED NOTES
WASHINGTON REVENUE BONDS
IDAHO REVENUE BONDS
OHIO REVENUE BONDS The Company and its Subsidiaries will use
commercially reasonable efforts to ensure that
no letters of credit ("L/C") are drawn down in
their entirety ("L/C Draw") by or on behalf of
holders of or the representatives of holders
of housing bonds ("Housing Bonds") that have
been issued by or for the benefit of the
Company or its Subsidiaries. With respect to
each issue of Housing Bonds, in the event that
an L/C Draw does not occur, such Housing Bonds
shall remain unimpaired by the Transaction,
and debt service will continue to be paid on
such Housing Bond obligations in the ordinary
course of business. Should an L/C Draw occur,
any remaining secured debt associated with the
L/C Draw shall be either refinanced on terms
agreeable to the Committee or amended or
modified, in a manner agreeable to the
Committee.
GENERAL UNSECURED CLAIMS Except as set forth below, on the Effective
Date, holders of allowed general unsecured
claims against the Debtors, including allowed
general unsecured claims arising from the
Notes and from the Debtors' rejection of
executory contracts and unexpired leases,
shall receive, on a pro rata basis, a
combination of new issues of senior secured
notes ("New Senior Secured Notes"), junior
secured notes ("New Junior Secured Notes" and,
collectively with the New Senior Secured
Notes, "New Notes") and common stock ("New
Common Stock") of the restructured Company
("Newco").
TRADE CLAIMS Unsecured trade debt will not be impaired and
will be paid in the ordinary course of
business.
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Holders of existing equity of the Company
("Old Equity") shall exchange their Old Equity
for New Common Stock representing 4% of the
equity of Newco.
THE NEW NOTES AND NEW COMMON STOCK
NEW SENIOR SECURED NOTES
PRINCIPAL AMOUNT $40,250,000
COLLATERAL Senior security interest in the collateral
pledged for the benefit of the holders of New
Notes (the "Note Collateral"), consisting of:
(a) a first priority security
interest in each assisted
living facility owned by the
Company or any of its
Subsidiaries that is presently
unencumbered;
(b) a first priority security
interest in each assisted
living facility owned by the
Company or any of its
Subsidiaries that becomes
unencumbered before or as of
the Effective Date; and
(c) to the extent the Note
Collateral has a fair market
value (as calculated below) of
less than $75 million, a
junior security interest in
all of Xxxxxx'x collateral (as
defined in that certain exit
financing term sheet between
the Company and Xxxxxx, dated
September 28, 2001), junior
only to Xxxxxx'x senior
security interests therein,
sufficient such that the Note
Collateral has a fair market
value of at least $75 million.
For purposes of valuing the Note Collateral,
fair market value shall be derived using a
6.5x EBITDA multiple with a minimum value for
any facility that constitutes part of the Note
Collateral of $10,000/unit.
MATURITY Seven years from the Effective Date.
INTEREST RATE 10.00% per annum cash pay, payable
semi-annually in arrears.
AMORTIZATION None.
MANDATORY REDEMPTION Newco will redeem the New Senior Secured Notes
in whole or in part (on a pro rata basis or by
pro rata offer) in cash with the net proceeds
from sales of Note Collateral.
OPTIONAL REDEMPTIONS Newco must offer to purchase the New Senior
Secured Notes in whole or in part (on a pro
rata basis) in cash, with net proceeds of
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sales of assets other than Note Collateral and
Xxxxxx collateral, and from net proceeds of
refinancings of Note Collateral or other
borrowings. In addition Newco, at its option,
can redeem all the New Senior Secured Notes at
any time after the Effective Date in cash.
COVENANTS Standard for this type of security.
NEW JUNIOR SECURED NOTES
PRINCIPAL AMOUNT $15,250,000
COLLATERAL Junior security interest in the Note
Collateral.
MATURITY 10 years from the Effective Date.
INTEREST RATE 8.00% pay-in-kind (PIK) for the first three
years post Effective Date and thereafter cash
pay at 12.00%, payable semi-annually in
arrears.
AMORTIZATION None.
MANDATORY REDEMPTION Newco will redeem the New Junior Secured Notes
after all New Senior Secured Notes in whole or
in part (on a pro rata basis) in cash with the
net proceeds from sales of Note Collateral.
OPTIONAL REDEMPTION Newco must offer to purchase the New Junior
Secured Notes after extending an offer first
to the New Senior Secured Notes in whole or in
part (on a pro rata basis) in cash, with net
proceeds of sales of assets other than Note
Collateral and Xxxxxx collateral, and from net
proceeds of refinancings of Note Collateral or
other borrowings. In addition the Newco, at
its option, can redeem all the Junior Notes at
any time after the Effective Date in cash
provided any outstanding Senior Notes are
redeemed concurrently.
New Common Stock representing all equity in
Newco not issued to holders of Old Equity.
MANAGEMENT/CORPORATE GOVERNANCE/MISC.
HIRING OF OPERATIONS CONSULTANT The Company shall immediately employ Senior
Services of America
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("Consultant") as an operational consultant on
terms and conditions acceptable to the
Committee; provided however that the
employment of Consultant shall not be cause to
delay the Petition Date.
MANAGEMENT TBD in a manner acceptable to the Committee
Management shall receive incentives in the
form of options and other compensation to be
determined by Newco's Board of Directors.
CORPORATE GOVERNANCE OF NEWCO Newco's Board of Directors will consist of 7
members, one of whom shall be either Xxxxx
Xxxx or Xxxxxxx Xxxxxxxxxx, one of whom shall
be another member of the Company's existing
Board of Directors selected by the Committee,
one of whom shall be Newco's Chief Executive
Officer, and four of whom shall be designated
by the Committee. Newco shall provide a
reasonable amount of compensation and
Directors and Officers liability insurance
coverage for each board member. The Committee
shall identify its designated members prior to
the disclosure statement hearing.
OTHER MATERIAL TERMS
RESTRUCTURING EXPENSES The Company and its Subsidiaries will pay all
reasonable expenses of the Committee and its
members in connection with the restructuring:
including (i) individual Committee members'
reasonable out-of-pocket expenses (excluding
attorneys' fees) associated with the
negotiation and, to the extent an agreement is
reached, facilitation of the anticipated
restructuring; (ii) the Committee's
professionals' reasonable fees and expenses;
and (iii) the reasonable fees and expenses of
the Trustee under each Indenture and its
counsel.
COMPANY'S COOPERATION IN
COMMITTEE'S DUE DILIGENCE The Transaction is conditioned upon the
Company's cooperation in the continuing
financial and legal due diligence review by
the Committee.
DOCUMENTATION All of the documents necessary or appropriate
to facilitate the restructuring of the Company
will be in form and substance
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satisfactory to the Company and the Committee.
MATERIAL CHANGES There shall have been no material adverse
change to the assets, liabilities or business
prospects of the Company or its Subsidiaries
or in the ability of the Company or its
Subsidiaries to perform their respective
obligations hereunder. Neither the Company or
its Subsidiaries shall engage in transactions
outside the ordinary course of business,
including the incurrence of any new
indebtedness for borrowed money, amend in any
negative way any terms of any existing
indebtedness for borrowed money or make any
payments or transfers to shareholders.
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EXHIBIT 1
MEMBERS OF UNOFFICIAL COMMITTEE OF HOLDERS OF THE $86,250,000, 6% CONVERTIBLE
SUBORDINATED DEBENTURES DUE 2002 AND THE $75,000,000, 5.625% CONVERTIBLE
SUBORDINATED DEBENTURES DUE 2003 ISSUED BY ASSISTED LIVING CONCEPTS, INC.
LTC HEALTHCARE, INC.
LTC PROPERTIES, INC.
SUN TRUST EQUITABLE SECURITIES FOR THE ACCOUNT OF NATIONAL HEALTH INVESTORS,
INC.
DEEPHAVEN CAPITAL MANAGEMENT
JMG CAPITAL PARTNERS
TRITON CAPITAL INVESTMENTS, LTD
JMG CAPITAL MANAGEMENT MONEY PURCHASE PENSION PLAN
25
