Exhibit 99.1
ASSIGNMENT AND ASSUMPTION AGREEMENT
This ASSIGNMENT AND ASSUMPTION AGREEMENT (this "Agreement") is entered into as
of December 17, 2001 (the "Effective Date"), by and between LTC Properties,
Inc., a Maryland corporation ("Assignor") and a subsidiary of LTC Healthcare,
Inc., a Nevada corporation, Healthcare Holdings, Inc., a Nevada corporation
("Assignee").
WHEREAS, Assisted Living Centers, Inc. ("ALF") a tenant of Assignor, filed
bankruptcy in the U.S. Bankruptcy Court, Chapter 11, Case Nos. 01-10670 and
01-10674 and is expected to emerge from bankruptcy on January 1, 2002. On or
before such emergence, reorganized ALF will issue new common stock, as more
fully described in the Description of the New Common Stock (hereinafter "ALF
Stock") attached to this Agreement as Exhibit "A" (the date upon which the ALF
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Stock is issued shall be referred to as the "Issuance Date");
WHEREAS, ALF filed a Disclosure Statement Accompanying Joint Plan of
Reorganization ("Plan") dated as of October 1, 2001 and First Amendment dated
October 30, 2001 with such Plan being confirmed on December 5, 2001 and expected
to become effective in the near future, with ALF Stock being issued hereunder;
WHEREAS, Assignor holds the right to receive ALF Stock (the "Stock Rights") and
desires to assign to Assignee, and Assignee desires to assume, the Stock Rights,
in accordance with the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the promises and the mutual covenants and
agreements hereinafter contained, and for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
1. Assignment and Assumption. As of the Effective Date and subject to
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receipt by Assignor of the Purchase Price as well as the full and complete
satisfaction of all other terms and conditions of both parties contained in
this Agreement, Assignor hereby assigns, and Assignee hereby assumes, the
Stock Rights.
2. Purchase Price. In consideration of the assignment of Stock Rights
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(the "Assignment") Assignee shall pay to Assignor the sum of Seven Million
and 00/100 Dollars ($7,000,000.00) (the "Purchase Price"). The Purchase
Price shall be paid by Assignee by delivery to Assignor of an executed
original promissory note effective as of the Effective Date made by
Assignee and payable to Assignor ("Note") having a face amount equal to the
Purchase Price. The Note shall be full recourse to all assets of Assignee,
secured by a pledge of Assignee's assets, which asset pledge is effective
as of the Effective Date (to be in form and substance mutually agreed upon
by the parties) (the "Asset Pledge"). Assignee shall execute and deliver to
Assignor such other items as may be reasonably requested by Assignor (or
its lenders) from time to time, evidencing and/or securing the pledge of
the assets. In addition to being secured by the Asset Pledge, the Note
shall have the following terms: (i) the Note shall bear interest at the
rate of 5% compounded annually ("Compounded Interest") and accruing to the
principal balance, plus interest at the rate of 2% on the original
principal balance of $7,000,000 and payable in cash annually; (ii) there
shall be no regular payments of principal, with all amounts (both principal
and Compounded Interest) coming due on December 31, 2006 (or earlier in the
event that Assignee defaults on its obligations and Assignor accelerates
payment), provided however to the extent that Assignee sells all or a
portion of the ALF Stock, one hundred percent (100%) of the proceeds must
be remitted to the Assignor to be applied as provided in the Note. All
other terms and conditions are to be mutually agreed upon by the parties.
3. Ownership. ALF Stock will be deemed owned by Assignee upon issuance.
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4. Representations and Warranties of Assignor Assignor hereby represents
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and warrants to Assignee as follows:
(a) The Stock Rights are being assigned to Assignee free and clear of
all liens and encumbrances.
(b) Assignor is a corporation duly organized, validly existing and in
good standing under the laws of the state of its incorporation;
(c) Assignor has full corporate power and authority to execute and
deliver this Agreement and to perform its obligations hereunder. The
execution, delivery and performance by Assignor of this Agreement (and
the other documents executed by it in connection with this Agreement
to which it is a party) have been duly authorized by all necessary
corporate action by Assignor, and this Agreement (and the other
documents executed in connection with this Agreement to which it is a
party) constitute a valid and binding obligation of Assignor,
enforceable against Assignor in accordance with its terms, subject to
the qualifications that enforcement of the rights and remedies created
hereby is subject to: (i) bankruptcy, insolvency, reorganization and
other laws of general application affecting the rights and remedies of
creditors and (ii) general principles of equity (regardless of whether
such enforcement is considered in a proceeding in equity or at law);
and
(d) The execution, delivery and performance of this Agreement (and
the other documents executed in connection with this Agreement to
which it is a party) by Assignor will not (with or without the giving
of notice or the
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passage of time, or both) (i) violate any applicable provision of law
or any rule or regulation of any administrative agency or governmental
authority applicable to Assignor, or any order, writ, injunction,
judgment or decree of any court, administrative agency or governmental
authority applicable to Assignor, (ii) violate the organizational
documents of Assignor, (iii) require any consent under or constitute a
default under any agreement, indenture, mortgage, deed of trust,
lease, license, or other instrument to which Assignor is a party or by
which Assignor is bound, or any license, permit or certificate held by
Assignor, (iv) require any consent or approval by, notice to or
registration with any governmental authority.
5. Representations and Warranties of Assignee. Assignee hereby represents
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and warrants to Assignor as follows:
(a) Assignee is a corporation duly organized, validly existing and in
good standing under the laws of the state of its incorporation;
(b) Assignee has full corporate power and authority to execute and
deliver this Agreement and to perform its obligations hereunder. The execution,
delivery and performance by Assignee of this Agreement (and the other documents
executed by it in connection with this Agreement to which it is a party) have
been duly authorized by all necessary corporate action by Assignee, and this
Agreement (and the other documents executed in connection with this Agreement to
which it is a party) constitute a valid and binding obligation of Assignee,
enforceable against Assignee in accordance with its terms, subject to the
qualifications that enforcement of the rights and remedies created hereby is
subject to: (i) bankruptcy, insolvency, reorganization and other laws of general
application affecting the rights and remedies of creditors and (ii) general
principles of equity (regardless of whether such enforcement is considered in a
proceeding in equity or at law); and
(c) The execution, delivery and performance of this Agreement (and
the other documents executed in connection with this Agreement to which it is a
party) by Assignee will not (with or without the giving of notice or the passage
of time, or both) (i) violate any applicable provision of law or any rule or
regulation of any administrative agency or governmental authority applicable to
Assignee, or any order, writ, injunction, judgment or decree of any court,
administrative agency or governmental authority applicable to Assignee, (ii)
violate the organizational documents of Assignee, (iii) require any consent
under or constitute a default under any agreement, indenture, mortgage, deed of
trust, lease, license, or other instrument to which Assignee is a party or by
which Assignor is bound, or any license, permit or certificate held by Assignee,
(iv) require any consent or approval by, notice to or registration with any
governmental authority.
6. Further Assurances. Each of the parties shall, at any time and from
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time to time after the date hereof, fairly and in good faith, do, execute,
acknowledge and deliver, or cause to be done, executed, acknowledged and
delivered, all such further acts, deeds, assignments, transfers,
conveyances, powers of attorney, receipts, acknowledgements, acceptances
and assurances as may be reasonably required to procure for each of the
parties and their respective successors and assigns, the consideration to
be delivered to them as provided for herein or otherwise to carry out the
intent and purposes of this Agreement or to consummate any of the
transactions contemplated hereby.
7. Choice of Law. This Agreement and the performance hereunder shall be
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governed by, and construed in accordance with, the laws of the State of
California, without giving effect to such State's rules governing the
conflicts of laws.
8. Notices. All notices, requests, demands and other communications which
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a party is required to or may desire to give any other party in connection
with this Agreement shall be in writing, and shall be personally delivered,
delivered by facsimile transmission, delivered by nationally recognized
overnight courier, or delivered by United States registered or certified
mail, postage prepaid with return receipt requested, addressed as follows:
If to the Assignor: LTC Properties, Inc.
-------- 000 Xxxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Attn: Xxxx Xxxxxx
000-000-0000 tel
000-000-0000 fax
With a copy (which shall not Legal Department
constitute notice) to: LTC Properties, Inc.
000 Xxxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, XX 00000
000-000-0000 tel
000-000-0000 fax
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If to Assignee: Healthcare Holdings, Inc.
-------- 000 Xxxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Attn: Xxxxx Xxxxxxx
000-000-0000 tel
000-000-0000 fax
With a copy (which shall not LTC Healthcare, Inc.
constitute notice) to: 000 Xxxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Attn: Legal Department
000-000-0000 tel
000-000-0000 fax
Any notice given in accordance with the provisions of this Section shall be
deemed delivered upon proof of delivery. If notice is given by facsimile
transmission in accordance with the provisions of this Section, said notice
shall be deemed given at the time the sender receives electronic
confirmation that the transmission has been successfully transmitted. The
addressees or addresses set forth above may be changed from time to time by
a notice sent to the other parties.
9. Amendments. This Agreement may not be amended or modified, nor may the
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rights of any party hereunder be waived, except by a written document that
is executed by each party hereto. No waiver of any provision of this
Agreement shall be deemed to constitute a waiver of any other provision
hereof, nor shall any waiver constitute a continuing waiver. The provisions
of this Agreement may be altered, amended, or repealed, in whole or in
part, only on the written consent of the parties hereto.
10. Entire Agreement. This Agreement constitutes the entire agreement
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between the parties hereto pertaining to the subject matter contained
herein and supersedes any and all other prior or contemporaneous
agreements, arrangements, and understandings, either oral or in writing,
between the parties hereto with respect to the subject matter hereof. Each
party to this Agreement acknowledges and represents that no
representations, warranties, covenants, conditions, inducements, promises
or agreements, oral or otherwise, other than as set forth herein, have been
made by any party hereto, or anyone acting on behalf of any party.
11. Severability. It is intended that each section of this Agreement
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should be viewed as separate and divisible, and in the event that any
section, provision, covenant, or condition of this Agreement shall be held
to be invalid, void, or unenforceable, the remainder of the provisions
shall remain in full force and effect and shall in no way be affected,
impaired, or invalidated.
12. Waiver. No provision of this Agreement may be waived except in
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writing by the party (or by the requisite minimum vote of such party)
entitled to the benefit of such provision.
13. Counterparts and Facsimile. This Agreement may be executed in any
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number of counterparts, by facsimile and by different parties on separate
counterparts, each of which shall be deemed an original and all of which
shall constitute one and the same agreement.
IN WITNESS WHEREOF, the undersigned has executed this Agreement as of date first
written above.
ASSIGNOR:
LTC PROPERTIES, INC.
By: /s/ XXXXX XXXXXXX
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Name: Xxxxx Xxxxxxx
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Title: Chief Financial Officer
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ASSIGNEE:
HEALTHCARE HOLDINGS, INC.
By: /s/ XXXXXXXXXXX XXXXXXXX
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Name: Xxxxxxxxxxx Xxxxxxxx
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Title: President
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Exhibit "A"
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DESCRIPTION OF ALF STOCK
New Common Stock/ALF Stock means common stock of Reorganized ALC which is
to be issued by Reorganized ALC on or after the Effective Date, as more
fully described in the Description of the New Common Stock attached as
Schedule 1.
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TERM SHEET
September 27, 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 I 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 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 I1 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
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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 26, 2001.
Oregon Trust Deed Notes The Company and its Subsidiaries will use
Washington Revenue Bonds commercially reasonable efforts to ensure
Idaho Revenue Bonds that no letters of credit are drawn down in
Ohio Revenue Bonds 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 IJC 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 LC Draw occur, any
remaining secured debt associated with the VC
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.
Old Equity 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.
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THE NEW NOTES AND NEW COMMON STOCK
New Senior Secured Notes
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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 security interest in all
presently unencumbered real property
owned by Company and by each
Subsidiary for whom a chapter 11
bankruptcy case is commenced;
(b) a first security interest --in all
real property owned by Company and by
each Subsidiary for whom a chapter 11
bankruptcy case is commenced that
becomes unencumbered before or as of
the Effective Date;
(c) a first security interest- in certain
real property owned by Home and
Community, Inc. that is or becomes
unencumbered before or as of the
Effective Date; and
(d) 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 26; 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
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.
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Page 4
New Junior Secured Notes
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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 New Common Stock representing all equity in
---------------- Newco not issued to holders of Old Equity.
MANAGEMENT/CORPORATE GOVERNANCE/MISC.
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Hiring of Operations Consultant The Company shall immediately employ Senior
Services of America ("Consultant") as an
operational consultant on terms and
conditions acceptable to the Committee;
provided however that the employment of
Consultant shall not because to delay the
Petition Date.
Management TBD in a manner acceptable to the Committee
Management Incentives 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.
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OTHER MATERIAL TERMS
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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 The Transaction is conditioned upon the
Committee's Due Diligence 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
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
nor 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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Page 6
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
15
