-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SONcq6b/yTsIRq2NPwvoTgCR3vdKzh3r7k4ReMpPsOY+VJguOaxVDj9FDqbZR7ZL PCCgGnjQUZIzOficvrE+BA== 0000895345-02-000519.txt : 20021016 0000895345-02-000519.hdr.sgml : 20021016 20021016161208 ACCESSION NUMBER: 0000895345-02-000519 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 20021016 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: ARV ASSISTED LIVING INC CENTRAL INDEX KEY: 0000949322 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-NURSING & PERSONAL CARE FACILITIES [8050] IRS NUMBER: 330160968 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-44631 FILM NUMBER: 02790542 BUSINESS ADDRESS: STREET 1: 245 FISCHER AVE STREET 2: SUITE D-1 CITY: COSTA MESA STATE: CA ZIP: 92626 BUSINESS PHONE: 7147517400 MAIL ADDRESS: STREET 1: 245 FISCHER AVENUE STREET 2: SUITE D-1 CITY: COSTA MESA STATE: CA ZIP: 92626 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: LAZARD FRERES REAL ESTATE INVESTORS LLC CENTRAL INDEX KEY: 0001042593 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 30 ROCKEFELLER PLAZA STREET 2: 63RD FL CITY: NEW YORK STATE: NY ZIP: 10020 BUSINESS PHONE: 2126326000 MAIL ADDRESS: STREET 1: 30 ROCKEFELLER PLAZA STREET 2: 63RD FL CITY: NEW YORK STATE: NY ZIP: 10020 SC 13D/A 1 lp13da_lazard.txt SCHEDULE 13D (AMENDMENT #16) SCHEDULE 13D (RULE 13d-101) Information to be Included in Statements Filed Pursuant to Rule 13d-1(a) and Amendments Thereto Filed Pursuant to Rule 13d-2(a) SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Under the Securities Exchange Act of 1934 (Amendment No. 16)* ARV ASSISTED LIVING, INC. - ------------------------------------------------------------------------------ (Name of Issuer) Common Stock, par value $0.01 per share - ------------------------------------------------------------------------------ (Title of Class of Securities) 00204C107 --------------------------------- (CUSIP Number)
Marjorie L. Reifenberg, Esq. Lee S. Parks, Esq. Lazard Freres Real Estate Investors L.L.C. Fried, Frank, Harris, Shriver & Jacobson 30 Rockefeller Plaza One New York Plaza New York, New York 10020 New York, New York 10004 (212) 632-6000 (212) 859-8000
- ------------------------------------------------------------------------------ (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communication) October 7, 2002 - ------------------------------------------------------------------------------ (Dates of Events Which Require Filing of This Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this Schedule because of Rule 13d-1(b)(3) or (4), check the following box |_|. Note. Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7 for other parties to whom copies are to be sent. * The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 (the "Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). SCHEDULE 13D CUSIP No. 00204C107 Page 2 of 12 Pages 1. NAME OF REPORTING PERSONS. S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON Prometheus Assisted Living LLC 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [ ] 3. SEC USE ONLY 4. SOURCE OF FUNDS OO 5. CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] 6. CITIZENSHIP OR PLACE OF ORGANIZATION DELAWARE NUMBER OF 7. SOLE VOTING POWER SHARES -0- BENEFICIALLY 8. SHARED VOTING POWER OWNED BY EACH 7,595,069 shares of Common Stock REPORTING 9. SOLE DISPOSITIVE POWER PERSON WITH -0- 10. SHARED DISPOSITIVE POWER 7,595,069 shares of Common Stock 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 7,595,069 shares of Common Stock 12. CHECK IF THE AGGREGATE AMOUNT IN ROW (11) [X] EXCLUDES CERTAIN SHARES 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 43.5% 14. TYPE OF REPORTING PERSON OO SCHEDULE 13D CUSIP No. 00204C107 Page 3 of 12 Pages 1. NAME OF REPORTING PERSONS. S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON LF Strategic Realty Investors II L.P. 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [ ] 3. SEC USE ONLY 4. SOURCE OF FUNDS OO, BK 5. CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] 6. CITIZENSHIP OR PLACE OF ORGANIZATION DELAWARE NUMBER OF 7. SOLE VOTING POWER SHARES -0- BENEFICIALLY 8. SHARED VOTING POWER OWNED BY EACH 8,345,069 shares of Common Stock REPORTING 9. SOLE DISPOSITIVE POWER PERSON WITH -0- 10. SHARED DISPOSITIVE POWER 8,345,069 shares of Common Stock 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 8,345,069 shares of Common Stock 12. CHECK IF THE AGGREGATE AMOUNT IN ROW (11) [ ] EXCLUDES CERTAIN SHARES 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 45.8% 14. TYPE OF REPORTING PERSON PN SCHEDULE 13D CUSIP No. 00204C107 Page 4 of 12 Pages 1. NAME OF REPORTING PERSONS. S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON LFSRI II Alternative Partnership L.P. 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [ ] 3. SEC USE ONLY 4. SOURCE OF FUNDS OO, BK 5. CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] 6. CITIZENSHIP OR PLACE OF ORGANIZATION DELAWARE NUMBER OF 7. SOLE VOTING POWER SHARES -0- BENEFICIALLY 8. SHARED VOTING POWER OWNED BY EACH 7,595,069 shares of Common Stock REPORTING 9. SOLE DISPOSITIVE POWER PERSON WITH -0- 10. SHARED DISPOSITIVE POWER 7,595,069 shares of Common Stock 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 7,595,069 shares of Common Stock 12. CHECK IF THE AGGREGATE AMOUNT IN ROW (11) [X] EXCLUDES CERTAIN SHARES 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 43.5% 14. TYPE OF REPORTING PERSON PN SCHEDULE 13D CUSIP No. 00204C107 Page 5 of 12 Pages 1. NAME OF REPORTING PERSONS. S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON LFSRI II - CADIM Alternative Partnership L.P. 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [ ] 3. SEC USE ONLY 4. SOURCE OF FUNDS OO, BK 5. CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] 6. CITIZENSHIP OR PLACE OF ORGANIZATION DELAWARE NUMBER OF 7. SOLE VOTING POWER SHARES -0- BENEFICIALLY 8. SHARED VOTING POWER OWNED BY EACH 7,595,069 shares of Common Stock REPORTING 9. SOLE DISPOSITIVE POWER PERSON WITH -0- 10. SHARED DISPOSITIVE POWER 7,595,069 shares of Common Stock 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 7,595,069 shares of Common Stock 12. CHECK IF THE AGGREGATE AMOUNT IN ROW (11) [X] EXCLUDES CERTAIN SHARES 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 43.5% 14. TYPE OF REPORTING PERSON PN SCHEDULE 13D CUSIP No. 00204C107 Page 6 of 12 Pages 1. NAME OF REPORTING PERSONS. S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON Lazard Freres Real Estate Investors L.L.C. 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [ ] 3. SEC USE ONLY 4. SOURCE OF FUNDS OO, BK 5. CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] 6. CITIZENSHIP OR PLACE OF ORGANIZATION NEW YORK NUMBER OF 7. SOLE VOTING POWER SHARES -0- BENEFICIALLY 8. SHARED VOTING POWER OWNED BY EACH 8,345,069 shares of Common Stock REPORTING 9. SOLE DISPOSITIVE POWER PERSON WITH -0- 10. SHARED DISPOSITIVE POWER 8,345,069 shares of Common Stock 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 8,345,069 shares of Common Stock 12. CHECK IF THE AGGREGATE AMOUNT IN ROW (11) [ ] EXCLUDES CERTAIN SHARES 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 45.8% 14. TYPE OF REPORTING PERSON OO SCHEDULE 13D CUSIP No. 00204C107 Page 7 of 12 Pages 1. NAME OF REPORTING PERSONS. S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON Lazard Freres & Co. LLC 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [ ] 3. SEC USE ONLY 4. SOURCE OF FUNDS OO, BK 5. CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] 6. CITIZENSHIP OR PLACE OF ORGANIZATION NEW YORK NUMBER OF 7. SOLE VOTING POWER SHARES -0- BENEFICIALLY 8. SHARED VOTING POWER OWNED BY EACH 8,345,069 shares of Common Stock REPORTING 9. SOLE DISPOSITIVE POWER PERSON WITH -0- 10. SHARED DISPOSITIVE POWER 8,345,069 shares of Common Stock 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 8,345,069 shares of Common Stock 12. CHECK IF THE AGGREGATE AMOUNT IN ROW (11) [ ] EXCLUDES CERTAIN SHARES 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 45.8% 14. TYPE OF REPORTING PERSON OO SCHEDULE 13D CUSIP No. 00204C107 Page 8 of 12 Pages 1. NAME OF REPORTING PERSONS. S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON LFSRI II Assisted Living LLC 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [ ] 3. SEC USE ONLY 4. SOURCE OF FUNDS OO 5. CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] 6. CITIZENSHIP OR PLACE OF ORGANIZATION DELAWARE NUMBER OF 7. SOLE VOTING POWER SHARES -0- BENEFICIALLY 8. SHARED VOTING POWER OWNED BY EACH 750,000 shares of Common Stock REPORTING 9. SOLE DISPOSITIVE POWER PERSON WITH -0- 10. SHARED DISPOSITIVE POWER 750,000 shares of Common Stock 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 750,000 shares of Common Stock 12. CHECK IF THE AGGREGATE AMOUNT IN ROW (11) [X] EXCLUDES CERTAIN SHARES 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 4.1% 14. TYPE OF REPORTING PERSON OO This Amendment No. 16 to Schedule 13D (this "Amendment") is filed by Prometheus Assisted Living LLC, a Delaware limited liability company ("Prometheus"), LF Strategic Realty Investors II L.P., a Delaware limited partnership ("LFSRI"), LFSRI II Alternative Partnership L.P., a Delaware limited partnership ("LFSRI II AP"), LFSRI II-CADIM Alternative Partnership L.P., a Delaware limited partnership ("LFSRI CADIM"), Lazard Freres Real Estate Investors L.L.C., a New York limited liability company ("LFREI"), Lazard Freres & Co. LLC, a New York limited liability company ("Lazard") and LFSRI II Assisted Living LLC, a Delaware limited liability company ("LFSRI II AL", and together with Prometheus, LFSRI, LFSRI II AP, LFSRI CADIM, LFREI and Lazard, the "Reporting Persons"). Capitalized terms used herein but not defined shall have the meanings ascribed thereto in the Schedule 13D, as amended, originally filed by Prometheus and LFREI on July 23, 1997 (as amended, the "Initial Schedule 13D"). The Initial Schedule 13D is hereby amended as follows: ITEM 4. PURPOSE OF TRANSACTION. Item 4 is amended to add the following: As of October 7, 2002, Atria, Inc., Kapson Senior Quarters Corp. and the Company entered into a letter agreement, which is attached hereto as Exhibit 1 (the "Letter Agreement"), extending the term of a certain confidentiality/non-disclosure agreement, filed as Exhibit 1 to Amendment No. 13 to the Initial Schedule 13D (the "Confidentiality Agreement"), from November 15, 2002 until March 31, 2003. On October 7, 2002, Prometheus and the Company entered into a confidentiality/non-disclosure agreement, which is attached hereto as Exhibit 2 (the "Prometheus Confidentiality Agreement"). Pursuant to the Prometheus Confidentiality Agreement, the Company and Prometheus will exchange confidential information regarding a possible negotiated transaction between the Company and Prometheus. All references to the Letter Agreement and/or the Prometheus Confidentiality Agreement contained herein are qualified in their entirety by reference to the complete text of those agreements, which are attached hereto as Exhibits 1 and 2, respectively, and are each incorporated herein by reference. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER. Item 6 is amended to add the following: On October 7, 2002, Prometheus and the Company entered into the Prometheus Confidentiality Agreement (see Item 4) on substantially the same terms as the Confidentiality Agreement. Pursuant to the Prometheus Confidentiality Agreement, Prometheus and the Company have made certain agreements with respect to, among other things, additional restrictions on the further acquisition of the Company's Common Stock by Prometheus, LFREI and other controlled affiliates of Prometheus and LFREI for one year following the execution of the Confidentiality Agreement. All references to the Prometheus Confidentiality Agreement contained herein are qualified in their entirety by reference to the complete text thereof, which is attached hereto as Exhibit 2 and incorporated herein by reference. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS. Exhibit 1. Letter Agreement, dated as of October 7, 2002, between Atria, Inc., Kapson Senior Quarters Corp. and ARV Assisted Living, Inc. Exhibit 2. Confidentiality/Non-Disclosure Agreement, dated October 7, 2002, between Prometheus Assisted Living LLC and ARV Assisted Living, Inc. SIGNATURE After reasonable inquiry and to the best of its knowledge and belief, each of the undersigned certifies that the information set forth in this statement is true, complete and correct. Dated: October 16, 2002 PROMETHEUS ASSISTED LIVING LLC By: LF Strategic Realty Investors II L.P., its managing member By: Lazard Freres Real Estate Investors L.L.C. its general partner By: /s/ John A. Moore ---------------------------------------- Name: John A. Moore Title: Managing Principal & Chief Financial Officer LF STRATEGIC REALTY INVESTORS II L.P. By: Lazard Freres Real Estate Investors L.L.C., its general partner By: /s/ John A. Moore -------------------------------------------- Name: John A. Moore Title: Managing Principal & Chief Financial Officer LFSRI II ALTERNATIVE PARTNERSHIP L.P. By: Lazard Freres Real Estate Investors L.L.C., its general partner By: /s/ John A. Moore -------------------------------------------- Name: John A. Moore Title: Managing Principal & Chief Financial Officer LFSRI II-CADIM ALTERNATIVE PARTNERSHIP L.P. By: Lazard Freres Real Estate Investors L.L.C., its general partner By: /s/ John A. Moore ------------------------------------------- Name: John A. Moore Title: Managing Principal & Chief Financial Officer LAZARD FRERES REAL ESTATE INVESTORS L.L.C. By: /s/ John A. Moore -------------------------------------------- Name: John A. Moore Title: Managing Principal & Chief Financial Officer LAZARD FRERES & CO. LLC By: /s/ Scott D. Hoffman --------------------------------------------- Name: Scott D. Hoffman Title: Managing Director LFSRI II ASSISTED LIVING LLC By: LF Strategic Realty Investors II L.P., its managing member By: Lazard Freres Real Estate Investors L.L.C. its general partner By: /s/ John A. Moore --------------------------------------- Name: John A. Moore Title: Managing Principal & Chief Financial Officer EX-99.1 3 ex99_1.txt EXHIBIT 99.1 EXHIBIT 1 ARV Assisted Living, Inc. 245 Fischer Avenue, D-1 Costa Mesa, CA 92626 October 7, 2002 Atria, Inc. Kapson Senior Quarters Corp. 501 South Fourth Avenue Suite 140 Louisville, Kentucky 40202 Re: Confidentiality/Non-Disclosure Agreement (Reciprocal) ----------------------------------------------------- Gentlemen: Reference is hereby made to the letter agreement dated November 15, 2001 (the "Confidentiality Agreement") between Atria, Inc., Kapson Senior Quarters Corp. and ARV Assisted Living, Inc. ("ARV"), a copy of which is attached hereto. Atria, Inc., Kapson Senior Quarters Corp. and ARV hereby agree that the Confidentiality Agreement shall not terminate on November 15, 2002 as currently contemplated thereby, and hereby amend the Confidentiality Agreement in order to extend the term of the Confidentiality Agreement until March 31, 2003. Atria, Kapson Senior Quarters Corp. and ARV hereby further amend the Confidentiality Agreement by replacing the second reference to "Board of Directors" in the second sentence of the ninth paragraph thereof of the Confidentiality Agreement with "Board of Directors or any special committee thereof." Very Truly Yours, /s/ Maurice DeWald ----------------------------------- Maurice DeWald Chairman of the Special Committee of the Board of Directors of ARV Assisted Living, Inc. CONFIRMED AND AGREED Atria, Inc. By: /s/ Mark D. Jessee ------------------- Name: Mark D. Jessee Title: Chief Financial Officer Kapson Senior Quarters Corp. By: /s/ Mark D. Jessee ------------------- Name: Mark D. Jessee Title: Chief Financial Officer EX-99.2 4 ex99_2.txt EXHIBIT 99.2 EXHIBIT 2 ARV Assisted Living, Inc. 245 Fischer Avenue, D-1 Costa Mesa, CA 92626 October 7, 2002 Prometheus Assisted Living LLC 30 Rockefeller Plaza, 50th floor New York, New York 10020 Re: Confidentiality/Non-Disclosure Agreement (Reciprocal) ----------------------------------------------------- Gentlemen: In connection with the consideration of a possible negotiated transaction (the "Transaction") between ARV Assisted Living, Inc. and/or its subsidiaries, controlled affiliates or divisions (collectively, "ARV") and Prometheus Assisted Living LLC and/or its subsidiaries, controlled affiliates or divisions (other than ARV) (collectively, "Prometheus"), each party (as such, the "disclosing party") intends to make available to the other party (as such the "receiving party") certain information concerning its business, financial condition, operations, assets and liabilities which is non-public, confidential or proprietary in nature. As a condition to such information being exchanged by the parties and their respective directors, officers, employees, agents or advisors (including, without limitation, attorneys, accountants, consultants, bankers and financial advisors) (collectively, "Representatives"), the receiving party must agree to treat any information concerning the disclosing party (whether prepared by the disclosing party, its advisors or otherwise and irrespective of the form of communication) which has been or is furnished pursuant to this letter agreement to the receiving party or to its Representatives by or on behalf of the disclosing party (such information herein collectively referred to as the "Evaluation Material") in accordance with the provisions of this letter agreement. Lazard Freres Real Estate Investors L.L.C. ("LFREI") and its controlled affiliates shall constitute Representatives of Prometheus and Prometheus intends to provide to LFREI and/or its controlled affiliates the information provided to Prometheus pursuant to this letter agreement. The term "Evaluation Material" shall also be deemed to include all notes, analyses, compilations, studies, interpretations or other documents prepared by the receiving party or its Representatives which contain, reflect or are based upon, in whole or in part, the information furnished to the receiving party or its Representatives pursuant hereto. For purposes of this Agreement, the term "Evaluation Material" does not include information which (i) becomes generally available to the public other than as a result of a disclosure by the receiving party or its Representatives, (ii) was available to the receiving party on a nonconfidential basis prior to its disclosure by the disclosing party or its Representatives, or (iii) becomes available to the receiving party from a source other than the disclosing party or its Representatives, provided that such source is not known by the receiving party to be bound by a confidentiality agreement with the disclosing party or its Representatives. It is understood that the receiving party or its Representatives may disclose any of the Evaluation Material (1) to those of its other Representatives who require such material for the purpose of evaluating a possible Transaction (provided that such Representatives (a) need to know the Evaluation Material for the purpose of evaluation of the Transaction, (b) are informed by the receiving party or Representative of the confidential nature of the Information, and (c) agree to act in accordance with the terms of this letter agreement) or (2) to potential financing sources for any possible Transaction (provided that such financing sources are informed by the receiving party or Representative of the confidential nature of the Information). The receiving party agrees that the Evaluation Material will be kept confidential by it and its Representatives and, except with the specific prior written consent of the disclosing party or as expressly otherwise permitted by the terms hereof, will not be disclosed by it or its Representatives. The receiving party further agrees that it and its Representatives will not use any of the Evaluation Material for any reason or purpose other than to evaluate a possible Transaction. Without the prior written consent of the other party, each party hereto and its Representatives will not disclose to any person (i) the fact that the Evaluation Material has been made available to a receiving party or that a receiving party or its Representatives have inspected any portion of the Evaluation Material, (ii) the fact that any discussions or negotiations are taking place concerning a possible Transaction, or (iii) any of the terms, conditions or other facts with respect to any possible Transaction, including the status thereof, unless and only to the extent that such disclosure (after making reasonable efforts to avoid such disclosure and after advising and consulting with the other party about the intention to make, and the proposed contents of, such disclosure) is required by applicable law. The term "person" as used in this letter agreement shall be broadly interpreted to include, without limitation, any corporation, company, partnership and individual. In the event that either party or its Representatives is requested or required (by oral questions, interrogatories, requests for information or documents, subpoena, civil investigative demand or similar legal process) to disclose any of the Evaluation Material, it is agreed that such party or its Representative, as the case may be, will provide the other party with prompt notice of such request(s) so that such other party may seek an appropriate protective order or other appropriate remedy and/or waive its or such Representative's compliance with the provisions of this letter agreement. In the event that such protective order or other remedy is not obtained, or that any party grants a waiver hereunder, the other party or its Representative may furnish that portion (and only that portion) of the Evaluation Material which such other party is legally required to disclose and will exercise its best efforts to obtain reliable assurance that confidential treatment will be accorded any Evaluation Material so furnished. Each party agrees that it will not use the Evaluation Material for any purpose other than determining whether to enter into a Transaction. Each party agrees that it will not use the Evaluation Material in any way directly or indirectly detrimental to the other party. In particular, each party agrees that for a period of one (1) year from the date of the signing of this letter agreement, it will not knowingly, as a result of knowledge or information obtained from the Evaluation Material or otherwise in connection with a possible Transaction, directly solicit for employment any employee of the other, provided the parties acknowledge that they may employ any person that responds to a public advertisement for an available position. In the event that the receiving party does not proceed with a Transaction, upon the written request of the disclosing party, the receiving party shall promptly deliver to the disclosing party or destroy (with such destruction certified to the disclosing party) all documents or other matter furnished by it to the receiving party or its Representatives constituting Evaluation Material, together with all copies thereof in the possession of the receiving party or its Representatives. Notwithstanding the return or destruction of Evaluation Material, the receiving party will continue to be bound by its obligations of confidentiality and other obligations hereunder. Although it is understood that the disclosing party will endeavor to include in the Evaluation Material information believed by it to be relevant for the purpose of this investigation, the receiving party further understands that neither the disclosing party nor its Representatives make any representation or warranty as to the accuracy or completeness of the Evaluation Material. The receiving party agrees that neither it nor its Representatives shall have any liability to the receiving party or any of its Representatives resulting from the use of the Evaluation Material by the receiving party or such Representatives. Only those representations and warranties that may be made to the receiving party or its affiliates in a definitive written agreement for a Transaction, when, as and if executed and subject to such limitations and restrictions as may be specified therein, shall have any legal effect, and the receiving party agrees that if it determines to engage in a Transaction, such determination will be based solely on the terms of such written agreement and on the receiving party's own investigation, analysis, and assessment of the business to be acquired. Moreover, unless and until such a definitive written agreement is entered into, neither the receiving party nor its Representatives will be under any legal obligation of any kind whatsoever with respect to such a Transaction except for the matters specifically agreed to in this letter agreement. The agreements set forth in this letter agreement may be modified or waived only by a separate writing signed by both parties expressly so modifying or waiving such agreements. Prometheus agrees that, for a period of one (1) year from the date hereof, unless such shall have been specifically approved in writing by the Board of Directors of ARV, neither Prometheus, LFREI, nor any controlled affiliates of Prometheus or LFREI, will in any manner, directly or indirectly, (a) effect or seek, offer or propose (whether publicly or otherwise) to effect, or cause or participate in (i) any acquisition of any securities (or beneficial ownership thereof) or any rights or options to acquire any securities or assets of ARV or any of its subsidiaries; (ii) any tender or exchange offer or merger or other business combination involving ARV or any of its subsidiaries; (iii) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to ARV or its subsidiaries; or (iv) any "solicitation" of "proxies" (as such terms are used in the proxy rules of the Securities and Exchange Commission) or consents to vote any voting securities of ARV, (b) form, join or in any way participate in a "group" (as defined under the Securities Exchange Act of 1934), other than with any of their affiliates, with respect to ARV or (c) otherwise act, alone or in concert with others (other than with any of their affiliates), to seek to control or influence the management, Board of Directors or policies of ARV, other than through directors designated or nominated by affiliates of LFREI under the Settlement Agreement, dated as of September 29, 1999, among ARV, LFREI and certain other parties (the "Settlement Agreement"); provided, however, that, the foregoing provisions of this paragraph shall not apply to the granting or exercise of warrants, options or other rights issued by ARV to affiliates of LFREI or their employees, officers or directors or if (i) a third party acquires beneficial ownership of more than 15% of the outstanding common stock of ARV, (ii) ARV or any of its subsidiaries or affiliates (other than LFREI and its affiliates) enter into a definitive agreement providing for, or a third party publicly announces an intention to effect, any transaction which would result in (A) the sale by ARV or one or more of its subsidiaries of 50% of its assets or assets representing more than 50% of its consolidated earning power, (B) the common stockholders of ARV immediately prior to such transaction owning less than 50% of the outstanding common stock of the acquiring entity or, in the case of a merger transaction, the surviving corporation (or, if the surviving corporation is a subsidiary of a parent company, the parent company) or (C) a third party acquiring beneficial ownership of more than 15% of the outstanding common stock of ARV, or (iii) after a tender or exchange offer is made by any third party for the common stock of ARV, the Board of Directors of ARV has not recommended that its stockholders reject the tender or exchange offer within 10 business days after the public announcement of such tender or exchange offer. Notwithstanding the foregoing, neither Prometheus, LFREI nor any of their respective affiliates shall be prohibited from making, or be required to obtain the consent of ARV or its Board of Directors to make, one or more proposals to ARV or its Board of Directors or any special committee thereof with respect to a possible Transaction and nothing herein shall restrict or otherwise prevent Prometheus or any of its affiliates from selling or otherwise disposing of any shares, warrants, options or other rights for such shares, of ARV now held or hereafter acquired. Nothing contained herein shall supersede, amend or modify the terms of the Settlement Agreement, including without limitation Section 3.01 thereof. It is understood and agreed that money damages would not be a sufficient remedy for any breach of this letter agreement by either party or its Representatives and that any such breach would cause the non-breaching party irreparable harm. Accordingly, it is further agreed that in the event of any breach or threatened breach of this letter agreement, the non-breaching party, in addition to any other remedies at law or in equity it may have, shall be entitled, without the requirement of posting a bond or other security, to equitable relief, including injunctive relief and specific performance. It is understood and agreed that no failure or delay by either party in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any right, power, or privilege hereunder. The invalidity or unenforceability of any provision of this letter agreement shall not affect the validity or enforceability of any other provisions of this letter agreement, which shall remain in full force and effect. This letter agreement shall be governed by and construed in accordance with the laws of the State of Delaware. This agreement will terminate on March 31, 2003. If you are in agreement with the foregoing, please sign, date, and return one copy of this letter agreement, which will constitute our agreement with respect to the matters set forth herein. Very truly yours, /s/ Maurice DeWald ------------------------------------------- Maurice DeWald Chairman of the Special Committee of the Board of Directors of ARV Assisted Living, Inc. CONFIRMED AND AGREED: Prometheus Assisted Living LLC By: /s/ John A. Moore --------------------------------------- Name: John A. Moore Title: Authorized Signatory -----END PRIVACY-ENHANCED MESSAGE-----