1
EXHIBIT (c) 1
AGREEMENT AND PLAN OF MERGER
dated as of
May 29, 1997
among
INTEGRATED LIVING COMMUNITIES, INC.,
WHITEHALL STREET REAL ESTATE LIMITED PARTNERSHIP VII
and
SLC Acquisition Corp.
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TABLE OF CONTENTS
PAGE
----
ARTICLE I THE OFFER...................................................... 2
SECTION 1.01. The Offer.......................................... 2
SECTION 1.02. Company Actions.................................... 3
ARTICLE II THE MERGER.................................................... 5
SECTION 2.01. The Merger......................................... 5
SECTION 2.02. Conversion of Shares............................... 6
SECTION 2.03. Exchange of Certificates........................... 6
SECTION 2.04. Stock Options...................................... 8
SECTION 2.05. Dissenting Shares.................................. 8
SECTION 2.06. Adjustments........................................ 9
ARTICLE III THE SURVIVING CORPORATION; DIRECTORS AND
OFFICERS............................................ 9
SECTION 3.01. Certificate of Incorporation....................... 9
SECTION 3.02. Bylaws............................................. 10
SECTION 3.03. Directors and Officers............................. 10
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE
COMPANY............................................. 10
SECTION 4.01. Corporate Existence and Power...................... 10
SECTION 4.02. Corporate Authorization............................ 10
SECTION 4.03. Governmental Authorization......................... 11
SECTION 4.04. Non-Contravention.................................. 11
SECTION 4.05. Capitalization..................................... 11
SECTION 4.06. Subsidiaries....................................... 12
SECTION 4.07. Reports............................................ 13
SECTION 4.08. Financial Statements............................... 14
SECTION 4.09. Proxy Statement; Offer Documents; Schedule
14D-1; Schedule 14D-9.............................. 14
SECTION 4.10. Absence of Certain Changes......................... 15
SECTION 4.11. Litigation......................................... 17
SECTION 4.12. Certificate of Incorporation and Bylaws............ 17
SECTION 4.13. ERISA.............................................. 17
SECTION 4.14. Taxes.............................................. 19
SECTION 4.15. Finders and Investment Bankers..................... 19
SECTION 4.16. Opinion of Financial Advisor....................... 19
SECTION 4.17. Vote Required...................................... 19
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SECTION 4.18. Anti-takeover Plan; State Takeover Statutes........ 20
SECTION 4.19. Environmental Matters.............................. 20
SECTION 4.20. Title to Properties; Absence of Liens
and Encumbrances; Leases; Condition of Facilities 21
SECTION 4.21. Compliance with Laws; Government Approvals......... 23
SECTION 4.22. Undisclosed Liabilities............................ 23
SECTION 4.23. Insurance. ........................................ 23
SECTION 4.24. Absence of Sensitive Payments...................... 24
SECTION 4.25. Affiliate Transactions............................. 24
SECTION 4.26. Contracts. ........................................ 24
SECTION 4.27. Offer Price. ...................................... 25
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT...................... 25
SECTION 5.01. Corporate Existence and Power...................... 25
SECTION 5.02. Corporate Authorization............................ 26
SECTION 5.03. Governmental Authorization......................... 26
SECTION 5.04. Non-Contravention.................................. 26
SECTION 5.05. Proxy Statement; Offer Documents; Schedule
14D-1; Schedule 14D-9......................... 27
SECTION 5.06. Financing. ........................................ 27
ARTICLE VI COVENANTS..................................................... 28
SECTION 6.01. Conduct of the Company............................. 28
SECTION 6.02. Access to Information.............................. 31
SECTION 6.03. Other Offers. ..................................... 32
SECTION 6.04. Notices of Certain Events.......................... 33
SECTION 6.05. Merger Subsidiary.................................. 33
SECTION 6.06. Director and Officer Liability..................... 33
SECTION 6.07. Employee Benefits.................................. 34
SECTION 6.08. Board Representation............................... 35
SECTION 6.09. Meeting of the Company's Stockholders.............. 35
SECTION 6.10. Proxy Statement.................................... 36
SECTION 6.11. Best Efforts....................................... 36
SECTION 6.12. Public Announcements............................... 37
SECTION 6.13. Further Assurances................................. 37
ARTICLE VII CONDITIONS TO THE MERGER..................................... 37
SECTION 7.01. Conditions to the Obligations of Each Party........ 37
ARTICLE VIII TERMINATION.................................................. 38
SECTION 8.01. Termination........................................ 38
SECTION 8.02. Effect of Termination.............................. 39
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ARTICLE IX MISCELLANEOUS.................................................. 39
SECTION 9.01. Notices............................................ 39
SECTION 9.02. Survival of Representations and Warranties and
Agreements......................................... 41
SECTION 9.03. Amendments; No Waivers............................. 41
SECTION 9.04. Fees and Expenses.................................. 41
SECTION 9.05. Successors and Assigns............................. 42
SECTION 9.06. Governing Law...................................... 42
SECTION 9.07. Counterparts; Effectiveness........................ 42
SECTION 9.08. Entire Agreement................................... 42
SECTION 9.09. Headings........................................... 43
SECTION 9.10. Severability....................................... 43
SECTION 9.11. Specific Performance............................... 43
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of May 29, 1997, among
INTEGRATED LIVING COMMUNITIES, INC., a Delaware corporation (the "Company"),
WHITEHALL STREET REAL ESTATE LIMITED PARTNERSHIP VII, a Delaware limited
partnership ("Parent"), and SLC ACQUISITION CORP., a Delaware corporation and a
wholly owned subsidiary of Parent ("Merger Subsidiary").
BACKGROUND
The respective Boards of Directors of Parent, Merger
Subsidiary and the Company have each approved the acquisition of the Company by
Parent on the terms and subject to the conditions set forth in this Agreement.
In furtherance of such acquisition, Parent proposes to cause
Merger Subsidiary to make a tender offer to purchase all the issued and
outstanding shares of the Company's Common Stock, par value $.01 per share
("Company Common Stock"), at a price of $11.50 per share net to the seller in
cash, without interest, upon the terms and subject to the conditions set forth
in this Agreement (such tender offer, as it may be amended and supplemented from
time to time as permitted under this Agreement, the "Offer"); and the Board of
Directors of the Company has adopted resolutions approving the Offer and
recommending that the Company's stockholders accept the Offer.
The respective Boards of Directors of Parent, Merger
Subsidiary and the Company have each approved, upon terms and subject to the
conditions set forth in this Agreement, the merger of Merger Subsidiary with and
into the Company (the "Merger"), whereby each issued and outstanding share of
Company Common Stock not owned directly or indirectly by Parent or the Company,
except shares of Company Common Stock held by persons who object to the Merger
and comply with all provisions of Delaware law concerning the right of
stockholders to dissent from the Merger and require appraisal of their shares of
Company Common Stock, will be converted into the right to receive per share
consideration paid pursuant to the Offer.
Concurrently with the execution of this Agreement and in order
to induce Parent to enter into this Agreement, on the date hereof, Parent,
Merger Subsidiary and Integrated Health Systems, Inc., a Delaware corporation
and the holder of approximately 37% of the outstanding shares of Company Common
Stock ("IHS"), have entered into a Voting and Tender Agreement (the "Tender
Agreement").
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AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth
herein, the parties hereto agree as follows:
ARTICLE I
THE OFFER
SECTION 1.01. The Offer. (a) Subject to the provisions of this
Agreement, as promptly as practicable (but in no event later than five business
days after the date of the first public announcement of the execution of this
Agreement), Merger Subsidiary shall, and Parent shall cause Merger Subsidiary
to, commence, within the meaning of Rule 14d-2 under the Securities Exchange Act
of 1934 and the rules and regulations promulgated thereunder (the "Exchange
Act"), the Offer. The obligation of Merger Subsidiary to, and of Parent to cause
Merger Subsidiary to, consummate the Offer and accept for payment and pay for
any shares of Common Stock tendered shall be subject only to the satisfaction of
the conditions set forth in Annex I and to the terms and conditions of this
Agreement; provided that the Minimum Condition (as defined in Annex I) may not
be waived by Parent and Subsidiary without the Company's consent. As used
herein, "business day" means any day other than a Saturday, Sunday or a federal
holiday, and consists of the time period from 12:01 a.m. through 12:00 midnight,
New York City time.
(b) On the date of commencement of the Offer, Parent and
Merger Subsidiary shall file with the Securities and Exchange Commission (the
"SEC") with respect to the Offer a Tender Offer Statement on Schedule 14D-1 (as
amended and supplemented from time to time, the "Schedule 14D-1"), which shall
comply in all material respects with the provisions of applicable federal
securities laws, and shall contain the offer to purchase relating to the Offer
and forms of the related letter of transmittal and other appropriate documents
(which documents, as amended or supplemented from time to time, are referred to
herein collectively as the "Offer Documents").
(c) The Offer shall initially expire 20 business days after
the date of its commencement; provided, however, that, unless this Agreement is
terminated in accordance with Article VIII (other than due to the failure to
satisfy the Minimum Condition or the failure to occur of the expiration or
termination of applicable waiting periods under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of ▇▇▇▇ (▇▇▇ "▇▇▇ ▇▇▇")), in which case the Offer (whether or
not previously extended in accordance with
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the terms hereof) shall expire on such date of termination, Parent and Merger
Subsidiary shall be obligated to extend the expiration date of the Offer from
time to time to the earlier of (i) the date on which Merger Subsidiary purchases
or becomes obligated to purchase, pursuant to the Offer, that number of shares
of Company Common Stock that would represent at least a majority of the
outstanding shares of Company Common Stock on a fully diluted basis and (ii) the
date 35 business days after the date of its commencement. Merger Subsidiary may
in its sole discretion increase the price per share of Company Common Stock
payable in the Offer, but neither Parent nor Merger Subsidiary shall, without
the prior written consent of the Company, decrease the price per share of Common
Stock payable in the Offer, change the form of consideration payable in the
Offer, decrease the number of shares of Common Stock sought pursuant to the
Offer, change or impose additional conditions to the Offer or otherwise amend
the Offer in any manner adverse to the Company's stockholders. Notwithstanding
the foregoing, Merger Subsidiary may from time to time, without the consent of
the Company, extend the Offer (i) if at the then scheduled expiration date of
the Offer any of the conditions to Merger Subsidiary's obligation to accept for
payment and pay for shares of Common Stock shall not be satisfied or waived,
until up to such time as such conditions are satisfied or waived and (ii) for
any period required by any rule, regulation, interpretation or position of the
SEC or its staff applicable to the Offer. Subject to the terms and conditions of
the Offer and this Agreement, Merger Subsidiary shall, and Parent shall cause
Merger Subsidiary to, accept for payment and pay for shares of Common Stock
validly tendered and not withdrawn pursuant to the Offer as soon as possible
after the expiration thereof.
(d) Parent shall provide or cause to be provided to Merger
Subsidiary on a timely basis the funds necessary to purchase any shares of
Common Stock that Merger Subsidiary becomes obligated to purchase pursuant to
the Offer.
SECTION 1.02. Company Actions. (a) The Company hereby approves
of and consents to the Offer and represents that (i) the Board of Directors of
the Company, at a meeting duly called and held, has adopted resolutions (A)
determining that this Agreement and the terms of each of the Offer and the
Merger are fair to and in the best interests of the Company's stockholders, (B)
approving the Offer, the Merger and this Agreement and acknowledging that such
approval is effective for purposes of Section 203 of the Delaware General
Corporation Law ("Delaware Law") and (C) recommending acceptance of the Offer
and approval of the Merger and this Agreement by the Company's stockholders and
(ii) the Company's financial advisor, ▇▇▇▇▇ ▇▇▇▇▇▇ Inc. ("▇▇▇▇▇ ▇▇▇▇▇▇"), has
delivered to the Board of Directors of the Company an opinion to the effect
that, as of the date of this Agreement, the consideration to be received by the
holders of Company Common Stock (other than Parent, IHS or their respective
affiliates) in the Offer and the Merger, taken together, is fair to such holders
from a financial point of view. The Company hereby consents to the inclusion in
the Offer Documents of the recommendation of the Board of Directors of the
Company described in the first sentence
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of this Section 1.02(a) and represents that it has obtained all necessary
consents to permit the inclusion of the fairness opinion of ▇▇▇▇▇ ▇▇▇▇▇▇ in the
Offer Documents and the Proxy Statement (as defined below).
(b) The Company shall file with the SEC on the date of
commencement of the Offer a Solicitation/Recommendation Statement on Schedule
14D-9 (as amended and supplemented from time to time, the "Schedule 14D-9") and
shall disseminate the Schedule 14D-9 to stockholders of the Company as required
by Rule 14D-9 promulgated under the Exchange Act. To the extent practicable, the
Company shall cooperate with Parent and Merger Subsidiary in mailing or
otherwise disseminating the Schedule 14D-9 with the appropriate Offer Documents
to the Company's stockholders. The Schedule 14D-9 shall comply in all material
respects with the provisions of applicable federal securities laws. The Company
shall deliver copies of the proposed form of the Schedule 14D-9 to Parent within
a reasonable time prior to the filing thereof with the SEC for review and
comment by Parent and its counsel (who shall provide any comments thereon as
soon as practicable). The Company agrees to provide in writing to Parent and its
counsel, promptly after receipt thereof, any comments that the Company or its
counsel may receive from the SEC or its staff with respect to the Schedule
14D-9. The Company shall promptly correct any information in the Schedule 14D-9
that shall become false or misleading in any material respect, and shall take
all steps necessary to cause the Schedule 14D-9 as so corrected to be filed with
the SEC and disseminated to the stockholders of the Company as and to the extent
required by applicable laws.
(c) In connection with the Offer, the Company shall promptly
furnish Parent with (or cause Parent to be furnished with) mailing labels,
security position listings and any available listing or computer file containing
the names and addresses of the record holders of the shares of Common Stock as
of a recent date, and of those persons becoming record holders after such date,
and shall furnish Parent with such information and assistance as Parent or its
agents may reasonably request in communicating the Offer to the stockholders of
the Company. Subject to the requirements of applicable law, and except for such
steps as are necessary to disseminate the Offer Documents and any other
documents necessary to consummate the Merger, Parent and Merger Subsidiary
shall, and shall cause each of their affiliates to, hold in confidence the
information contained in any of such labels, listings and files, use such
information only in connection with the Offer and the Merger, and, if this
Agreement is terminated, deliver to the Company all copies of such information
or extracts therefrom then in their possession or under their control.
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ARTICLE II
THE MERGER
SECTION 2.01. The Merger. (a) Upon the terms and subject to
the conditions hereof, and in accordance with the relevant provisions of
Delaware Law, Merger Subsidiary shall be merged with and into the Company as
soon as practicable following the satisfaction or waiver, if permissible, of the
conditions set forth in Article VII. Following the Merger, the Company shall
continue as the surviving corporation (the "Surviving Corporation") and shall
continue its existence under the laws of the State of Delaware, and the separate
corporate existence of Merger Subsidiary shall cease. Notwithstanding the
foregoing, Parent may elect at any time prior to the consummation of the Merger,
instead of merging Merger Subsidiary with and into the Company as provided
above, to merge the Company with and into Merger Subsidiary; provided, however,
that the Company shall not be deemed to have breached any of its
representations, warranties, covenants or agreements set forth in this Agreement
solely by reason of such election. In such event, this Agreement shall be deemed
modified to reflect the foregoing, and if requested by Parent, the Company
agrees to execute an appropriate amendment to this Agreement in order to reflect
the foregoing. At the election of Parent, any wholly-owned subsidiary of Parent
may be substituted for Merger Subsidiary as a constituent corporation in the
Merger. In such event, this Agreement shall be deemed modified to reflect the
foregoing, and if requested by Parent, the Company agrees to execute an
appropriate amendment to this Agreement in order to reflect the foregoing.
(b) As soon as practicable following the satisfaction or
waiver of the conditions set forth in Article VII, the Merger shall be
consummated by filing with the Secretary of State of the State of Delaware a
certificate of merger or other appropriate documents (in any case, the
"Certificate of Merger") in accordance with Delaware Law. The Merger shall
become effective at such time as the Certificate of Merger is duly filed, or at
such other time as Merger Subsidiary and the Company shall specify in the
Certificate of Merger (the time the Merger becomes effective being the
"Effective Time").
(c) The Merger shall have the effect specified under Delaware
Law. As of the Effective Time, the Company shall be a wholly-owned subsidiary of
Parent.
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SECTION 2.02. Conversion of Shares. At the Effective Time, by
virtue of the Merger and without any action on the part of Parent, Merger
Subsidiary, the Company or the holders of any of the following securities:
(a) each share of Company Common Stock held by the
Company or any subsidiary of the Company as treasury stock and
each issued and outstanding share of Company Common Stock
owned by Parent, Merger Subsidiary or any other subsidiary of
Parent shall be cancelled and retired and shall cease to
exist, and no payment or consideration shall be made with
respect thereto;
(b) each issued and outstanding share of Company
Common Stock, other than (i) shares of Common Stock referred
to in paragraph (a) above and (ii) Dissenting Shares (as
defined in Section 2.05) shall be converted into the right to
receive from the Surviving Corporation an amount in cash,
without interest, equal to the price per share of Common Stock
paid pursuant to the Offer (the "Merger Consideration"). At
the Effective Time, all such shares of Company Common Stock
shall no longer be outstanding and shall automatically be
cancelled and retired and shall cease to exist, and each
holder of a certificate representing any such shares of
Company Common Stock shall cease to have any rights with
respect thereto, except the right to receive the Merger
Consideration, without interest; and
(c) each issued and outstanding share of capital
stock of Merger Subsidiary shall be converted into one fully
paid and nonassessable share of common stock, par value $0.01,
of the Surviving Corporation.
SECTION 2.03. Exchange of Certificates. (a) Prior to the
Effective Time, Parent shall appoint a bank or trust company to act as
disbursing agent (the "Disbursing Agent") for the payment of Merger
Consideration upon surrender of certificates representing the shares of Company
Common Stock. Parent will enter into a disbursing agent agreement with the
Disbursing Agent, in form and substance reasonably acceptable to the Company,
and at such times, and from time to time, as the Disbursing Agent requires funds
to make the payments pursuant to Section 2.02, Parent shall deposit or cause to
be deposited with the Disbursing Agent cash in an aggregate amount necessary to
make the payments pursuant to Section 2.02 to holders of shares of Company
Common Stock (such amounts being hereinafter referred to as the "Exchange
Fund").
(b) Promptly after the Effective Time, the Surviving
Corporation shall cause the Disbursing Agent to mail to each person who was a
record holder as of the
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Effective Time of an outstanding certificate or certificates which immediately
prior to the Effective Time represented shares of Company Common Stock (the
"Certificates"), and whose shares were converted into the right to receive
Merger Consideration pursuant to Section 2.02, a form of letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss and title
to the Certificates shall pass, only upon proper delivery of the Certificates to
the Disbursing Agent) and instructions for use in effecting the surrender of the
Certificates in exchange for payment of the Merger Consideration. Upon surrender
to the Disbursing Agent of a Certificate, together with such letter of
transmittal duly executed and such other documents as may be reasonably required
by the Disbursing Agent, the holder of such Certificate shall be paid promptly
in exchange therefor cash in an amount equal to the product of the number of
shares of Company Common Stock represented by such Certificate multiplied by the
Merger Consideration, and such Certificate shall forthwith be canceled. No
interest will be paid or accrued on the cash payable upon the surrender of the
Certificates. If payment is to be made to a person other than the person in
whose name the Certificate surrendered is registered, it shall be a condition of
payment that the Certificate so surrendered be properly endorsed or otherwise be
in proper form for transfer and that the person requesting such payment pay any
transfer or other taxes required by reason of the payment to a person other than
the registered holder of the Certificate surrendered or establish to the
satisfaction of the Surviving Corporation that such tax has been paid or is not
applicable. Until surrendered in accordance with the provisions of this Section
2.03, each Certificate (other than Certificates representing shares of Company
Common Stock owned by Parent, Merger Subsidiary or any other subsidiary of
Parent, shares of Company Common Stock held in the treasury of the Company, and
Dissenting Shares) shall represent for all purposes only the right to receive
the Merger Consideration in cash multiplied by the number of shares of Company
Common Stock evidenced by such Certificate, without any interest thereon.
(c) At and after the Effective Time, there shall be no
registration of transfers of shares of Company Common Stock which were
outstanding immediately prior to the Effective Time on the stock transfer books
of the Surviving Corporation. From and after the Effective Time, the holders of
shares of Company Common Stock outstanding immediately prior to the Effective
Time shall cease to have any rights with respect to such shares of Company
Common Stock except as otherwise provided in this Agreement or by applicable
law. All cash paid upon the surrender of Certificates in accordance with the
terms of this Article II shall be deemed to have been paid in full satisfaction
of all rights pertaining to the shares of Company Common Stock previously
represented by such Certificates. If, after the Effective Time, Certificates are
presented to the Surviving Corporation for any reason, such Certificates shall
be cancelled and exchanged for cash as provided in this Article II. At the close
of business on the day of the Effective Time the stock ledger of the Company
shall be closed.
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(d) At any time more than six months after the Effective Time,
the Surviving Corporation shall be entitled to require the Disbursing Agent to
deliver to it any funds which had been made available to the Disbursing Agent
and not disbursed in exchange for Certificates (including, without limitation,
all interest and other income received by the Disbursing Agent in respect of all
such funds). Thereafter, holders of shares of Company Common Stock shall look
only to the Surviving Corporation (subject to the terms of this Agreement,
abandoned property, escheat and other similar laws) as general creditors thereof
with respect to any Merger Consideration that may be payable, without interest,
upon due surrender of the Certificates held by them. If any Certificates shall
not have been surrendered prior to three years after the Effective Time (or
immediately prior to such time on which any payment in respect hereof would
otherwise escheat or become the property of any governmental unit or agency),
the payment in respect of such Certificates shall, to the extent permitted by
applicable law, become the property of the Surviving Corporation, free and clear
of all claims or interest of any person previously entitled thereto.
Notwithstanding the foregoing, none of Parent, the Company, the Surviving
Corporation nor the Disbursing Agent shall be liable to any holder of a share of
Company Common Stock for any Merger Consideration delivered in respect of such
share of Company Common Stock to a public official pursuant to any abandoned
property, escheat or other similar law.
SECTION 2.04. Stock Options. The Company shall (a) terminate
the Company's 1996 Stock Incentive Plan and 1996 Stock Option Plan
(collectively, the "Company Option Plans") immediately prior to the Effective
Time without prejudice to the rights of the holders of options (the "Options")
awarded pursuant thereto and (b) grant no additional Options under the Company
Option Plans. The Company shall obtain the consent of each holder of an Option
(whether or not then exercisable) under the Company Option Plans at the
Effective Time to the cancellation of such holder's Options (without regard to
the exercise price of such Option), to take effect immediately prior to the
Effective Time. Each such consent shall require the Company to pay, as soon as
practicable following the Effective Time, in respect of each Option, an amount
equal to the excess, if any, of the Merger Consideration over the exercise price
of such Option, multiplied by the number of shares of Company Common Stock
subject to such Option. Notwithstanding the foregoing, payment may be withheld
in respect of any Option until the consent of the holder thereof to its
cancellation as contemplated hereby is obtained. The Company has obtained
consents from the holders of Options listed on Schedule 2.04 to the cancellation
of their Options contemplated by this Section.
SECTION 2.05. Dissenting Shares. (a) Notwithstanding anything
in this Agreement to the contrary, shares of Company Common Stock that are held
by any record holder who has not voted in favor of the Merger or consented
thereto in writing and who has demanded appraisal rights in accordance with
Section 262 of Delaware Law (the "Dissenting Shares") shall not be converted
into the right to receive the Merger
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Consideration but shall become the right to receive such consideration as may be
determined to be due in respect of such Dissenting Shares pursuant to Delaware
Law; provided, however, that any holder of Dissenting Shares who shall have
failed to perfect or shall have withdrawn or lost his rights to appraisal of
such Dissenting Shares, in each case under Delaware Law, shall forfeit the right
to appraisal of such Dissenting Shares, and such Dissenting Shares shall be
deemed to have been converted into the right to receive, as of the Effective
Time, the Merger Consideration without interest. Notwithstanding anything to the
contrary contained in this Section, if the Merger is rescinded or abandoned,
then the right of any stockholder to be paid the fair value of such
stockholder's Dissenting Shares shall cease. The Surviving Corporation shall
comply with all of its obligations under Delaware Law with respect to holders of
Dissenting Shares.
(b) The Company shall give Parent (i) prompt notice of any
demands for appraisal, and any withdrawals of such demands, received by the
Company and any other related instruments served pursuant to Delaware Law and
received by the Company, and (ii) the opportunity to direct all negotiations and
proceedings with respect to demands for appraisal under Delaware Law. The
Company shall not, except with the prior written consent of Parent, make any
payment with respect to any demands for appraisal or negotiate, offer to settle
or settle any such demands.
SECTION 2.06. Adjustments. (a) If at any time during the
period between the date of this Agreement and the date shares of Company Common
Stock are accepted for payment pursuant to the Offer or the Effective Time, any
change in the outstanding shares of Company Common Stock shall occur, including
by reason of any reclassification, recapitalization, stock dividend, stock split
or combination, exchange or readjustment of shares, or any stock dividend
thereon with the record date during such period, the price per share to be paid
to holders of Company Common Stock in the Offer and the Merger, as the case may
be, shall be appropriately adjusted.
ARTICLE III
THE SURVIVING CORPORATION; DIRECTORS AND OFFICERS
SECTION 3.01. Certificate of Incorporation. The Surviving
Corporation shall adopt the certificate of incorporation of the Merger
Subsidiary in effect at the Effective Time as the certificate of incorporation
of the Surviving Corporation until amended in accordance with applicable law;
provided, however, that at the Effective Time, Article I of such certificate
shall be amended by virtue of this Agreement to read as follows: "The name of
the corporation is Integrated Living Communities, Inc."
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SECTION 3.02. Bylaws. The Surviving Corporation shall adopt the bylaws
of Merger Subsidiary in effect at the Effective Time as the bylaws of the
Surviving Corporation until amended in accordance with applicable law.
SECTION 3.03. Directors and Officers. The directors and officers of
Merger Subsidiary immediately prior to the Effective Time shall be the directors
and officers, respectively, of the Surviving Corporation as of the Effective
Time.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
The Company represents and warrants to Parent that:
SECTION 4.01. Corporate Existence and Power. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware, and has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
substantially as now conducted, except where the failure to do so would not
have, individually or in the aggregate, a Company Material Adverse Effect. For
purposes of this Agreement, the term "Company Material Adverse Effect" means any
change or effect that is or is reasonably likely to be materially adverse to the
condition (financial or otherwise), business, assets or results of operations,
of the Company and its Subsidiaries (as defined in Section 4.06(a) hereof) taken
as a whole or adversely affects the ability of the Company to consummate the
transactions contemplated by this Agreement in any material respect or
materially impairs or delays the Company's ability to perform its obligations
hereunder. The Company is duly qualified to do business as a foreign corporation
and is in good standing in each jurisdiction where the character of the property
owned or leased by it or the nature of its activities makes such qualification
necessary, except for those jurisdictions where the failure to be so qualified
would not have, individually or in the aggregate, a Company Material Adverse
Effect.
SECTION 4.02. Corporate Authorization. The execution, delivery and
performance by the Company of this Agreement and the consummation of the Merger
by the Company are within the Company's corporate power and authority and,
except for any required approval by the Company's stockholders in connection
with the consummation of the Merger, have been duly authorized by all necessary
corporate action on the part of the Company. This Agreement has been duly
executed and delivered by the Company and, assuming the due authorization,
execution and delivery thereof by Parent and Merger Subsidiary, constitutes a
legal, valid and binding agreement of the Company.
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SECTION 4.03. Governmental Authorization. The execution, delivery and
performance by the Company of this Agreement and the consummation of the Merger
by the Company do not require any consent, approval, authorization or permit of
or other action by, or filing with, any governmental body, agency, official or
authority other than (i) the filing of appropriate merger documents in
accordance with Delaware Law and (ii) compliance with applicable requirements of
the HSR Act, the Exchange Act, and any applicable state securities or "blue sky"
laws, except for filings and approvals which are not required prior to the
consummation of the Merger and where the failure of any such action to be taken
or filing to be made would not have, individually or in the aggregate, a Company
Material Adverse Effect or prevent or delay consummation of the Merger.
SECTION 4.04. Non-Contravention. The execution, delivery and
performance by the Company of this Agreement and the consummation of the Merger
and the other transactions contemplated hereby by the Company do not and will
not (i) contravene or conflict with the Certificate of Incorporation or By-Laws
of the Company, (ii) assuming compliance with the matters referred to in Section
4.03, contravene or conflict with or constitute a violation of any provision of
any law, rule, regulation, judgment, injunction, order or decree binding upon or
applicable to the Company or any of its Subsidiaries, (iii) constitute a default
under or give rise to a right of termination, cancellation or acceleration of
any right or obligation or to the loss of any benefit or material adverse
modification of the effect (including an increase in the price paid by, or cost
to, the Company or any of its Subsidiaries) of, or under any provision of any
agreement or other instrument to which the Company is a party or that is binding
upon the Company or any of its Subsidiaries or their properties or assets or any
license, franchise, permit or other similar authorization held by the Company or
any of its Subsidiaries, or (iv) result in the creation or imposition of any
Lien on any asset of the Company or any of its Subsidiaries, except with respect
to clauses (iii) and (iv) as set forth in Schedule 4.04 and except for any
occurrences or results referred to in clauses (ii), (iii), and (iv) that would
not have, individually or in the aggregate, a Company Material Adverse Effect or
prevent or delay consummation of the Merger. For purposes of this Agreement,
"Lien" means, with respect to any asset, any mortgage, lien, pledge, charge,
security interest or encumbrance or right of another to or adverse claim of any
kind in respect of such asset.
SECTION 4.05. Capitalization. (a) The authorized capital stock of the
Company consists of (i) 100,000,000 shares of Company Common Stock, of which, as
of the date hereof, (A) 6,697,900 shares were issued and outstanding and (B)
831,750 shares were reserved for issuance upon exercise of options issued
pursuant to the Company Option Plans and (ii) 5,000,000 shares of preferred
stock, $.01 par value per share, none of which are outstanding. Except as
described in this Section 4.05 or in Schedule 4.05, as of the date of this
Agreement, no shares of capital stock of the Company are reserved for
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issuance for any purpose. Since May 5, 1997, no shares of capital stock have
been issued by the Company except pursuant to options for which shares are
adequately reserved under subclause (B) of clause (i) of this paragraph (a).
Except as set forth in Schedule 4.05, the Company has not granted any options
for, or other rights to purchase, any shares of capital stock of the Company.
Each of the issued shares of capital stock of the Company is duly authorized,
validly issued and fully paid and nonassessable, and has not been issued in
violation of (nor are any of the authorized shares of capital stock subject to)
any preemptive or similar rights created by statute, the Certificate of
Incorporation or Bylaws of the Company, or any agreement to which the Company is
a party or is bound.
(b) Except as set forth in paragraph (a) above, there are no options,
warrants or other rights, agreements, arrangements or commitments of any
character to which the Company is a party relating to the issued or unissued
capital stock of the Company or obligating the Company to grant, issue or sell
any shares of the capital stock of the Company. Except as set forth in Schedule
4.05, there are no obligations, contingent or otherwise, of the Company to (i)
repurchase, redeem or otherwise acquire any shares of Company Common Stock or
other capital stock of the Company, or the capital stock or other equity
interests of any Subsidiary of the Company; or (ii) (other than advances to
Subsidiaries in the ordinary course of business) provide material funds to, or
make any material investment in (in the form of a loan, capital contribution or
otherwise), or provide any guarantee with respect to the obligations of, any
Subsidiary of the Company or any other Person, except as permitted by Section
6.01 in respect of certain acquisition and development activities. There are no
outstanding stock appreciation rights or similar derivative securities or rights
of the Company or any of its Subsidiaries. There are no bonds, debentures, notes
or other indebtedness of the Company having the right to vote (or convertible
into, or exchangeable for, securities having the right to vote) on any matters
on which stockholders of the Company may vote. For purposes of this Agreement,
"Person" means any natural person, corporation, business trust, joint venture,
association, company, partnership, limited liability company or other entity, or
any government, or any agency or political subdivision thereof.
(c) The Company has delivered to Parent complete and correct copies of
the Company Option Plans and all forms of Options issued pursuant to the Company
Option Plans, including all amendments thereto. Schedule 4.05 is a complete and
correct list setting forth as of the date hereof, (i) the number of Options
outstanding, (ii) the dates on which such options were granted and (iii) the
exercise price of each outstanding Option.
SECTION 4.06. Subsidiaries. (a) Each Subsidiary of the Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of its jurisdiction of incorporation or is a partnership duly constituted
under its governing law,
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has all requisite corporate or partnership power and authority to own, lease and
operate its properties and to carry on its business substantially as now
conducted and is duly qualified to do business as a foreign corporation or
partnership and is in good standing in each jurisdiction where the character of
the property owned or leased by it or the nature of its activities makes such
qualification necessary, except where failure to be so would not have,
individually or in the aggregate, a Company Material Adverse Effect. All
Subsidiaries of the Company are set forth on Schedule 4.06. For purposes of this
Agreement, "Subsidiary" of any Person means (i) any corporation or other entity
of which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions are directly or indirectly owned by such Person, (ii) any partnership
of which such Person is a general partner and (iii) any limited liability
company of which such Person owns a majority of the membership interests in or
is its managing Member.
(b) Except as set forth on Schedule 4.06, each Subsidiary of the
Company is wholly-owned by the Company, directly or indirectly, free and clear
of any Lien and free and clear of any other limitation or restriction (including
any restriction on the right to vote, sell or otherwise dispose of such capital
stock or other ownership interests). Except as set forth in the Company SEC
Reports or on Schedule 4.06, there are no outstanding (i) securities of the
Company or any of its Subsidiaries convertible into or exchangeable for shares
of capital stock or other voting securities or ownership interests in any such
Subsidiary of the Company, or (ii) options or other rights to acquire from the
Company or any of its Subsidiaries, and no other obligation of the Company or
any of its Subsidiaries to issue, any capital stock, voting securities or other
ownership interests in, or any securities convertible into or exchangeable for
any capital stock, voting securities or ownership interests in, any such
Subsidiary of the Company (the items in clauses (i) and (ii) being referred to
collectively as the "Company Subsidiary Securities"). There are no outstanding
obligations of the Company or any of such Subsidiaries to repurchase, redeem or
otherwise acquire any outstanding Company Subsidiary Securities.
(c) Except as disclosed on Schedule 4.06, the Company does not directly
or indirectly own any equity or similar interest in, or any interest convertible
into or exchangeable or exercisable for any equity or similar interest in, any
corporation, partnership, joint venture or other business association or entity.
SECTION 4.07. Reports. Since December 31, 1996, the Company and its
Subsidiaries have timely filed (i) all forms, reports, statements and other
documents required to be filed with (A) the SEC, including without limitation
(1) all Annual Reports on Form 10-K, (2) all Quarterly Reports on Form 10-Q, (3)
all proxy statements relating to meetings of stockholders (whether annual or
special), (4) all Current Reports on Form 8-K and (5) all other reports,
schedules, registration statements or other documents
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(collectively referred to as the "Company SEC Reports"), and (B) any other
applicable state securities authorities and (ii) all forms, reports, statements
and other documents required to be filed with any other applicable federal or
state regulatory authorities, including, without limitation, state insurance and
health regulatory authorities, except where the failure to file any such forms,
reports, statements or other documents would not have a Company Material Adverse
Effect (all such forms, reports, statements and other documents in clauses (i)
and (ii) of this Section 4.07 being referred to herein, collectively, as the
"Company Reports"). The Company Reports (i) have been made available to Parent,
(ii) were prepared in all material respects in accordance with the requirements
of applicable law (including, with respect to the Company SEC Reports, the
Securities Act of 1933 and the rules and regulations promulgated thereunder (the
"Securities Act") or the Exchange Act, as the case may be) and (iii) did not at
the time they were filed contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.
SECTION 4.08. Financial Statements. The audited consolidated financial
statements and unaudited consolidated interim financial statements of the
Company and its consolidated Subsidiaries included in the Company SEC Reports,
including reports on Forms 10-K and 10-Q, comply as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, were prepared in accordance with
generally accepted accounting principles applied on a consistent basis (except
as may be indicated in the notes thereto), and fairly present the consolidated
financial position of the Company and its consolidated Subsidiaries as of the
dates thereof and their consolidated results of operations and cash flows for
the periods then ended (subject, in the case of any unaudited interim financial
statements, to normal year-end adjustments, none of which would have,
individually or in the aggregate, a Company Material Adverse Effect).
SECTION 4.09. Proxy Statement; Offer Documents; Schedule 14D-1;
Schedule 14D-9. (a) The Schedule 14D-9 will not, at the time filed with the SEC,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except that no representation is made by the Company with respect to
information supplied by Parent or Merger Subsidiary in writing specifically for
inclusion in the Schedule 14D-9.
(b) The Proxy Statement and the information supplied by the Company in
writing specifically for inclusion or incorporation by reference in the Schedule
14D-1 and the Offer Documents will not, in the case of the Schedule 14D-1 and
the Offer Documents, at the time filed with the SEC, or, in the case of the
Proxy Statement, at the time it is mailed to the Company's stockholders, at the
time of the special meeting of the
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stockholders of the Company to approve the Merger (the "Meeting") or at the
Effective Time, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading, except that no representation is made by the Company with
respect to information supplied by Parent or Merger Subsidiary in writing
specifically for inclusion or incorporation by reference in the Proxy Statement.
The letter to stockholders, notice of meeting, proxy statement and form of
proxy, or the information statement, as the case may be, if any, to be
distributed to stockholders of the Company in connection with the Merger, or any
schedule required to be filed with the SEC in connection therewith, are
collectively referred to as the "Proxy Statement." If, prior to the Effective
Time, any event relating to the Company or any of its subsidiaries or any of
their affiliates, officers or directors is discovered by the Company that should
be set forth in an amendment of or supplement to the Schedule 14D-1 or the Offer
Documents, the Company will promptly inform Parent. The Proxy Statement and any
amendments or supplements thereto will, when filed, comply as to form in all
material respects with the applicable requirements of the Exchange Act.
SECTION 4.10. Absence of Certain Changes. Except as disclosed in
Schedule 4.10, since December 31, 1996 (a) except as permitted by Section 6.01
in respect of certain acquisition and development activities or as described in
any Company SEC Report, the Company and its Subsidiaries have conducted their
business in all material respects in the ordinary course consistent with past
practices, (b) except as described in any Company SEC Report, there has not been
any event or events having, individually or in the aggregate, a Company Material
Adverse Effect (provided, however, that changes affecting the health care
industry generally or in the subacute healthcare or assisted living communities
industries, generally, changes in the economies of the jurisdictions in which
the Company or its Subsidiaries conduct business, and any changes in the
condition, business, operations or financial results of the Company and its
Subsidiaries taken as a whole that are caused primarily or substantially by such
changes or events or as a result of the announcement of this Agreement and the
transactions contemplated hereby or by the deferral or termination of
development activities in anticipation of, or required by, this Agreement shall
not be deemed to be a Company Material Adverse Effect and no Company Material
Adverse Effect shall be deemed to have occurred as a result of the payment by
the Company of costs, expenses, fees or similar charges incurred by its
contemplation, negotiation, execution or consummation of this Agreement, up to
the amounts set forth in Schedule 4.10), (c) there has not been any declaration,
setting aside or payment of any dividend or other distribution with respect to
any shares of capital stock of the Company, or any repurchase, redemption or
other acquisition by the Company or any of its Subsidiaries of any outstanding
shares of capital stock or other securities of, or other ownership interests in,
the Company or any of its Subsidiaries or any split, combination or
reclassification of any of any of the Company's
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capital stock or issuance or authorization relating to the issuance of any other
securities in respect of, in lieu of or in substitution for shares of the
Company's capital stock, (d) there has not been any amendment of any material
term of any outstanding security of the Company or any of its Subsidiaries, (e)
except as reflected in the Company's Quarterly Report on Form 10-Q for the
quarter ending March 31, 1997, there has not been any incurrence, assumption or
guarantee by the Company or any of its Subsidiaries of any indebtedness for
borrowed money or any other agreement or arrangement entered into by the Company
or any of its Subsidiaries having the economic effect of any of the foregoing,
except (i) accounts payable of the Company or any of its Subsidiaries incurred
in the ordinary course of business consistent with past practice, (ii) pursuant
to loan and other financing agreements disclosed in the SEC Reports or Schedule
4.10, or (iii) in connection with acquisition and development activity prior to
April 30, 1997 which is reflected in the Company's unaudited balance sheet as at
April 30, 1997 previously delivered to Parent; (f) there has not been any
creation or assumption by the Company or any of its Subsidiaries of any Lien on
any material asset other than in the ordinary course of business consistent with
past practices (including the sale, pledging or assignment of receivables)
except in connection with indebtedness referred to in clause (e); (g) there has
not been any change in any method of accounting or accounting practice by the
Company or any of its Subsidiaries, except for any such change required by
reason of a concurrent change in generally accepted accounting principles or to
conform a Subsidiary's accounting policies and practices to those of the
Company; (h) except as disclosed in any Company SEC Report or in Schedules
4.05(a), 4.10(h) or 6.07 to this Agreement, there has not been any (i) grant of
any severance or termination pay to any director, executive officer or key
employee of the Company or any of its Subsidiaries, (ii) entering into of any
employment, deferred compensation or other similar agreement (or any amendment
to any such existing agreement) with any director, executive officer or key
employee of the Company or any of its Subsidiaries, (iii) increase in benefits
payable under any existing severance or termination pay policies or employment
agreements with any director, executive officer or key employee, or (iv)
increase in compensation, bonus or other benefits payable to directors,
executive, officers or key employees of the Company or any of its Subsidiaries;
(i) there has not been any sale or transfer by the Company of any of the assets
of the Company (other than sales or transfers of immaterial assets in the
ordinary course of business), cancellation of any material debts or claims or
waiver of any material rights by the Company; (j) there has not been any
amendment to the Company's Certificate of Incorporation or Bylaws; (k) the
Company has not made any loans, advances or capital contributions to or
investments in, any other person, other than to any direct or indirect
wholly-owned Subsidiary of the Company and other than travel and entertainment
advances to employees of the Company in the ordinary course of business
consistent with past practices or in connection with development projects
disclosed to Parent; (l) except for this Agreement and any other agreement
executed and delivered pursuant to this Agreement, the Company has not entered
into any material transaction or
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incurred any material expenditure other than in the ordinary course of business
or permitted under other Sections of this Agreement or in connection with the
transactions contemplated hereby or in connection with development projects
disclosed to Parent; and (m) except as specifically contemplated by Schedule
4.10, there have not been any payments or other distributions by the Company or
any of its Subsidiaries to IHS or any of its officers, directors or affiliates,
except for compensation for service as a director or officer as disclosed in the
Company SEC Reports.
SECTION 4.11. Litigation. Except as described in any Company SEC
Report, there is no action, suit, investigation or proceeding pending or, to the
best of the Company's knowledge, threatened against the Company or any of its
Subsidiaries or to which any of their respective properties, assets or rights
are reasonably likely to be subject before any court or arbitrator or any
governmental body, agency or official which would reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse Effect, nor
is there any judgment, decree, injunction, rule or order of any court or
arbitrator or any governmental body, agency or official outstanding against the
Company or any of its Subsidiaries which would have, individually or in the
aggregate, a Company Material Adverse Effect.
SECTION 4.12. Certificate of Incorporation and Bylaws. The Company has
heretofore furnished to Parent complete and correct copies of the Certificates
of Incorporation and the Bylaws or the equivalent organizational documents, in
each case as amended or restated, of the Company and each of its Subsidiaries.
SECTION 4.13. ERISA. (a) "Employee Plans" shall mean each "employee
benefit plan," as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974 ("ERISA"), which (i) is subject to any provision of ERISA
and (ii) is maintained, administered or contributed to by the Company or any
affiliate (as defined below) and covers any employee or former employee of the
Company or any affiliate or under which the Company or any affiliate has any
liability. For purposes of this Section and Section 4.13, "affiliate" of any
Person means any other Person which, together with such Person, would be treated
as a single employer under Section 414 of the Internal Revenue Code of 1986, as
amended (the "Code").
(b) No Employee Plan constitutes a "multiemployer plan," as defined in
Section 3(37) of ERISA, and no Employee Plan is subject to Title IV of ERISA.
Neither the Company nor any of its affiliates has incurred, nor are they
reasonably likely to incur, any liability under Title IV of ERISA arising in
connection with the termination of, or complete or partial withdrawal from, any
plan previously covered by Title IV of ERISA that would have, individually or in
the aggregate, a Company Material Adverse Effect. No transaction or holding of
any asset under or in connection with any Employee Plan has or will make the
Company or any of its Subsidiaries or any officer or director of the
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Company or any of its Subsidiaries subject to any liability under Section 502(i)
of ERISA or liable for any tax pursuant to Section 4975 of the Code that would
have, individually or in the aggregate, a Company Material Adverse Effect.
(c) Except to the extent it would not have, individually or in the
aggregate, a Company Material Adverse Effect, (i) each Employee Plan that is
intended to be qualified under Section 401(a) of the Code is the subject of a
favorable determination letter issued by the Internal Revenue Service relating
to its qualified status, and, to the Company's knowledge, nothing has occurred
that would adversely effect the qualified status of any such plan, and (ii) each
Employee Plan has been maintained in compliance with its terms and with the
requirements prescribed by any and all statutes, orders, final rules and final
regulations, including but not limited to ERISA and the Code, which are
applicable to such Employee Plan.
(d) "Benefit Arrangement" shall mean each employment, severance or
other similar contract, arrangement or policy and each plan or arrangement
(written or oral) providing for compensation, bonus, profit-sharing, stock
option, or other stock related rights or other forms of incentive or deferred
compensation, which (i) is not an Employee Plan, (ii) is entered into,
maintained or contributed to, as the case may be, by the Company or any of its
affiliates, and (iii) covers any employee or former employee of the Company or
any of its affiliates. Except to the extent that it would not have, individually
or in the aggregate, a Company Material Adverse Effect, each Benefit Arrangement
has been maintained in compliance with its terms and with the requirements
prescribed by any and all statutes, orders, rules and regulations that are
applicable to such Benefit Arrangement.
(e) With respect to each Employee Plan and Benefit Arrangement (where
applicable): the Company has made available to Parent complete and accurate
copies of the following: (i) all plan texts and agreements; (ii) all material
employee communications (including summary plan descriptions); (iii) the most
recent annual report; (iv) the most recent annual and periodic accounting of
plan assets; (v) the most recent determination letter received from the IRS; and
(vi) the most recent actuarial valuation.
(f) Except as set forth on Schedule 4.13, the consummation of the
transactions contemplated by this Agreement will not (i) entitle any individual
to severance pay, (ii) accelerate the time of payment or vesting of, or increase
the amount of, compensation due to any individual or (iii) result in the payment
of an amount that will be taken into account in determining whether there is an
"excess parachute payment" under Section 280G(b)(1) of the Code.
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(g) The Company has received the consent of each participant in the
Company's SERP to the amendments to the SERP attached hereto as Schedule 4.13(g)
and has previously provided Parent with a copy of such consents.
SECTION 4.14. Taxes. Except for such matters that would not have,
individually or in the aggregate, a Company Material Adverse Effect, (a) the
Company and its Subsidiaries have timely filed all returns and reports required
to be filed by them with any taxing authority with respect to taxes, taking into
account any extension of time to file granted to or obtained on behalf of the
Company and its Subsidiaries, (b) all taxes required to be paid with respect to
the periods covered by such returns or reports that are due prior to the
Effective Time have been paid or will be paid prior to the Effective Time, (c)
no deficiency for any material amount of tax has been asserted or assessed by a
taxing authority against the Company or any of its Subsidiaries and remains
unpaid, (d) all liability for taxes of the Company or any of its Subsidiaries
that are or will become due or payable with respect to periods covered by the
financial statements referred to in Section 4.08 have been paid or adequately
reserved for on such financial statements in accordance with generally accepted
accounting principles and (e) the Company and its Subsidiaries have withheld and
paid all taxes required to have been withheld or paid in connection with amounts
paid to any employee, independent contractor, creditor, stockholder or other
third party.
SECTION 4.15. Finders and Investment Bankers. Except for ▇▇▇▇▇ ▇▇▇▇▇▇,
whose fees will be paid by the Company pursuant to an engagement letter, a copy
of which has previously been provided to Parent, there is no investment banker,
broker, finder or other intermediary which has been retained by or is authorized
to act on behalf of the Company or any of its Subsidiaries who might be entitled
to any fee or commission in connection with the transactions contemplated by
this Agreement. Neither the Company nor any of its Subsidiaries has entered into
any contract, arrangement or understanding to pay any fee or commission to any
investment banker, broker, finder or other intermediary on behalf of any
significant stockholders of the Company in their capacity as stockholders of the
Company in connection with the transactions contemplated by this Agreement.
SECTION 4.16. Opinion of Financial Advisor. The Board of Directors of
the Company has received the opinion of ▇▇▇▇▇ ▇▇▇▇▇▇, a copy of which has been
provided to Parent, to the effect that, as of the date of this Agreement, the
consideration to be received in the Offer and the Merger, taken together, by the
holders of Company Common Stock (other than Parent or its affiliates) is fair to
such holders from a financial point of view.
SECTION 4.17. Vote Required. The only vote of the holders of any class
or series of Company capital stock necessary to approve the Merger is the
affirmative
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vote of the holders of a majority of the outstanding shares of the Company
Common Stock.
SECTION 4.18. Anti-takeover Plan; State Takeover Statutes. Neither the
Company nor any Subsidiary has in effect any plan, scheme, device or
arrangement, commonly or colloquially known as a "poison pill" or
"anti-takeover" plan or any similar plan, scheme, device or arrangement. The
Board of Directors of the Company has approved the Offer, the Merger, the Tender
Agreement, and this Agreement and has agreed (unless otherwise required in
accordance with fiduciary duties of the Board of Directors under applicable law
as advised by independent legal counsel to the Company) to recommend that
holders of shares of Company Common Stock tender their shares in the Offer and
vote their shares in favor of the Merger; such approval is sufficient to render
inapplicable to the Offer, the Merger, and this Agreement and the transactions
contemplated by this Agreement the provisions of Section 203 of Delaware Law. To
the best of the Company's knowledge, no other state takeover statute or similar
statute or regulation applies or purports to apply to the Offer, the Merger,
this Agreement, or any of the transactions contemplated by this Agreement.
SECTION 4.19. Environmental Matters. Except as set forth on Schedule
4.19 or in the Company SEC Reports (including the notes to the financial
statements attached thereto), to the Knowledge of the Company, (A) the Company
and each of its Subsidiaries has obtained and is in material compliance with the
terms and conditions of all permits, licenses and other authorizations required
under applicable Environmental Laws; (B) the Company and each of its
Subsidiaries is in material compliance with all applicable Environmental Laws;
(C) none of the Company or any of its Subsidiaries has (and to the Company's
Knowledge, IHS has not) received written notice of any past or present events,
conditions, circumstances, activities, practices or incidents that have resulted
in or threatened to result in any common law or legal liability of the Company
or any Subsidiary or otherwise form the basis of any claim, action, suit or
proceeding, hearing or investigation against the Company or any Subsidiary under
any Environmental Laws; and (D) the Company has no liabilities and there are no
circumstances or events related to the Company or its properties, assets or
business that are reasonably likely to result in any such liability under any
Environmental Laws, except to the extent that any of the matters addressed in
clauses (A) through (D) above would not, individually or in the aggregate,
constitute a Company Material Adverse Effect. As used herein, (i) Knowledge
means actual knowledge without independent investigation, and (ii)
"Environmental Laws" means all federal, state and local statutes, regulations
and ordinances concerning pollution and protection of the environment,
including, without limitation all those relating to the presence, use,
production, distribution, labeling, testing, processing, discharge, release,
threatened release, control, or cleanup of any hazardous materials, substances
or wastes, as such statutes, regulations and ordinances are enacted and in
effect at or prior to the Closing. The Company has made available to Parent
true,
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complete and correct copies of all environmental reports, including, to the
extent they exist, Phase I and Phase II Environmental Reports, in its possession
relating to the Company or its properties or assets.
SECTION 4.20. Title to Properties; Absence of Liens and Encumbrances;
Leases; Condition of Facilities. (a) Except as set forth in Schedule 4.20(a),
the Company and its Subsidiaries have good and insurable title to all of their
real properties and interests in real properties (fee simple title as to real
properties owned by the Company or its Subsidiaries) set forth on Schedule
4.20(a) and good title to all their other properties and assets, tangible and
intangible, including all of the buildings, structures and other improvements
located on such real properties, free and clear of all claims, encumbrances and
other title defects other than (i) as specifically disclosed in the consolidated
balance sheet of the Company at ▇▇▇▇▇ ▇▇, ▇▇▇▇, (▇▇) any liens for taxes not yet
due and payable or being contested in good faith by appropriate proceedings for
which adequate reserves have been provided in the consolidated balance sheet of
the Company at ▇▇▇▇▇ ▇▇, ▇▇▇▇, (▇▇▇) Liens and other title defects disclosed on
the title policies or title reports for the real properties owned by the Company
and its Subsidiaries provided to Parent and (iv) such imperfections of title,
covenants, restrictions, easements and other non-monetary encumbrances, if any,
as do not, individually or in the aggregate, materially detract from the value
or materially interfere with the present use of any of the properties of the
Company or any of its Subsidiaries or otherwise would not have, individually or
in the aggregate, a Company Material Adverse Effect. The real property listed on
Schedule 4.20(a) constitutes all of the real property owned by the Company and
its Subsidiaries.
(b) The leases pursuant to which the Company or any of its Subsidiaries
leases any real or personal property are (i) valid and binding on the Company or
the applicable Subsidiary and (ii), to the knowledge of the Company, valid and
binding on all other respective parties to such leases in accordance with their
respective terms. There are not under such leases any existing breaches,
defaults, events of default by the Company or a Subsidiary or events which with
notice and/or lapse of time would constitute a breach, default or event of
default by the Company or a Subsidiary, nor does the Company know, nor has the
Company received notice of, or made a claim with respect to, any breach or
default, the consequences of which would have, individually or in the aggregate,
a material adverse effect on the aggregate value of the properties of the
Company and its Subsidiaries or a Company Material Adverse Effect. Except as set
forth in Schedule 4.20(b), none of the rights of the Company or its Subsidiaries
under any such leases is subject to termination or modification as a result of
the transactions contemplated hereby, except where such modification or
termination would not have, individually or in the aggregate, a Company Material
Adverse Effect. The Company has provided Parent with true, correct and complete
copies of all of the leases, subleases, licenses, overleases and other similar
agreements (including all modifications,
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amendments and supplements thereto) with respect to real property leased by the
Company or its Subsidiaries, requiring, in each case, rental payments on real
property of over $75,000 per year. Schedule 4.20(b) lists all such documents.
(c) To the knowledge of the Company, each of the facilities owned,
leased or managed by the Company or its Subsidiaries (each such facility, a
"Facility") is in all material respects suitable for its current and intended
use and is in all material respects in proper condition for such use.
(d) With respect to the properties set forth on Schedule 4.20(d), there
has not been any event and no condition exists which has resulted in a material
loss in the value of such property which is not covered by insurance (subject to
deductibles) or which renders such property unfit for its intended use. The
transactions contemplated by that certain Purchase and Sale Agreement dated as
of April 28, 1997 among Cherry Hills Club Partners, a California limited
partnership, Integrated Management ▇▇▇▇▇▇▇▇▇▇ Point, Inc., a Delaware
corporation, and Integrated Living Communities, Inc., a Delaware corporation,
have been consummated without any waiver or amendment of any material terms or
conditions by the Company.
(e) Schedule 4.20(e) is a true, correct and complete schedule of all
parcels of real property owned by the Company and its Subsidiaries which
constitute condominium units. The Company has heretofore delivered to, or has
caused the applicable Subsidiary to delivery to, Parent true, correct and
complete copies of all condominium declarations, by-laws and other condominium
association documents relating to each such unit (including all modifications,
amendments and supplements to any of the foregoing). Neither the Company nor any
Subsidiary is in default under any of the foregoing documents which default,
individually or in the aggregate with all other such defaults, would have a
Company Material Adverse Effect.
(f) Schedule 4.20(f)(1) is a correct and complete schedule of (i) all
facilities ("Contract Facilities") which the Company or its Subsidiaries are
obligated, or have the right, to purchase or lease which are now not owned or
leased by the Companies and its Subsidiaries and (ii) all such facilities, and
all facilities included in Schedule 4.20(a) or 4.20(b), which are not fully
constructed and operational. Schedule 4.20(f)(2) is a correct and complete
schedule of the purchase and sale agreements, development agreements, purchase
options and other similar agreements relating to the Contract Facilities.
Neither the Company nor any Subsidiary nor, to the best knowledge of the
Company, any other party to any such agreement is in default thereunder which
default, individually or in the aggregate would have a Company Material Adverse
Effect. True, correct and complete copies of all such agreements have been made
available to Parent.
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SECTION 4.21. Compliance with Laws; Government Approvals. The business
of the Company and its Subsidiaries has been operated in compliance with all
laws, ordinances, regulations and orders of all governmental entities, except
for violations which would not have, individually or in the aggregate, a Company
Material Adverse Effect. The Company and its Subsidiaries have all permits,
certificates, licenses, approvals, consents and other authorizations of all
governmental agencies (collectively, "Government Approvals"), whether Federal,
state or local, required by law with respect to the operation of their
businesses, except those the absence of which would not have, individually or in
the aggregate, a Company Material Adverse Effect or prevent or delay
consummation of the Merger. All such Government Approvals are in full force and
effect, and the Company and its Subsidiaries are in compliance in all material
respects with all conditions and requirements of the Government Approvals and
with all rules and regulations relating thereto. The Company has not received
any notices of violations of any Federal, state and local laws, regulations and
ordinances relating to its business and operations, including the Occupational
Safety and Health Act, the Americans with Disabilities Act, any applicable
Medicare or Medicaid, statutes and regulations, and any applicable law for
reimbursement for assisted living care or other type of care provided at each
Facility, license, certificate of need, ordinance, or governmental or regulatory
rule or regulation, whether Federal, state, local or foreign, to which the
Company's business, operations, assets or properties is subject and no notice of
any pending inspection of or violation of any such law, regulation or ordinance
has been received by the Company which, in the case of any of the foregoing, if
it were determined that a violation had occurred, would have a Company Material
Adverse Effect.
SECTION 4.22. Undisclosed Liabilities. Except as and to the extent
reflected, reserved against or otherwise disclosed in the Company's consolidated
balance sheet at December 31, 1996 (including the notes thereto), or as set
forth in Schedule 4.22, neither the Company nor any of its Subsidiaries had, at
December 31, 1996, any liabilities or obligations of any kind, whether accrued,
absolute, asserted or unasserted, contingent or otherwise, whether or not such
liabilities would have been required to be disclosed on a balance sheet prepared
in accordance with generally accepted accounting principles consistently
applied, which would have, individually or in the aggregate, a Company Material
Adverse Effect.
SECTION 4.23. Insurance. The Company maintains, and has maintained,
without interruption, during its existence, policies or binders of insurance
covering such risk, and events, including personal injury, property damage and
general liability in amounts the Company reasonably believes adequate for its
business and operations and except as set forth on Schedule 4.23, such policies
shall not terminate as a result of the consummation of the transactions
contemplated hereby.
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SECTION 4.24. Absence of Sensitive Payments. To the Company's
knowledge, none of the Company, or any Subsidiary or affiliate or any officer or
director of any of them acting alone or together, has performed any of the
following acts, except to the extent that such acts, individually or
collectively, would not have a Company Material Adverse Effect: (i) the making
of any contribution, payment, remuneration, gift or other form of economic
benefit (a "Payment") to or for the private use of any governmental official,
employee or agent where the Payment or the purpose of the Payment was illegal
under the laws of the United States or the jurisdiction in which such payment
was made, (ii) the establishment or maintenance of any unrecorded fund, asset or
liability for any purpose or the making of any false or artificial entries on
its books, (iii) the making of any Payment to any person or the receipt of any
Payment with the intention or understanding that any part of the Payment was to
be used for any purpose other than that described in the documents supporting
the Payment, or (iv) the giving of any Payment to, or the receipt of any Payment
from, any person who was or could have been in a position to help or hinder the
business of the Company or any Subsidiary (or assist the Company or any
Subsidiary in connection with any actual or proposed transaction) which (A)
would reasonably have been expected to subject the Company or any Subsidiary to
any damage or penalty in any civil, criminal or governmental litigation or
proceeding, (B) if not given in the past, would have had a Company Material
Adverse Effect or (C) if it had not continued in the future, would have had a
Company Material Adverse Effect.
SECTION 4.25. Affiliate Transactions. Except to the extent disclosed in
any Company SEC Report, there are no other transactions, agreements,
arrangements or understandings between the Company or its Subsidiaries, on the
one hand, and the Company's Affiliates (other than wholly-owned Subsidiaries of
the Company) or other Persons, on the other hand, that would be required to be
disclosed under Item 404 of Regulation S-K under the Securities Act. For
purposes of this Agreement, the term "Affiliate," when used with respect to any
Person, means any other Person directly or indirectly controlling, controlled
by, or under common control with such Person. As used in the definition of
"Affiliate," the term "control" means possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise.
SECTION 4.26. Contracts. There is no contract, agreement or
understanding required to be described in or filed as an exhibit to any Company
SEC Report that is not described in or filed as required by the Securities Act
or the Exchange Act, as the case may be. Except as would not individually or in
the aggregate have a Company Material Adverse Effect, all such contracts,
agreements and understandings are valid and binding and are in full force and
effect and enforceable in accordance with their respective terms other than
contracts, agreements or understandings which are by their terms no longer in
force or effect. Except as disclosed in
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Schedule 4.04 or 4.26 to this Agreement, no approval or consent of, or notice
to, any Person is needed in order that such contract, agreement or understanding
shall continue in full force and effect in accordance with its terms without
penalty, acceleration or rights of early termination following the consummation
of the transactions contemplated by this Agreement. Except to the extent any of
the following would not individually or in the aggregate have a Company Material
Adverse Effect, the Company is not in violation or breach of or default under
any such contract, agreement or understanding, nor to the Company's knowledge is
any other party to any such contract, agreement or understanding. Except as set
forth in the Company SEC Reports or as set forth in Schedule 4.26, the Company
is not a party to any contracts, agreements or arrangements (including leases of
real property) (i) restricting the ability of the Company or any of its
Subsidiaries to compete or engage in business or guarantees of indebtedness of
any person (other than a Subsidiary) or (ii) with IHS or any of its officers,
directors or affiliates which are not terminable by the Company without penalty
on no more than 30-days' written notice. Except under contracts disclosed
pursuant to the preceding sentence or except as disclosed on Schedule 4.26, IHS
or its affiliates do not provide any services or benefits to the Company and its
Subsidiaries the absence of which individually or in the aggregate would have a
Company Material Adverse Effect.
SECTION 4.27. Offer Price. The price per share of Company Common Stock
to be paid pursuant to the Offer and Merger is no less than the price per share
of Company Common Stock offered to be paid by any of the other participants in
the auction for the Company conducted by the Company with the assistance of
▇▇▇▇▇ ▇▇▇▇▇▇ Inc.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF PARENT
Parent represents and warrants to the Company that:
SECTION 5.01. Corporate Existence and Power. Parent is a limited
partnership duly organized, validly existing and in good standing under the laws
of the State of Delaware, and Merger Subsidiary is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware, and each of them has all requisite partnership or corporate power
and authority to own, lease and operate its properties and to carry on its
business substantially as now conducted, except where the failure to do so would
not have, individually or in the aggregate, a Parent Material Adverse Effect.
For purposes hereof, the term "Parent Material Adverse Effect" means any change
or effect that is or is reasonably likely to be materially adverse to the
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condition (financial or otherwise), business, assets or results of operations,
of the Parent and its Subsidiaries taken as a whole or adversely effects the
ability of the Parent to consummate the transactions contemplated by this
Agreement in any material respect or materially impairs or delays the Parent's
ability to perform its obligations hereunder. Parent is duly qualified to do
business as a foreign limited partnership and is in good standing in each
jurisdiction where the character of the property owned or leased by it or the
nature of its activities makes such qualification necessary, except for those
jurisdictions where the failure to be so qualified would not have, individually
or in the aggregate, a Parent Material Adverse Effect. Merger Subsidiary has not
engaged and will not engage in any activities other than in connection with or
as contemplated by this Agreement and the transactions contemplated hereby.
SECTION 5.02. Corporate Authorization. The execution, delivery and
performance by each of Parent and Merger Subsidiary of this Agreement and the
consummation of the Merger by Merger Subsidiary are within the partnership or
corporate powers and authority, as the case may be, of each of Parent and Merger
Subsidiary and have been duly authorized by all necessary partnership or
corporate action, as the case may be, on the part of each of Parent and Merger
Subsidiary. Each of Parent, as sole stockholder of Merger Subsidiary, and the
Board of Directors of Merger Subsidiary has approved the Merger and no further
corporate or stockholder action is required on the part of Merger Subsidiary in
connection with the consummation of the Merger other than the filing of a
certificate of merger as contemplated by this Agreement. This Agreement has been
duly executed and delivered by Parent and Merger Subsidiary and, assuming the
due authorization, execution and delivery thereof by the Company, constitutes a
legal, valid and binding agreement of each of Parent and Merger Subsidiary.
SECTION 5.03. Governmental Authorization. The execution, delivery and
performance by Parent and Merger Subsidiary of this Agreement and the
consummation of the Merger by Merger Subsidiary do not require any consent,
approval, authorization or permit of or other action by or filing with, any
governmental body, agency, official or authority other than (i) as set forth on
Schedule 5.03, (ii) the filing of appropriate merger documents in accordance
with Delaware Law and (iii) compliance with any applicable requirements of the
HSR Act, the Exchange Act, the Securities Act, any applicable state securities
or "blue sky" laws, except for filings not required prior to consummation of the
Merger and where the failure of any such action to be taken or filing to be made
would not have, individually or in the aggregate, a Parent Material Adverse
Effect or prevent or delay consummation of the Merger.
SECTION 5.04. Non-Contravention. The execution, delivery and
performance by each of Parent and Merger Subsidiary of this Agreement and the
consummation of the Merger by Merger Subsidiary do not and will not (i)
contravene or conflict with the limited partnership agreement of Parent or the
certificate of
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incorporation or bylaws of Merger Subsidiary, (ii) assuming compliance with the
matters referred to in Section 5.03, contravene or conflict with or constitute a
violation of any provision of law, rule, regulation, judgment, injunction, order
or decree binding upon or applicable to Parent or any of its Subsidiaries, (iii)
constitute a default under or give rise to any right of termination,
cancellation or acceleration of any right or obligation of Parent or any of its
Subsidiaries or to a loss of any benefit to which Parent or any of its
Subsidiaries is entitled under any provision of any material agreement or other
instrument binding upon Parent or any of its Subsidiaries, their property or
assets or any license, franchise, permit or other similar authorization held by
Parent or any of its Subsidiaries, or (iv) result in the creation or imposition
of any Lien on any material asset of Parent or any of its Subsidiaries, except
for any occurrences or results referred to in clauses (ii), (iii) and (iv) which
would not have, individually or in the aggregate, a Parent Material Adverse
Effect or prevent or delay consummation of the Merger.
SECTION 5.05. Proxy Statement; Offer Documents; Schedule 14D-1;
Schedule 14D-9. (a) The Schedule 14D-1 and the Offer Documents will not, in the
case of the Schedule 14D-1, at the time filed with the SEC, and, in the case of
the Offer Documents, when first published, sent or given to the stockholders of
the Company, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading, except that no representation is made by Parent or Merger
Subsidiary with respect to information supplied by the Company in writing
specifically for inclusion in the Schedule 14D-1 or the Offer Documents.
(b) None of the information supplied by Parent, Merger Subsidiary and
their respective affiliates in writing specifically for inclusion or
incorporation by reference in the Schedule 14D-9 and/or the Proxy Statement
will, in the case of the Schedule 14D-9, at the time filed with the SEC, or, in
the case of the Proxy Statement, at the time the Proxy Statement is mailed to
the Company's stockholders, at the time of the Meeting or at the Effective Time,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. If, prior to the Effective Time, any event relating to Parent,
Merger Subsidiary or any of their affiliates, officers or directors is
discovered by Parent that should be set forth in an amendment of or supplement
to the Schedule 14D-9 or the Proxy Statement, Parent will promptly inform the
Company.
SECTION 5.06. Financing. Parent and Merger Subsidiary have
unconditional access to and will have, sufficient funds to enable them to
consummate the Offer and the Merger on the terms contemplated by this Agreement.
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ARTICLE VI
COVENANTS
SECTION 6.01. Conduct of the Company. Except as expressly contemplated
by this Agreement, from the date hereof until the Effective Time, the Company
and its Subsidiaries shall conduct their business in the ordinary course
consistent with past practice and shall use their best efforts to preserve
intact their business organizations and relationships with third parties and to
keep available the services of their present officers and key employees. Except
as otherwise approved in writing by Parent or as expressly contemplated by this
Agreement, and without limiting the generality of the foregoing, from the date
hereof until the Effective Time:
(a) the Company shall not, and shall not permit any
of its Subsidiaries to, adopt or propose any change in its
Certificate of Incorporation or Bylaws or comparable charter
or other organization documents;
(b) the Company shall not, and shall not permit any
of its Subsidiaries to, acquire or agree to acquire, lease or
manage (i) by merging or consolidating with, or by purchasing
a substantial portion of the assets of, or by any other
manner, any business or any corporation, partnership, joint
venture, association or other business organization or
division thereof or (ii) any assets, other than assets that
are immaterial to the Company and its Subsidiaries taken as a
whole and except for purchases in the ordinary course of
business consistent with past practice, or (iii) any long term
care or assisted living facility;
(c) the Company will not, and will not permit its
Subsidiaries to, sell, lease, license, mortgage or otherwise
encumber or subject to any Lien or otherwise dispose of any of
its properties or assets, or stock or other ownership interest
in any of its properties or subsidiaries other than (i) in the
ordinary course of business consistent with past practice (ii)
pursuant to any agreements existing as of the date hereof,
which agreements are set forth on Schedule 4.20 to this
Agreement, (iii) any Liens for taxes not yet due and payable
or being contested in good faith by appropriate proceedings
for which adequate reserves have been provided in the
consolidated balance sheet of the Company at March 31, 1997
and (iv) such mechanics and similar liens, if any, as do not
materially detract from the value of any of such properties,
assets, stock or ownership interests or materially interfere
with the present use of any of such properties or assets;
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(d) the Company shall not declare, set aside, or pay
any dividends or make any distributions on Company Common
Stock;
(e) the Company shall not, and shall not permit any
of its Subsidiaries to, (i) issue, deliver or sell, or
authorize or propose the issuance, delivery or sale of, any
capital stock of the Company or any Company Subsidiary
Securities, or any security convertible into or exercisable
for either of the foregoing other than the issuance of shares
of Company Common Stock upon the exercise of Options as
described in Section 4.05, (ii) split, combine or reclassify
any capital stock of the Company or any of its Subsidiaries or
issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for shares of
capital stock of the Company or any of its Subsidiaries or
(iii) except as required or permitted by this Agreement or as
disclosed in Section 4.05, repurchase, redeem or otherwise
acquire any shares of capital stock of the Company or any of
its Subsidiaries or any other securities thereof or any
rights, warrants or options to acquire any such shares or
other securities;
(f) except as otherwise expressly permitted hereby,
the Company will not make any commitment or enter into, or
amend, modify, or terminate any contract or agreement material
to the Company and its Subsidiaries taken as a whole except in
the ordinary course of business consistent with past practice;
(g) (i) except as contemplated by Schedule 6.01(g),
the Company will not, and will not permit any of its
Subsidiaries to, incur any indebtedness for borrowed money or
guarantee any such indebtedness of another person, issue or
sell any debt securities or warrants or other rights to
acquire any debt securities of the Company or any of its
Subsidiaries, guarantee any debt securities of another person,
enter into any "keep well" or other agreement to maintain any
financial statement condition of another person or enter into
any arrangement having the economic effect of any of the
foregoing, except for borrowings under its line of credit for
working capital purposes and the endorsement of checks in the
normal course of business; or (ii) make any loans, advances or
capital contributions to, or investments in, any other person,
other than to the Company or any direct or indirect wholly
owned subsidiary of the Company and other than travel and
entertainment advances to employees in the ordinary course of
business consistent with past practice;
(h) except as contemplated by Schedule 6.01(h), the
Company will not, and will not permit any of its Subsidiaries
to, (i) increase the
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compensation payable or to become payable to its officers,
directors or key employees, (ii) grant any severance or
termination pay to officers, directors or key employees; (iii)
enter into any employment, severance or consulting agreement
with any current or former director, officer or other employee
of the Company or any Subsidiary, or (iv) establish, adopt,
enter into or amend, any collective bargaining, bonus, profit
sharing, thrift, compensation stock option, restricted stock,
pension, retirement, deferred compensation, employment
termination, severance or other plan, agreement, trust, fund,
policy or arrangement for the benefit of any current or former
director, officer or employee;
(i) except as disclosed in the Company SEC Reports
and except as may be required as a result of a change in law
or in generally accepted accounting principles or a change in
order to comply with SEC requirements, the Company will not,
and will not permit any of its Subsidiaries to, change any of
its accounting policies or its procedures (including, without
limitation, procedures with respect to the payment of accounts
payable and collection of accounts receivable);
(j) the Company will not, and will not permit its
Subsidiaries to, (i) except as specifically contemplated by
Schedule 6.01(j) make any payments or other distributions to
IHS, its officers, directors or affiliates except pursuant to
existing compensation arrangements for directors or officers
of the Company or (ii) enter into any contracts, agreements or
understandings with IHS, its officers, directors or
affiliates;
(k) the Company will, and the Company will use its
reasonable best efforts to ensure that it and each of its
Subsidiaries will, use its reasonable best efforts to keep or
cause to be kept its insurance policies (or substantial
equivalents) in such amounts duly in force until the Effective
Time and will give Parent notice of any material change in its
insurance policies;
(l) except as permitted by the last paragraph of
Section 6.01 in respect of certain acquisition or development
activities or in connection with the expenses incurred or to
be incurred in connection with this Agreement and the
transactions contemplated hereby as set forth in Schedule
4.10(b) or in connection with the payment of corporate
administrative and overhead expenses consistent with past
practice, or with the Parent's consent, which is not to be
unreasonably withheld, the Company will not, and will not
permit its Subsidiaries to, make any individual or series of
related expenditures (whether capital or otherwise) of
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over $250,000 or enter into any contract that is not
terminable by the Company without penalty upon 30 days notice;
(m) the Company will not, and will not permit any of
its Subsidiaries to, agree or commit to do any of the
foregoing; and
(n) the Company will not, and will not permit any of
its Subsidiaries to, take or agree to commit to take any
action that would make any representation and warranty of the
Company hereunder inaccurate in any material respect at, or as
of any time prior to, the Effective Time or which is
reasonably likely to result in a delay in consummation of the
Offer or the Merger, including delaying the effectiveness of
the Proxy Statement, if any, and the mailing thereof.
Notwithstanding anything in this Section to the contrary, the Company and its
Subsidiaries are permitted to take commercially reasonable actions after
consultation with Parent in connection with the acquisition and development
projects set forth in Schedule 6.01 hereto, including, but not limited to,
entering into agreements relating to the purchase and development of properties
or facilities, entering into arrangements for the financing of these projects
(provided, that prior to entering into such arrangements, the Company shall
provide Parent with the opportunity to provide financing for such project on
terms which are comparable to the effective interest rate, maturity and
otherwise to the Company's proposed financing), to enter into guarantees in
connection with such projects, and to perform their obligations under any
agreements relating to the foregoing.
SECTION 6.02. Access to Information. From the date hereof until the
Effective Time, the Company shall give Parent, its counsel, financial advisors,
auditors and other authorized representatives reasonable access to the offices,
properties, books and records of the Company and its Subsidiaries, will furnish
to Parent, its counsel, financial advisors, auditors and other authorized
representatives such financial and operating data and other information as such
Persons may reasonably request and will instruct the Company's employees,
counsel and financial advisors to cooperate with Parent in its investigation of
the business of the Company and its Subsidiaries; provided that no investigation
pursuant to this Section shall affect any representation or warranty given by
the Company to Parent hereunder. All nonpublic information provided to, or
obtained by, Parent in connection with the transactions contemplated hereby
shall be "Information" for purposes of the Confidentiality Agreement previously
executed by or on behalf of Parent and the Company (the "Confidentiality
Agreement"); provided, however, that notwithstanding anything to the contrary
contained in the Confidentiality Agreement or this Agreement, nothing shall
prohibit Parent or Merger Subsidiary from including, after prior consultation
with the Company, in the Schedule 14D-1, the Offer to
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Purchase, the other Tender Offer Documents or the Proxy Statement, any
information that based on the advice of counsel to Parent is required to be
disclosed therein in connection with the purchase of shares of Company Common
Stock or the solicitation of proxies in connection with the Offer and the
Merger, respectively. Notwithstanding the foregoing, the Company shall not be
required to provide any information which it reasonably believes it may not
provide to Parent by reason of applicable law, rules or regulations, which
constitutes information protected by attorney/client privilege, or which the
Company or any Subsidiary is required to keep confidential by reason of
contract, agreement or understanding with third parties; provided that the
Company gives the Parent notice of the fact that it is withholding information
pursuant to this Section 6.02.
SECTION 6.03. Other Offers. From the date hereof until the termination
of this Agreement, the Company and its Subsidiaries will not, and will use their
reasonable best efforts to cause their officers, directors, employees or other
agents not to, directly or indirectly, (i) take any action to solicit or
initiate any Company Acquisition Proposal (as defined below) or (ii) unless
otherwise required in accordance with the fiduciary duties of the Board of
Directors under applicable law as advised by independent legal counsel to the
Company, engage in negotiations with, or disclose any nonpublic information
relating to the Company or any of its Subsidiaries or afford access to the
properties, books or records of the Company or any of its Subsidiaries to, any
Person that may be considering making, or has made, a Company Acquisition
Proposal or has agreed to endorse any Company Acquisition Proposal (other than
the Merger). (Nothing herein shall prohibit the Company from amending or waiving
the provisions of confidentiality agreements it has entered into with third
persons in respect of the ability of such persons to submit a Company
Acquisition Proposal to the Company or its stockholders.) The Company will
promptly as reasonably practicable notify Parent after receipt of any Company
Acquisition Proposal or any indication that any Person is considering making a
Company Acquisition Proposal or any request for nonpublic information relating
to the Company or any of its Subsidiaries or for access to the properties, books
or records of the Company or any of its Subsidiaries by any Person that may be
considering making, or has made, a Company Acquisition Proposal or that the
Company intends to engage in negotiations with, or to provide information to any
such Person. The Company shall as promptly as reasonably practicable provide
Parent with the identity of such Person and a reasonable description of such
Company Acquisition Proposal. For purposes of this Agreement, "Company
Acquisition Proposal" means any offer or proposal for, or any indication of
interest in, (i) a merger, share exchange or business combination or similar
transaction, (ii) any sale, lease, exchange, transfer or other disposition of
25% or more of the assets of the Company and its Subsidiaries, taken as a whole,
in a single transaction or series of transactions (whether or not related) or
(iii) any tender offer or exchange offer for 25% or more of the outstanding
shares of capital stock of the Company involving the Company or any of its
Subsidiaries or the acquisition of a substantial portion of the assets
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of, the Company or any of its Subsidiaries, other than the transactions
contemplated by this Agreement. The Company shall immediately cease and cause to
be terminated, its existing solicitation, activity, discussions or negotiations
with any parties conducted heretofore by the Company or any of its
representatives with respect to a Company Acquisition Proposal.
SECTION 6.04. Notices of Certain Events. (a) The Company shall
promptly as reasonably practicable notify Parent of: (i) any notice or other
communication from any Person alleging that the consent of such Person (or
another Person) is or may be required in connection with the transactions
contemplated by this Agreement; (ii) any notice or other communication from any
governmental or regulatory agency or authority in connection with the
transactions contemplated by this Agreement; (iii) any actions, suits, claims,
investigations or proceedings commenced or, to the best of its knowledge
threatened against, relating to or involving or otherwise affecting the Company
or any of its Subsidiaries that, if pending on the date of this Agreement, would
have been required to have been disclosed pursuant to Section 4.11 or which
relate to the consummation of the transactions contemplated by this Agreement;
and (iv) of any fact or occurrence between the date of this Agreement and the
Effective Time of which it becomes aware which makes any of its representations
contained in this Agreement untrue or causes any breach of its obligations under
this Agreement.
(b) Each of Parent and Merger Subsidiary shall promptly as reasonably
practicable notify the Company of: (i) any notice or other communication from
any Person alleging that the consent of such Person (or other Person) is or may
be required in connection with the transactions contemplated by this Agreement,
(ii) any notice or other communication from any governmental or regulatory
agency or authority in connection with the transactions contemplated by this
Agreement; and (iii) of any fact or occurrence between the date of this
Agreement and the Effective Time of which it becomes aware which makes any of
its representations contained in this Agreement untrue or causes any breach of
its obligations under this Agreement.
SECTION 6.05. Merger Subsidiary. Parent will take all action necessary
(a) to cause Merger Subsidiary to perform its obligations under this Agreement
and to commence the Offer and consummate the Merger on the terms and conditions
set forth in this Agreement and, to the extent permitted under Delaware Law, in
accordance with Section 253 of Delaware Law as promptly as reasonably
practicable following completion of the Offer and (b) to ensure that, prior to
the Effective Time, Merger Subsidiary shall not conduct any business or make any
investments other than as specifically contemplated by this Agreement.
SECTION 6.06. Director and Officer Liability. From and after the
Effective Time, (a) Parent shall indemnify, defend and hold harmless the present
and
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former officers and directors of the Company and its Subsidiaries against all
losses, claims, damages and liability in respect of acts or omissions occurring
at or prior to the Effective Time and (b) the Surviving Corporation shall
indemnify, defend and hold harmless to the fullest extent permitted by law the
present and former officers and directors of the Company and its Subsidiaries
against all losses, claims, damages and liability in respect of acts or
omissions occurring at or prior to the Effective Time. Parent shall cause the
Surviving Corporation (and its successors) to establish and maintain provisions
in its Certificate of Incorporation and Bylaws concerning the indemnification
and exoneration of the Company's former and present officers, directors,
employees and agents that are no less favorable to those persons than the
provisions of the Company's Certificate of Incorporation and Bylaws in effect on
the date hereof. For at least six years after the Effective Time, Parent will,
without any lapse in coverage, provide officers' and directors' liability
insurance in respect of acts or omissions occurring prior to the Effective Time
covering each such Person currently covered by the Company's officers' and
directors' liability insurance policy on terms with respect to coverage and
amount no less favorable than those of such policy in effect on the date hereof;
provided, that Parent shall only be obligated to maintain such insurance to the
extent available at annual premiums during such period not in excess of 150% of
the per annum rate of the aggregate annual premium currently paid by the Company
for such insurance on the date of this Agreement. Parent shall cause the
Surviving Corporation to reimburse all expenses, including reasonable attorney's
fees, incurred by any Person to enforce the obligations of Parent and Surviving
Corporation under this Section 6.06.
SECTION 6.07. Employee Benefits. From and after the Effective Time,
Parent will and will cause the Surviving Corporation to honor in accordance with
their terms, the employment, severance, indemnification or similar agreements
and the Employee Retention Plan disclosed in Schedule 6.07 between the Company
and certain employees (the "Employment Agreements") and all the Employee Plans
and Benefit Arrangements; provided, however, that nothing herein shall preclude
the Parent or any of its affiliates from having the right to terminate the
employment of any Company Employee (as defined below), with or without cause, or
to amend or to terminate any employee benefit plan of Parent ("Parent Benefit
Plan") established, maintained or contributed to by the Parent or any of its
affiliates after the Effective Time. Parent hereby acknowledges that the
consummation of the Merger will result in a "change of control" under the
Employment Agreements, the Company Option Plans and the Company's Supplemental
Employee Retirement Plan. Following the Effective Time, Parent and its
Subsidiaries will provide benefits to employees employed by the Company
immediately prior to the Effective Time ("Company Employees") (i) no less
favorable than those provided by Parent and its affiliates to similarly situated
employees employed by companies in substantially similar businesses to that
engaged by the Company and (ii) no less commercially favorable than those
generally provided to similarly situated employees
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in the industry. With respect to the Parent Benefit Plans, Parent and the
Surviving Corporation shall provide to all Company Employees, from and after the
Effective Time, credit for all service with and compensation by the Company and
its affiliates and predecessors prior to the Effective Time for all purposes for
which such service was recognized by the Company prior to the Effective Time,
but without duplication of benefits. To the extent Parent Benefit Plans provide
medical, dental or other welfare benefits, Parent shall use its best efforts to
cause such plans to waive any pre-existing conditions and actively-at-work
exclusions with respect to Company Employees and to provide that any expenses
incurred on or before the Effective Time by or on behalf of any Company
Employees shall be taken into account under the Parent Benefit Plans for
purposes of satisfying applicable deductible, coinsurance and maximum
out-of-pocket provisions. If any employee is terminated following the purchase
of shares pursuant to the Offer, the employee shall be paid for his accrued but
unused vacation time for periods prior to the Effective Time.
SECTION 6.08. Board Representation. Promptly upon the purchase of
shares of Company Common Stock pursuant to the Offer, Merger Subsidiary shall be
entitled to designate such number of directors, rounded up to the next whole
number, to serve on the Board of Directors of the Company as will give Merger
Subsidiary, subject to compliance with Section 14(f) of the Exchange Act and the
rules and regulations promulgated thereunder, representation on the Board of
Directors of the Company equal to the product of (a) the total number of
directors on the Board of Directors and (b) the percentage that the number of
shares of Common Stock purchased by Merger Subsidiary bears to the number of
shares of Common Stock outstanding, and the Company shall, upon request by
Merger Subsidiary, promptly increase the size of the Board of Directors and/or
exercise its reasonable best efforts to secure the resignations of such number
of directors as is necessary to enable Merger Subsidiary's designees to be
elected to the Board of Directors and shall cause Merger Subsidiary's designees
to be so elected. The Company shall take, at its expense, all action required
pursuant to Section 14(f) and Rule 14f-1 in order to fulfill its obligations
under this Section 6.08 and shall include in the Schedule 14D-9 or otherwise
timely mail to its stockholders such information with respect to the Company and
its officers and directors as is required by Section 14(f) and Rule 14f-1 in
order to fulfill its obligations under this Section 6.08. Prior to the mailing
of the Schedule 14D-9 to the Company's stockholders, Parent will supply to the
Company in writing and be solely responsible for any information with respect to
itself and its or Merger Subsidiary's nominees, officers, directors and
affiliates required by Section 14(f) and Rule 14f-1.
SECTION 6.09. Meeting of the Company's Stockholders. (a) If required by
applicable law in order to consummate the Merger, the Company shall take all
action necessary in accordance with Delaware Law and its Certificate of
Incorporation and Bylaws to convene the Meeting as promptly as practicable
following the purchase of
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shares of Common Stock in the Offer. At the Meeting, all of the shares of Common
Stock then owned by Parent, Merger Subsidiary or any other subsidiary of Parent
shall be voted to approve the Merger and this Agreement (subject to applicable
law). The Board of Directors of the Company shall recommend that the Company's
stockholders vote to approve the Merger and this Agreement if such vote is
sought, shall use its best efforts to solicit from stockholders of the Company
proxies in favor of the Merger and shall take all other action in its judgment
necessary and appropriate to secure the vote of stockholders required by
Delaware Law to effect the Merger.
(b) Parent and Merger Subsidiary shall not, and shall cause their
subsidiaries not to, sell, transfer, assign, encumber or otherwise dispose of
the shares of Company Common Stock acquired pursuant to the Offer or otherwise
prior to the earlier of the Meeting and the Effective Time; provided, however,
that this Section 6.09(b) shall not apply to the sale, transfer, assignment,
encumbrance or other disposition of any or all of such shares of Company Common
Stock in transactions solely involving Parent, Merger Subsidiary and/or one or
more of their wholly-owned subsidiaries.
SECTION 6.10. Proxy Statement. If required under applicable law, the
Company shall prepare the Proxy Statement, file it with the SEC under the
Exchange Act as promptly as practicable after Merger Subsidiary purchases shares
of Company Common Stock pursuant to the Offer, and use all reasonable efforts to
have the Proxy Statement cleared by the SEC. Parent, Merger Subsidiary and the
Company shall cooperate with each other in the preparation of the Proxy
Statement, and the Company shall notify Parent of the receipt of any comments of
the SEC with respect to the Proxy Statement and of any requests by the SEC for
any amendment or supplement thereto or for additional information and shall
provide to Parent promptly copies of all correspondence between the Company or
any representative of the Company and the SEC. The Company shall give Parent and
its counsel the opportunity to review the Proxy Statement prior to its being
filed with the SEC and shall give Parent and its counsel the opportunity to
review all amendments and supplements to the Proxy Statement and all responses
to requests for additional information and replies to comments prior to their
being filed with, or sent to, the SEC. Each of the Company, Parent and Merger
Subsidiary agrees to use its reasonable best efforts, after consultation with
the other parties hereto to respond promptly to all such comments of and
requests by the SEC. As promptly as practicable after the Proxy Statement has
been cleared by the SEC, the Company shall mail the Proxy Statement to the
stockholders of the Company.
SECTION 6.11. Best Efforts. Subject to the terms and conditions of
this Agreement, each party will use its reasonable best efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate the transactions contemplated by this Agreement.
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SECTION 6.12. Public Announcements. Parent and the Company will
consult with each other before issuing any press release or making any public
statement with respect to this Agreement and the transactions contemplated
hereby and, except as may be required by applicable law or any listing agreement
with the NASDAQ National Market, will not issue any such press release or make
any such public statement prior to such consultation.
SECTION 6.13. Further Assurances. At and after the Effective Time, the
officers and directors of the Surviving Corporation shall be authorized to
execute and deliver, in the name and on behalf of the Company or Merger
Subsidiary, any deeds, bills of sale, assignments or assurances and to take and
do, in the name and on behalf of the Company or Merger Subsidiary, any other
actions and things to vest, perfect or confirm of record or otherwise in the
Surviving Corporation any and all right, title and interest in, to and under any
of the rights, properties or assets of the Company acquired or to be acquired by
the Surviving Corporation as a result of, or in connection with, the Merger.
ARTICLE VII
CONDITIONS TO THE MERGER
SECTION 7.01. Conditions to the Obligations of Each Party. The
obligations of the Company, Parent and Merger Subsidiary to consummate the
Merger are subject to the satisfaction of the following conditions:
(i) if approval of the Merger by the holders of
Company Common Stock is required by applicable law, this
Agreement and the Merger shall have been adopted by the
requisite vote of the stockholders of the Company in
accordance with Delaware Law;
(ii) no provision of any applicable domestic law or
regulation and no judgment, injunction, order or decree of a
court or governmental agency or authority of competent
jurisdiction which has the effect of making the Merger illegal
or shall otherwise restrain or prohibit the consummation of
the Merger (each party agreeing to use its best efforts,
including appeals to higher courts, to have any judgment,
injunction, order or decree lifted); and
(iii) all consents, authorizations, orders and
approvals of (or filings or registrations with) any
governmental commission, board or other regulatory body
required in connection with the execution, delivery and
performance of this Agreement shall have been obtained or
made, except for filings in connection with the Merger and any
other documents required to be filed after the Effective Time
and except where the failure to have
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obtained or made any such consent, authorization, order
approval, filing or registration would not make the Merger
illegal or have a Company Material Adverse Effect or a Parent
Material Adverse Effect, as the case may be.
ARTICLE VIII
TERMINATION
SECTION 8.01. Termination. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time (notwithstanding
any approval of this Agreement by the stockholders of the Company or Parent):
(i) by mutual written consent of the Company and Parent;
(ii) by either the Company or Parent, if the Offer has not
been consummated on or before the earlier of (A) the forty-sixth
business day after the first public announcement of the execution of
this Agreement and (B) August 15, 1997 (provided that the right to
terminate this Agreement under this clause (ii) shall not be available
to any party whose failure to fulfill any of its obligations under this
Agreement has been the cause of or resulted in the failure to
consummate the Merger by such date);
(iii) by either the Company or Parent, if there shall be any
applicable domestic law, rule or regulation that makes consummation of
the Merger illegal or if any judgment, injunction, order or decree of a
court or governmental agency or authority of competent jurisdiction
shall restrain or prohibit the consummation of the Merger, and such
judgment, injunction, order or decree shall become final and
nonappealable;
(iv) by either the Company or Parent, if the stockholder
approval referred to in Section 7.01(i) shall not have been obtained by
reason of the failure to obtain the requisite vote upon a vote at a
duly held meeting of stockholders or at any adjournment thereof;
(v) by either the Company or Parent, if (x) there has been a
breach by the other party of any representation or warranty contained
in this Agreement which would have a Parent Material Adverse Effect or
Company Material Adverse Effect, as the case may be, or (y) there has
been a material breach of any of the covenants or agreements set forth
in this Agreement on the part of the other party, which breach is not
curable or, if curable, is not cured within 30 days after written
notice of such breach is given by the terminating party to the other
party;
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(vi) by the Company or Parent, if the Company shall have
received a Company Acquisition Proposal, and the Company's Board of
Directors shall have determined in good faith that such Company
Acquisition Proposal represents a more attractive financial alternative
that provides greater immediate value for the Company's stockholders
than the Offer and the Merger; or
(vii) by the Company, if the Offer has not been timely
commenced (except as a result of actions or omissions of the Company in
accordance with Section 1.01) provided that such right of termination
shall have been exercised by the Company prior to the commencement of
the Offer;
(viii) by the Parent if the Board of Directors of the Company
shall have failed to recommend, or shall have withdrawn, modified or
amended in any material respects its approval or recommendations of the
Offer or the Merger or shall have resolved to do any of the foregoing;
or
(ix) by Parent or the Company if as the result of the failure
of any of the conditions set forth in Annex I hereto, the Offer shall
have terminated or expired in accordance with its terms without Merger
Subsidiary having purchased any shares of Company Common Stock pursuant
to the Offer; provided, however, that the right to terminate this
Agreement pursuant to this Section 8.01(ix) shall not be available to
any party whose failure to fulfill any of its obligations under this
Agreement results in the failure of any such condition.
SECTION 8.02. Effect of Termination. If this Agreement is terminated
pursuant to Section 8.01, this Agreement shall become void and of no effect with
no liability on the part of any party hereto and all rights and obligations of
any party hereto will cease, except that (a) the agreements contained in Section
9.04 and the last sentence of Section 6.02 shall survive the termination hereof
and (b) the parties shall be liable for any willful breaches hereof.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Notices. All notices, requests and other communications
to any party hereunder shall be in writing (including telecopy, telex or similar
writing) and shall be given,
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if to Parent or Merger Subsidiary, to:
Whitehall Street Real Estate Limited Partnership VII
c/o Goldman, ▇▇▇▇▇ & Co.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
with a copy to:
▇▇▇▇, Weiss, Rifkind, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
if to the Company, to:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇ ▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Vice President and General Counsel
with a copy to:
Fried, Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
or such other address or telex or telecopy number as such party may hereafter
specify for the purpose by notice to the other parties hereto. Each such notice,
request or other communication shall be effective (i) if given by telex, when
such telex is transmitted to the telex number specified in this Section and the
appropriate answerback is received or (ii) if given by any other means, when
delivered at the address specified in this Section.
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SECTION 9.02. Survival of Representations and Warranties and
Agreements. The representations and warranties and agreements contained herein
and in any certificate or other writing delivered pursuant hereto shall not
survive the Effective Time, except Sections 6.06, 6.07, 6.13 and Articles I and
II.
SECTION 9.03. Amendments; No Waivers. (a) Any provision of
this Agreement may be amended or waived prior to the Effective Time if, and only
if, such amendment or waiver is in writing and signed, in the case of an
amendment, by the Company, Parent and Merger Subsidiary or, in the case of a
waiver, by the party against whom the waiver is to be effective; provided that
(i) any waiver or amendment shall be effective against a party only if the Board
of Directors of such party approves such waiver or amendment and (ii) after the
adoption of this Agreement by the stockholders of the Company, no such amendment
or waiver shall, without the further approval of such stockholders and each
party's Board of Directors alter or change (x) the amount or kind of
consideration to be received in exchange for any shares of capital stock of the
Company, (y) any term of the certificate of incorporation of the Surviving
Corporation or (z) any of the terms or conditions of this Agreement if such
alteration or change would adversely affect the holders of any shares of capital
stock of the Company. Notwithstanding any provision of this Section 9.03 to the
contrary, no provision of this Agreement may be waived by the Company or amended
following the purchase by Parent or Merger Subsidiary of shares of Company
Common Stock pursuant to the Offer unless such amendment or waiver is approved
by the affirmative vote of a majority of the directors of the Company other than
directors designated by Merger Subsidiary as contemplated by Section 6.08.
(b) No failure or delay by any 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 other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 9.04. Fees and Expenses. All costs and expenses incurred in
connection with this Agreement shall be paid by the party incurring such cost or
expense, except that Parent shall pay all costs and expenses except as provided
in paragraph (b) below.
(b) The Company will pay, or cause to be paid, in same day funds to
Parent the sum of (i) Parent's Expenses (as defined below) up to a maximum
amount of $1,000,000 and (ii) $2,000,000 (the "Termination Fee") upon demand if
(a) this Agreement is terminated under Section 8.01(vi) or Section 8.01(viii);
or (b) this Agreement is terminated under Section 8.01(ix) and at the time of
such termination (x) the Minimum Condition has not been satisfied and (y) a
Company Acquisition
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Proposal existed. "Expenses" means documented out-of-pocket fees and
expenses incurred or paid by or on behalf of Parent in connection with the
Merger or the consummation of any of the transactions contemplated by this
Agreement, including without limitation all HSR Act filing fees, fees and
expenses of counsel, commercial banks, investment banking firms, accountants,
experts, environmental consultants, and other consultants to Parent.
(c) Any amounts payable pursuant to Section 9.04(b) shall be payable
as promptly as practicable following termination of this Agreement and, if the
Company is the party seeking to terminate this Agreement, as a condition
thereto.
SECTION 9.05. Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, provided that no party may assign, delegate
or otherwise transfer any of its rights or obligations under this Agreement
without the consent of the other parties hereto, except as permitted by Section
6.09(b) (and which transfer shall not relieve Parent and Merger Sub of their
obligations hereunder in the event of a breach by their transferee).
SECTION 9.06. Governing Law. This Agreement shall be construed in
accordance with and governed by the law of the State of Delaware.
SECTION 9.07. Counterparts; Effectiveness. This Agreement may be signed
in any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement shall become effective when each party hereto shall have received
counterparts hereof signed by all of the other parties hereto.
SECTION 9.08. Entire Agreement. This Agreement and the Confidentiality
Agreement constitute the entire agreement between the parties with respect to
the subject matter hereof and supersede all prior agreements, understandings and
negotiations, both written and oral, between the parties with respect to the
subject matter of this Agreement. No representation, inducement, promise,
understanding, condition or warranty not set forth herein has been made or
relied upon by either party hereto. Neither this Agreement nor any provision
hereof is intended to confer upon any Person other than the parties hereto any
rights or remedies hereunder except for the provisions of Section 6.06, which
are intended for the benefit of the Company's former and present officers,
directors, employees and agents, the provisions of Articles I and II, which are
intended for the benefit of the Company's stockholders, including holders of
Company Options, the provisions of Section 6.07, which are intended for the
benefit of the parties to the Employment Agreements and Employee Plans, as the
case may be, therein.
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SECTION 9.09. Headings. The headings contained in this Agreement are
for reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
SECTION 9.10. Severability. If any term or other provision of this
Agreement is invalid, illegal or unenforceable, all other provisions of this
Agreement shall remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party.
SECTION 9.11. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any of the provisions of this
Agreement were not to be performed in accordance with the terms hereof and that
the parties shall be entitled to specific performance of the terms hereof in
addition to any other remedies at law or in equity.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
INTEGRATED LIVING COMMUNITIES INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------
Title: President and Chief
Executive Officer
WHITEHALL STREET REAL ESTATE
LIMITED PARTNERSHIP VII
By: WH ADVISORS, L.P. VII
General Partner
By: WH ADVISORS, INC. VII
General Partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------
Title: Vice President
SLC ACQUISITION CORP.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------------
Title: Vice President
49
ANNEX I
CONDITIONS TO THE OFFER. Notwithstanding any other term of the Offer or
this Agreement, Merger Subsidiary shall not be required to accept for payment or
pay for, subject to any applicable rules and regulations of the SEC, including
Rule 14e-l(c) of the Exchange Act, any shares of Company Common Stock not
theretofore accepted for payment or paid for and may terminate or amend the
Offer as to such shares of Company Common Stock unless (i) there shall have been
validly tendered and not withdrawn prior to the expiration of the Offer that
number of shares of Company Common Stock that would represent at least a
majority of the outstanding shares of Company Common Stock on a fully diluted
basis (the "Minimum Condition") and (ii) any waiting period under the HSR Act
applicable to the purchase of shares of Company Common Stock pursuant to the
Offer shall have expired or been terminated. Furthermore, notwithstanding any
other term of the Offer or the Agreement, Merger Subsidiary shall not be
required to accept for payment or, subject as aforesaid, to pay for any shares
of Company Common Stock not theretofore accepted for payment or paid for, and
may terminate or amend the Offer if at any time on or after the date of this
Agreement and before the acceptance of such shares of Company Common Stock for
payment or the payment therefor, any of the following conditions exist or shall
occur and remain in effect:
(a) there shall have been instituted or pending any action or
proceeding by any court, governmental, regulatory or administrative
agency or authority that (i) seeks to challenge the acquisition by
Merger Subsidiary of shares of Company Common Stock pursuant to the
Offer, restrain, prohibit or delay the making or consummation of the
Offer or the Merger, or obtain any material damages in connection
therewith, (ii) seeks to make the purchase of or payment for some or
all of the shares of Common Stock pursuant to the Offer or the Merger
illegal, (iii) seeks to impose material limitations on the ability of
Parent and Merger Subsidiary (or any of their affiliates) effectively
to acquire or hold, or to require Parent and Merger Subsidiary or the
Company or any of their respective affiliates or subsidiaries to
dispose of or hold separate, any material portion of the assets or the
business of Parent and its subsidiaries taken as a whole or the Company
and its subsidiaries taken as a whole, or (iv) seeks to impose material
limitations on the ability of Merger Subsidiary (or its affiliates) to
exercise full rights of ownership of the shares of Company Common Stock
purchased by it, including, without limitation, the right to vote the
shares purchased by it on all matters properly presented to the
stockholders of the Company; or
(b) there shall have been promulgated, enacted, entered,
enforced or deemed applicable to the Offer or the Merger, by any state,
federal or foreign government or governmental authority or by any
court, domestic or foreign, any statute (other than the HSR Act), rule,
regulation, judgment, decree, order or
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injunction, that, in the reasonable judgment of Parent and Merger
Subsidiary, might, directly or indirectly, result in any of the
consequences referred to in clauses (i) through (iv) of subsection (a)
above; or
(c) there shall have occurred (i) any general suspension of
trading in, or limitation on prices for, securities on any national
securities exchange or in the over-the-counter market in the United
States, (ii) the declaration of a banking moratorium or any suspension
of payments in respect of banks in the United States, or (iii) the
commencement of a war, armed hostilities or other international or
national calamity directly or indirectly involving the United States;
or
(d) the Company and Parent shall have reached an agreement or
understanding that the Offer or the Agreement be terminated or the
Agreement shall have been terminated in accordance with its terms; or
(e) (i) any of the representations and warranties made by the
Company in the Agreement shall not be true and correct in all material
respects when made, or shall thereafter have ceased to be true and
correct in all material respects as of such later date (other than
representations and warranties made as of a specified date) or (ii) any
of the representations and warranties made by the Company in the
Agreement shall not have been true and correct when made, or shall
thereafter have ceased to be true and correct as if made as of such
later date (other than representations and warranties made as of a
specified date), in each case, without giving effect to any materiality
standard contained in such representation or warranty (including
"Company Material Adverse Effect"), except to the extent that any such
failure to be true and correct, individually and in the aggregate with
all such other failures, would not have a Company Material Adverse
Effect, or the Company shall not in all material respects have
performed each obligation and agreement and complied with each covenant
to be performed and complied with by it under the Agreement; or
(f) the Company's Board of Directors shall have modified or
amended its recommendation of the Offer in any manner adverse to Parent
and Merger Subsidiary or shall have withdrawn its recommendation of the
Offer, or shall have recommended acceptance of any Company Acquisition
Proposal or shall have resolved to do any of the foregoing; or
(g) (i) any corporation, entity or "group" (as defined in
Section 13(d)(3) of the Exchange Act) ("person"), other than Parent,
shall have acquired beneficial ownership of 50% or more of the
outstanding shares of Company Common Stock, or shall have been granted
any options or rights, conditional or otherwise, to acquire a total of
50% or more of the outstanding shares of Company Common
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Stock; (ii) any new group shall have been formed that beneficially owns
50% or more of the outstanding shares of Company Common Stock; or (iii)
any person (other than Parent or one or more of its affiliates) shall
have entered into an agreement in principle or definitive agreement
with the Company with respect to a tender or exchange offer for any
shares of Company Common Stock or a merger, consolidation or other
business combination with or involving the Company; or
(h) Parent shall have received the consent of Health Care
Property Investors ("HCPI") on behalf of itself and its affiliates to
the consummation (the "Consummation") of the Offer, the Merger and the
other transactions contemplated by the Agreement and the waiver of any
rights ("Rights") HCPI might have under agreements with the Company to
terminate or exercise any rights to terminate such agreements or any
other rights that would be triggered as a result of a change of control
of the Company; provided that no consent shall be required from HCPI if
such consent is not required under such agreements for the Consummation
and no such Rights exist.
The foregoing conditions are for the sole benefit of Parent and may be
asserted by Parent, in whole or in part, at any time and from time to time, in
the reasonable judgment of Parent regardless of the circumstances giving rise to
any such condition (other than a breach by Parent or Merger Subsidiary). The
failure by Parent at any time to exercise any of the foregoing rights will not
be deemed a waiver of any right, the waiver of such right with respect to any
particular facts or circumstances shall not be deemed a waiver with respect to
any other facts or circumstances, and each right will be deemed an ongoing right
that may be asserted at any time and from time to time.
Should the Offer be terminated pursuant to the foregoing provisions,
all tendered shares of Company Common Stock not theretofore accepted for payment
shall be returned forthwith by the Disbursing Agent to the tendering
stockholders.
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