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Exhibit (c) 2
SHORT FORM MERGER OPTION AGREEMENT
AGREEMENT, dated as of May 29, 1997 among Integrated Living
Communities, Inc., a Delaware corporation (the "Company"), SLC Acquisition
Corp., a Delaware corporation ("Sub"), and Whitehall Street Real Estate Limited
Partnership VII, a Delaware limited partnership ("Parent").
WHEREAS, concurrently with the execution of this Agreement, the
Company, Sub and Parent are entering into an Agreement and Plan of Merger (the
"Merger Agreement") providing for the making of a tender offer (the "Offer") to
purchase all of the issued and outstanding shares of the Company's Common Stock,
par value $.01 per share (the "Shares") and, following the completion of the
Offer, the merger (the "Merger") of Sub and the Company in which each Share not
purchased pursuant to the Offer (other than shares as to which appraisal rights
are asserted) will be converted into the per share consideration paid pursuant
to the Offer, in accordance with the terms of the Merger Agreement; and
WHEREAS, the Company desires to induce Parent and Sub to enter into the
Merger Agreement and to facilitate the prompt completion of the Merger following
the purchase of Shares pursuant to the Offer;
NOW, THEREFORE, the parties hereto agree as follows:
1. Grant of Option. The Company hereby irrevocably grants to Sub an
option (the "Option") to purchase up to 32,000,000 newly issued Shares (the
"Optioned Shares") for a consideration per share equal to (i) $.01 per Optioned
Share in cash and (ii) a promissory note (a "Note") of Parent in the principal
amount of the price per Share paid in the Offer less $.01, which Note shall (a)
be due and payable 5 years from the date of its issue, (b) bear interest, at the
prime rate in effect from time to time of Citibank N.A., payable annually on
each
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anniversary of the date of its issue, and (c) be prepayable at any time without
penalty at Parent's option.
2. Exercise of the Option. The Option may be exercised by Sub at any
time within six business days after the acceptance for payment by Sub of Shares
pursuant to the Offer in accordance with the terms of the Merger Agreement;
provided that Sub may only exercise the Option in respect of at least that
number of Optioned Shares which, when added to the number of Shares purchased
pursuant to the Offer, represents at least 90% of the outstanding Shares, after
giving effect to the issuance of the Optioned Shares. In the event Sub wishes to
exercise the Option, Sub shall give written notice (the "Notice") to the Company
specifying the total number of Optioned Shares it will purchase pursuant to the
exercise, of the Option and a place and a time not less than one day from the
date of the Notice for the closing of such purchase.
3. Payment and Delivery of Certificates. At any closing hereunder: (i)
Sub will make payment to the Company of the aggregate price for the Shares so
purchased by (a) check or wire transfer in the amount of the aggregate cash
consideration to be paid for all such Shares and (b) a Note in the aggregate
principal amount of the consideration to be paid by Note for all such Shares;
and (ii) the Company will deliver to Sub a certificate or certificates
representing the number of Shares so purchased. Each of Sub and the Company
hereby represents to the other party that such person will not offer to sell,
sell or otherwise dispose of, any Shares or Note, as the case may be, acquired
by it pursuant to this Agreement in violation of the Securities Act of 1933, as
amended (the "1933 Act").
4. Covenant. Each of Parent and Sub agrees to consummate the Merger as
promptly as practicable following the closing of the purchase of Optioned Shares
in accordance with Section 253 of the Delaware General Corporation Law.
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5. Representations and Warranties of the Company. The Company hereby
represents and warrants to Parent and Sub as follows:
5.1. The Company has all requisite corporate power and
authority to enter into and perform all of its obligations under this Agreement.
The execution, delivery and performance of this Agreement and all of the
transactions, contemplated hereby 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.
5.2. The Company has taken all necessary corporate action to
authorize and reserve for issuance 32,000,000 Shares upon exercise of the
Option.
5.3. The Shares to be issued upon due exercise, in whole or in
part, of the Option, when paid for as provided herein, will be duly authorized,
validly issued, fully paid and non-assessable.
5.4. The execution and delivery of this Agreement do not, and
the performance of this Agreement will not, (i) conflict with any provision of
the Company's Certificate of Incorporation or By-Laws, or (ii) violate any law,
rule or regulation, or any judgment, decree or order of any court or
governmental agency or instrumentality, to which the Company or any of its
subsidiaries is subject, or (iii) conflict with, or result in a breach or
violation of, or accelerate the performance required by, or result in early
termination under, or result in any loss of benefits under, the terms of any
agreement, indenture, mortgage or other instrument to which the Company or any
of its subsidiaries is a party or to which any of its or their property is
subject, or constitute a default thereunder or an event which, with the lapse of
time or action by a third party, could result in a default thereunder or the
creation of any lien, charge or encumbrance upon any of the assets or properties
of the Company or any of its subsidiaries, except if the effect of any of the
foregoing contained in subsections (ii) or (iii) above, singly or in the
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aggregate, would not be material to the business, financial condition, results
of operations or prospects of the Company and its subsidiaries, considered as a
whole.
6. Representations and Warranties of Parent and Sub. Each of Parent and
Sub hereby represents and warrants to the Company that (i) it has all requisite
power and authority to enter into and perform all of its obligations under this
Agreement, (ii) all of the transactions contemplated hereby have been duly
authorized by all necessary action on the part of Parent and Sub and (iii) this
Agreement has been duly executed and delivered by Parent and Sub.
7. Adjustment Upon Changes in Capitalization. In the event of any
change in the Shares by reason of stock dividends, split-ups, recapitalizations,
combinations, exchanges of shares or the like, the number of Optioned Shares
and/or the purchase price per Optioned Share shall be adjusted appropriately.
8. Termination. This Agreement will terminate upon termination of the
Merger Agreement.
9. Assignment. Without the prior written consent of the Company, this
Agreement shall not be assigned by Sub except to Parent or any direct or
indirect wholly-owned subsidiary of Parent.
10. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given (and shall be deemed to have
been duly received if so given) if personally delivered or sent by registered or
certified mail, postage prepaid, or telecopy addressed to the respective parties
as follows:
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If to the Company:
Integrated Living Communities, Inc.
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
If to Parent or Sub:
Whitehall Street Real Estate Limited Partnership VII
c/o Goldman, ▇▇▇▇▇ & Co.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
or to such other address as any party may have furnished to the other parties in
writing in accordance herewith.
11. Specific Performance. The Company agrees that damages would be an
inadequate remedy for a breach of the provisions of this Agreement and that this
Agreement may be enforced by injunctive or other equitable relief.
12. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without regard to the
conflict of laws provisions thereof.
13. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement.
IN WITNESS WHEREOF, this Agreement has been executed by duly authorized
officers of each of the parties hereto all as of the date first above written.
INTEGRATED LIVING COMMUNITIES, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
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WHITEHALL REAL ESTATE LIMITED
PARTNERSHIP VII
By: WH Advisors, L.P. VII
General Partner
By: WH Advisors, Inc. VII
General Partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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SLC ACQUISITION CORP.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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