CONFORMED COPY
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AGREEMENT AND PLAN OF MERGER
Dated as of April 19, 1998
Among
KAPSON SENIOR QUARTERS CORP.,
KA ACQUISITION CORP.,
And
ATRIA COMMUNITIES, INC.
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TABLE OF CONTENTS
Page
Definitions and Usage...................................................1
ARTICLE I
[Intentionally Omitted]
ARTICLE II
The Merger
SECTION 2.01. The Merger...............................................2
SECTION 2.02. Closing..................................................2
SECTION 2.03. Effective Time...........................................2
SECTION 2.04. Effects of the Merger....................................2
SECTION 2.05. Certificate of Incorporation and By-laws.................2
SECTION 2.06. Directors................................................3
SECTION 2.07. Officers.................................................3
SECTION 2.08. Supplemental Indenture...................................3
SECTION 2.09. Parent's Election to Modify the Terms of the Merger......4
ARTICLE III
Effect of the Merger on the Capital Stock of the
Constituent Corporations; Exchange of Certificates
SECTION 3.01. Effect on Capital Stock..................................4
SECTION 3.02. Exchange of Certificates.................................5
ARTICLE IV
Representations and Warranties
SECTION 4.01. Representations and Warranties of the Company............7
SECTION 4.02. Representations and Warranties of Parent and Sub........20
ARTICLE V
Covenants Relating to Conduct of Business
SECTION 5.01. Conduct of Business.....................................23
SECTION 5.02. No Solicitation.........................................26
Contents, p. 2
Page
ARTICLE VI
Additional Agreements
SECTION 6.01. Preparation of Proxy Materials..........................27
SECTION 6.02. Access to Information; Confidentiality..................28
SECTION 6.03. Reasonable Efforts; Notification........................28
SECTION 6.04. Rights Agreement........................................29
SECTION 6.05. Stock Options...........................................29
SECTION 6.06. Benefit Plans...........................................30
SECTION 6.07. Indemnification.........................................31
SECTION 6.08. Fees and Expenses ......................................31
SECTION 6.09. Public Announcements....................................32
SECTION 6.10. Transfer Taxes..........................................32
SECTION 6.11. Support Agreements......................................39
SECTION 6.12. Headquarters............................................40
ARTICLE VII
Conditions Precedent
SECTION 7.01. Conditions to Each Party's Obligation To
Effect the Merger.....................................33
SECTION 7.02. Conditions to Obligations of Parent and Sub.............33
SECTION 7.03. Condition to Obligation of the Company..................34
ARTICLE VIII
Termination, Amendment and Waiver
SECTION 8.01. Termination.............................................35
SECTION 8.02. Effect of Termination...................................36
SECTION 8.03. Amendment...............................................36
SECTION 8.04. Extension; Waiver.......................................37
SECTION 8.05. Procedure for Termination, Amendment,
Extension or Waiver...................................37
ARTICLE IX
General Provisions
SECTION 9.01. Nonsurvival of Representations and Warranties...........38
SECTION 9.02. Notices.................................................38
SECTION 9.03. Definitions.............................................39
SECTION 9.04. Interpretation..........................................41
SECTION 9.05. Counterparts............................................41
SECTION 9.06. Entire Agreement; No Third-Party Beneficiaries..........41
SECTION 9.07. Governing Law...........................................41
SECTION 9.08. Assignment..............................................41
SECTION 9.09. Enforcement.............................................41
Contents, p. 3
Page
EXHIBITS
Exhibit A Form of Press Release Announcing the Transactions
Exhibit B-1 Form of Support Agreement with V Corp.
Exhibit B-2 Form of Support Agreement with Management Stockholders
Exhibit C Form of Shareholders and Registration Rights Agreement
Exhibit D Form of Certificate of Incorporation of
Surviving Corporation
SCHEDULES
Schedule 4.01(a) Organization, Standing and Corporate Power
Schedule 4.01(d) Consents
Schedule 4.01(g) Absence of Certain Changes or Events
Schedule 4.01(j) ERISA Compliance
Schedule 4.01(k) Taxes
Schedule 4.01(l) Excess Parachute Payments
Schedule 4.01(r) Transactions with Affiliates
Schedule 4.01(s)(i) Company Properties; Liens
Schedule 4.01(s)(ii) Title Policies
Schedule 4.01(s)(iii) Material Noncompliance
Schedule 4.01(s)(iv) Material Demands
Schedule 4.01(s)(v) The Projects
Schedule 4.01(t) Environmental Matters
Schedule 4.01(u) Labor Matters
Schedule 4.01(w) Permits
Schedule 6.05(a) Stock Plans
Schedule 6.05(d) Rollover Options
AGREEMENT AND PLAN OF MERGER dated as of
April 19, 1998, among KAPSON SENIOR QUARTERS CORP,
a Delaware corporation ("Parent"), KA ACQUISITION
CORP., a Delaware corporation ("Sub") and a wholly
owned subsidiary of Parent, and ATRIA COMMUNITIES,
INC., a Delaware corporation (the "Company").
WHEREAS, the respective Boards of Directors of Parent, Sub
and the Company have approved the acquisition of the Company by Parent
on the terms and subject to the conditions set forth in this
Agreement;
WHEREAS, the respective Boards of Directors of Parent, Sub
and the Company have approved the merger (the "Merger") of Sub into
the Company on the terms and subject to the conditions set forth in
this Agreement, whereby each issued share of common stock, par value
$0.10 per share, of the Company (the "Common Stock"), including the
associated Rights (as defined in Section 4.01(c)) (except shares (i)
owned directly or indirectly by Parent or the Company, (ii) 1,234,568
shares (the "V Corp. Retained Shares") of Common Stock owned by V
CORP. ("V Corp.") and its wholly owned subsidiaries, and (iii) shares
held by Dissenting Stockholders (as defined below)), shall be
converted into the right to receive $20.25 in cash;
WHEREAS, concurrently with the execution and delivery of
this Agreement, Parent and Sub are entering into (i) a Support
Agreement with V Corp., in the form of Exhibit B-1 hereto, and (ii) a
Support Agreement with certain officers and directors of the Company
(collectively, the "Management Stockholders"), in the form of Exhibit
B-2 hereto, pursuant to which V Corp. and such officers and directors
shall agree to take certain actions to support the transactions
contemplated by this Agreement (the "Support Agreements");
WHEREAS, the respective Board of Directors of the Company,
Parent and V Corp. have approved the execution and delivery at the
Closing (as defined below) of the Shareholders and Registration Rights
Agreement (the "Shareholders Agreement" and together with this
Agreement and the Support Agreements, the "Operative Agreements")
among the Company, Parent, V Corp. and the Management Stockholders, in
the form of Exhibit C;
WHEREAS, Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection
with the Merger and also to prescribe various conditions to the
Merger.
NOW, THEREFORE, in consideration of the representations,
warranties, covenants and agreements contained in this Agreement, the
parties agree as follows (certain terms used herein have the meanings
assigned to them in Section 9.03):
ARTICLE I
[Intentionally Omitted]
ARTICLE II
The Merger
SECTION 2.01. The Merger. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the
Delaware General Corporation Law (the "DGCL"), Sub shall be merged
with and into the Company at the Effective Time of the Merger (as
hereinafter defined). Following the Merger, the separate corporate
existence of Sub shall cease and the Company shall continue as the
surviving corporation (the "Surviving Corporation") and shall succeed
to and assume all the rights and obligations of Sub in accordance with
the DGCL. At the election of Parent, any affiliate of Parent may be
substituted for Sub as a constituent corporation in the Merger. In
such event, the parties agree to execute an appropriate amendment to
this Agreement in order to reflect the foregoing. The Merger and the
other transactions contemplated by the Operative Agreements are
referred to in this Agreement collectively as the "Transactions".
SECTION 2.02. Closing. The closing of the Merger (the
"Closing") will take place at 10:00 a.m. on a date to be specified by
the parties, which (subject to satisfaction or waiver of the
conditions set forth in Sections 7.02 and 7.03) shall be no later than
the fifth business day after satisfaction or waiver of the conditions
set forth in Section 7.01 and no earlier than July 15, 1998 (the
"Closing Date"), at the offices of Cravath, Swaine & ▇▇▇▇▇, Worldwide
Plaza, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇, unless another date or
place is agreed to in writing by the parties hereto.
SECTION 2.03. Effective Time. As soon as practicable
following the satisfaction or waiver of the conditions set forth in
Article VII, the parties shall file a certificate of merger or other
appropriate documents (in any such case, the "Certificate of Merger")
executed in accordance with the relevant provisions of the DGCL and
shall make all other filings or recordings required under the DGCL.
The Merger shall become effective at such time as the Certificate of
Merger is duly filed with the Delaware Secretary of State, or at such
other time as Sub and the Company shall agree and specify in the
Certificate of Merger (the time the Merger becomes effective being the
"Effective Time of the Merger").
SECTION 2.04. Effects of the Merger. The Merger shall have
the effects set forth in Section 259 of the DGCL.
SECTION 2.05. Certificate of Incorporation and By-laws. (a)
The Certificate of Incorporation of the Company, as in effect
immediately prior to the Effective Time of the Merger, shall be
amended as of the Effective Time of the Merger to read in the form of
Exhibit D and, as so amended, such Certificate of Incorporation shall
be the Certificate of Incorporation of the Surviving Corporation until
thereafter changed or amended as provided therein or by applicable
law.
(b) The By-laws of Sub as in effect at the Effective Time of
the Merger shall be the By-laws of the Surviving Corporation until
thereafter changed or amended as provided therein or by applicable
law.
SECTION 2.06. Directors. The directors of Sub at the
Effective Time of the Merger shall be the directors of the Surviving
Corporation, until the earlier of their
resignation or removal or until their respective successors are duly
elected and qualified, as the case may be.
SECTION 2.07. Officers. The officers of the Company at the
Effective Time of the Merger shall be the officers of the Surviving
Corporation, until the earlier of their resignation or removal or
until their respective successors are duly elected and qualified, as
the case may be.
SECTION 2.08. Supplemental Indenture. Prior to the Effective
Time of the Merger, the Company and the Trustee (as defined below)
shall enter into a supplemental indenture (the "Supplemental
Indenture") to the Indenture dated as of October 16, 1997 (the
"Indenture"), between the Company and PNC Bank, Kentucky, Inc., as
trustee (the "Trustee"), pursuant to Section 15.6 of the Indenture,
which shall (i) become effective upon the Effective Time of the Merger
and (ii) provide that, from and after the Effective Time of the
Merger, each of the Company's outstanding 5.0% Convertible
Subordinated Notes due 2002 (the "Convertible Sub Notes") shall cease
to be convertible into shares of Common Stock, but shall be
convertible solely into an amount of cash, without interest, equal to
the product of (x) the number of shares of Common Stock into which
such Note was convertible immediately prior to the Effective Time of
the Merger and (y) the Merger Consideration (as defined below). The
Company shall give Parent a reasonable opportunity to comment on the
form of the Supplemental Indenture prior to the execution thereof, and
shall not enter into the Supplemental Indenture if Parent reasonably
objects thereto.
SECTION 2.09. Parent's Election to Modify the Terms of the
Merger. (a) If, at any time following the date of this Agreement and
prior to the initial mailing of the Proxy Materials to the Company's
stockholders, Parent shall determine, in its sole discretion, that the
Surviving Corporation would not be entitled to treat the Merger as a
recapitalization under GAAP, Parent shall have the right to modify the
terms of the Merger as set forth in clauses (i) and (ii) below:
(i) each holder of any issued and outstanding shares of
Common Stock of the Company (other than shares to be canceled or
converted in accordance with Sections 3.01(b) and 3.01(c)) and
other than V Corp. or any of its subsidiaries (the "Public
Stockholders") will have right to elect to receive the Merger
Consideration in the form of cash and/or shares of Common Stock
of the Surviving Corporation ("New Public Shares"), valuing each
such share at $20.25 per share, up to a maximum of 1,234,568 New
Public Shares (or, at the option of Parent, 2,469,136 New Public
Shares); provided, however, that (A) such elections shall be
subject to proration (based on the number of shares subject to
election) if the Public Stockholders elect to receive more than
1,234,568 New Public Shares (or, at the option of Parent,
2,469,136 New Public Shares) and (B) at the option of Parent, no
New Public Shares will be issued (and the Public Stockholders
will receive Merger Consideration consisting solely of cash) if
the Public Stockholders elect to receive less than 617,284 New
Public Shares; and
(ii) the number of V Corp. Retained Shares shall be reduced
on share-for-share basis by the total number of New Public Shares
issued to the Public Stockholders in the Merger (but not below
zero).
(b) If Parent elects to modify the terms of the Merger as
set forth in paragraph (a) above, the parties agree to execute an
appropriate amendment to this Agreement in order to reflect such
modification, which amendment shall include (i) an extension of the
Outside Date to December 31, 1998, (ii) provisions relating to the
preparation and filing by the Company with the SEC of a Registration
Statement on Form S-4, in which the proxy statement (including any
appropriate amendment to reflect the modified terms of the Merger)
will be included as a prospectus and (iii) such other provisions
regarding the mechanics and timing of the Merger as are customary for
cash-election mergers.
(c) Parent and the Company each represents and warrants to
the other party that its Board of Directors has approved the Merger on
the modified terms set forth in this Section 2.09; provided, however,
that each party acknowledges that, notwithstanding any other provision
of this Agreement, the Board of Directors of the Company has not, and
is not obligated to, approve or recommend any election by any
stockholder of the Company to receive any Merger Consideration in the
form of New Public Shares.
ARTICLE III
Effect of the Merger on the Capital Stock of the
Constituent Corporations; Exchange of Certificates
SECTION 3.01. Effect on Capital Stock. As of the Effective
Time of the Merger, by virtue of the Merger and without any action on
the part of the holder of any shares of Common Stock or any shares of
capital stock of Sub:
(a) Capital Stock of Sub. Each issued and outstanding share
of the capital stock of Sub shall be converted into and become
11,111.111 fully paid and nonassessable shares of Common Stock,
par value $0.01 per share, of the Surviving Corporation.
(b) Treasury Stock and Parent Owned Stock. Each share of
Common Stock that is owned by the Company and each share of
Common Stock that is owned by Parent or Sub (together, in each
case, with the associated Right) shall automatically be canceled
and retired and shall cease to exist, and no consideration shall
be delivered in exchange therefor. Each share of Common Stock
that is owned by any subsidiary of the Company or Parent (other
than Sub), together, in each case, with the associated Right,
shall automatically be converted into and become one fully paid
and nonassessable share of Common Stock, par value $0.01 per
share, of the Surviving Corporation.
(c) V Corp. Retained Shares. Each V Corp. Retained Share,
together with the associated Right, shall automatically be
converted into and become a one fully paid and nonassessable
share of Common Stock, par value $0.01 per share, of the
Surviving Corporation.
(d) Conversion of Common Stock. Subject to Section 3.01(e),
each issued and outstanding share of Common Stock (other than
shares to be canceled or converted in accordance with Sections
3.01(b) and 3.01(c)), together with the
associated Right, shall be converted into the right to receive
$20.25 in cash (the "Merger Consideration"). As of the Effective
Time of the Merger, all such shares of Common Stock (and the
associated Rights) shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist,
and each holder of a certificate representing any such shares of
Common Stock (and the associated Rights) shall cease to have any
rights with respect thereto, except the right to receive the
Merger Consideration, without interest.
(e) Shares of Dissenting Stockholders. Notwithstanding
anything in this Agreement to the contrary, shares of Common
Stock that are outstanding immediately prior to the Effective
Time of the Merger and that are held by any person who objects to
the Merger and complies with Section 262 of the DGCL concerning
the right of holders of Common Stock to dissent from the Merger
and require appraisal of their shares of Common Stock (a
"Dissenting Stockholder") shall not be converted as described in
Section 3.01(d) but, as of the Effective Time of the Merger,
shall no longer be outstanding and shall automatically be
canceled and retired and shall cease to exist and shall become
the right to receive such consideration as may be determined to
be due to such Dissenting Stockholder pursuant to the laws of the
State of Delaware; provided, however, that the shares of Common
Stock (together with the associated Rights) outstanding
immediately prior to the Effective Time of the Merger and held by
a Dissenting Stockholder who shall, after the Effective Time of
the Merger, withdraw his demand for appraisal or lose his right
of appraisal, in either case pursuant to the DGCL, shall be
deemed to be converted as of the Effective Time of the Merger
into the right to receive the Merger Consideration. The Company
shall give Parent (i) prompt notice of any written demands for
appraisal of shares of Common Stock received by the Company and
(ii) the opportunity to direct all negotiations and proceedings
with respect to any such demands. The Company shall not, without
the prior written consent of Parent, voluntarily make any payment
with respect to, or settle, offer to settle or otherwise
negotiate, any such demands.
SECTION 3.02. Exchange of Certificates. (a) Paying Agent.
Prior to the Effective Time of the Merger, Parent shall select a bank
or trust company reasonably satisfactory to the Company to act as
paying agent (the "Paying Agent") for the payment of the Merger
Consideration upon surrender of certificates representing Common
Stock. At the Effective Time, Parent shall transfer funds (or provide
for the transfer of funds) to Sub in an amount sufficient to pay the
Merger Consideration for every share of Common Stock to be converted
at the Effective Time into the Merger Consideration, and Parent hereby
represents and warrants to the Company that the Surviving Corporation
will have all such funds at the Effective Time.
(b) Surviving Corporation To Provide Funds. The Surviving
Corporation will provide to the Paying Agent on a timely basis, as and
when needed after the Effective Time of the Merger, funds necessary to
pay for the shares of Common Stock pursuant to Section 3.01, it being
understood that any and all interest earned on funds made available to
the Paying Agent in accordance with this Agreement shall be turned
over to Parent.
(c) Exchange Procedure. As soon as reasonably practicable
after the Effective Time of the Merger, the Paying Agent shall mail to
each holder of record of a
certificate or certificates which immediately prior to the Effective
Time of the Merger represented outstanding shares of Common Stock (the
"Certificates") whose shares were converted into the right to receive
the Merger Consideration pursuant to Section 3.01, (i) a letter of
transmittal (which shall specify that delivery shall be effected, and
risk of loss and title to the Certificates shall pass, only upon
delivery of the Certificates to the Paying Agent and shall be in a
form and have such other provisions as Parent may reasonably specify)
and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for the Merger Consideration. Upon surrender
of a Certificate for cancelation to the Paying Agent or to such other
agent or agents as may be appointed by the Parent, together with such
letter of transmittal, duly executed, and such other documents as may
reasonably be required by the Paying Agent, the holder of such
Certificate shall be entitled to receive in exchange therefor the
amount of cash into which the shares of Common Stock theretofore
represented by such Certificate shall have been converted pursuant to
Section 3.01, and the Certificate so surrendered shall forthwith be
canceled. In the event of a transfer of ownership of Common Stock
which is not registered in the transfer records of the Company,
payment may be made to a person other than the person in whose name
the Certificate so surrendered is registered, if such Certificate
shall be properly endorsed or otherwise be in proper form for transfer
and the person requesting such payment shall pay any transfer or other
taxes required by reason of the payment to a person other than the
registered holder of such Certificate or establish to the satisfaction
of the Surviving Corporation that such tax has been paid or is not
applicable. Until surrendered as contemplated by this Section 3.02,
each Certificate shall be deemed at any time after the Effective Time
of the Merger to represent only the right to receive upon such
surrender the amount of cash, without interest, into which the shares
of Common Stock theretofore represented by such Certificate shall have
been converted pursuant to Section 3.01. No interest will be paid or
will accrue on the cash payable upon the surrender of any Certificate.
(d) No Further Ownership Rights in Common Stock. All cash
paid upon the surrender of Certificates in accordance with the terms
of this Article III shall be deemed to have been paid in full
satisfaction of all rights pertaining to the shares of Common Stock
theretofore represented by such Certificates, and there shall be no
further registration of transfers on the stock transfer books of the
Surviving Corporation of the shares of Common Stock which were
outstanding immediately prior to the Effective Time of the Merger. If,
after the Effective Time of the Merger, Certificates are presented to
the Surviving Corporation for any reason, they shall be canceled and
exchanged as provided in this Article III.
(e) No Liability. None of Parent, Sub, the Company or the
Paying Agent shall be liable to any person in respect of any cash
delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law. If any Certificates shall not have
been surrendered prior to seven years after the Effective Time of the
Merger (or immediately prior to such earlier date on which any payment
pursuant to this Article III would otherwise escheat to or become the
property of any Governmental Entity (as defined in Section 4.01(d))),
the payment in respect of such Certificate 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.
(f) Withholding Rights. Parent or Sub, as the case may be,
shall be entitled to deduct and withhold from the consideration
otherwise payable to any holder of Common Stock pursuant to this
Agreement only such amounts as are required to be
deducted and withheld with respect to the making of such payment under
the Internal Revenue Code of 1986, as amended (the "Code"), or under
any provision of state, local or foreign tax law.
ARTICLE IV
Representations and Warranties
SECTION 4.01. Representations and Warranties of the Company.
The Company represents and warrants to Parent and Sub as follows:
(a) Organization, Standing and Corporate Power. The Company
and each of its subsidiaries is the type of entity listed on
Schedule 4.01(a), duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is
organized and has the requisite power and authority to carry on
its business as now being conducted. The Company and each of its
subsidiaries is duly qualified or licensed to do business and is
in good standing in each jurisdiction in which the nature of its
business or the ownership or leasing of its properties makes such
qualification or licensing necessary, other than in such
jurisdictions where the failure to be so qualified or licensed
(individually or in the aggregate) would not have a Material
Adverse Effect on the Company. The Company has delivered to
Parent complete and correct copies of its Certificate of
Incorporation and By-laws and the certificates of incorporation
and by-laws (or comparable charter or organizational documents)
of its Significant Subsidiaries, in each case as amended to the
date of this Agreement. For purposes of this Agreement, a
"Significant Subsidiary" means any subsidiary of the Company that
constitutes a significant subsidiary within the meaning of Rule
1-02 of Regulation S-X of the SEC.
(b) Subsidiaries. Schedule 4.01(a) lists each subsidiary of
the Company. All the outstanding shares of capital stock or other
equity interests of each such subsidiary have been validly issued
and are fully paid and nonassessable and, except as set forth in
Schedule 4.01(a), are owned by the Company and/or one or more
other subsidiaries of the Company, free and clear of all pledges,
claims, liens, charges, encumbrances and security interests of
any kind or nature whatsoever (collectively, "Liens"). Except for
the capital stock or other equity interests of its subsidiaries
and except for the ownership interests set forth in Schedule
4.01(a), the Company does not own, directly or indirectly, any
capital stock or other ownership interest in any corporation,
partnership, joint venture or other entity.
(c) Capital Structure. The authorized capital stock of the
Company consists of 50,000,000 shares of Common Stock, par value
$0.10 per share, and 5,000,000 shares of preferred stock, par
value $1.00 per share. At the close of business on April 16,
1998, (i) 23,381,362 shares of Common Stock were issued and
outstanding, of which 80,000 shares were shares of restricted
stock granted to employees of the Company pursuant to the Stock
Plans ("Restricted Shares"); (ii) no shares of preferred stock
were issued and outstanding; (iii) no shares of Common Stock were
held by the Company in its treasury; (iv) the outstanding
Convertible Sub Notes were convertible into 6,889,858 shares of
Common Stock (without giving effect to fractional shares)
pursuant to the terms of the Indenture
governing the Convertible Sub Notes; (v) Company Stock Options
covering 2,255,875 shares of Common Stock were issued and
outstanding, of which (x) Company Stock Options covering 223,374
shares of Common Stock are currently exercisable and (y) Company
Stock Options covering 2,032,501 shares of Common Stock are
currently not exercisable; and (vi) sufficient shares of Common
Stock were reserved for issuance pursuant to the Convertible Sub
Notes and the Company Stock Options and sufficient shares of
preferred stock were reserved for issuance pursuant to the rights
(the "Rights") to purchase shares of Common Stock issued pursuant
to the Rights Agreement dated as of February 15, 1998 (as amended
from time to time, the "Rights Agreement"), between the Company
and National City Bank, as Rights Agent (the "Rights Agent").
Except as set forth above, no shares of capital stock or other
voting securities of the Company were issued, reserved for
issuance or outstanding. There are no outstanding stock
appreciation rights granted under any Stock Plan. All outstanding
shares of capital stock of the Company are, and all shares which
may be issued pursuant to the Stock Plans will be, when issued,
duly authorized, validly issued, fully paid and nonassessable and
not subject to preemptive rights. Except for the Convertible Sub
Notes, there are not any 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. Except for the Rights, securities issued under
the Stock Plans, the Convertible Sub Notes and as otherwise set
forth above, as of the date of this Agreement, there are not any
securities, options, warrants, calls, rights, commitments,
agreements, arrangements or undertakings of any kind to which the
Company or any of its subsidiaries is a party or by which any of
them is bound obligating the Company or any of its subsidiaries
to issue, deliver or sell, or cause to be issued, delivered or
sold, additional shares of capital stock or other voting
securities of the Company or of any of its subsidiaries or
obligating the Company or any of its subsidiaries to issue,
grant, extend or enter into any such security, option, warrant,
call, right, commitment, agreement, arrangement or undertaking.
As of the date of this Agreement, there are not any outstanding
contractual obligations of the Company or any of its subsidiaries
to repurchase, redeem or otherwise acquire any shares of capital
stock of the Company or any of its subsidiaries. The Company has
delivered to Parent a complete and correct copy of the Rights
Agreement as amended and supplemented to the date of this
Agreement.
(d) Authority; Noncontravention. The Company has the
requisite corporate power and authority to enter into this
Agreement and, subject to receipt of Company Stockholder Approval
(as defined in Section 4.01(m)), to consummate the Transactions.
The execution and delivery by the Company of the Operative
Agreements to which it is a party and the consummation by the
Company of the Transactions have been duly authorized by all
necessary corporate action on the part of the Company, subject to
receipt of Company Stockholder Approval. This Agreement has been
duly executed and delivered by the Company and constitutes a
valid and binding obligation of the Company, enforceable against
the Company in accordance with its terms (subject to applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer and other similar laws affecting creditors' rights
generally from time to time in effect and to general principles
of equity, including concepts of materiality, reasonableness,
good faith and fair dealing, regardless of whether
considered in a proceeding in equity or in law). The execution
and delivery by the Company of the Operative Agreements to which
it is a party do not, and the consummation by the Company of the
Transactions and compliance with the provisions of the Operative
Agreements to which it is a party will not conflict with, or
result in any violation of, or default (with or without notice or
lapse of time, or both) under, or give rise to a right of
termination, cancelation or acceleration of any obligation or to
loss of a material benefit under, or result in the creation of
any Lien upon any of the properties or assets of the Company or
any of its subsidiaries under, (i) the Certificate of
Incorporation or By-laws of the Company or the comparable charter
or organizational documents of any of its subsidiaries, (ii) any
loan or credit agreement, note, bond, mortgage, indenture, lease
or other agreement, instrument, permit, concession, franchise or
license applicable to the Company or any of its subsidiaries or
their respective properties or assets or (iii) except for the
governmental filings and other matters referred to in the
following sentence, any judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to the Company or any of
its subsidiaries or their respective properties or assets, other
than, (A) in the case of clause (ii) and (iii), any such
conflicts, violations, defaults, rights, losses or Liens that
individually or in the aggregate would not (x) have a Material
Adverse Effect on the Company, (B) with respect to the Company's
obligation to repurchase the Convertible Sub Notes at the
election of the holders thereof upon a "Change of Control" in
accordance with the terms of the Indenture and (C) with respect
to the Credit Agreement dated as of August 15, 1996, as amended,
by and among the Company and the financial institutions listed
therein (the "Credit Agreement"). No consent, approval, order or
authorization of, or registration, declaration or filing with,
any Federal, state or local government or any court,
administrative or regulatory agency or commission or other
governmental authority or agency, domestic or foreign (a
"Governmental Entity"), is required by or with respect to the
Company or any of its subsidiaries in connection with the
execution and delivery by the Company of the Operative Agreements
to which it is a party or the consummation by the Company of the
Transactions, except for (i) the filing of a premerger
notification and report form by the Company under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of ▇▇▇▇ (▇▇▇ "▇▇▇
▇▇▇"), (▇▇) the filing with the SEC of (x) a proxy or information
statement relating to the adoption by the Company's stockholders
of this Agreement (as amended or supplemented from time to time,
the "Proxy Statement") and (y) such reports under Section 13 of
the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), as may be required in connection with this Agreement and
the Transactions, (iii) the filing of the Certificate of Merger
with the Delaware Secretary of State and appropriate documents
with the relevant authorities of other states in which the
Company is qualified to do business, (iv) such filings as may be
required in connection with the taxes described in Section 6.10,
(v) such filings as may be required under applicable state
licensing and certificate of need laws, (vi) such other consents,
approvals, notices, orders, authorizations, registrations,
declarations and filings as are set forth on Schedule 4.01(d),
and (vii) any such consent, approval, order or authorization,
registration, declaration or filing that, if not obtained or
made, individually or in the aggregate, would not have a Material
Adverse Effect on the Company.
(e) SEC Documents; Undisclosed Liabilities. The Company has
filed all required reports, schedules, forms, statements and
other documents with the SEC
since January 1, 1997 (the "SEC Documents"). As of their
respective dates, the SEC Documents complied in all material
respects with the requirements of the Securities Act of 1933 (the
"Securities Act"), or the Exchange Act, as the case may be, and
the rules and regulations of the SEC promulgated thereunder
applicable to such SEC Documents, and none of the SEC Documents
contained any untrue statement of a material fact or omitted to
state a 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. The
financial statements of the Company included in the SEC Documents
comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations
of the SEC with respect thereto, have been prepared in accordance
with GAAP (except, in the case of unaudited statements, as
permitted by Form 10-Q of the SEC) applied on a consistent basis
during the periods involved (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 the consolidated results of their
operations and cash flows for the periods then ended (subject, in
the case of unaudited statements, to normal year-end audit
adjustments). Except as set forth in the Filed SEC Documents (as
defined below), neither the Company nor any of its subsidiaries
has any liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise) required by GAAP to
be set forth on a consolidated balance sheet of the Company and
its consolidated subsidiaries or in the notes thereto and which,
individually or in the aggregate, would have a Material Adverse
Effect on the Company.
(f) Information Supplied. None of the Proxy Materials (as
defined in Section 6.01), taken as a whole, will, at the
respective times they are first published, sent or given to the
Company's stockholders or at the time of the Stockholders
Meeting, 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 are made, not misleading,
except that no representation or warranty is made by the Company
with respect to statements made or incorporated by reference
therein based on information supplied by Parent or Sub for
inclusion or incorporation by reference therein. The Proxy
Materials will comply as to form in all material respects with
the requirements of the Exchange Act and the rules and
regulations thereunder.
(g) Absence of Certain Changes or Events. Except as
disclosed in Schedule 4.01(g) or in the SEC Documents filed and
publicly available prior to the date of this Agreement (the
"Filed SEC Documents"), since the date of the most recent
financial statements included in the SEC Documents, the Company
has conducted its business only in the ordinary course, and there
has not been (i) any Material Adverse Change in the Company and
its subsidiaries taken as a whole, (ii) any declaration, setting
aside or payment of any dividend or other distribution (whether
in cash, stock or property) with respect to, or any repurchase
for value by the Company of, any of the Company's capital stock,
(iii) any split, combination or reclassification of any of its
capital stock or any issuance or the authorization of any
issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock, (iv) (x) any
granting by the Company or any of its subsidiaries to any
director, employee or officer of the Company or any of its
subsidiaries of any increase in compensation, except in the
ordinary course
of business consistent with prior practice or as was required
under employment agreements in effect as of the date of the most
recent financial statements included in the Filed SEC Documents,
(y) any granting by the Company or any of its subsidiaries to any
such director, employee or officer of any increase in severance
or termination pay, except as was required under any employment,
severance or termination agreements in effect as of the date of
the most recent financial statements included in the Filed SEC
Documents or (z) any entry by the Company or any of its
subsidiaries into any employment or termination agreement with
any such director, employee or officer, (v) any damage,
destruction or loss, whether or not covered by insurance, that
has a Material Adverse Effect on the Company or (vi) any change
in accounting methods, principles or practices by the Company
materially affecting its assets, liabilities or results of
operations, except insofar as may have been required by a change
in GAAP or other applicable law or regulation. The foregoing
representation and warranty shall not be deemed to be inaccurate
as of the Closing Date solely by reason of any action described
in clauses (i)-(xiii) of Section 5.01 that is taken by the
Company or any of its subsidiaries after the date of this
Agreement with the consent of Parent.
(h) Litigation. Except as disclosed in the Filed SEC
Documents, there is no suit, action or proceeding pending or, to
the knowledge of the Company, threatened against or affecting the
Company or any of its subsidiaries (and the Company is not aware
of any basis for any such suit, action or proceeding that is
considered by the Company probable of assertion and which if
asserted would have a reasonable probability of an unfavorable
outcome) that, individually or in the aggregate, would (i) have a
Material Adverse Effect on the Company, (ii) materially impair
the ability of the Company to perform its obligations under this
Agreement or (iii) prevent the consummation of any of the
Transactions, nor is there any judgment, decree, injunction, rule
or order of any Governmental Entity or arbitrator outstanding
against the Company or any of its subsidiaries having any such
effect.
(i) Absence of Changes in Benefit Plans. Except as disclosed
in the Filed SEC Documents, since the date of the most recent
financial statements included in the Filed SEC Documents, there
has not been any adoption or amendment in any material respect by
the Company or any of its subsidiaries of any collective
bargaining agreement, employment agreement or any bonus, pension,
profit sharing, deferred compensation, incentive compensation,
stock ownership, stock purchase, stock option, phantom stock,
retirement, vacation, severance, disability, death benefit,
hospitalization, medical or other plan, arrangement or
understanding (whether or not legally binding) providing benefits
to any current or former employee, officer or director of the
Company or any of its subsidiaries (collectively, "Benefit
Plans"). Except as disclosed in the Filed SEC Documents, there
exist no material employment, consulting, severance, termination
or indemnification agreements, arrangements or understandings
between the Company or any of its subsidiaries and any current or
former employee, officer or director of the Company or any of its
subsidiaries.
(j) ERISA Compliance. (i) Schedule 4.01(j) contains a list
and brief description of all "employee pension benefit plans" (as
defined in Section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")) (sometimes referred
to herein as "Pension Plans"), "employee welfare benefit
plans" (as defined in Section 3(1) of ERISA) and all other
Benefit Plans maintained, or contributed to, by the Company or
any of its subsidiaries for the benefit of any current or former
employees, officers or directors of the Company or any of its
subsidiaries. The Company has made available to Parent true,
complete and correct copies of (v) each Benefit Plan (or, in the
case of any unwritten Benefit Plans, descriptions thereof), (w)
the most recent annual report on Form 5500 filed with the
Internal Revenue Service with respect to each Benefit Plan (if
any such report was required), (x) the most recent summary plan
description for each Benefit Plan for which such summary plan
description is required, (y) each trust agreement and group
annuity contract relating to any Benefit Plan and (z) the most
recent actuarial or financial valuation prepared with respect to
any Benefit Plan.
(ii) Except as disclosed in Schedule 4.01(j), all
Pension Plans have been the subject of determination letters from
the Internal Revenue Service to the effect that such Pension
Plans are qualified and exempt from Federal income taxes under
Sections 401(a) and 501(a), respectively, of the Internal Revenue
Code of 1986, as amended (the "Code"), and no such determination
letter has been revoked nor, to the knowledge of the Company, has
revocation been threatened, nor has any such Pension Plan been
amended since the date of its most recent determination letter or
application therefor in any respect that would adversely affect
its qualification or materially increase its costs. Each Benefit
Plan has been operated in material compliance with the provisions
of all applicable laws, including ERISA and the Code.
(iii) No Pension Plan that the Company or any of its
subsidiaries maintains, or to which the Company or any of its
subsidiaries is obligated to contribute, other than any Pension
Plan that is a "multiemployer plan" (as such term is defined in
Section 4001(a)(3) of ERISA) (collectively, the "Multiemployer
Pension Plans"), had, as of the respective last annual valuation
date for each such Pension Plan, an "unfunded benefit liability"
(as such term is defined in Section 4001(a)(18) of ERISA), based
on actuarial assumptions which have been furnished to Parent.
None of the Pension Plans has an "accumulated funding deficiency"
(as such term is defined in Section 302 of ERISA or Section 412
of the Code), whether or not waived. None of the Company, any of
its subsidiaries, any officer of the Company or any of its
subsidiaries, any trustee of any trust created under any of the
Benefit Plans or any other fiduciary with responsibilities with
respect to such trusts has engaged in a "prohibited transaction"
(as such term is defined in Section 406 of ERISA or Section 4975
of the Code) involving a Benefit Plan that is subject to ERISA
(including the Pension Plans) or any other breach of fiduciary
responsibility that could subject the Company, any of its
subsidiaries or any officer of the Company or any of its
subsidiaries to the tax or penalty on prohibited transactions
imposed by such Section 4975 or to any liability under Section
502(i) or (l) of ERISA. Neither any of such Benefit Plans nor any
trusts created thereunder has been terminated, nor has there been
any "reportable event" (as that term is defined in Section 4043
of ERISA) with respect thereto, during the last five years.
Neither the Company nor any of its subsidiaries has suffered or
otherwise caused a "complete withdrawal" or a "partial
withdrawal" (as such terms are defined in Section 4203 and
Section 4205, respectively, of ERISA) since the effective date of
such Sections 4203 and 4205 with respect to any of the
Multiemployer Pension Plans.
(iv) There are no pending claims or suits, or to the
knowledge of the Company, investigations or threatened claims,
suits or investigations regarding the Benefit Plans (other than
claims for benefits in the ordinary course).
(v) Except as disclosed in Schedule 4.01(j), the
consummation of the Transactions (either alone or with any other
event) shall not entitle any director or employee of the Company
or any of its subsidiaries to additional compensation or benefits
or accelerate the vesting, payment or funding of any compensation
or benefits.
(vi) Neither the Company nor any entity required to be
treated with the Company as a single employer under Section 414
of the Code has any material unsatisfied liability under Title IV
of ERISA.
(vii) With respect to any Benefit Plan that is an
employee welfare benefit plan, except as disclosed in Schedule
4.01(j), (x) each such Benefit Plan that is a "group health
plan", as such term is defined in Section 5000(b)(1) of the Code,
complies in all material respects with the applicable
requirements of Section 4980B(f) of the Code and (y) each such
Benefit Plan (including any such Plan covering retirees or other
former employees) may be amended or terminated without material
liability to the Company or any of its subsidiaries on or at any
time after the consummation of the Merger upon not more than 30
days' notice to the participants in such Benefit Plan.
(k) Taxes. Except as set forth on Schedule 4.01(k), (i) each
of the Company and each of its subsidiaries has timely filed all
material tax returns and reports required to be filed by it, and
as of the time of filing, each such return was true, complete and
correct in all material respects; (ii) each of the Company and
each of its subsidiaries has timely paid (or the Company has paid
on its behalf) all material taxes in respect of such tax returns
and all other material taxes; (iii) the most recent financial
statements contained in the Filed SEC Documents reflect an
adequate reserve (other than a reserve for deferred income taxes
established to reflect differences between book basis and tax
basis of assets and liabilities) for all material taxes payable
by the Company and its subsidiaries for all taxable periods and
portions thereof through the date of such financial statements;
(iv) no deficiencies for any taxes have been proposed, asserted
or assessed against the Company or any of its subsidiaries, and
no requests for waivers of the time to assess any such taxes are
pending; (v) to the knowledge of the Company, the Federal income
tax returns of V Corp. and each of its subsidiaries consolidated
in such returns have been examined by and settled with the United
States Internal Revenue Service for all years through 1993; (vi)
to the knowledge of the Company, all material assessments for
taxes due with respect to such completed and settled examinations
or any concluded litigation have been fully and timely paid;
(vii) there are no material Liens for taxes (other than for
current taxes not yet due and payable) on the assets of the
Company or any of its subsidiaries; (viii) no Federal or state
income tax returns of the Company or any of its subsidiaries with
respect to a taxable period beginning on or after August 20, 1996
have ever been (and no such returns are currently being) examined
by the United States Internal Revenue Service or any state taxing
authority; and (ix) neither the Company nor any of its
subsidiaries is bound by any agreement or arrangement with
respect to taxes, other than the Tax Sharing Agreement dated
August 20, 1996 (the "Tax
Sharing Agreement"), by and between V Corp. and the Company. As
used in this Agreement, "taxes" shall include all forms of
taxation, whenever created or imposed, and whether of the United
States or elsewhere, and whether imposed by a local, municipal,
governmental, state, foreign, Federal or other body, or in
connection with any agreement with respect to taxes, including
all interest, penalties and additions imposed with respect to
such amounts, and "tax return" shall mean all Federal, state,
local, provincial and foreign tax returns, forms and information
returns and any amended tax return relating to taxes.
(l) No Excess Parachute Payments; Waiver of Severance and
Other Payments. (i) Other than payments that may be made to the
persons listed on Schedule 4.01(l) (the "Primary Executives"),
any amount that could be received (whether in cash or property or
the vesting of property) as a result of any of the Transactions
by any employee, officer or director of the Company or any of its
affiliates who is a "disqualified individual" (as such term is
defined in proposed Treasury Regulation Section 1.280G-1) under
any employment, severance or termination agreement, other
compensation arrangement or Benefit Plan currently in effect
would not be characterized as an "excess parachute payment" (as
such term is defined in Section 280G(b)(1) of the Code). Set
forth in Schedule 4.01(l) is (i) the maximum amount that could be
paid to each Primary Executive as a result of the Transactions
under all employment, severance and termination agreements, other
compensation arrangements and Benefit Plans currently in effect
and (ii) the "base amount" (as such term is defined in Section
280G(b)(3) of the Code) for each Primary Executive calculated as
of the date of this Agreement.
(ii) No director or officer of the Company has any
right to receive any severance or other payment as a result of
the Transactions under any employment, severance or termination
agreement, other compensation arrangement or benefit plan
currently in effect, except that upon the consummation of the
Merger (i) all outstanding Company Stock Options (other than
Rollover Options (as defined in Section 6.05(d)) will become
immediately exercisable and (ii) all restrictions applicable to
outstanding Restricted Shares will immediately lapse.
(m) Voting Requirements. (i) The affirmative vote of the
holders of a majority of the outstanding shares of Common Stock
approving this Agreement (the "Company Stockholder Approval") is
the only vote of the holders of any class or series of the
Company's capital stock necessary to approve this Agreement and
the Transactions.
(n) Approval by Board; State Takeover Statutes; Opinion of
the Company's Financial Advisor. The Board of Directors of the
Company, at a meeting duly called and held, acting on the
recommendation of the special committee of disinterested
directors of such Board of Directors (the "Special Committee"),
duly adopted resolutions (i) approving this Agreement, the Merger
and the other Transactions, (ii) determining that the terms of
the Merger and the other Transactions are fair to and in the best
interests of the Company and its stockholders and (iii)
recommending that the Company's stockholders adopt this
Agreement. Such resolutions are sufficient to render inapplicable
to this Agreement and the other Operative Agreements, the Merger
and the other Transactions the provisions of Section 203 of the
DGCL. To the Company's
knowledge, no other state takeover statute or similar statute or
regulation applies or purports to apply to the Company with respect to
this Agreement and the other Operative Agreements, the Merger or the
Transactions. The Company hereby represents that the Board of
Directors of the Company has received the opinion of BT Alex. ▇▇▇▇▇
Incorporated, dated the date of this Agreement, to the effect that, as
of such date, the Merger Consideration to be received in the Merger by
the holders of Common Stock (other than certain affiliates of the
Company who will be continuing stockholders) is fair to such holders
from a financial point of view, and a complete and correct signed copy
of such opinion will be delivered by the Company to Parent promptly
after receipt thereof by the Company.
(o) Rights Agreement. The Company has taken all necessary action
to (i) render the Rights inapplicable to the Merger and the other
Transactions and (ii) ensure that (y) neither Parent nor any of its
affiliates is or becomes an Acquiring Person (as defined in the Rights
Agreement) as a result of the execution and delivery of this Agreement
or the announcement or consummation of the Merger or any of the other
Transactions and (z) the Separation Time (as defined in the Rights
Agreement) does not occur by reason of the execution and delivery of
this Agreement or the announcement or consummation of the Merger or
any of the other Transactions.
(p) Compliance with Laws. Neither the Company nor any of its
subsidiaries has violated or failed to comply with any statute, law,
ordinance, regulation, rule, judgment, decree or order of any
Governmental Entity applicable to its business or operations,
including, without limitation, with respect to any services
reimbursable under the Medicare, Medicaid, or any other Federal or
state funded health care program, except for violations and failures
to comply that would not, individually or in the aggregate, result in
a Material Adverse Effect on the Company.
(q) Contracts. Except as disclosed in the Filed SEC Documents,
there are no contracts or agreements that are material to the
business, properties, assets, condition (financial or otherwise),
results of operations or prospects of the Company and its subsidiaries
taken as a whole. Neither the Company nor any of its subsidiaries is
in violation of or in default under (nor does there exist any
condition which upon the passage of time or the giving of notice would
cause such a violation of or default under) any loan or credit
agreement, note, bond, mortgage, indenture, lease, permit, concession,
franchise, license or any other contract, agreement, arrangement or
understanding, to which it is a party or by which it or any of its
properties or assets is bound, except for violations or defaults that
would not, individually or in the aggregate, result in a Material
Adverse Effect on the Company.
(r) Transactions with Affiliates. As of the date hereof, except
in connection with the Transactions or as disclosed on Schedule
4.01(r) or in the Filed SEC Documents, (i) there are no material
outstanding amounts payable to or receivable from, or material
advances by the Company or any of its subsidiaries to, and neither the
Company nor any of its subsidiaries is otherwise a material creditor
of or debtor to, V Corp. or any of its affiliates or any officer,
director or employee of the Company and (ii) neither the Company nor
any of its subsidiaries is a party to any transaction, agreement,
arrangement or understanding with V
Corp. or any of its affiliates or any officer, director or employee of
the Company, other than, with respect to clauses (i) and (ii), in the
case of officers, directors and employees, items arising out of the
ordinary course of employment with the Company.
(s) Properties. (i) Schedule 4.01(s)(i) sets forth a complete and
accurate list and the address of all material real property and
interests in real property owned in fee by the Company and the
subsidiaries (individually, an "Owned Property"). Schedule 4.01(s)(i)
also sets forth a complete list of all material real property and
interests in real property leased by the Company and the subsidiaries
(individually, a "Leased Property"). An Owned Property or Leased
Property is sometimes referred to herein, individually, as a "Company
Property" and, collectively, as "Company Properties".
(ii) The Company or one of its subsidiaries has good and
insurable fee title to the Owned Properties, subject to (i) Permitted
Liens, (ii) all matters of record and all matters which would be shown
by a current survey or inspection of Owned Properties, (iii) all
matters disclosed in the Filed SEC Documents and (iv) all other
matters which, in the case of clauses (ii)-(iv) above, do not,
individually or in the aggregate, (x) interfere materially with the
ordinary conduct of any Owned Property or the business of the Company
and its subsidiaries as a whole or (y) detract materially from the
value or usefulness of the Owned Properties to which they apply. Set
forth on Schedule 4.01(s)(ii) is a list of all title insurance
policies which the Company has in its possession for the Owned
Properties. To the knowledge of the Company, such title insurance
policies reflect material title exceptions and other matters relating
to the Owned Properties as of the effective date of the policies and
surveys. Since May 1, 1996, the Company has not created or consented
to the creation of any title matters for the Owned Properties which it
believes does or will materially and adversely affect the current use
of the Owned Properties, other than Permitted Liens or as disclosed in
the Filed SEC Documents or on Schedule 4.01(s)(i). With respect to
the Leased Properties in which a leasehold estate is created under
applicable law, the Company or one of its subsidiaries is the holder
of good and valid title to such leasehold estate (or, with respect to
any other Leased Properties, has the interest of the lessee under the
applicable leases), and such party has not assigned, transferred, or
encumbered its interest in the leases in any material way, except for
(i) Permitted Liens, (ii) all matters of record and all matters which
would be shown by a current survey or inspection of the Leased
Properties, (iii) all matters disclosed in the Filed SEC Documents,
and (iv) all other matters which, in the case of clauses (ii)-(iv)
above, do not, individually or in the aggregate, (x) interfere
materially with the ordinary conduct of any Leased Property or the
business of the Company and its subsidiaries as a whole or (y) detract
materially from the value or usefulness of the Leased Properties to
which they apply. To the knowledge of the Company, the uses currently
existing with respect to the Company Properties are permitted under
applicable zoning laws. The Company has made available to Parent for
its review originals or copies of all title insurance policies,
material exceptions referenced in such policies, surveys and title
reports which the Company has in its possession for the Owned
Properties.
(iii) Schedule 4.01(s)(iii) contains a complete and accurate
description of any noncompliance by any Company Property, to the
Company's
knowledge, with any law, ordinance, code, health and safety regulation
or insurance requirement other than such noncompliance as would not,
individually or in the aggregate, have a Material Adverse Effect on
the Company.
(iv) Except as set forth in Schedule 4.01(s)(iv), there are
no outstanding or, to the Company's knowledge, threatened requirements
by any insurance company which has issued an insurance policy covering
any Company Property, or by any board of fire underwriters or other
body exercising similar functions, requiring any repairs or
alterations to be made to any Company Property that would,
individually or in the aggregate, (x) interfere materially with the
ordinary conduct of any Company Property or the business of the
Company and its subsidiaries as a whole or (y) detract materially from
the value or usefulness of the Company Properties to which they apply.
(v) Schedule 4.01(s)(v) contains a list of each Company
Property which consists of or includes undeveloped land or which is in
the process of being developed or redeveloped (collectively, the
"Development Properties") and a brief description of the development
or redevelopment intended by the Company or any subsidiary to be
carried out or completed thereon (collectively, the "Projects"). The
Company has made available to Parent all feasibility studies, soil
tests, due diligence reports and other studies, tests or reports
performed by or for the Company at any time since the Company's
initial public offering which relate to the Development Properties or
the Projects.
(vi) The Company and each of its subsidiaries have good and
marketable title to all the personal and non-real properties and
assets reflected in their books and records as being owned by them,
free and clear of all Liens, except for (i) Permitted Liens, (ii)
Liens created in connection with the Credit Agreement and described in
Schedule 4.01(s)(i), (iii) all matters disclosed in the Filed SEC
Documents, and (iv) all other matters which, in the case of clauses
(iii) and (iv) above, do not, individually or in the aggregate,
interfere materially with the ability of the Company and its
subsidiaries to conduct their businesses, taken as a whole, as
currently conducted.
(t) Environmental Matters. (i) Except as set forth in the Filed
SEC Documents or as would not, individually or in the aggregate, have
a Material Adverse Effect on the Company, neither the Company nor any
of its subsidiaries has (x) placed, held, located, released,
transported or disposed of any Hazardous Substances (as defined below)
on, under, from or at any of the Company Properties or any other
properties, (y) any knowledge of the presence of any Hazardous
Substances on, under or at any of the Company Properties or any other
property but arising from the Company Properties, or (z) during the
preceding five years, received any written notice (A) of any violation
of any statute, law, ordinance, regulation, rule, judgment, decree or
order of any Governmental Entity relating to any matter of pollution,
protection of the environment, environmental regulation or control or
regarding Hazardous Substances on or under any of the Company
Properties or any other properties (collectively, "Environmental
Laws"), (B) of the institution or pendency of any suit, action, claim,
proceeding or investigation by any Governmental Entity or any third
party in connection with any such violation (collectively,
"Environmental Claims"), (C) requiring the response to or remediation
of Hazardous Substances at or arising from any of the
Company Properties or any other properties, or (D) demanding payment
for response to or remediation of Hazardous Substances at or arising
from any of the Company Properties or any other properties, except in
each case for the notices set forth in Schedule 4.01(t). For purposes
of this Agreement, the term "Hazardous Substance" shall mean any toxic
or hazardous materials or substances, including asbestos, buried
contaminants, chemicals, flammable explosives, radioactive materials,
petroleum and petroleum products and any substances defined as, or
included in the definition of, "hazardous substances", "hazardous
wastes", "hazardous materials" or "toxic substances" under any
Environmental Law.
(ii) Except as set forth in the Filed SEC Documents or
Schedule 4.01(t), no Environmental Law imposes any obligation upon the
Company or its subsidiaries arising out of or as a condition to any
transaction contemplated by this Agreement, including, without
limitation, any requirement to modify or to transfer any permit or
license, any requirement to file any notice or other submission with
any Governmental Entity, the placement of any notice, acknowledgment
or covenant in any land records, or the modification of or provision
of notice under any agreement, consent order or consent decree, except
for obligations that, individually or in the aggregate, would not have
a Material Adverse Effect on the Company. Except as set forth in the
Filed SEC Documents, or Liens that, individually or in the aggregate,
would not have a Material Adverse Effect on the Company, no Lien has
been placed upon any of the Company's or its subsidiaries' properties
under any Environmental Law.
(u) Labor Matters. Except as set forth in Schedule 4.01(u), there
are no collective bargaining or other labor union agreements to which
the Company or any of its subsidiaries is a party or by which any of
them is bound. To the knowledge of the Company, since January 1, 1993,
neither the Company nor any of its subsidiaries has encountered any
labor union organizing activity, or had any actual or threatened
employee strikes, work stoppages, slowdowns or lockouts. There are no
pending or, to the knowledge of the Company, threatened, claims,
suits, grievances or investigations regarding the compliance by the
Company or its subsidiaries with any federal, state or local labor or
wage law or regulations, except for any claims, suits, grievances or
investigations that, individually or in the aggregate, would not have
a Material Adverse Effect on the Company.
(v) Brokers. No broker, investment banker, financial advisor or
other person, other than BT Alex. ▇▇▇▇▇ Incorporated, the fees and
expenses of which will be paid by the Company, is entitled to any
broker's, finder's, financial advisor's or other similar fee or
commission in connection with the Transactions based upon arrangements
made by or on behalf of the Company. The Company has furnished to
Parent a true and complete copy of all agreements between the Company
and BT Alex. ▇▇▇▇▇ Incorporated relating to the Merger and the other
Transactions.
(w) Compliance with Law.
(i) Licenses and Permits. The Company and each of its
subsidiaries has obtained, maintains in force, and has provided copies
to Parent of all material licenses, permits, certificates of
authority, orders and waivers required from any Governmental Entity
("Permits") to operate or manage, as the case may
be, their respective businesses in the manner in which they are
currently operated and to occupy, operate and use any buildings,
improvements, fixtures and equipment owned or leased in connection
with the operation of all operational assisted living facilities,
independent living facilities, home health agencies and skilled
nursing facilities of the Company and its subsidiaries. Except as
specified in Schedule 4.01(w), all of the Permits referenced in the
foregoing sentence have been issued in the name of the Company or the
applicable subsidiary having an ownership, leasehold, management or
operational interest in the facilities referenced therein. No such
permits of the Company or any of its subsidiaries have been suspended,
canceled or terminated and, to the knowledge of the Company, no
suspension, cancelation or termination of any such Permit is
threatened or imminent. To the knowledge of the Company, each employee
of the Company and each of its subsidiaries has obtained and maintains
in force all licenses, permits or similar authorizations required to
authorize such employee to perform his or her duties on behalf of the
Company and its subsidiaries with only such exceptions that
individually and in the aggregate would not have a Material Adverse
Effect on the Company.
(ii) Billing. The Company and each of its subsidiaries has
complied in all material respects with all applicable Medicare and all
other third party billing policies, procedures, limitations and
restrictions, and there is no pending or, to the knowledge of the
Company, threatened recoupment or penalty action or proceeding against
the Company or any of its subsidiaries under the Medicare program or
any other third party payor program except for such noncompliance,
actions or proceedings that individually or in the aggregate would not
have a Material Adverse Effect on the Company.
(iii) No Kickbacks. Neither the Company nor any of its
subsidiaries, nor, to the knowledge of the Company, any director,
officer or employee of the Company or any of its subsidiaries acting
for or on behalf of the Company or any of its subsidiaries, has paid
or caused to be paid, directly or indirectly, in connection with the
business of the Company or any of its subsidiaries, (i) any bribe,
kickback or other similar payment to any Governmental Entity or any
agent of any supplier or customer, except for payments to V. Corp and
its affiliates that were in compliance with applicable law, or (ii)
any contribution to any political party or candidate (other than from
personal funds of directors, officers or employees not reimbursed by
their respective employers or in compliance with applicable law).
(iv) No Investigations. To the knowledge of the Company,
neither the Company nor any of its subsidiaries is the subject of any
investigation, proceeding or other action, nor has any investigation,
proceeding or other action been threatened by any Governmental Entity
or other person, regarding noncompliance with any law, and no
reasonable basis exists for any such investigation or prosecution
which would have a Material Adverse Effect on the Company.
SECTION 4.02. Representations and Warranties of Parent and Sub.
Parent and Sub represent and warrant to the Company as follows:
(a) Organization, Standing and Corporate Power. Each of Parent
and Sub is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is
incorporated and has the requisite corporate power and authority to
carry on its business as now being conducted.
(b) Authority; Noncontravention. Parent and Sub have all
requisite corporate power and authority to enter into this Agreement
and to consummate the Transactions. The execution and delivery by
Parent and Sub of the Operative Agreements to which they are parties
and the consummation of the Transactions have been duly authorized by
all necessary corporate action on the part of Parent and Sub. This
Agreement has been duly executed and delivered by Parent and Sub and
constitutes a valid and binding obligation of such party, enforceable
against such party in accordance with its terms (subject to applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer and other similar laws affecting creditors' rights generally
from time to time in effect and to general principles of equity,
including concepts of materiality, reasonableness, good faith and fair
dealing, regardless of whether considered in a proceeding in equity or
in law). The execution and delivery by Parent and Sub of the Operative
Agreements to which they are parties do not, and the consummation of
the Transactions and compliance with the provisions of the Operative
Agreements will not, conflict with, or result in any violation of, or
default (with or without notice or lapse of time, or both) under, or
give rise to a right of termination, cancelation or acceleration of
any obligation or to loss of a material benefit under, or result in
the creation of any Lien upon any of the properties or assets of
Parent or Sub under, (i) the certificate of incorporation or by-laws
(or other comparable organizational documents) of Parent or Sub, (ii)
any loan or credit agreement, note, bond, mortgage, indenture, lease
or other agreement, instrument, permit, concession, franchise or
license applicable to Parent or Sub or their respective properties or
assets or (iii) except for the governmental filings and other matters
referred to in the following sentence, any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to Parent or
Sub, other than, in the case of clauses (ii) or (iii), any such
conflicts, violations, defaults, rights, losses or Liens that
individually or in the aggregate would not (x) have a Material Adverse
Effect on Parent, (y) materially impair the ability of Parent and Sub
to perform their respective obligations under this Agreement or (z)
prevent or materially delay the consummation of any of the
Transactions. No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is
required by or with respect to Parent or Sub in connection with the
execution and delivery by Parent or Sub of the Operative Agreements to
which they are parties or the consummation by Parent or Sub, as the
case may be, of any of the Transactions, except for (i) the filing of
a premerger notification and report form under the HSR Act, (ii) the
filing with the SEC of the Proxy Materials and such reports under
Sections 13 and 16(a) of the Exchange Act as may be required in
connection with the Operative Agreements and the Transactions, (iii)
the filing of the Certificate of Merger with the Delaware Secretary of
State and appropriate documents with the relevant authorities of other
states in which the Company is qualified to do business, (iv) such
filings as may be required in connection with the taxes described in
Section 6.10 and (v) such other consents, approvals, orders,
authorizations, registrations, declarations and filings as may be
required under the "takeover" or "blue sky" laws of various states.
(c) Information Supplied. None of the information supplied or to
be supplied by Parent or Sub for inclusion or incorporation by
reference in the Proxy Materials will, at the respective times they
are first published, sent or given to the Company's stockholders, or
at the time of the Stockholders Meeting, 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 are made, not
misleading.
(d) Brokers. No broker, investment banker, financial advisor or
other person, other than Lazard Freres & Co. LLC, the fees and
expenses of which will be paid by Parent, is entitled to any broker's,
finder's, financial advisor's or other similar fee or commission in
connection with the Transactions based upon arrangements made by or on
behalf of Parent or Sub.
(e) Financing. At the Effective Time of the Merger, Parent and
Sub will have available all of the funds necessary for the acquisition
of all shares of Common Stock pursuant to the Merger, and to perform
their respective obligations under this Agreement.
(f) Management Arrangements. Parent has provided the Board of
Directors of the Company with a summary of the terms of all contracts,
agreements and other arrangements proposed to be entered into between
the Surviving Corporation (or any of its affiliates) and any of the
officers, directors and employees of the Company (or any of its
affiliates), and the Surviving Corporation shall not enter into any
such contracts, agreements or arrangements on terms that are more
favorable to such officers, directors and employees than those set
forth in such summary.
(g) Financial Statements.
(i) To the knowledge of Parent, (A) the financial statements
of Parent for the year ended December 31, 1997 previously delivered to
the Company by Parent ("Parent Financial Statements") comply as to
form in all material respects with applicable accounting requirements
and (if applicable) the published rules of the SEC with respect
thereto, were prepared in accordance with GAAP applied on a consistent
basis during the periods presented (except as may be indicated in the
notes thereto) and fairly present the consolidated financial position
of Parent and its subsidiaries, as of the dates thereof and the
consolidated financial position of Parent and its subsidiaries, as of
the dates thereof and the consolidated results of their operations and
cash flows for the periods then ended, and (B) except as set forth in
the Parent Financial Statements, Parent and its subsidiaries had no
liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) at December 31, 1997 required by GAAP to be
set forth on a consolidated balance sheet of the Parent and its
consolidated subsidiaries or in the notes thereto and which have a
Material Adverse Effect on Parent.
(ii) Concurrently with the acquisition of Parent by
Prometheus Senior Quarters LLC ("Prometheus"), Prometheus contributed
in excess of $175 million to the equity capital of Prometheus
Acquisition Corp., which merged with and into Parent on April 7, 1998
(the "Equity Contribution"). To the knowledge of
Parent, between December 31, 1997 and the time of such contribution
(the "Contribution Date"), Parent did not suffer any Material Adverse
Change or incur any liability or obligation required by GAAP to be set
forth on a consolidated balance sheet of Parent and its consolidated
subsidiaries or in the notes thereto which would have a Material
Adverse Effect on Parent, other than (i) liabilities and obligations
for transaction-related expenses incurred in connection with the
acquisition of Parent by Prometheus and (ii) other liabilities and
obligations in an aggregate amount not in excess of $25 million.
(iii) Between the Contribution Date and the date of this
Agreement, Parent (A) did not (a) suffer any Material Adverse Change
or (b) incur any liability or obligation required by GAAP to be set
forth on a consolidated balance sheet of Parent and its consolidated
subsidiaries or in the notes thereto which would have a Material
Adverse Effect on Parent (other than (x) liabilities and obligations
for transaction-related expenses incurred in connection with the
acquisition of Parent by Prometheus and (y) other liabilities and
obligations in an aggregate amount not in excess of $25 million), or
(B)(y) declare, set aside or pay any dividends on, or make any other
distributions in respect of, any of its capital stock or other equity
interests (including any distribution of any portion of the Equity
Contribution to any person), or (z) purchase, redeem or otherwise
acquire any shares of capital stock of Parent or any of its
subsidiaries or any other securities thereof any rights, warrants or
options to acquire any such shares or other securities or interests.
(h) Sub; No Prior Activities. Sub was formed solely for the
purpose of engaging in the transactions contemplated by this
Agreement. As of the date hereof and the Effective Time of the Merger,
except for obligations or liabilities incurred in connection with its
organization or to be incurred in connection with the consummation of
the Transactions, Sub has not incurred any obligations or liabilities
or engaged in any business activity of any type of any kind whatsoever
or entered into agreements or arrangements with any person, other than
the Operative Agreements.
(i) Certain Actions by Parent. During the period of time from the
date of this Agreement until the Effective Time of the Merger, Parent
shall not, and shall not permit any of its subsidiaries to, (i) pay
any extraordinary dividend, make any extraordinary redemption of any
equity securities or make any other extraordinary distribution of cash
or other property to its securityholders or (ii) sell, transfer or
otherwise dispose any of its assets out of the ordinary course of
business unless it receives consideration equal to the fair market
value of such assets (as determined in good faith by the board of
directors of Parent).
ARTICLE V
Covenants Relating to Conduct of Business
SECTION 5.01. Conduct of Business. (a) Ordinary Course. During
the period from the date of this Agreement to the Effective Time of the
Merger, the Company shall, and shall cause its subsidiaries to, carry on
their respective businesses in the usual, regular and ordinary course in
substantially the same manner as heretofore conducted
and, to the extent consistent therewith, use all reasonable efforts to
preserve intact their current business organizations, keep available the
services of their current officers and employees and preserve their
relationships with customers, suppliers, licensors, licensees, distributors
and others having business dealings with them. Without limiting the
generality of the foregoing, during the period from the date of this
Agreement to the Effective Time of the Merger, the Company shall not, and
shall not permit any of its subsidiaries to:
(i) (x) declare, set aside or pay any dividends on, or make
any other distributions in respect of, any of its capital stock, other
than dividends and distributions by any direct or indirect wholly
owned subsidiary of the Company to its parent, (y) split, combine or
reclassify any of its capital stock or issue or authorize the issuance
of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock or (z) purchase, 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;
(ii) issue, deliver, sell, pledge or otherwise encumber any
shares of its capital stock, any other voting securities or any
securities convertible into or exchangeable for, or any rights,
warrants or options to acquire, any such shares, voting securities or
convertible securities (other than (1) the issuance of Common Stock
(and associated Rights) upon the exercise of Company Stock Options
outstanding on the date of this Agreement in accordance with their
present terms and (2) the issuance of Common Stock (and associated
Rights) upon the exercise of Convertible Sub Notes in accordance with
their terms);
(iii) amend its certificate of incorporation, by-laws or
other comparable charter or organizational documents;
(iv) acquire or agree to acquire (x) 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 (y) any assets that are material, individually
or in the aggregate, to the Company and its subsidiaries taken as a
whole, except purchases of inventory (other than real property) in the
ordinary course of business consistent with past practice;
(v) (A) grant to any employee, officer or director of
Company or any of its subsidiaries any increase in compensation,
except in the ordinary course of business consistent with prior
practice or to the extent required under employment agreements in
effect as of the date of the most recent financial statements included
in the Filed SEC Documents, (B) grant to any employee, officer or
director of Company or any of its subsidiaries any increase in
severance or termination pay, except to the extent required under any
agreement in effect as of the date of the most recent financial
statements included in the Filed SEC Documents, (C) enter into any
employment, consulting, indemnification, severance or termination
agreement with any such employee having an annual salary greater than
$75,000, officer or director, (D) establish, adopt, enter into or
amend in any material respect any collective bargaining agreement or
Benefit Plan or (E) take any action to accelerate any material rights
or benefits, or make any material determinations
not in the ordinary course of business consistent with prior practice,
under any collective bargaining agreement or Benefit Plan, except as
otherwise required by applicable law or regulation;
(vi) make any change in accounting methods, principles or
practices materially affecting the reported consolidated assets,
liabilities or results of operations of the Company, except insofar as
may have been required by a change in GAAP or other applicable laws or
regulations;
(vii) sell, lease, mortgage or otherwise encumber or subject
to any Lien or otherwise dispose of any of properties or assets of the
Company and its subsidiaries having a fair market value in excess of
$50,000, except sales or inventory (other than real property) in the
ordinary course of business consistent with past practice;
(viii) (y) 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, other than any guarantee of indebtedness or debt
securities of Elder Healthcare Developers, LLC (including through the
issuance of letters of credit) in an aggregate amount not to exceed
$10,000,000, or (z) 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, in the
case of clause (y) or (z) above is in an amount which exceeds $50,000;
(ix) make or agree to make any new capital expenditure or
expenditures which, individually, is in excess of $500,000 or, in the
aggregate, are in excess of $5,000,000;
(x) make any material tax election, amend any material tax
return or settle or compromise any material tax liability or refund;
(xi) pay, discharge or satisfy any material claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than required payments of interest
under the terms of the Convertible Sub Notes or the payment, discharge
or satisfaction, in the ordinary course of business consistent with
past practice or in accordance with their terms, of liabilities
reflected or reserved against in, or contemplated by, the most recent
consolidated financial statements (or the notes thereto) of the
Company included in the Filed SEC Documents or incurred in the
ordinary course of business consistent with past practice, or waive
the benefits of, or agree to modify in any manner, any
confidentiality, standstill or similar agreement to which the Company
or any of its subsidiaries is a party;
(xii) except as part of the Transactions as contemplated by
this Agreement, enter into any transaction, agreement, arrangement or
understanding with V Corp. or any of its affiliates; or
(xiii) authorize any of, or commit or agree to take any of,
the foregoing actions (it being understood and agreed that the Company
shall not be deemed to have breached the foregoing covenant by virtue
of the Company's obligation to repurchase the Convertible Sub Notes at
the election of the holders thereof following the consummation of the
Merger in accordance with the "Change of Control" provisions of the
Indenture).
(b) Other Actions. The Company shall not, and shall not permit
any of its subsidiaries to, take any action that would, or that could
reasonably be expected to, result in (i) any of the representations and
warranties of the Company set forth in this Agreement that are qualified as
to materiality becoming untrue, (ii) any of such representations and
warranties that are not so qualified becoming untrue in any material
respect or (iii) except as otherwise permitted by Section 5.02, any of the
conditions to the Merger set forth in Article VII not being satisfied.
(c) Advice of Changes. The Company shall promptly advise Parent
orally and in writing of any change or event having, or which, insofar as
can reasonably be foreseen, would have, a Material Adverse Effect on the
Company.
SECTION 5.02. No Solicitation. (a) The Company shall not, nor
shall it permit any of its subsidiaries to, nor shall it authorize or
permit any officer, director or employee of, or any investment banker,
attorney or other advisor or representative of, the Company or any of its
subsidiaries to, (i) directly or indirectly solicit, initiate, or encourage
the submission of, any takeover proposal, (ii) enter into any agreement
with respect to any takeover proposal or (iii) directly or indirectly
participate in any discussions or negotiations regarding, or furnish to any
person any information with respect to, or take any other action to
facilitate any inquiries or the making of any proposal that constitutes, or
may reasonably be expected to lead to, any takeover proposal; provided,
however, that, prior to the adoption of this Agreement by the stockholders
of the Company, to the extent required by the fiduciary obligations of the
Board of Directors of the Company, as determined in good faith by a
majority of the disinterested members thereof based on the advice of
outside counsel, the Company may (x) in response to an unsolicited request
therefor, participate in discussions or negotiations with, or furnish
information with respect to the Company pursuant to a customary
confidentiality agreement (as determined by the Company's independent
counsel) to, any person in connection with any takeover proposal or
potential takeover proposal or (y) issue a press release or other public
announcement disclosing the receipt by the Company of any takeover
proposal. Without limiting the foregoing, it is understood that any
violation of the restrictions set forth in the preceding sentence by any
executive officer of the Company or any of its subsidiaries or any
investment banker, attorney or other advisor or representative of the
Company or any of its subsidiaries, whether or not such person is
purporting to act on behalf of the Company or any of its subsidiaries or
otherwise, shall be deemed to be a breach of this Section 5.02(a) by the
Company. For purposes of this Agreement, "takeover proposal" means any
proposal for a merger or other business combination involving the Company
or any of its Significant Subsidiaries, any proposal for the issuance by
the Company of additional equity securities equal to 20% or more of the
outstanding equity securities of the Company as consideration for the
assets or securities of another person or any proposal or offer to acquire
in any manner, directly or indirectly, additional equity securities equal
to 20% or more of the outstanding equity securities of the Company, or 20%
or more of the assets of
the Company (and, with respect to assets, its subsidiaries, taken as a
whole), other than the Transactions.
(b) Neither the Board of Directors of the Company nor any
committee thereof shall (i) withdraw or modify, or propose to withdraw or
modify, in a manner adverse to Parent or Sub, the approval or
recommendation by such Board of Directors or any such committee of this
Agreement or the Merger or (ii) approve or recommend, or propose to approve
or recommend, any takeover proposal. Notwithstanding the foregoing, the
Board of Directors of the Company (or any committee thereof), to the extent
required by the fiduciary obligations thereof, as determined in good faith
by a majority of the disinterested members thereof based on the advice of
outside counsel, may approve or recommend (and, in connection therewith,
withdraw or modify its approval or recommendation of this Agreement and the
Merger) another takeover proposal; provided, however that the Board of
Directors of the Company (or any committee thereof) may not approve or
recommend another takeover proposal, or withdraw or modify its approval or
recommendation of this Agreement, the Merger and the Transactions until 48
hours after Parent shall have received the written notice set forth in
Section 5.02(c) below with respect to such takeover proposal.
(c) The Company promptly shall advise Parent orally and in
writing, within 24 hours of receipt of any takeover proposal or any inquiry
with respect to or which could reasonably be expected to lead to any
takeover proposal, and the material terms and conditions of such proposal
or inquiry (including any change to the material terms of any such takeover
proposal or inquiry).
ARTICLE VI
Additional Agreements
SECTION 6.01. Preparation of Proxy Materials. (a) As soon as
practicable following the execution of this Agreement, the Company will
prepare and file with the SEC a preliminary Proxy Statement and a Rule
13e-3 Transaction Statement on Schedule 13E-3 (together with all amendments
and supplements thereto, the "Schedule 13E-3"; the Proxy Statement and the
Schedule 13E-3 are collectively referred to herein as the "Proxy
Materials"). The Company will use its best efforts to respond to any
comments of the SEC or its staff and to cause the Proxy Statement to be
mailed to the Company's stockholders as promptly as practicable after such
filing. The Company will notify Parent promptly of the receipt of any
comments from the SEC or its staff and of any request by the SEC or its
staff for amendments or supplements to the Proxy Materials or for
additional information and will supply Parent with copies of all
correspondence between the Company or any of its representatives, on the
one hand, and the SEC or its staff, on the other hand, with respect to the
Proxy Materials or the Merger. If at any time prior to the adoption of this
Agreement by the Company's stockholders there shall occur any event that
should be set forth in an amendment or supplement to the Proxy Materials,
the Company will promptly prepare and mail to its stockholders such an
amendment or supplement. The Company will not mail any Proxy Materials or
any amendment or supplement thereto if Parent reasonably objects thereto.
Each of the Company, Parent and Sub agrees promptly to correct any
information provided by it for use in the Proxy Materials if and to the
extent that such information shall have become false or misleading in any
material respect, and the Company further agrees to take all steps
necessary to
amend or supplement the Proxy Materials and to cause the Proxy Materials as
so amended or supplemented to be filed with the SEC and to be disseminated
to the Company's stockholders, in each case as and to the extent required
by applicable Federal securities laws. The Company agrees to provide
Parent, Sub and their counsel copies of any written comments the Company or
its counsel may receive from the SEC or its staff with respect to the Proxy
Materials promptly after the receipt of such comments.
(b) Subject to any necessary SEC approvals of the Proxy
Materials, the Company will, as soon as practicable following the date of
this Agreement, duly call, give notice of, convene and hold a meeting of
its stockholders (the "Stockholders Meeting") for the purpose of approving
this Agreement and the Transactions. The Company will, through its Board of
Directors or a committee thereof, recommend to its stockholders approval of
this Agreement and the Transactions, except to the extent that the Board of
Directors of the Company or a committee thereof shall have withdrawn or
modified its approval or recommendation of this Agreement or the Merger as
permitted by Section 5.02(b). Without limiting the generality of the
foregoing, except as otherwise provided herein the Company agrees that its
obligations pursuant to the first sentence of this Section 6.01(b) shall
not be affected by (i) the commencement, public proposal, public disclosure
or communication to the Company of any takeover proposal or (ii) the
withdrawal or modification by the Board of Directors of the Company of its
approval or recommendation of this Agreement or the Merger.
SECTION 6.02. Access to Information; Confidentiality. The Company
shall, and shall cause each of its subsidiaries to, afford to Parent, and
to Parent's officers, employees, accountants, counsel, financial advisers
and other representatives, reasonable access during normal business hours
during the period prior to the Effective Time of the Merger to all their
respective properties, books, contracts, commitments, personnel and records
and, during such period, the Company shall, and shall cause each of its
subsidiaries to, furnish promptly to Parent (a) a copy of each report,
schedule, registration statement and other document filed by it during such
period pursuant to the requirements of Federal or state securities laws and
(b) all other information concerning its business, properties and personnel
as Parent may reasonably request. All such information shall be held in
accordance with the confidentiality agreement (the "Confidentiality
Agreement") dated February 2, 1998, as amended.
SECTION 6.03. Reasonable Efforts; Notification. (a) Upon the
terms and subject to the conditions set forth in this Agreement, unless, to
the extent permitted by Section 5.02(b), the Board of Directors of the
Company (or a committee thereof) approves or recommends another takeover
proposal, each of the parties agrees to use its reasonable efforts to take,
or cause to be taken, all actions, and to do, or cause to be done, and to
assist and cooperate with the other parties in doing, all things necessary,
proper or advisable to consummate and make effective, in the most
expeditious manner practicable, the Merger and the other Transactions,
including (i) the obtaining of all necessary actions or nonactions,
waivers, consents and approvals from Governmental Entities and the making
of all necessary notifications, registrations and filings (including
filings with Governmental Entities, if any) and the taking of all
reasonable steps as may be necessary to obtain an approval or waiver from,
or to avoid an action or proceeding by, any Governmental Entity, (ii) the
obtaining of all necessary consents, approvals or waivers from third
parties, (iii) the defending of any lawsuits or other legal proceedings,
whether judicial or administrative, challenging this Agreement or the
consummation of any of the Transactions, including seeking to have any stay
or temporary restraining order entered
by any court or other Governmental Entity vacated or reversed and (iv) the
execution and delivery of any additional instruments necessary to
consummate the Transactions and to fully carry out the purposes of the
Operative Agreements. In connection with and without limiting the
foregoing, the Company and its Board of Directors shall (i) take all
reasonable action necessary to ensure that no state takeover statute or
similar statute or regulation is or becomes applicable to the Merger, any
Operative Agreement or any of the other Transactions and (ii) if any state
takeover statute or similar statute or regulation becomes applicable to the
Merger, any Operative Agreement or any other Transaction, take all
reasonable action necessary to ensure that the Merger and the other
Transactions may be consummated as promptly as practicable on the terms
contemplated by the Operative Agreements and otherwise to minimize the
effect of such statute or regulation on the Merger and the other
Transactions. Notwithstanding the foregoing, the Board of Directors of the
Company (or any committee thereof) shall not be prohibited from taking any
action permitted by Section 5.02(b).
(b) The Company shall give prompt notice to Parent, and Parent or
Sub shall give prompt notice to the Company, of (i) any representation or
warranty made by it contained in this Agreement that is qualified as to
materiality becoming untrue or inaccurate in any respect or any such
representation or warranty that is not so qualified becoming untrue or
inaccurate in any material respect or (ii) the failure by it to comply with
or satisfy in any material respect any covenant, condition or agreement to
be complied with or satisfied by it under this Agreement; provided,
however, that no such notification shall affect the representations,
warranties, covenants or agreements of the parties or the conditions to the
obligations of the parties under this Agreement.
SECTION 6.04. Rights Agreement. (a) The Board of Directors of the
Company shall take all further action (in addition to that referred to in
Section 4.01(o)) reasonably requested in writing by Parent (including
redeeming the Rights immediately prior to the Effective Time of the Merger
or amending the Rights Agreement) in order to render the Rights
inapplicable to the Merger and the other Transactions. Except as provided
in this Agreement or requested in writing by Parent prior to the
Stockholders Meeting, the Board of Directors of the Company shall not (i)
amend the Rights Agreement or (ii) take any action with respect to, or,
except as specifically permitted by Section 6.04(b), make any determination
under, the Rights Agreement (including a redemption of the Rights).
(b) If, to the extent permitted by Section 5.02(b), the Board of
Directors of the Company (or a committee thereof) approves or recommends a
takeover proposal, the Company may take any action in order to render the
Rights inapplicable to such takeover proposal; provided, however, that the
foregoing shall not permit the Company to make any determination under, or
take any action with respect to, the Rights Agreement in order to render
the Rights applicable to the Merger or any of the other Transactions or to
redeem the Rights.
SECTION 6.05. Stock Options. (a) Subject to Section 6.05(d), at
the Effective Time of the Merger (and without any action by Board of
Directors of the Company or any committee administering the Stock Plans),
all outstanding stock options to purchase shares of Common Stock ("Company
Stock Options") heretofore granted under any stock option or stock
appreciation rights plan, program or arrangement of the Company
(collectively, the "Stock Plans"), shall be canceled in exchange for the
right to receive a cash payment by the Surviving Corporation at that time
of an amount equal to
(i) the excess, if any, of (x) the price per share of Common Stock to be
paid pursuant to the Merger over (y) the exercise price per share of Common
Stock subject to such Company Stock Option, multiplied by (ii) the number
of shares of Common Stock for which such Company Stock Option shall not
theretofore have been exercised (the "Option Consideration") (irrespective
of whether and the extent to which any or all such options are exercisable
or will be exercisable at the Effective Time). Schedule 6.05(a) identifies
all Stock Plans in effect as of the date of this Agreement.
(b) All amounts payable pursuant to this Section 6.05 shall be
subject to any required withholding of taxes and shall be paid without
interest. The Company shall use its commercially reasonable efforts to
obtain all consents of the holders of the Company Stock Options as shall be
necessary to effectuate the foregoing. Notwithstanding anything to the
contrary contained in this Agreement, payment shall, at Parent's request,
be withheld in respect of any Company Stock Option until all necessary
consents for such Company Stock Option are obtained.
(c) The Stock Plans shall terminate as of the Effective Time of
the Merger, and the provisions in any other Benefit Plan providing for the
issuance, transfer or grant of any capital stock of the Company or any
interest in respect of any capital stock of the Company shall be deleted as
of the Effective Time of the Merger, and the Company shall ensure that
following the Effective Time of the Merger no holder of a Company Stock
Option or any participant in any Stock Plan or other Benefit Plan shall
have any right thereunder to acquire any capital stock of the Surviving
Corporation except as set forth in Section 6.05(d).
(d) Notwithstanding anything the contrary contained herein, the
provisions of Section 6.05(a) shall not apply to the Company Stock Options
listed on Schedule 6.05(d) (the "Rollover Options"). The Rollover Options
shall remain outstanding after the Effective Time of the Merger as options
to acquire shares of the Surviving Corporation, except that the number of
shares and the exercise price with respect thereto shall be equitably
adjusted by the Board of Directors of the Surviving Corporation as of the
Effective Time of the Merger in order to preserve the aggregate spread with
respect to each Rollover Option. For purposes of the immediately preceding
sentence, (i) the aggregate "spread" with respect to each Rollover Option
immediately prior to the Effective Time of the Merger shall be equal to the
product of (x) the number of shares covered by such Rollover Option and (y)
the excess of the Merger Consideration over the exercise price of such
Rollover Option and (ii) the aggregate "spread" with respect to each
Rollover Option immediately following the Effective Time of the Merger
shall be equal to the product of (x) the number of shares covered by such
Rollover Option and (y) the excess of the fair market value of one share of
Common Stock of the Surviving Corporation (as determined in good faith by
the Board of Directors of the Surviving Corporation, provided that if
Parent shall purchase any shares of Common Stock of the Surviving
Corporation at or immediately following the Effective Time of the Merger,
the fair market value of one share of Common Stock shall be deemed to be
equal to the price per share paid by Parent) over the exercise price of
such Rollover Option. The Rollover Options shall be subject after the
Effective Time of the Merger to the same terms and conditions that applied
before the Effective Time of the Merger with the following exceptions: (i)
any provision or agreement providing for the accelerated vesting of such
Rollover Options as a result of the transactions contemplated by this
Agreement shall not be given effect (so that the original vesting schedule
shall continue to apply to such Rollover Options) and (ii) the shares of
the Surviving
Corporation delivered upon exercise of the Rollover Options shall be
subject to the shareholder provisions set forth in the Shareholders
Agreement. Before the Effective Time of the Merger, the Company shall take
any reasonable actions (including obtaining any employee consent) as are
necessary to implement the provisions of this Section 6.05(d). The
Surviving Corporation shall adopt a stock option plan as of the Effective
Time of the Merger that shall provide for the issuance of the Rollover
Options and by virtue of the Merger and without the need of any further
corporate action, the Surviving Corporation shall assume all obligations of
the Company under the Rollover Options.
SECTION 6.06. Benefit Plans. Except as provided in Section
6.05(c), Parent will cause the Surviving Corporation to maintain for the
period from the Effective Time of the Merger through December 31, 1998 the
Benefit Plans of the Company and its subsidiaries in effect on the date of
this Agreement or to provide benefits to employees of the Company and its
subsidiaries that are not materially less favorable in the aggregate to
such employees than those in effect on the date of this Agreement. For
purposes of participation, vesting and benefit accrual under any such
plans, the service of the employees of Company and its subsidiaries prior
to the Effective Time shall be treated as service with any employer
participating in such employee benefit plans. Parent also shall cause the
Surviving Corporation and its subsidiaries to honor in accordance with
their terms all employment, severance, consulting and other compensation
contracts, agreements and other arrangements disclosed in the Filed SEC
Documents or in any schedule hereto between any of the Company or any of
its subsidiaries and any current or former director, officer, or employee
thereof, and all provisions for vested benefits or other vested amounts
earned or accrued through the Effective Time under the Benefit Plans.
SECTION 6.07. Indemnification. Parent and Sub agree that all
rights to indemnification for acts or omissions occurring prior to the
Effective Time of the Merger now existing in favor of the current or former
directors or officers of the Company and its subsidiaries as provided in
their respective certificates of incorporation or by-laws (or similar
organizational documents) shall survive the Merger and shall continue in
full force and effect in accordance with their terms for a period of not
less than six years from the Effective Time of the Merger. Parent will
cause to be maintained for a period of not less than six years from the
Effective Time of the Merger the Company's current directors' and officers'
insurance and indemnification policy to the extent that it provides
coverage for events occurring prior to the Effective Time of the Merger
(the "D&O Insurance") for all persons who are directors and officers of the
Company on the date of this Agreement, so long as the annual premium
therefor would not be in excess of 200% of the last annual premium paid
prior to the date of this Agreement (the "Maximum Premium"). If the
existing D&O Insurance expires, is terminated or canceled during such
six-year period, Parent will use all reasonable efforts to cause to be
obtained as much D&O Insurance as can be obtained for the remainder of such
period for an annualized premium not in excess of the Maximum Premium, on
terms and conditions no less advantageous than the existing D&O Insurance.
The Company represents to Parent that the Maximum Premium is $240,720.
SECTION 6.08. Fees and Expenses. (a) Except as provided below,
all fees and expenses incurred in connection with the Merger, this
Agreement and the Transactions shall be paid by the party incurring such
fees or expenses, whether or not the Merger is consummated.
(b) The Company shall pay to Parent upon demand a fee of
$18,209,496, payable in same day funds, plus all Expenses (as defined
below) of the Company, if (i) the Company terminates this Agreement
pursuant to Section 8.01(f); (ii) Parent terminates this Agreement pursuant
to Section 8.01(c), provided that the breach or failure to perform by the
Company giving rise to such right to terminate under Section 8.01(c) must
be a deliberate breach or failure to perform with the intent of frustrating
the Closing; (iii) Parent terminates this Agreement pursuant to Section
8.01(d); (iv) any person makes a takeover proposal that was not withdrawn
more than ten days prior to the date of the Stockholders Meeting and
thereafter this Agreement is terminated pursuant to Section 8.01(b)(i); or
(v) any person makes a takeover proposal that was not withdrawn on the date
60 days prior to the Outside Date (as defined in Section 8.01(b)(ii)) and
the Company Stockholder Approval is not obtained prior to termination of
this Agreement. Any fee payable to Parent by the Company pursuant to this
Section 6.08(b) is herein referred to as the "Termination Fee".
(c) For purposes of this Agreement, the term "Expenses" shall
mean, with respect to a party hereto, all reasonable out-of-pocket fees and
expenses incurred or paid by or on behalf of such party or any of its
affiliates in connection with the Merger or the consummation of any of the
Transactions, including all fees and expenses of counsel, investment
banking firms, accountants, experts and consultants to such party or any or
its affiliates and all fees and expenses of banks, investment banking firms
and other financial institutions and their respective counsel, accountants
and agents in connection with arranging or providing financing
(collectively, the "Expenses").
(d) Parent shall reimburse all of the Expenses of the Company
upon demand if this Agreement is terminated by the Company pursuant to
Section 8.01(e).
SECTION 6.09. Public Announcements. Parent and Sub, on the one
hand, and the Company, on the other hand, will consult with each other
before issuing, and provide each other the opportunity to review and
comment upon, any press release or other public statements with respect to
the Transactions, including the Merger, and shall not issue any such press
release or make any such public statement prior to such consultation,
except as may be required by applicable law, court process or by
obligations pursuant to any listing agreement with any national securities
exchange. The parties agree that (a) the initial press release to be issued
with respect to the Transactions is set forth in Exhibit A to this
Agreement, (b) such initial press release shall contain a statement to the
effect that, to the extent required by the fiduciary obligations of the
Board of Directors of the Company, determined in good faith by a majority
of the disinterested members thereof based on the advice of outside
counsel, the Company may, in response to an unsolicited request therefor,
furnish information with respect to the Company to any person pursuant to
an appropriate confidentiality agreement, and (c) the Company shall be
entitled to prepare (in its sole discretion) and file a report on Form 8-K
with the SEC pursuant to the Exchange Act describing this Agreement and the
Merger and file the Operative Agreements as exhibits to such Form 8-K.
SECTION 6.10. Transfer Taxes. Parent shall pay or cause Sub to
pay any state, local, foreign or provincial sales, use, real property
transfer, stock, transfer, stock or similar tax (including any interest or
penalties with respect thereto) payable in connection with the consummation
of the Merger (collectively, the "Transfer Taxes"). The Company agrees to
cooperate with Parent or Sub, as the case may be, in the filing of any
returns with respect to the Transfer Taxes, including supplying in a timely
manner a complete list
of all real property interests held by the Company and its subsidiaries and
any information with respect to such property that is reasonably necessary
to complete such returns. The portion of the consideration allocable to the
assets giving rise to such Transfer Taxes shall be agreed to by the Company
and the Parent.
SECTION 6.11. Support Agreements. Parent and Sub hereby represent
and warrant to the Company that the Support Agreements, complete and
correct copies of which (including all amendments or other modifications
thereto) are attached hereto as Exhibits B-1 and B-2, are the only
contracts, agreements, arrangements or other understandings currently in
effect related to the Transactions by and among Parent and/or any of its
affiliates, on the one hand, and V Corp. and/or any other stockholder of
the Company, on the other hand. Parent and Sub will not (directly or
indirectly) amend either or both of the Support Agreements, or enter into
any other contract, agreement, arrangement or other understanding related
(directly or indirectly) to the Transactions with any stockholder of the
Company (record or beneficial), without the prior written consent of the
Company.
SECTION 6.12. Headquarters. Parent, Sub and Surviving Corporation
hereby covenant that from and after the Effective Time of the Merger until
the date that is three years after the Effective Time of the Merger, the
corporate headquarters and principal offices of the Company and, after the
Effective Time of the Merger, the Surviving Corporation, shall remain in
the Louisville, Kentucky, metropolitan area.
ARTICLE VII
Conditions Precedent
SECTION 7.01. Conditions to Each Party's Obligation To Effect the
Merger. The respective obligation of each party to effect the Merger is
subject to the satisfaction or waiver on or prior to the Closing Date of
the following conditions:
(a) Stockholder Approval. The Company shall have obtained the
Company Stockholder Approval.
(b) HSR Act. The waiting period (and any extension thereof)
applicable to the Merger under the HSR Act shall have been terminated
or shall have expired.
(c) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court
of competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the Merger shall be in effect;
provided, however, that each of the parties shall have used its
reasonable efforts to prevent the entry of any such injunction or
other order and to appeal as promptly as possible any injunction or
other order that may be entered.
SECTION 7.02. Conditions to Obligations of Parent and Sub. The
obligations of Parent and Sub to effect the Merger are further subject to
the following conditions:
(a) Representations and Warranties. There shall not exist
inaccuracies in the representations and warranties of the Company set
forth in the Agreement, in each case as of the Closing Date (except
for representations and warranties confined to a specified date, which
speak only to such date), such that the aggregate effect of such
inaccuracies has, or is reasonably likely to have, a (A) Material
Adverse Effect on the Company or (B) material adverse impact on the
ability of the Company (i) to perform its obligations under this
Agreement or (ii) to consummate the Merger (disregarding for purposes
of such determination any exceptions for materiality or Material
Adverse Effect contained in such representations and warranties so as
not to "double-count"), and Parent shall have received a certificate
signed on behalf of the Company by the chief executive officer and the
chief financial officer of the Company to such effect.
(b) Performance of Obligations of the Company. The Company shall
have performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing Date,
and Parent shall have received a certificate signed on behalf of the
Company by the chief executive officer and the chief financial officer
of the Company to such effect.
(c) No Litigation. There shall not be pending any suit, action or
proceeding by any Governmental Entity or any other person, or before
any court or governmental authority, agency or tribunal, domestic or
foreign, in each case that has a reasonable likelihood of success, (i)
challenging the acquisition by Parent or Sub of any shares of Common
Stock, seeking to restrain or prohibit the consummation of the Merger
or any of the other Transactions, or seeking to obtain from the
Company, Parent or Sub any damages that are material in relation to
the Company and its subsidiaries taken as a whole, (ii) seeking to
prohibit or limit the ownership or operation by the Company, Parent or
any of their respective subsidiaries of any material portion of the
business or assets of the Company, Parent or any of their respective
subsidiaries, or to compel the Company, Parent or any of their
respective subsidiaries to dispose of or hold separate any material
portion of the business or assets of the Company, Parent or any of
their respective subsidiaries, as a result of the Merger or any of the
other Transactions, (iii) seeking to impose limitations on the ability
of Parent or Sub to acquire or hold, or exercise full rights of
ownership of, any shares of Common Stock, including, without
limitation, the right to vote the Common Stock purchased by it on all
matters properly presented to the stockholders of the Company, (iv)
seeking to prohibit Parent or any of its subsidiaries from effectively
controlling in any material respect the business or operations of the
Company or its subsidiaries, or (v) which otherwise has a Material
Adverse Effect on the Company.
(d) Material Filings and Notices. There shall have been made by
the Company and its subsidiaries, as applicable, all material filings
and notifications required to be made to any Governmental Entity in
connection with the Merger, and all material consents, approvals,
authorizations and Permits required to be obtained by the Company and
its subsidiaries from any Governmental Entity at or prior to the
Effective Time of the Merger shall have been obtained.
SECTION 7.03. Condition to Obligation of the Company. The
obligation of the Company to effect the Merger is subject to the following
conditions:
(a) Parent and Sub shall have performed in all material respects
all obligations to be performed by them under this Agreement at or prior to
the Closing Date, and the Company shall have received a certificate signed
on behalf of Parent and Sub by their respective chief executive officers
and chief financial officers to such effect.
(b) Representations and Warranties. There shall not exist
inaccuracies in the representations and warranties of Parent and Sub set
forth in this Agreement, in each case as of the Closing Date (except for
representations and warranties confined to a specified date, which speak
only to such date), such that the aggregate effect of such inaccuracies
has, or is reasonably likely to have, a (A) Material Adverse Effect on
Parent or (B) material adverse impact on the ability of Parent or Sub,
respectively, (i) to perform their respective obligations under this
Agreement or (ii) in the case of Parent and Sub, to consummate the Merger
(disregarding for purposes of such determination any exceptions for
materiality or Material Adverse Effect contained in such representations
and warranties so as not to "double-count"), except as otherwise
contemplated by this Agreement, and the Company shall have received a
certificate signed on behalf of Parent and Sub by the chief executive
officers and chief financial officers of Parent and Sub, respectively, to
such effect.
(c) Solvency Opinion. The Company shall have received a solvency
letter, dated as of the Closing Date, from a nationally recognized
valuation firm, as to the solvency of the Surviving Corporation after the
Effective Time of the Merger, in form and substance reasonably satisfactory
to the Company.
ARTICLE VIII
Termination, Amendment and Waiver
SECTION 8.01. Termination. This Agreement may be terminated at
any time prior to the Effective Time of the Merger, whether before or after
approval of matters presented in connection with the Merger by the
stockholders of the Company:
(a) by mutual written consent of Parent, Sub and the Company;
(b) by either Parent or the Company:
(i) if, upon a vote at a duly held Stockholders Meeting (or
any adjournment thereof), the Company Stockholder Approval shall
not have been obtained;
(ii) if the Merger is not consummated on or before October
31, 1998 (the "Outside Date"), unless the failure to consummate
the Merger is the result of a wilful and material breach of this
Agreement by the party seeking to terminate this Agreement;
provided, however, that the passage of such period shall be
tolled for any part thereof during which any party shall be
subject to a nonfinal order, decree, ruling or action
restraining, enjoining or otherwise prohibiting the consummation
of the Merger;
(iii) if any Governmental Entity issues an order, decree or
ruling or takes any other action permanently enjoining,
restraining or otherwise prohibiting the Merger and such order,
decree, ruling or other action shall have become final and
nonappealable; or
(iv) if any condition to the obligation of such party to
consummate the Merger set forth in Section 7.02 (in the case of
Parent) or 7.03 (in the case of the Company) becomes incapable of
satisfaction prior to the Outside Date; provided, however, that
the terminating party is not then in wilful and material breach
of any representation, warranty or covenant contained in this
Agreement);
(c) by Parent, if the Company breaches or fails to perform in any
material respect any of its representations, warranties or covenants
contained in this Agreement, which breach or failure to perform (i)
would give rise to the failure of a condition set forth in Section
7.02(a) or 7.02(b) and (ii) cannot be or has not been cured within 30
days after the giving of written notice to the Company of such breach
(provided that Parent is not then in wilful and material breach of any
representation, warranty or covenant contained in this Agreement);
(d) by Parent:
(i) if the Board of Directors of the Company or any
committee thereof withdraws or modifies in a manner adverse to
Parent its approval of recommendation of this Agreement or fails
to recommend to the Company's stockholders that they give the
Company Stockholder Approval, or such Board of Directors or any
committee thereof resolves to take any of the foregoing actions;
or
(ii) if the Board of Directors of the Company fails to
reaffirm publicly and unconditionally its recommendation to the
Company's stockholders that they give the Company Stockholder
Approval within five business days of Parent's written request to
do so (which request may be made at any time following public
disclosure of a takeover proposal, which public reaffirmation
must also include the unconditional rejection of such takeover
proposal);
(e) by the Company, if either Parent or Sub breaches or fails to
perform in any material respect of any of its representations,
warranties or covenants contained in this Agreement, which breach or
failure to perform (i) would give rise to the failure of a condition
set forth in Section 7.03(a) or 7.03(b) and (ii) cannot be or has not
been cured within 30 days after the giving of written notice to Parent
of such breach (provided that the Company is not then in wilful and
material breach of any representation, warranty or covenant in this
Agreement); or
(f) by the Company prior to receipt of the Company Stockholder
Approval in accordance with Section 8.05(b); provided, however, that
the Company shall have complied with all provisions thereof, including
the notice provisions therein.
SECTION 8.02. Effect of Termination. In the event of termination
of this Agreement by either the Company or Parent as provided in Section
8.01, this Agreement shall forthwith become void and have no effect,
without any liability or obligation on the part of Parent, Sub or the
Company, other than the provisions of Section 4.01(v), Section 4.02(d), the
last sentence of Section 6.02, Section 6.08, this Section 8.02 and Article
IX and except to the extent that such termination results from the wilful
and material breach by a party of any of its representations, warranties,
covenants or agreements set forth in the Operative Agreements.
SECTION 8.03. Amendment. This Agreement may be amended by the
parties at any time before or after receipt of the Company Stockholder
Approval; provided, however, that after any such approval, there shall not
be made any amendment that by law requires further approval by such
stockholders without the further approval of such stockholders. This
Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties. Notwithstanding the foregoing, without the
written consent of V Corp., the parties shall not make any amendment to
this Agreement that (i) reduces the Merger Consideration or changes the
form of the Merger Consideration provided herein, (ii) changes the number
of V Corp. Retained Shares or the number of shares of Common Stock into
which the V Corp. Retained Shares shall be converted as of the Effective
Time of the Merger or (iii) amends Section 6.05.
SECTION 8.04. Extension; Waiver. At any time prior to the
Effective Time of the Merger, the parties may (a) extend the time for the
performance of any of the obligations or other acts of the other parties,
(b) waive any inaccuracies in the representations and warranties contained
in this Agreement or in any document delivered pursuant to this Agreement
or (c) subject to the proviso of Section 8.03, waive compliance with any of
the agreements or conditions contained in this Agreement. Any agreement on
the part of a party to any such extension or waiver shall be valid only if
set forth in an instrument in writing signed on behalf of such party. The
failure of any party to this Agreement to assert any of its rights under
this Agreement or otherwise shall not constitute a waiver of those rights.
SECTION 8.05. Procedure for Termination, Amendment, Extension or
Waiver. (a) A termination of this Agreement pursuant to Section 8.01, an
amendment of this Agreement pursuant to Section 8.03 or an extension or
waiver pursuant to Section 8.04 shall, in order to be effective, require
(a) in the case of Parent, Sub or the Company, action by its Board of
Directors or the duly authorized designee of its Board of Directors and (b)
in the case of the Company, action by a majority of the members of the
Board of Directors of the Company who were members thereof on the date of
this Agreement and remain as such hereafter or the duly authorized designee
of such members.
(b) The Company may terminate this Agreement pursuant to Section
8.01(f) only if (i) the Board of Directors of the Company has received a
takeover proposal, (ii) in light of such takeover proposal a majority of
the disinterested directors of the Company shall have determined in good
faith, based upon the advice of outside counsel, that the Board of
Directors of the Company should withdraw or modify its approval or
recommendation of the Merger or this Agreement in order to comply with its
fiduciary duty under applicable law, (iii) the Company has notified Parent
in writing of the determinations described in clause (ii) above, (iv) at
least 48 hours following receipt by Parent of the notice referred to in
clause (iii) above, and taking into account any
revised proposal made by Parent since receipt of the notice referred to in
clause (iii) above, a majority of the disinterested directors of the
Company has again made the determinations referred to in clause (ii) above,
(v) the Company is in compliance in all material respects with Section 5.02
and (vi) the Company has previously paid the fee due under Section 6.08.
Acceptance by Parent of the fee due under Section 6.08 shall constitute
acceptance by Parent of the validity of any termination of this Agreement
under Section 8.01(f) and this Section 8.05(b).
ARTICLE IX
General Provisions
SECTION 9.01. Nonsurvival of Representations and Warranties. None
of the representations and warranties in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the Effective
Time of the Merger. This Section 9.01 shall not limit any covenant or
agreement of the parties which by its terms contemplates performance after
the Effective Time of the Merger.
SECTION 9.02. Notices. All notices, requests, claims, demands and
other communications under this Agreement shall be in writing and shall be
deemed given if delivered personally or sent by overnight courier
(providing proof of delivery) to the parties at the following addresses (or
at such other address for a party as shall be specified by like notice):
(a) if to Parent or Sub, to
Kapson Senior Quarters Corp.
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Attention: ▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇ ▇▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
Lazard Freres Real Estate Investors L.L.C.
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Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
and
Cravath, Swaine & ▇▇▇▇▇
Worldwide Plaza
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▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to the Company, to
ATRIA COMMUNITIES, INC.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇.
W. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ & Bird LLP
One Atlantic Center
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
SECTION 9.03. Definitions. For purposes of this Agreement:
(a) an "affiliate" of any person means another person that
directly or indirectly, through one or more intermediaries, controls,
is controlled by, or is under common control with, such first person
(it being understood and agreed that a person shall be deemed to
"control" (i) any corporation of which such person owns at least 40%
of the outstanding equity interests and (ii) any partnership or
limited liability company of which such person is the general partner
or managing member, as applicable; provided, however, that V Corp.
shall not be deemed to be an affiliate of the Company);
(b) "Company Stock Option" has the meaning assigned thereto in
Section 6.05(a).
(c) "Company Stockholder Approval" has the meaning assigned
thereto in Section 4.01(m).
(d) "GAAP" means United States generally accepted accounting
principles;
(e) "Material Adverse Change" or "Material Adverse Effect" means,
when used in connection with the Company or Parent, any change or
effect (or any development that, insofar as can reasonably be
foreseen, is likely to result in any change or effect) that (i) is
materially adverse to the business, properties, assets, condition
(financial or otherwise), results of operations or prospects of such
party and its subsidiaries taken as a whole, (ii) would materially
impair the ability of such party to perform its obligations under this
Agreement or (iii) would prevent or materially delay the consummation
by such party of any of the Transactions.
(f) "Medicaid" means that means-tested entitlement program under
Title XIX of the Social Security Act that provides federal grants to
states for medical assistance based on specific eligibility criteria.
(Social Security Act of 1965, Title XIX, P.L. 89-97, as amended; 42
U.S.C. 1396 et seq.).
(g) "Medicare" means that government-sponsored entitlement
program under Title XVIII of the Social Security Act that provides for
a health insurance system for eligible elderly and disabled
individuals. (Social Security Act of 1965, Title XVIII, P.L. 89-87, as
amended, 42 U.S.C. 1395 et seq.).
(h) "Permitted Liens" means (i) Liens (other than Liens imposed
under ERISA or any Environmental Law, or in connection with any
Environmental Claim) for taxes or other assessments or charges of
Governmental Entities that are not yet delinquent or that are being
contested in good faith by appropriate proceedings, in each case, with
respect to which adequate reserves are being maintained by the Company
or its subsidiaries to the extent required by GAAP, (ii) statutory
Liens of landlords, carriers, warehousemen, mechanics, materialmen and
other Liens (other than Liens imposed under ERISA or any Environmental
Law or in connection with any Environmental Claim) imposed by law and
created in the ordinary course of business for amounts not yet overdue
or which are being contested in good faith by appropriate proceedings,
in each case, with respect to which adequate reserves or other
appropriate provisions are being maintained by the Company or its
subsidiaries to the extent required by GAAP, (iii) easements,
rights-of-way, covenants and restrictions which are customary and
typical for properties similar to the Company Properties and which do
not (x) interfere materially with the ordinary conduct of any Company
Property or the business of the Company and its subsidiaries as a
whole or (y) detract materially from the value or usefulness of the
Company Properties to which they apply, (iv) Liens described or
disclosed on Schedule B of any title insurance policy held by the
Company and its subsidiaries and provided to Parent and (iv) the other
Liens, if any, described in Schedule 4.01(s)(i);
(i) "person" means an individual, corporation, partnership,
limited liability company, joint venture, association, trust,
unincorporated organization or other entity;
(j) "Proxy Materials" has the meaning assigned thereto in Section
6.01(a).
(k) "Stockholders Meeting" has the meaning assigned thereto in
Section 6.01(c).
(l) a "subsidiary" of any person means another person, an amount
of the voting securities, other voting ownership or voting partnership
interests of which is sufficient to elect at least a majority of its
Board of Directors or other governing body (or, if there are no such
voting interests, 50% or more of the equity interests of which) is
owned directly or indirectly by such first person;
(m) "takeover proposal" has the meaning assigned thereto in
Section 5.02.
SECTION 9.04. Interpretation. When a reference is made in this
Agreement to a Section, Exhibit or Schedule, such reference shall be to a
Section of, or an Exhibit or Schedule to, this Agreement unless otherwise
indicated. The table of contents and headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning
or interpretation of this Agreement. Whenever the words "include",
"includes" or "including" are used in this Agreement, they shall be deemed
to be followed by the words "without limitation".
SECTION 9.05. Counterparts. This Agreement may be executed in one
or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when one or more counterparts have
been signed by each of the parties and delivered to the other parties.
SECTION 9.06. Entire Agreement; No Third-Party Beneficiaries. The
Operative Agreements and the Confidentiality Agreement, taken together, (a)
constitute the entire agreement, and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to
the subject matter of the Transactions and (b) except for the provisions of
Article III and Sections 6.06 and 6.07 and the last sentence of Section
8.03, are not intended to confer upon any person other than the parties any
rights or remedies hereunder.
SECTION 9.07. Governing Law. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of Delaware,
regardless of the laws that might otherwise govern under applicable
principles of conflict of laws thereof.
SECTION 9.08. Assignment. Neither this Agreement nor any of the
rights, interests or obligations under this Agreement shall be assigned, in
whole or in part, by operation of law or otherwise by any of the parties
without the prior written consent of the other parties, except that Sub may
assign, in its sole discretion, any of or all its rights, interests and
obligations under this Agreement to Parent or to any affiliate of Parent,
but no such assignment shall relieve Sub of any of its obligations under
this Agreement. Any purported assignment without such consent shall be
void. Subject to the preceding sentences, this Agreement will be binding
upon, inure to the benefit of, and be enforceable by, the parties and their
respective successors and assigns.
SECTION 9.09. Enforcement. The parties agree that irreparable
damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions of this
Agreement in any court of the United States located in the State of New
York or the State of Delaware or in Delaware state court, this being in
addition to any other remedy to which they are entitled at law or in
equity. In addition, each of the parties hereto (a) consents to
submit itself to the personal jurisdiction of any Federal court located in
the State of New York or the State of Delaware or any Delaware state court
in the event any dispute arises out of any Operative Agreement or any of
the Transactions, (b) agrees that it will not attempt to deny or defeat
such personal jurisdiction by motion or other request for leave from any
such court and (c) agrees that it will not bring any action relating to any
Operative Agreement or any of the Transactions in any court other than a
Federal or state court sitting in the State of New York or the State of
Delaware or a Delaware state court.
IN WITNESS WHEREOF, Parent, Sub and the Company have caused this
Agreement to be signed by their respective officers thereunto duly
authorized, all as of the date first written above.
KAPSON SENIOR QUARTERS CORP.,
by
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
KA ACQUISITION CORP.,
by
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
ATRIA COMMUNITIES, INC.,
by
/s/ W. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇
------------------------------
Name: W. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇
Title: President/CEO
EXHIBIT A
Contact: J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Chief Financial Officer, Vice President of Development
and Secretary
(▇▇▇) ▇▇▇-▇▇▇▇
ATRIA COMMUNITIES ANNOUNCES MERGER AGREEMENT
Louisville, Kentucky. April 20, 1998. Atria Communities, Inc.
("Atria") (Nasdaq/NM: ATRC), and Kapson Senior Quarters Corp. ("Kapson"),
an affiliate of Lazard Freres Real Estate Investors LLC, today announced
that they have signed a definitive merger agreement under which Kapson will
acquire Atria in a transaction valued at approximately $750 million. Under
the terms of the merger agreement, a subsidiary of Kapson will merge into
Atria and the public stockholders of Atria will receive $20.25 per share in
cash. Vencor, Inc. ("Vencor"), which currently holds approximately 42.8% of
the currently outstanding common stock of Atria, will also receive $20.25
per share in cash for approximately 88% of its Atria shares (approximately
$177.5 million), and will retain its remaining shares of Atria after the
closing of the merger.
In connection with the execution of the merger agreement, Kapson
entered into support agreements with Vencor and certain officers and
directors of Atria collectively holding approximately 46.4% of the
currently outstanding Atria common stock under which Vencor and such
directors and officers have agreed to vote their shares in favor of the
merger. Atria has also agreed to pay Kapson a break-up fee of approximately
$18.2 million and reimburse ▇▇▇▇▇▇'▇ expenses in certain circumstances.
The merger is subject to customary conditions, including approval of
Atria's stockholders and certain regulatory approvals. BT Alex. ▇▇▇▇▇
Incorporated has provided financial advisory services to Atria's Board of
Directors and has issued a fairness opinion in connection with the merger.
Atria, based in Louisville, Kentucky, is a leading national provider
of assisted and independent living services for the elderly. Atria
currently operates 53 communities in 19 states with 5,247 units. Atria has
41 additional communities currently under development.
FORWARD-LOOKING STATEMENTS CONTAINED IN THIS PRESS RELEASE ARE SUBJECT
TO CERTAIN RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO
DIFFER MATERIALLY. CERTAIN RISKS ARE DETAILED IN THE COMPANY'S REPORTS
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.
-END-
EXHIBIT D
CERTIFICATE OF INCORPORATION
OF
SURVIVING CORPORATION
ARTICLE I
The name of the corporation (hereinafter called the
"Corporation") is ATRIA COMMUNITIES, INC..
ARTICLE II
The address of the Corporation's registered office in the State
of Delaware Corporation Trust Center, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇. The name of the registered agent at such address
is The Corporation Trust Company.
ARTICLE III
The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General
Corporation Law of the State of Delaware.
ARTICLE IV
The total number of shares of all classes of stock that the
Corporation shall have authority to issue is 20,000,000 shares of Common
Stock having the par value of $0.01 per share.
ARTICLE V
The number of directors of the Corporation shall be fixed from
time to time by the Board of Directors of the Corporation.
ARTICLE VI
In furtherance and not in limitation of the powers conferred upon
it by law, the Board of Directors of the Corporation is expressly
authorized to adopt, amend or repeal the By-laws of the Corporation.
ARTICLE VII
Unless and except to the extent that the By-laws of the
Corporation so require, the election of directors of the Corporation need
not be by written ballot.
ARTICLE VIII
To the fullest extent from time to time permitted by law, no
director of the Corporation shall be personally liable to any extent to the
Corporation or its stockholders for monetary damages for breach of his
fiduciary duty as a director.
ARTICLE IX
Each person who is or was or had agreed to become a director or
officer of the Corporation, and each such person who is or was serving or
who had agreed to serve at the request of the Corporation as a director,
officer, partner, member, employee or agent of another corporation,
partnership, limited liability company, joint venture, trust or other
enterprise (including the heirs, executor, administrators or estate of such
person), shall be indemnified by the Corporation to the fullest extent
permitted from time to time by applicable law.