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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT
PURSUANT TO SECTION 14(d)(1) OF THE SECURITIES EXCHANGE ACT OF 1934
AND
SCHEDLUE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
INTEGRATED LIVING COMMUNITIES, INC.
(NAME OF SUBJECT COMPANY)
SLC ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
WHITEHALL STREET REAL ESTATE
LIMITED PARTNERSHIP VII
(BIDDERS)
COMMON STOCK, PAR VALUE $.01 PER SHARE
(TITLE OF CLASS OF SECURITIES)
45813N10
(CUSIP NUMBER OF CLASS OF SECURITIES)
MICHAEL K. KLINGHER
85 BROAD STREET
NEW YORK, NEW YORK 10004
(212) 902-1000
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED
TO RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDERS)
COPY TO:
ROBERT B. SCHUMER, ESQ.
PAUL, WEISS, RIFKIND, WHARTON & GARRISON
1285 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10019-6064
(212) 373-3000
MAY 29, 1997
(DATE OF EVENT WHICH REQUIRES FILING STATEMENT ON SCHEDULE 13D)
------------------------
CALCULATION OF FILING FEE
<TABLE>
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Transaction Valuation* Amount of Filing Fee*
$86,590,975 $17,318.20
</TABLE>
* The transaction valuation assumes the purchase of shares of Common Stock at
$11.50 per share in cash, which is based on (i) the number of shares of
Common Stock represented by the Company to be outstanding, which number is
6,697,900 and (ii) the number of shares underlying outstanding stock
options, which number is 831,750. The amount of the filing fee, calculated
in accordance with Rule 0-11(d) under the Securities Exchange Act of 1934,
equals 1/50 of one percent of the cash offered by the Bidder.
[ ] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
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Amount Previously Paid:............................... N/A
Form or Registration No.:............................. N/A
Filing Party:......................................... N/A
Date Filed:........................................... N/A
</TABLE>
TOTAL OF SEQUENTIALLY NUMBERED PAGES:
EXHIBIT INDEX ON SEQUENTIALLY NUMBERED PAGE
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1. NAME OF REPORTING PERSON
SS OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
SLC Acquisition Corp. -- 75-2709884
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(SEE INSTRUCTIONS) (b) [ ]
3. SEC USE ONLY
4. SOURCES OF FUNDS
AF
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(E) OR 2(F) [ ]
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
None (0). See Section 12 of the Offer to Purchase, dated June 5, 1997, filed
as Exhibit (a)(1) hereto.
8. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES. (SEE
INSTRUCTIONS.) [ ]
9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
None (0)
10. TYPE OF REPORTING PERSON
SLC Acquisition Corp. -- CO
2
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1. NAME OF REPORTING PERSON
SS OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Whitehall Street Real Estate Limited Partnership VII -- 75-2637050
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(SEE INSTRUCTIONS) (b) [ ]
3. SEC USE ONLY
4. SOURCES OF FUNDS
OO, AF
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(E) OR 2(F) [ ]
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
None (0). See Section 12 of the Offer to Purchase, dated June 5, 1997, filed
as Exhibit (a)(1) hereto.
8. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES. (SEE
INSTRUCTIONS.) [ ]
9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
None (0)
10. TYPE OF REPORTING PERSON
Whitehall Street Real Estate Limited Partnership VII -- PN
3
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This Tender Offer Statement on Schedule 14D-1 also constitutes a Statement
on Schedule 13D. The item numbers and responses thereto below are in accordance
with the requirements of Schedule 14D-1.
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Integrated Living Communities, Inc.,
a Delaware corporation (the "Company"), and the address of its principal
executive offices is 24850 Old 41 Road, Suite 10, Bonita Springs, Florida.
(b) The class of securities to which this statement relates is the Common
Stock, par value $.01 per share (the "Common Stock"), of the Company (the
"Shares"). The information set forth in the Introduction and Section 1 ("Terms
of the Offer, Expiration Date") of the Offer to Purchase (the "Offer to
Purchase") annexed hereto as Exhibit (a)(1) is incorporated herein by reference.
(c) The information concerning the principal market in which the Shares are
traded and the high and low sales prices for the Shares in such principal market
is set forth in Section 6 ("Price Range of Shares") of the Offer to Purchase
which is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
This statement is being filed by SLC Acquisition Corp., a Delaware
corporation (the "Purchaser"), and Whitehall Street Real Estate Limited
Partnership VII, a Delaware limited partnership (the "Parent"). The Purchaser is
a wholly owned subsidiary of Parent.
(a)-(d) and (g) See Section 9 ("Certain Information Concerning the
Purchaser and the Parent") and Schedule I and Schedule II to the Offer to
Purchase, which are incorporated herein by reference.
(e) and (f) During the last five years none of the Purchaser or the Parent
or, to the best knowledge of the Purchaser and the Parent, any of the persons
listed in Schedules I and II to the Offer to Purchase (i) has been convicted in
a criminal proceeding (excluding traffic violations or similar misdemeanors) or
(ii) was a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and, as a result of such proceeding, was or is subject to
a judgment, decree or final order enjoining future violations of, or prohibiting
activities subject to, federal or state securities laws or finding any violation
of, or prohibiting activities subject to, federal or state securities laws or
finding any violation of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a) and (b) The information set forth in the Introduction, Section 9
("Certain Information Concerning the Purchaser and the Parent"), Section 11
("Background of the Offer, Contacts with the Company") and Section 12 ("Purpose
of the Offer, Merger, Plans for the Company") of the Offer to Purchase is
incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) and (b) The information set forth in Section 10 ("Source and Amount of
Funds") of the Offer to Purchase is incorporated herein by reference.
(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(e) The information set forth in the Introduction and Section 12
("Purpose of the Offer, Merger, Plans for the Company") of the Offer to Purchase
is incorporated herein by reference.
4
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(f) and (g) The information set forth in Section 7 ("Effect of the Offer on
the Market for the Shares, Margin Regulations and Registration under the
Exchange Act") of the Offer to Purchase is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) and (b) The information set forth in the Introduction, Section 9
("Certain Information Concerning the Purchaser and Parent") and Section 12
("Purposes of the Offer, Merger, Plans for the Company") is incorporated herein
by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE SUBJECT COMPANY'S SECURITIES.
The information set forth in the Introduction, Section 9 ("Certain
Information Concerning the Purchaser and the Parent"), Section 10 ("Source and
Amount of Funds"), Section 12 ("Purpose of the Offer, Merger, Plans for the
Company"), Section 15 ("Certain Legal Matters") and Section 16 ("Fees and
Expenses") of the Offer to Purchase is incorporated herein by reference. Except
as set forth in the Introduction and Sections 9, 10, 12, 15 and 16 of the Offer
to Purchase, neither the Purchaser or Parent nor, to the best knowledge of the
Purchaser or Parent, any of the persons listed in Schedules I and II to the
Offer to Purchase, has any contract, arrangement, understanding or relationship
(whether or not legally enforceable) with any other person with respect to any
securities of the Company (including, but not limited to, any contract,
arrangement, understanding or relationship concerning the transfer or the voting
of any such securities, joint ventures, loan or option arrangements, puts or
calls, guaranties of loans, guaranties against loss, or the giving or
withholding of proxies).
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in Section 16 ("Fees and Expenses") of the Offer
to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
Not applicable.
ITEM 10. ADDITIONAL INFORMATION.
(a) None.
(b)-(d) The information set forth in the Introduction, Section 7 ("Effect
of the Offer on the Market for the Shares, Margin Regulations and Registration
under the Exchange Act") and Section 15 ("Certain Legal Matters") of the Offer
to Purchase is incorporated herein by reference.
(e) None.
(f) The information set forth in the Offer to Purchase and the Letter of
Transmittal, to the extent not otherwise incorporated herein by reference, is
incorporated herein by reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
(a) (1) Offer to Purchase, dated June 5, 1997.
(2) Letter of Transmittal.
(3) IRS Guidelines for Certification of Taxpayer Identification Number
on Substitute Form W-9.
(4) Form of Summary Advertisement, dated June 5, 1997.
5
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(5) Form of Notice of Guaranteed Delivery.
(6) Form of Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(7) Form of Letter to Clients for Use by Brokers, Dealers, Commercial
Banks, Trust Companies and other Nominees.
(8) Press Release dated May 30, 1997.
(b) Commitment Letter dated June 3, 1997 between The Goldman Sachs Group,
L.P. and Parent.
(c) (1) Agreement and Plan of Merger dated as of May 29, 1997 among Parent,
Purchaser and the Company.
(2) Short Form Merger Option Agreement dated as of May 29, 1997 among
Parent, Purchaser and the Company.
(3) Voting and Tender Agreement dated as of May 29, 1997 between
Integrated Health Services, Inc. and Parent.
(d) None.
(e) Not applicable.
(f) None.
6
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SIGNATURES
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this Statement is true, complete and correct.
Dated: June 5, 1997
SLC Acquisition Corp.
By: /s/ ELIZABETH A. O'BRIEN
------------------------------------
Name: Elizabeth A. O'Brien
Title: Vice-President
Whitehall Street Real Estate Limited
Partnership VII
By: WH Advisors, L.P. VII,
its general partner,
By: WH Advisors, Inc. VII,
its general partner,
By: /s/ MICHAEL K. KLINGHER
------------------------------------
Name: Michael K. Klingher
Title: Vice-President
7
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT PAGE NO. IN SEQUENTIALLY
NO. TITLE NUMBERED COPY
- ------- -------------------------------------------------------------- ------------------------
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(a)(1) Offer to Purchase, dated June 5, 1997.
(a)(2) Letter of Transmittal.
(a)(3) IRS Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
(a)(4) Form of Summary Advertisement, dated June 5, 1997.
(a)(5) Form of Notice of Guaranteed Delivery.
(a)(6) Form of Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(a)(7) Form of Letter to Clients for Use by Brokers, Dealers,
Commercial Banks, Trust Companies and other Nominees.
(a)(8) Press Release dated May 30, 1997.
(b) Commitment Letter dated June 3, 1997 between The Goldman Sachs
Group, L.P. and Parent.
(c)(1) Agreement and Plan of Merger dated as of May 29, 1997 among
Parent, Purchaser and the Company.
(c)(2) Short form Merger Option Agreement dated as of May 29, 1997
among Parent, Purchaser and the Company.
(c)(3) Voting and Tender Agreement dated as of May 29, 1997 between
Integrated Health Services, Inc. and Parent.
</TABLE>
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<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
INTEGRATED LIVING COMMUNITIES, INC.
AT
$11.50 NET PER SHARE
BY
SLC ACQUISITION CORP.,
A WHOLLY OWNED SUBSIDIARY
OF
WHITEHALL STREET REAL ESTATE
LIMITED PARTNERSHIP VII
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON WEDNESDAY, JULY 2, 1997, UNLESS THE OFFER IS EXTENDED.
THE BOARD OF DIRECTORS OF INTEGRATED LIVING COMMUNITIES, INC. ("THE
COMPANY") HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT (DESCRIBED HEREIN) AND
THE TRANSACTIONS CONTEMPLATED THEREBY, AND HAS DETERMINED THAT THE TERMS OF THE
OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY'S
STOCKHOLDERS AND RECOMMENDS THAT SUCH STOCKHOLDERS ACCEPT THE OFFER AND TENDER
THEIR SHARES PURSUANT TO THE OFFER.
------------------------
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER SUCH NUMBER OF
SHARES OF COMMON STOCK WHICH CONSTITUTES AT LEAST A MAJORITY OF THE OUTSTANDING
SHARES OF COMMON STOCK OF THE COMPANY ON A FULLY-DILUTED BASIS ON THE DATE OF
PURCHASE, (II) THE EXPIRATION OR TERMINATION OF ANY WAITING PERIOD UNDER THE
HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED, AND THE
REGULATIONS THEREUNDER APPLICABLE TO THE PURCHASE OF SHARES PURSUANT TO THE
OFFER AND (III) THE SATISFACTION OF THE OTHER CONDITIONS DESCRIBED IN SECTION 14
HEREIN.
THE OFFER IS NOT SUBJECT TO ANY FINANCING CONDITION.
------------------------
IMPORTANT
Any stockholder desiring to tender all or any portion of such stockholder's
shares of common stock should either (a) complete and sign the Letter of
Transmittal (or a facsimile thereof) in accordance with the instructions in the
Letter of Transmittal, have such stockholder's signature thereon guaranteed if
required by Instruction 1 to the Letter of Transmittal, and mail or deliver it
together with the certificates representing tendered shares, and any other
required documents, to the Depositary or tender such shares pursuant to the
procedure for book-entry transfer set forth in Section 3 or (b) request a
broker, dealer, commercial bank, trust company or other nominee to effect the
transaction for the stockholder. A stockholder whose shares are registered in
the name of a broker, dealer, commercial bank, trust company or other nominee
must contact such broker, dealer, commercial bank, trust company or other
nominee in order to tender such shares.
Any stockholder who desires to tender shares and whose certificates
representing such shares are not immediately available or who cannot comply with
the procedures for book-entry transfer on a timely basis may tender such shares
by following the procedures for guaranteed delivery set forth in Section 3.
Questions and requests for assistance may be directed to the Information
Agent at its address and telephone number set forth on the back cover of this
Offer to Purchase. Additional copies of this Offer to Purchase, the Letter of
Transmittal, the Notice of Guaranteed Delivery and other related materials may
be obtained from the Information Agent, brokers, dealers, commercial banks and
trust companies.
------------------------
The Dealer Managers for the Offer are:
GOLDMAN, SACHS & CO.
The date of the Offer to Purchase is June 5, 1997
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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PAGE
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Introduction............................................................................ 1
Section 1. Terms of the Offer, Expiration Date...................................... 3
Section 2. Acceptance for Payment and Payment for Shares............................ 4
Section 3. Procedure for Tendering Shares........................................... 5
Section 4. Withdrawal Rights........................................................ 8
Section 5. Certain Federal Income Tax Consequences of the Offer..................... 8
Section 6. Price Range of Shares.................................................... 9
Section 7. Effect of the Offer on the Market for Shares, Margin Regulations and
Registration Under the Exchange Act...................................... 10
Section 8. Certain Information Concerning the Company............................... 11
Section 9. Certain Information Concerning the Purchaser and the Parent.............. 14
Section 10. Source and Amount of Funds............................................... 15
Section 11. Background of the Offer, Contacts with the Company....................... 16
Section 12. Purpose of the Offer, Merger, Plans for the Company...................... 17
Section 13. Dividends and Distributions.............................................. 27
Section 14. Certain Conditions of the Offer.......................................... 27
Section 15. Certain Legal Matters.................................................... 29
Section 16. Fees and Expenses........................................................ 31
Section 17. Miscellaneous............................................................ 31
Schedule I Information with Respect to the Directors and Executive Officers of WH
Advisors, Inc. VII and the Purchaser..................................... S-1
Schedule II Information with Respect to the Directors and Members of the Executive
Committee of The Goldman Sachs Corporation and the Members of the
Executive Committee of The Goldman Sachs Group, L.P. .................... S-3
</TABLE>
<PAGE> 3
To the Holders of Common Stock of
Integrated Living Communities, Inc.:
INTRODUCTION
SLC Acquisition Corp., a Delaware corporation (the "Purchaser"), and a
wholly owned subsidiary of Whitehall Street Real Estate Limited Partnership VII,
a Delaware limited partnership (the "Parent"), hereby offers to purchase all
outstanding shares of common stock, par value $0.01 per share (the "Shares"), of
INTEGRATED LIVING COMMUNITIES, INC., a Delaware corporation (the "Company"), at
$11.50 per Share, net to the seller in cash, without interest upon the terms and
subject to the conditions set forth in this Offer to Purchase and in the related
Letter of Transmittal (which collectively constitute the "Offer"). Stockholders
of the Company (the "Holders") who tender Shares will not be obligated to pay
brokerage fees or commissions or, except as set forth in Instruction 3 to the
Letter of Transmittal, transfer taxes on the purchase of Shares by the Purchaser
pursuant to the Offer. The Purchaser will pay all charges and expenses of
ChaseMellon Shareholder Services, L.L.C. (the "Depositary") and MacKenzie
Partners, Inc. (the "Information Agent") related to the Offer. See Section 16.
The Board of Directors of the Company has unanimously approved the Merger
Agreement and the transactions contemplated thereby and has determined that the
terms of the Offer and the Merger are fair to, and in the best interests of, the
Holders and recommends that Holders accept the Offer and tender their Shares
pursuant to the Offer.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED BELOW) THAT
NUMBER OF SHARES WHICH CONSTITUTES AT LEAST A MAJORITY OF THE OUTSTANDING SHARES
ON A FULLY-DILUTED BASIS ON THE DATE OF PURCHASE (THE "MINIMUM CONDITION"), (II)
THE EXPIRATION OR TERMINATION OF ANY WAITING PERIOD UNDER THE HART-SCOTT-RODINO
ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED, AND THE REGULATIONS THEREUNDER
(THE "HSR ACT") APPLICABLE TO THE PURCHASE OF SHARES PURSUANT TO THE OFFER AND
(III) THE SATISFACTION OF THE OTHER CONDITIONS SET FORTH IN SECTION 14. THE
OFFER IS NOT SUBJECT TO ANY FINANCING CONDITION.
Pursuant to a Voting and Tender Agreement, dated as of May 29, 1997 (the
"Voting and Tender Agreement"), with the Purchaser and the Parent, Integrated
Health Services, Inc. a Delaware corporation ("IHS"), the owner of approximately
37.3% of the outstanding Shares, has agreed, among other things, to tender its
Shares in the Offer. See Section 12 -- "Related Agreements."
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of May 29, 1997 (the "Merger Agreement"), among the Company, the Parent and
the Purchaser. The Merger Agreement provides, among other things, for the making
of the Offer, and further provides that as promptly as practicable following the
completion of the Offer and the satisfaction or waiver of certain other
conditions set forth in Section 12, the Purchaser will be merged with and into
the Company (the "Merger") and the Company will continue as the surviving
corporation (the "Surviving Corporation") in the Merger and become a wholly
owned subsidiary of the Parent. Notwithstanding the foregoing, the Parent may
elect at any time prior to the consummation of the Merger, instead of merging
the Purchaser into the Company as provided above, to merge the Company with and
into the Purchaser. In addition, at the election of the Parent, any wholly owned
subsidiary of the Parent may be substituted for the Purchaser as a constituent
corporation in the Merger. At the effective time of the Merger (the "Effective
Time"), each Share outstanding immediately prior to the Effective Time (other
than Shares held by the Purchaser, the Parent or any direct or indirect
subsidiary of the Parent, the Company or any of its subsidiaries, which shall be
cancelled, and other than Shares, if any, held by Holders who have not voted in
favor of the Merger or consented thereto in writing and who have properly
demanded appraisal rights with respect thereto under Delaware law (the
"Dissenting Shares")) will, by virtue of the Merger and without any action on
the part of the Holder thereof, be converted into the right to receive $11.50 in
cash or any higher price paid per Share in
<PAGE> 4
the Offer (the "Merger Consideration") payable to the Holder thereof, without
interest thereon, upon surrender of the certificate formerly representing such
Share. See Section 12. If the Minimum Condition is satisfied and the Purchaser
accepts Shares for payment pursuant to the Offer, the Parent will have the
right, which it intends to exercise, to approve the Merger without the
affirmative vote of any other Holder. In the event that the Purchaser owns at
least 90% of the Shares, the only class of outstanding capital stock of the
Company, the "short form" merger provisions of the Delaware General Corporation
Law (the "DGCL") would permit the Merger to occur without calling for a vote of
the Holders. Upon completion of the Offer, pursuant to a Stock Option Agreement,
dated May 29, 1997 (the "Stock Option"), among the Purchaser, the Parent and the
Company, upon consummation of the Offer and subject to certain conditions, the
Purchaser has the right to purchase additional Shares from the Company to ensure
that the Purchaser will own 90% of the Shares following completion of the Offer.
See Section 12 -- "Related Agreements."
THE COMPANY HAS ADVISED THE PURCHASER THAT THE BOARD OF DIRECTORS OF THE
COMPANY HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED THEREBY; AND HAS DETERMINED THAT THE TERMS OF THE OFFER AND THE
MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE HOLDERS AND RECOMMENDS
THAT HOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER. THE
COMPANY HAS INFORMED THE PURCHASER THAT EACH OF THE COMPANY'S EXISTING DIRECTORS
INTENDS TO TENDER HIS OR HER SHARES PURSUANT TO THE OFFER.
The Company has also advised the Purchaser that Smith Barney Inc., the
Company's financial advisor ("Smith Barney"), has delivered to the Board of
Directors of the Company a written opinion, dated May 29, 1997, to the effect
that, as of such date and based upon and subject to certain matters stated
therein, the $11.50 per Share cash consideration to be received by the Holders
(other than the Parent and its affiliates) pursuant to the Offer and the Merger
was fair to such Holders from a financial point of view. A copy of such opinion,
together with a description of the recommendation of the Board of Directors of
the Company, is contained in the Company's Solicitation/Recommendation Statement
on Schedule 14D-9, which is being mailed to Holders in connection with this
Offer, and Holders are urged to review the opinion in its entirety.
The Merger Agreement provides that following the satisfaction or waiver of
the conditions to the Offer, the Purchaser will accept for payment, in
accordance with the terms of the Offer, all Shares validly tendered and not
withdrawn pursuant to the Offer as soon as practicable after the Expiration
Date. The initial expiration date of the Offer is 12:00 Midnight, New York City
time, on Wednesday, July 2, 1997. However, certain conditions may not be
satisfied as of such date. See Section 14. The Merger Agreement provides that
the Purchaser may extend the Offer beyond the scheduled expiration date, if at
the scheduled expiration date of the Offer any of the conditions to the
Purchaser's obligation to accept for payment and pay for the Shares shall not
have been satisfied or waived, until such time that the conditions are satisfied
or waived, and under certain circumstances, the Purchaser is required to extend
the Offer for up to 35 business days (as defined below) from the commencement of
the Offer. See Section 12 -- "The Offer."
The purpose of the Offer is to facilitate the acquisition of all of the
outstanding Shares by the Purchaser and thereby to enable the Parent to acquire
control of the Company. Following the purchase of Shares pursuant to the Offer
and upon the terms and subject to the conditions set forth in the Merger
Agreement, the Parent intends to cause the Purchaser to consummate the Merger in
order to acquire all of the remaining outstanding Shares of the Company. See
Section 12.
According to the Company, as of May 29, 1997, there were 6,697,900 Shares
outstanding and options outstanding to purchase an additional 831,750 Shares.
Therefore, the Minimum Condition would be satisfied if 3,772,355 Shares are
validly tendered and not properly withdrawn.
The Purchaser has been advised by the Company that, to the best of its
knowledge, all of the Company's executive officers and directors currently
intend to tender all Shares owned by them pursuant to the Offer. Such executive
officers and directors currently own 6,100 Shares (excluding Shares issuable
upon the exercise of stock options), or .1% of the outstanding Shares which,
when
2
<PAGE> 5
taken together with the Shares owned by IHS which are required to be tendered
pursuant to the Voting and Tender Agreement, constitute 2,504,000 Shares, or
approximately 37.3% of the outstanding Shares. See Section 12.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER. THE OFFER IS SUBJECT TO CERTAIN CONDITIONS. SEE
SECTION 14.
1. TERMS OF THE OFFER, EXPIRATION DATE.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any extension or
amendment), the Purchaser will accept for payment and pay for all Shares which
are validly tendered on or prior to the Expiration Date and not withdrawn as
provided in Section 4. The term "Expiration Date" shall mean 12:00 midnight, New
York City time, on Wednesday, July 2, 1997, unless and until the Purchaser,
pursuant to the terms of the Merger Agreement, shall have extended the period of
time for which the Offer is open, in which event "Expiration Date" shall mean
the latest time and date at which the Offer, as so extended by the Purchaser,
shall expire. The Offer shall initially expire 20 business days (as defined
below) after the date of its commencement; provided, however, that, unless the
Merger Agreement is terminated in accordance with Article VIII thereof (other
than due to the failure to satisfy the Minimum Condition or the failure to occur
of the expiration or termination of any applicable waiting period under the HSR
Act, in which case the Offer (whether or not previously extended in accordance
with the terms of the Merger Agreement) shall expire on such date of
termination), the Purchaser will be obligated to extend the Expiration Date of
the Offer from time to time to the earlier of (i) the date on which the
Purchaser purchases or becomes obligated to purchase, pursuant to the Offer,
that number of Shares that would satisfy the Minimum Condition and (ii) the date
that is 35 business days after the date of its commencement. In addition, the
Purchaser may, without the consent of the Company, extend the Offer (i) if at
the then scheduled expiration date of the Offer any of the conditions to the
Purchaser's obligations to accept for payment and pay for Shares shall not be
satisfied or waived, until up to such time as such conditions are satisfied or
waived and (ii) for any period required by any rule, regulation, interpretation
or position of the Securities and Exchange Commission (the "Commission") or its
staff applicable to the Offer. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON
THE OFFER PRICE FOR TENDERED SHARES, WHETHER OR NOT THE PURCHASER EXERCISES ITS
RIGHT TO EXTEND THE OFFER.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THE SATISFACTION OF
THE MINIMUM CONDITION, (II) THE EXPIRATION OR TERMINATION OF ANY WAITING PERIOD
UNDER THE HSR ACT APPLICABLE TO THE PURCHASE OF SHARES PURSUANT TO OFFER AND
(III) THE SATISFACTION OF THE OTHER CONDITIONS SET FORTH IN SECTION 14.
If any condition to the Purchaser's obligation to purchase Shares under the
Offer is not satisfied prior to the Expiration Date, the Purchaser reserves the
right (but shall not be obligated) to (i) decline to purchase any of the Shares
tendered and terminate the Offer, subject to certain obligations to extend the
Offer for up to 35 business days following the commencement of the Offer, (ii)
waive such unsatisfied condition, subject to the Merger Agreement and applicable
rules and regulations of the Commission, and purchase all Shares validly
tendered, (iii) extend the Offer and, subject to the right of Holders to
withdraw Shares until the Expiration Date, retain the Shares which have been
tendered during the period or periods for which the Offer is extended or (iv)
subject to the terms of the Merger Agreement, amend the Offer. The Merger
Agreement provides that although the Purchaser may in its sole discretion
increase the price per Share payable in the Offer, neither the Purchaser nor the
Parent will, without the prior written consent of the Company, decrease the
price per Share payable in the Offer, change the form of consideration payable
in the Offer, decrease the numbers of Shares sought in the Offer, change the
conditions to the Offer, impose additional conditions to the Offer or amend the
Offer in any manner that would adversely affect the Holders.
3
<PAGE> 6
There can be no assurances that the Purchaser will exercise its right to
extend the Offer. Any extension, amendment or termination will be followed as
promptly as practicable by public announcement. In the case of an extension,
Rule 14e-1(d) under the Securities Exchange Act of 1934, as amended, and the
regulations thereunder (the "Exchange Act"), requires that the announcement be
issued no later than 9:00 a.m., Eastern time, on the next business day after the
previously scheduled Expiration Date in accordance with the public announcement
requirements of Rule 14d-4(c) under the Exchange Act. Subject to applicable law
(including Rules 14d-4(c) and 14d-6(d) under the Exchange Act, which require
that any material change in the information published, sent or given to
stockholders in connection with the Offer be promptly disseminated to
stockholders in a manner reasonably designed to inform stockholders of such
change), and without limiting the manner in which the Purchaser may choose to
make any public announcement, the Purchaser will not have any obligation to
publish, advertise or otherwise communicate any such public announcement other
than by making a release to the Dow Jones News Service. As used in this Offer to
Purchase, "business day" means any day other than a Saturday, Sunday or federal
holiday and consists of the time period from 12:01 a.m. through 12:00 midnight,
New York City time.
If the Purchaser extends the Offer or if the Purchaser (whether before or
after its acceptance for payment of Shares) is delayed in its purchase of or
payment for Shares or is unable to pay for Shares pursuant to the Offer in
accordance with the terms of the Merger Agreement, then, without prejudice to
the Purchaser's rights under the Offer, the Depositary may retain tendered
Shares on behalf of the Purchaser, and such Shares may not be withdrawn except
to the extent tendering Holders are entitled to withdrawal rights as described
in Section 4. However, the ability of the Purchaser to delay the payment for
Shares which the Purchaser has accepted for payment is limited by Rule 14e-1(c)
under the Exchange Act, which requires that a bidder pay the consideration
offered or return the securities deposited by or on behalf of holders of
securities promptly after the termination or withdrawal of the Offer.
If the Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer, or waives a material condition of the Offer,
subject to the Merger Agreement, the Purchaser will disseminate additional
tender offer materials and extend the Offer to the extent required by Rules
14d-4(c) and 14d-6(d) under the Exchange Act. The minimum period during which
the Offer must remain open following material changes in the terms of the Offer
or information concerning the Offer, other than a change in price or a change in
percentage of securities sought, will depend upon the facts and circumstances,
including the relative materiality of the terms or information. If, prior to the
Expiration Date, the Purchaser should (with the prior written consent of the
Company) decrease the percentage of Shares being sought, or increase or (with
the prior written consent of the Company) decrease the consideration offered
pursuant to the Offer to Holders, such increase or decrease would be applicable
to all Holders whose Shares are accepted for payment pursuant to the Offer and
if, at the time notice of any increase or decrease is first published, sent or
given to Holders of Shares, the Offer is scheduled to expire at any time earlier
than the tenth business day from and including the date that such notice is
first so published, sent or given, the Offer would be extended at least until
the expiration of such ten business day period.
The Company has provided to the Purchaser its list of Holders and security
position listings for the purpose of disseminating the Offer to Holders. This
Offer to Purchase and the related Letter of Transmittal and other relevant
materials is being mailed to record holders of Shares and will be furnished to
brokers, dealers, commercial banks, trust companies and similar persons whose
names, or the names of whose nominees, appear on the stockholder list or, if
applicable, who are listed as participants in a clearing agency's security
position listing, for subsequent transmittal to beneficial owners of Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), the Purchaser will
4
<PAGE> 7
accept for payment, and will pay for, all Shares validly tendered prior to the
Expiration Date (and not properly withdrawn) as soon as practicable after the
Expiration Date. In all cases, payment for Shares purchased pursuant to the
Offer will be made only upon timely receipt by the Depositary of (i)
certificates for such Shares or timely confirmation (a "Book-Entry
Confirmation") of a book-entry transfer of such Shares into the Depositary's
account at The Depository Trust Company and the Philadelphia Depository Trust
Company (each, a "Book-Entry Transfer Facility") pursuant to the procedures set
forth in Section 3, (ii) the Letter of Transmittal (or facsimile thereof),
properly completed and duly executed, and (iii) any other documents required by
the Letter of Transmittal.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment, and thereby purchased, Shares validly tendered and not withdrawn
as, if and when the Purchaser gives oral or written notice to the Depositary of
the Purchaser's acceptance for payment of such Shares pursuant to the Offer.
Upon the terms and subject to the conditions of the Offer, payment for Shares
accepted for payment pursuant to the Offer will be made by deposit of the
purchase price with the Depositary, which will act as agent for tendering
Holders for the purpose of receiving payment from the Purchaser and transmitting
payment to Holders whose Shares have been accepted for payment. UNDER NO
CIRCUMSTANCES WILL INTEREST ON THE OFFER PRICE OF TENDERED SHARES BE PAID,
REGARDLESS OF ANY DELAY IN MAKING PAYMENT AFTER THE EXPIRATION DATE.
If any tendered Shares are not accepted for payment for any reason, or if
certificates are submitted for more Shares than are tendered, certificates
evidencing such unpurchased or untendered Shares will be returned, without
expense, to the tendering Holder (or, in the case of Shares delivered by
book-entry transfer within a Book-Entry Transfer Facility pursuant to the
procedures set forth in Section 3, such Shares will be credited to an account
maintained within such Book-Entry Transfer Facility), as promptly as practicable
following the expiration, termination or withdrawal of the Offer.
If the Purchaser varies the terms of the Offer by increasing the
consideration to be paid per Share, the Purchaser shall pay such increased
consideration for all Shares purchased pursuant to the Offer whether or not such
Shares have been tendered prior to such increase.
3. PROCEDURE FOR TENDERING SHARES.
Valid Tender. For Shares to be validly tendered pursuant to the Offer, the
Letter of Transmittal (or facsimile thereof), properly completed and duly
executed, with any required signature guarantees and any other required
documents, must be received by the Depositary at one of its addresses set forth
on the back cover of this Offer to Purchase prior to the Expiration Date. In
addition, either (i) certificates representing such Shares must be received by
the Depositary along with the Letter of Transmittal or such Shares must be
tendered pursuant to the procedure for book-entry transfer set forth below, and
a Book-Entry Confirmation must be received by the Depositary, in each case at or
prior to the Expiration Date, or (ii) the tendering Holder must comply with the
guaranteed delivery procedures set forth below.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER FACILITY,
IS AT THE ELECTION AND RISK OF THE TENDERING HOLDER. SHARES WILL BE DEEMED
DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN THE CASE
OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
Book Entry Transfer. The Depositary will establish accounts with respect to
the Shares at a Book-Entry Transfer Facility for purposes of the Offer within
two business days after the date of this Offer to Purchase. Any financial
institution that is a participant in any of the Book-Entry Transfer Facility
systems may make book-entry delivery of Shares by causing a Book-Entry Transfer
Facility
5
<PAGE> 8
to transfer such Shares into the Depositary's account at a Book-Entry Transfer
Facility, in accordance with such Book-Entry Transfer Facility's procedures for
transfer. However, although delivery of Shares may be effected through
book-entry transfer at a Book-Entry Transfer Facility, a Letter of Transmittal
(or facsimile thereof), properly completed and duly executed, together with any
required signature guarantees, or an Agent's Message (as defined below), and any
other required documents must, in any case, be transmitted to and received by
the Depositary at one of its addresses set forth on the back cover page of this
Offer to Purchase prior to the Expiration Date, or the tendering Holder must
comply with guaranteed delivery procedures set forth below.
The term "Agent's Message" means a message transmitted through electronic
means by a Book-Entry Transfer Facility, in accordance with the normal
procedures of such Book-Entry Transfer Facility and the Depositary, to and
received by the Depositary and forming a part of a Book-Entry Confirmation,
which states that such Book-Entry Transfer Facility has received an express
acknowledgment from the participant in such Book-Entry Transfer Facility
tendering the Shares which are the subject of such Book-Entry Confirmation that
such participant has received and agrees to be bound by the terms of the Letter
of Transmittal and that the Purchaser may enforce such agreement against the
participant. The term Agent's Message shall also include any hard copy printout
evidencing such message generated by a computer terminal maintained at the
Depositary's office.
Signature Guarantees. Signatures on all Letters of Transmittal must be
guaranteed by a participant in the Security Transfer Agents Medallion Program,
the New York Stock Exchange Medallion Signature Guarantee Program of the Stock
Exchange Medallion Program (each of the foregoing being referred to as an
"Eligible Institution"), except no signature guarantee is required where such
Shares are tendered (i) by a registered Holder who has not completed either the
box entitled "Special Delivery Instructions" or the box entitled "Special
Payment Instructions" on the Letter of Transmittal or (ii) for the account of an
Eligible Institution. See Instruction 1 of the Letter of Transmittal.
If the Share certificates are registered in the name of a person other than
the signer of the Letter of Transmittal, or if payment is to be made, or Share
certificates not accepted for payment, or not tendered are to be returned, to a
person other than the registered Holder, then the tendered Share certificates
must be endorsed or accompanied by appropriate stock powers, in either case
signed exactly as the name or names of the registered holder or holders appear
on the certificates, with the signature(s) on such certificates or stock powers
guaranteed as described above. See Instructions 1 and 5 of the Letter of
Transmittal.
If Share certificates are forwarded separately to the Depositary, a Letter
of Transmittal (or manually signed facsimile thereof), properly completed and
duly executed, must accompany each such delivery.
Guaranteed Delivery. If a Holder desires to tender Shares pursuant to the
Offer and such Holder's Share certificates are not immediately available or such
Holder cannot deliver the Share certificates and all other required documents to
the Depositary prior to the Expiration Date, or such Holder cannot complete the
procedure for delivery by book-entry transfer on a timely basis, such Shares may
nevertheless be tendered if all of the following conditions are satisfied:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Purchaser herewith, is
received by the Depositary, as provided below, on or prior to the
Expiration Date; and
(iii) the certificates representing all tendered Shares in proper form
for transfer (or a Book-Entry Confirmation) in each case together with a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof) are received by the Depositary within three National
6
<PAGE> 9
Association of Securities Dealers Automated Quotation -- National Market
("NASDAQ National Market") trading days after the date of execution of the
Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by telegram, telex, facsimile transmission or mail to the Depositary and must
include a guarantee by an Eligible Institution in the form set forth in such
Notice of Guaranteed Delivery.
Notwithstanding any other provisions hereof, payment for Shares purchased
pursuant to the Offer will be made only after timely receipt by the Depositary
of (a) certificates for (or a timely Book-Entry Confirmation with respect to)
such Shares, (b) a Letter of Transmittal (or facsimile thereof), properly
completed and duly executed, with any required signature guarantees, or, in the
case of a book-entry transfer, an Agent's Message, and (c) any other documents
required by the Letter of Transmittal. Accordingly, tendering stockholders may
be paid at different times depending upon when certificates for Shares or
Book-Entry Confirmations with respect to Shares are actually received by the
Depositary.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any
tendered Shares pursuant to any of the procedures described above will be
determined by the Purchaser, in its sole discretion, which determination shall
be final and binding on all parties. The Purchaser reserves the absolute right
to reject any or all tenders of any Shares determined by it not to be in proper
form or the acceptance of or payment for which may, in the opinion of the
Purchaser's counsel, be unlawful. The Purchaser also reserves the absolute
right, in its sole discretion, subject to the terms of the Merger Agreement, to
waive any of the conditions of the Offer or any defect or irregularity in any
tender with respect to Shares of any particular Holder, and the Purchaser's
interpretation of the terms and conditions of the Offer (including the Letter of
Transmittal and the Instructions thereto) will be final and binding. None of the
Purchaser, the Parent, the Depositary, the Information Agent, the Dealer
Managers or any other person will be under any duty to give notification of any
defects or irregularities in tenders or incur any liability for failure to give
any such notification.
Appointment. By executing a Letter of Transmittal as set forth above, a
tendering Holder irrevocably appoints designees of the Purchaser as the Holder's
attorneys-in-fact and proxies, each with full power of substitution, in the
manner set forth in the Letter of Transmittal, to the fullest extent of such
Holder's rights with respect to the Shares tendered by such Holder and accepted
for payment by the Purchaser. All such proxies shall be considered coupled with
an interest in the tendered Shares. This appointment will be effective when, and
only to the extent that, the Purchaser accepts such Shares for payment. Upon
acceptance for payment, all prior proxies given by the Holder with respect to
the Shares will be revoked, without further action, and no subsequent proxies
may be given by or any subsequent written consent executed by such Holder (and,
if given or executed, will not be deemed effective) with respect thereto. The
designees of the Purchaser will, with respect to the Shares, be empowered to
exercise all voting and other rights of such Holder as they in their sole
discretion may deem proper at any annual, special or adjourned meeting of the
Company's stockholders, by written consent or otherwise. The Purchaser reserves
the right to require that, in order for Shares to be validly tendered,
immediately upon the acceptance for payment of such Shares the Purchaser is able
to exercise full voting and other rights of a record and beneficial Holder,
including rights in respect of acting by written consent, with respect to such
Shares.
A tender of Shares pursuant to one of the procedures described above will
constitute the tendering Holder's acceptance of the terms and conditions of the
Offer. The Purchaser's acceptance for payment of Shares tendered pursuant to the
Offer will constitute a binding agreement between the tendering Holder and the
Purchaser upon the terms and subject to the conditions of the Offer.
Back-up Federal Income Tax Withholding. UNLESS AN EXEMPTION APPLIES UNDER
THE APPLICABLE LAW AND REGULATIONS CONCERNING "BACKUP WITHHOLDING" OF FEDERAL
INCOME TAX, THE DEPOSITARY WILL BE REQUIRED TO WITHHOLD, AND WILL WITHHOLD, 31%
OF THE GROSS PROCEEDS OTHERWISE PAYABLE TO A
7
<PAGE> 10
HOLDER OR OTHER PAYEE PURSUANT TO THE OFFER UNLESS THE HOLDER OR OTHER PAYEE
PROVIDES HIS TAXPAYER IDENTIFICATION NUMBER (SOCIAL SECURITY NUMBER OR EMPLOYEE
IDENTIFICATION NUMBER) AND CERTIFIES THAT SUCH NUMBER IS CORRECT (OR CERTIFIES
THAT HE IS AWAITING A TAXPAYER IDENTIFICATION NUMBER). To prevent back-up
federal income tax withholding on payments made to certain Holders with respect
to the purchase price of Shares purchased pursuant to the Offer, a tendering
Holder must provide the Depositary with such Holder's correct taxpayer
identification number and certify that such Holder is not subject to back-up
federal income tax withholding by completing the Substitute Form W-9 included in
the Letter of Transmittal.
4. WITHDRAWAL RIGHTS.
Tenders of Shares made pursuant to the Offer are irrevocable, except that
Shares tendered pursuant to the Offer may be withdrawn pursuant to the
procedures set forth below at any time prior to the Expiration Date and, unless
theretofore accepted for payment as provided herein, may also be withdrawn at
any time on or after August 4, 1997. If the Purchaser extends the Offer, is
delayed in its acceptance for payment of Shares or is unable to purchase or pay
for Shares validly tendered for any reason, then, without prejudice to the
Purchaser's rights hereunder, tendered Shares may be retained by the Depositary
on behalf of the Purchaser and may not be withdrawn except to the extent that
tendering Holders are entitled to withdrawal rights as set forth in this Section
4.
For a withdrawal to be effective, a written, telegraphic, telex or
facsimile transmission notice of withdrawal must be timely received by the
Depositary at one of its addresses set forth on the back cover of this Offer to
Purchase. Any such notice of withdrawal must specify the name of the person who
tendered the Shares to be withdrawn, the number of Shares to be withdrawn and
the name of the registered Holder, if different from that of the person who
tendered such Shares. If certificates for Shares have been delivered or
otherwise identified to the Depositary, then prior to the release of such
certificates, the serial numbers shown on the particular certificates evidencing
the Shares to be withdrawn, and a signed notice of withdrawal with signatures,
guaranteed by an Eligible Institution (except in the case of Shares tendered for
the account of the Eligible Institution), must also be furnished to the
Depositary as described above. If Shares have been tendered pursuant to the
procedure for book-entry transfer set forth in Section 3, any notice of
withdrawal must also specify the name and number of the account at the
applicable Book-Entry Transfer Facility to be credited with the withdrawn Shares
and otherwise comply with such Book-Entry Transfer Facility's procedures.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchaser, in its sole
discretion, which determination shall be final and binding. None of the
Purchaser, the Parent, the Depositary, the Information Agent, the Dealer Manager
or any other person will be under any duty to give notification of any defects
or irregularities in any notice of withdrawal or incur any liability for failure
to give any such notification. ANY SHARES PROPERLY WITHDRAWN WILL BE DEEMED NOT
VALIDLY TENDERED FOR PURPOSES OF THE OFFER. However, withdrawn Shares may be
retendered by following one of the procedures described in Section 3 at any time
prior to the Expiration Date.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE OFFER.
The following is a summary of the material United States federal income tax
consequences of the receipt of cash for Shares pursuant to the Offer or the
Merger. This summary is for general information only and does not address all
aspects of income taxation that may be relevant to Holders. For example, this
discussion does not address tax consequences under any applicable foreign,
state, local or other tax laws. In addition, this discussion does not address
the federal income tax consequences of the receipt of cash for Shares pursuant
to the Offer or the Merger to particular categories of taxpayers subject to
special treatment under the United States federal income tax laws, such as
trusts, financial institutions, broker-dealers, persons who are not citizens or
residents of the United States, tax-exempt organizations, life insurance
companies, employees
8
<PAGE> 11
who acquire their Shares through the exercise of an employee stock option or
otherwise as compensation, and persons who receive payments in respect of
options to acquire Shares. HOLDERS ARE URGED TO CONSULT THEIR TAX ADVISORS WITH
RESPECT TO THE SPECIFIC TAX CONSEQUENCES OF THE OFFER AND THE MERGER TO THEM,
INCLUDING THE CONSEQUENCES UNDER FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX
LAWS.
The receipt of cash for Shares pursuant to the Offer or the Merger will be
a taxable transaction for federal income tax purposes. In general, a Holder who
receives cash for Shares pursuant to the Offer or the Merger will recognize gain
or loss for federal income tax purposes equal to the difference between the
amount of cash received in exchange for the Shares sold and such Holder's
adjusted tax basis in such Shares. Provided that the Shares constitute capital
assets in the hands of the Holders, such gain or loss will be treated as capital
gain or loss and will be treated as long-term capital gain or loss if the Holder
has held the Shares for more than one year at the time of sale. However, because
the Shares (other than Shares held by IHS) were first issued to the public on
October 3, 1996, if the Offer and the Merger are consummated prior to October 3,
1997, gains or losses on such Shares will be treated as short-term capital gains
or losses. Gain or loss will be calculated separately for each block of Shares
(i.e., a group of Shares with the same tax basis and holding period).
Legislative proposals have recently been introduced in Congress to reduce
effective tax rates applicable to net long-term capital gains and to limit
further the deductibility of long-term capital losses. If the proposals were
enacted into law, and the effective date of such legislation were to be such
that the Offer and the Merger were covered by such legislation, it is possible
that capital gains recognized as a result of such transactions would generally
be taxed at reduced effective tax rates, and that capital losses would be
subject to further limitations on deductibility. However, it is not clear
whether the proposals will be enacted, and, if enacted, whether the proposals
will apply with respect to the sale of Shares pursuant to the Offer and/or the
Merger.
6. PRICE RANGE OF SHARES.
The Shares, which were initially offered to the public on October 3, 1996
at a price of $8.00 per share, are traded in the over-the-counter market and are
quoted on the NASDAQ National Market under the symbol "ILCC."
The following table sets forth, for the quarters indicated, the high and
low sale prices for the Shares on the NASDAQ National Market based on the
Company's 1996 Annual Report on Form 10-K (the "Company's 1996 Form 10-K") by
the Dow Jones Historical Stock Quote Reporter and other publicly available
sources.
<TABLE>
<CAPTION>
SHARES
QUARTER ------------
ENDING HIGH LOW
------------------------------------------------------ ---- ---
<S> <C> <C>
12/31/96.............................................. 8 1/2 4 3/4
3/31/97............................................... 7 5/8 4 7/8
6/30/97 (through June 4, 1997)........................ 11 1/2 5 3/8
</TABLE>
On May 29, 1997, the last full trading day prior to the announcement of the
execution of the Merger Agreement and the Purchaser's intention to commence the
Offer, the closing price of the Shares as reported on NASDAQ National Market was
$9 1/16. As of June 4, 1997, such closing price was $11 5/16. Holders are urged
to obtain current market quotations for the Shares.
The Purchaser has been advised by the Company that since the Company's
initial public offering in October 1996, the Company has neither paid nor
declared any dividends on the Shares.
Under the terms of the Merger Agreement, the Company has agreed that it
will not (i) declare, set aside for payment or pay any dividend or make any
distribution on its capital stock, (ii) issue or
9
<PAGE> 12
deliver or sell, or authorize or propose the issuance, delivery or sale of, any
capital stock of the Company or any of its subsidiaries or any security
convertible into or exercisable into such capital stock (other than the issuance
of shares of common stock upon the exercise of certain options described in the
Merger Agreement), (iii) split, combine or reclassify any capital stock of the
Company or any of its subsidiaries or issue or authorize the issuance of any
other securities in respect of, in lieu of or in substitution for such shares of
capital stock and (iv) except as required or permitted by the Merger Agreement,
repurchase, redeem or otherwise acquire an shares of capital stock of the
Company or any of its subsidiaries or any security thereof or any rights,
warrants or options to acquire any such shares or other securities.
7. EFFECT OF THE OFFER ON THE MARKET FOR SHARES, MARGIN REGULATIONS AND
REGISTRATION UNDER THE EXCHANGE ACT.
Market for the Shares. The purchase of Shares pursuant to the Offer will
reduce the number of Shares that might otherwise trade publicly and the number
of holders of Shares and could adversely affect the liquidity and market value
of the remaining Shares held by the public.
Depending on the number of Shares purchased pursuant to the Offer, the
Shares may no longer meet the requirements of the National Association of
Securities Dealers, Inc. (the "NASD") for continued inclusion in the NASDAQ
National Market, which require the issuer have (i) at least 200,000 publicly
held shares with a market value of $1,000,000, (ii) 400 shareholders or 300
shareholders of round lots, (iii) net tangible assets of $1,000,000, $2,000,000
or $4,000,000, depending on the profitability of the issuer during the four most
recent fiscal years and (iv) a minimum bid price per share of $1.00 or, in the
alternative, market value of public float of $3,000,000 and $4,000,000 of net
tangible assets. In the event that Shares were no longer eligible for NASDAQ
National Market quotation, quotations might still be available from other
sources. The extent of the public market for the Shares and the availability of
such quotations would, however, depend upon the number of holders of Shares
remaining at such time, the interest in maintaining a market in the Shares on
the part of securities firms, the possible termination of registration under the
Exchange Act, as described below, and other factors. The Company has informed
the Purchaser that there are approximately 12 Holders of record of the Shares
and that as of May 29, 1997, 6,697,900 Shares were outstanding. If as a result
of the Offer, the Shares no longer meet the requirements of the NASD for
continued trading and the trading of Shares on the NASDAQ National Market is
discontinued, the market for the Shares could be adversely affected. It is the
present intention of the Purchaser to have the trading of the Shares
discontinued on the NASDAQ National Market as promptly as possible after
completion of the Offer.
Margin Regulations. The Shares are currently "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), which has the effect, among other things, of allowing
brokers to extend credit on the collateral of the Shares. Depending upon factors
similar to those described above regarding listing and market quotations,
following the Offer it is possible that the Shares would no longer constitute
"margin securities" for the purposes of the margin regulations of the Federal
Reserve Board and therefore could no longer be used as collateral for loans made
by brokers.
Registration Under the Exchange Act. The Shares are currently registered
under the Exchange Act.Registration of the Shares under the Exchange Act may be
terminated upon application of the Company to the Commission if the Shares are
not listed on a national securities exchange and there are fewer than 300 record
holders of the Shares. Termination of registration of the Shares under the
Exchange Act would reduce substantially the information required to be furnished
by the Company to the Holders and to the Commission and would make certain
provisions of the Exchange Act, such as the short-swing profit recovery
provisions of Section 16(b), the requirement of furnishing a proxy statement in
connection with stockholders' meetings pursuant to Section 14(a) and the
requirements of Rule 13e-3 under the Exchange Act with respect to "going
private" transactions no longer applicable to the Company. Furthermore, if the
Purchaser acquires a substantial number of
10
<PAGE> 13
Shares or the registration of the Shares under the Exchange Act were to be
terminated, the ability of "affiliates" of the Company and persons holding
"restricted securities" of the Company to dispose of such securities pursuant to
Rule 144 under the Securities Act of 1933, as amended, may be impaired or
eliminated. If registration of the Shares under the Exchange Act were terminated
prior to the consummation of the Merger, the Shares would no longer be "margin
securities" or be eligible for NASDAQ National Market reporting.
The Purchaser currently intends to cause the Company to make an application
for termination of registration of the Shares under the Exchange Act after
consummation of the Merger, and may cause such an application to be filed prior
to the consummation of the Merger if a sufficient number of Shares are purchased
pursuant to the Offer. If registration of the Shares is not terminated prior to
the Merger, trading of the Shares on the NASDAQ National Market will be
discontinued, and the registration of the Shares under the Exchange Act will be
terminated, following consummation of the Merger.
8. CERTAIN INFORMATION CONCERNING THE COMPANY.
The information concerning the Company contained in this Offer to Purchase,
including financial information, has been furnished by the Company or taken
from, or based upon, publicly available documents and records on file with the
Commission and other public sources. The summary information concerning the
Company in this Section 8 and elsewhere in this Offer to Purchase is derived
from the Company's 1996 Form 10-K and the Company's Quarterly Report on Form
10-Q for the quarter ended March 31, 1997 (the "Company's 1997 Form 10-Q"). The
summary information set forth below is qualified in its entirety by reference to
such documents (which may be obtained and inspected as described below) and
should be considered in conjunction with the more comprehensive financial and
other information in such documents and other publicly available reports and
documents filed by the Company with the Commission. The Purchaser assumes no
responsibility for the accuracy or completeness of the information contained in
such documents and records, or for any failure by the Company to disclose events
that may have occurred and may affect the significance or accuracy of any such
information but which are not known to the Purchaser.
General. The Company, a Delaware corporation, was formed in November 1995
as a wholly owned subsidiary of IHS to operate the assisted living and other
senior housing facilities owned, leased and managed by IHS. The Company
completed its initial public offering in October 1996. The effect of the
offering was to reduce IHS' ownership of the Company from 100% to approximately
37.3%. The Company's principal executive offices are located at 24850 Old 41
Road, Suite 10, Bonita Springs, Florida.
The Company provides assisted living and related services to the private
pay elderly market. Assisted living facilities combine housing, personalized
support and healthcare services in a cost effective non-institutional setting
designed to address the individual needs of the elderly who need regular
assistance with the activities of daily living, such as eating, bathing,
dressing and personal hygiene, but who do not need the level of healthcare
provided in a skilled nursing facility.
As of May 5, 1997, the Company operated 24 facilities consisting of 11
owned, 9 leased and 4 managed facilities for a total of 2,481 beds. As of such
date, the Company also had 28 sites in various stages of development and
construction. Approximately 99% of the revenues from the Company's assisted
living facilities were derived from private pay sources in 1996.
Summary Historical Financial Data. Set forth below is certain selected
consolidated financial data with respect to the Company and its subsidiaries
that has been excerpted or derived from information contained in the Company's
1996 Form 10-K and the Company's 1997 Form 10-Q. More comprehensive financial
information is included in such reports and in other documents filed by the
Company with the Commission, and the following summary is qualified in its
entirety by reference to such reports and other documents and all of the
financial data and notes contained therein. Such
11
<PAGE> 14
reports and other documents may be examined and copies may be obtained from the
offices of the Commission in the manner set forth below under "Available
Information."
INTEGRATED LIVING COMMUNITIES, INC.
SELECTED SUMMARY CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED DECEMBER ENDED
31, MARCH 31,
--------------------- -----------------
1996 1995 1997 1996
-------- -------- ------ ------
(UNAUDITED)
<S> <C> <C> <C> <C>
Operating data:
Total revenues.................................. $ 24,229 $ 16,269 $8,428 $5,615
Total expenses.................................. 23,245 20,219 8,674 4,823
Operating income (loss)......................... 984 (3,950) (246) 792
Earnings (loss) before income taxes and minority
interest..................................... 727 (3,950) (489) 792
Net earnings (loss)............................. 447 (3,344) (489) 487
Earnings (loss) per common share................ .10 (.86) (.07) .12
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED ENDED
DECEMBER 31, MARCH 31,
------------------- -----------------
1996 1995 1997
------- ------- -----------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Balance sheet data:
Total current assets............................. $ 5,467 $ 1,126 $ 4,813
Total assets..................................... 75,575 25,774 93,437
Total current liabilities........................ 6,816 1,441 7,398
Total liabilities................................ 17,608 11,001 35,959
Stockholders' equity (deficit)................... 57,966 14,773 57,478
</TABLE>
Certain Company Projections. In connection with the Parent's review of the
Company and in the course of the negotiations between the Company and the Parent
described in Section 10 which led to the execution of the Merger Agreement, the
Company provided the Parent with certain business and financial information
which the Parent and the Purchaser believe is not publicly available.
Such information included (i) projected 1997 operating revenue, operating
expense and EBITDAR (as defined below) for each of the Company's existing sites
and for sites scheduled to become operational in 1997 pursuant to the Company's
acquisition and development program and (ii) projected 1997 corporate general
and administrative expense, including the rental payments for the Company's
headquarters in Bonita Springs, Florida. The information described in clause (i)
above is presented below on a consolidated basis.
INTEGRATED LIVING COMMUNITIES, INC.
PROJECTED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
1997
-----------
<S> <C>
Operating Revenue............................................. $41,559,103
Operating Expense............................................. $26,452,176
Corporate General and Administrative Expense.................. $ 9,771,711
EBITDAR....................................................... $ 5,335,216
</TABLE>
The Parent also was provided with projected 1998 operating revenue,
operating expense and EBITDAR for the Company's sites which are in development
or are expected to be acquired and, in each case, are expected to become
operational in 1997 or 1998. This information is presented
12
<PAGE> 15
below on an aggregate basis and does not include operating results for any of
the Company's sites that became operational prior to January 1, 1997.
PROJECTED FINANCIAL INFORMATION WITH
RESPECT TO ACQUISITION AND DEVELOPMENT PROPERTIES
<TABLE>
<CAPTION>
1998
-----------
<S> <C>
Operating Revenue............................................. $32,057,462
Operating Expense............................................. $20,237,663
EBITDAR....................................................... $11,819,800
</TABLE>
As used herein, the term "EBITDAR" means, for any period, the sum of (i)
the income (or deficit) from all operations before provision of income taxes for
such period and without deduction for actual management fees paid or incurred,
plus (ii) the interest charges paid or accrued during such period (including
imputed interest on lease (capital or operating) obligations, but excluding
amortization of debt discount and expense), plus(iii) all amounts in respect of
depreciation and amortization for such period, plus (iv) the rent due under all
leases (capital or operating) for such period.
THE COMPANY DOES NOT AS A MATTER OF COURSE MAKE PUBLIC ANY PROJECTIONS AS
TO FUTURE PERFORMANCE OR EARNINGS, AND THE PROJECTIONS SET FORTH ABOVE ARE
INCLUDED IN THIS OFFER TO PURCHASE ONLY BECAUSE THE INFORMATION WAS MADE
AVAILABLE TO THE PARENT AND THE PURCHASER BY THE COMPANY. THE COMPANY HAS
INFORMED THE PARENT AND THE PURCHASER THAT THESE PROJECTIONS WERE NOT PREPARED
WITH A VIEW TO PUBLIC DISCLOSURE OR COMPLIANCE WITH THE PUBLISHED GUIDELINES OF
THE COMMISSION OR THE GUIDELINES ESTABLISHED BY THE AMERICAN INSTITUTE OF
CERTIFIED PUBLIC ACCOUNTANTS REGARDING PROJECTIONS AND FORECASTS. THE COMPANY
HAS ALSO INFORMED THE PARENT AND THE PURCHASER THAT ITS INTERNAL FINANCIAL
FORECASTS (UPON WHICH THE PROJECTIONS PROVIDED TO THE PARENT AND THE PURCHASER
WERE BASED IN PART) ARE, IN GENERAL, PREPARED SOLELY FOR INTERNAL USE AND
CAPITAL BUDGETING AND OTHER MANAGEMENT DECISION-MAKING PURPOSES AND ARE
SUBJECTIVE IN MANY RESPECTS AND THUS SUSCEPTIBLE TO VARIOUS INTERPRETATIONS AND
PERIODIC REVISION BASED ON ACTUAL EXPERIENCE AND BUSINESS DEVELOPMENTS.
PROJECTED INFORMATION OF THIS TYPE IS BASED ON ESTIMATES AND ASSUMPTIONS THAT
ARE INHERENTLY SUBJECT TO SIGNIFICANT ECONOMIC AND COMPETITIVE UNCERTAINTIES AND
CONTINGENCIES, ALL OF WHICH ARE DIFFICULT TO PREDICT AND MANY OF WHICH ARE
BEYOND THE CONTROL OF THE COMPANY, THE PURCHASER OR THE PARENT OR THEIR
RESPECTIVE FINANCIAL ADVISORS. MANY OF THE ASSUMPTIONS UPON WHICH THE FOREGOING
PROJECTIONS WERE BASED, NONE OF WHICH WERE APPROVED BY THE PARENT OR THE
PURCHASER, ARE DEPENDENT UPON ECONOMIC FORECASTING (BOTH GENERAL AND SPECIFIC TO
THE COMPANY'S BUSINESSES), WHICH IS INHERENTLY UNCERTAIN AND SUBJECTIVE. NONE OF
THE PARENT, THE PURCHASER, THE COMPANY OR THEIR RESPECTIVE FINANCIAL ADVISORS
ASSUMES ANY RESPONSIBILITY FOR THE ACCURACY OR VALIDITY OF ANY OF SUCH
PROJECTIONS. INCLUSION OF THE FOREGOING PROJECTIONS SHOULD NOT BE REGARDED AS AN
INDICATION THAT PARENT, THE PURCHASER, THE COMPANY OR ANY OTHER PERSON WHO
RECEIVED SUCH INFORMATION CONSIDERS IT AN ACCURATE PREDICTION OF FUTURE EVENTS,
AND NEITHER THE PURCHASER NOR THE PARENT HAS RELIED ON THEM AS SUCH. NONE OF THE
PARENT, THE PURCHASER OR THE COMPANY, OR THEIR RESPECTIVE FINANCIAL ADVISORS, OR
ANY OTHER PARTY, INTENDS TO PUBLICLY UPDATE OR OTHERWISE PUBLICLY REVISE THE
PROJECTIONS SET FORTH ABOVE.
13
<PAGE> 16
THE INDEPENDENT ACCOUNTANTS FOR THE COMPANY, THE PARENT AND THE PURCHASER
HAVE NOT EXAMINED OR COMPILED THESE PROJECTIONS AND ACCORDINGLY DO NOT EXPRESS
AN OPINION OR ANY OTHER FORM OF ASSURANCE WITH RESPECT TO THEM.
Available Information. The Company is subject to the informational filing
requirements of the Exchange Act and, in accordance therewith, the Company files
periodic reports, proxy statements and other information with the Commission
under the Exchange Act relating to its business, financial condition and other
matters. The Company is required to disclose in such proxy statements certain
information, as of particular dates, concerning the Company's directors and
officers, their remuneration, options granted to them, the principal holders of
the Company's securities and any material interest of such persons in
transactions with the Company. Such reports, proxy statements and other
information may be inspected at the Commission's office at 450 Fifth Street,
N.W., Washington, D.C. 20549, and should also be available for inspection and
copying at the regional offices of the Commission located at Seven World Trade
Center, 13th Floor, New York, New York 10048 and Citicorp Center, 500 West
Madison Street (Suite 1400), Chicago, IL 60661. Copies may be obtained by mail,
upon payment of the Commission's customary fees from the Public Reference
Section of the Commission's principal office at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549. In addition, the Commission maintains a
Web site that contains reports, proxy and information statements and other
information regarding the Company (and other registrants that file
electronically with the Commission). The address of such Web site is
(http://www.sec.gov). Such material should also be available for inspection at
NASDAQ National Market, 33 Whitehall Street, New York, New York 10004.
9. CERTAIN INFORMATION CONCERNING THE PURCHASER AND THE PARENT.
The Purchaser, a Delaware corporation and wholly owned subsidiary of the
Parent, was incorporated on May 27, 1997 for the purpose of acquiring the
Company and has not engaged in any other business activity except in connection
with the Offer and the Merger. The Parent is a Delaware limited partnership that
engages in the business of investing in debt and equity interests in real estate
assets and businesses. WH Advisors, L.P. VII, a Delaware limited partnership
("WH Advisors, L.P."), acts as the sole general partner of the Parent, and WH
Advisors, Inc. VII, a Delaware corporation ("WH Advisors, Inc."), acts as the
sole general partner of WH Advisors, L.P. Neither WH Advisors, L.P. nor WH
Advisors, Inc. engages in any business other than in connection with its role as
a general partner.
WH Advisors, Inc. is a wholly owned subsidiary of The Goldman Sachs Group,
L.P., a Delaware limited partnership ("GS Group"). GS Group is a holding
partnership that (directly and indirectly through subsidiaries or affiliated
companies or both) is a leading international investment banking organization in
the business of buying and selling securities, both foreign and domestic, and in
making investments on behalf of its partners. The Goldman Sachs Corporation, a
Delaware corporation ("GS Corp."), is the sole general partner of GS Group. The
principal address of the Parent, the Purchaser, WH Advisors, Inc., GS Group and
GS Corp. is 85 Broad Street, New York, New York 10004.
The name, business address, present principal occupation or employment,
five-year employment history and citizenship (i) of each director and of each
executive officer of WH Advisors, Inc., the sole general partner of WH Advisors,
L.P., which is the sole general partner of the Parent, and (ii) of each director
and of each executive officer of the Purchaser are set forth in Schedule I
hereto. The name, business address, present principal occupation or employment
and citizenship of each director and of each member of the Executive Committee
of GS Corp. and of each member of the Executive Committee of GS Group are set
forth in Schedule II hereto.
Goldman, Sachs & Co. ("Goldman, Sachs"), a New York limited partnership of
which GS Group is a general partner, are acting as the Dealer Managers in the
Offer.
14
<PAGE> 17
Except with respect to the Stock Option and Voting and Tender Agreement
(see Section 12 -- "Related Agreements"), neither the Purchaser nor, to the best
knowledge of the Purchaser, any of the persons listed on Schedules I and II
hereto or any associate of the Purchaser, including the Parent, or any of the
persons so listed, beneficially owns or has a right to acquire directly or
indirectly any securities of the Company. Neither the Purchaser, nor the Parent,
nor to the best knowledge of the Purchaser, any of the persons or entities
referred to above, or any of the respective executive officers, directors or
subsidiaries of any of the foregoing, has effected any transactions in the
securities of the Company during the past 60 days.
Except as described in this Offer to Purchase, and except with respect to
the Stock Option and Voting and Tender Agreement (see Section 12 -- "Related
Agreements") neither the Purchaser nor Parent, nor to the best knowledge of the
Purchaser, any of the persons listed on Schedules I and II hereto, has any
contract, arrangement, understanding or relationship with any other person with
respect to any securities of the Company, including, but not limited to,
contracts, arrangements, understandings or relationships concerning the transfer
or voting of such securities, joint ventures, loan or option arrangements, puts
or calls, guaranties of loans, guaranties against loss or the giving or
withholding of proxies. Except as described in this Offer to Purchase, neither
the Purchaser nor the Parent, nor to the best knowledge of the Purchaser, any of
the persons listed on Schedules I and II hereto, has had since the formation of
the Company any business relationships or transactions with the Company or any
of its executive officers, directors or affiliates that are required to be
reported under the rules and regulations of the Commission applicable to the
Offer. Except as described in this Offer to Purchase, since the formation of the
Company, there have been no contacts, negotiations or transactions between the
Purchaser, the Parent or, to the best knowledge of the Purchaser, any of the
persons listed in Schedules I and II hereto, on the one hand, and the Company or
its affiliates, on the other hand, concerning a merger, consolidation or
acquisition, a tender offer or other acquisition of securities, an election of
directors, or a sale or other transfer of a material amount of assets.
10. SOURCE AND AMOUNT OF FUNDS.
The Purchaser estimates that approximately $83.0 million will be required
to (i) purchase Shares pursuant to the Offer and the Merger, (ii) pay the
holders of outstanding stock options an amount equal to the excess of the price
per Share pursuant to the Offer over the exercise price of such stock option,
multiplied by the number of Shares subject to such stock option and (iii) pay
the fees and expenses related to the Offer.
The Purchaser will obtain the necessary funds for the Offer from the
Parent. The Parent will obtain such funds from (i) capital contributions from
its partners, which contributions such partners are unconditionally required to
make at the Parent's request, and (ii) a loan from GS Group described below. GS
Group's existing capitalization and financial assets are sufficient to provide
the required funds. The loan from GS Group will represent less than 30% of the
funds required by the Purchaser.
Pursuant to a commitment letter dated June 3, 1997 (the "Commitment
Letter") between the Parent and GS Group, the Parent has received a commitment
from GS Group to make available a secured term loan facility (the "Facility") of
up to $20.0 million to finance the purchase of the Shares pursuant to the Offer
and the Merger, pay holders of stock options, refinance any indebtedness of the
Company, if required, and pay related fees and expenses and other transaction
expenses. Consummation of the Facility is subject to, among other things, the
negotiation, execution and delivery of definitive documentation consistent with
the Commitment Letter. In addition, consummation of the Facility is further
subject to the condition that the Offer shall have been consummated in
accordance with its terms without any waiver or amendment of any material
condition thereto by the Parent or the Purchaser (other than with the consent of
GS Group). Set forth below is a summary of the terms of the Facility.
15
<PAGE> 18
The Facility will bear interest at the one month London Interbank Offered
Rate, plus 2.5%. The Facility matures on November 28, 1997. The Facility will be
secured by a first priority lien on all rights of the Parent to require and
collect capital contributions from its limited partners pursuant to its
partnership agreement. The Parent will not be required to pay a financing fee in
connection with its borrowings under the Facility. The definitive documents
relating to the Facility will contain customary representations, warranties and
events of default, various covenants restricting, among other things, additional
debt, mergers, acquisitions and dispositions of assets, modification of the
Parent's partnership agreement and sale and leaseback transactions.
It is anticipated that borrowings under the Facility will be repaid from
funds generated internally by the Company and its subsidiaries or other sources,
which may include the proceeds of debt or equity financings of the Company. No
decisions have been made concerning these matters and such decisions will be
made based on the Parents' review of the Company's business and the advisability
of particular transactions, as well as on prevailing interest rates and other
financial and market conditions.
A copy of the Commitment Letter has been filed as an exhibit to the
Schedule 14D-1 filed by the Purchaser and the Parent with the Commission in
connection with Offer. References are made to such exhibit for a more complete
description of the terms and conditions of such document.
11. BACKGROUND OF THE OFFER, CONTACTS WITH THE COMPANY.
In March, 1997, senior management of Senior Lifestyle Corporation ("Senior
Lifestyle"), a developer, operator and owner of seniors housing facilities for
over twelve years, became aware that the Company was exploring the possible sale
of the Company. Senior Lifestyle and the Parent have in the past jointly pursued
the acquisition and development of assisted living, congregate care, Alzheimer
and other senior housing facilities nationwide. Subsequently, senior management
of Senior Lifestyle informed the Parent that the Company might be interested in
a business combination. On April 1, 1997, the Parent contacted representatives
of Smith Barney regarding its potential interest in a possible transaction with
the Company. On April 3, 1997, the Parent executed a confidentiality agreement
with the Company and subsequently received certain information about the Company
and its subsidiaries.
On April 8, 1997, representatives of the Company informed the Parent that
in light of the interest in the Company by other potential purchasers, the
Parent would have to submit a definitive proposal for the acquisition of the
Company so that the Company's Board of Directors could evaluate and consider all
offers presented by potential purchasers in order to determine which offer best
satisfied the Company's objectives. The request for a proposal included a form
of transaction agreement on which the potential acquirors were invited to
comment.
The Parent submitted a proposal on April 21, 1997 (which proposal included
the Parent's comments to the proposed form of transaction agreement). Pursuant
to its initial proposal, subject to certain conditions and confirmatory due
diligence, the Parent indicated its willingness to pursue a transaction in which
it would acquire the Company in a two-step tender offer and merger at a price of
$10.50 per Share in cash. The Parent noted in its initial proposal that its
offer would not be subject to any financing contingencies, but was subject to
the Parent's favorable due diligence review of the operations and assets of the
Company.
On April 23, 1997, at the direction of the Company's Board of Directors,
representatives of Smith Barney contacted the Parent to inform the Parent of the
Company's Board of Directors' response to the Parent's initial proposal. The
Parent was informed that the Company's Board of Directors had concluded that in
order to eliminate the condition of confirmatory due diligence contained in the
most favorable proposals it had received (including the Parent's), the Parent,
along with certain other bidders, were asked to resubmit a proposal by May 23,
1997, before which confirmatory due diligence could be conducted and the form of
a transaction agreement could be further negotiated. Subsequently,
representatives of the Parent and Senior Lifestyle and their
16
<PAGE> 19
respective advisors were invited to the Company's principal office in Bonita
Springs, Florida to review certain documents made available by the Company and
to receive presentations from the Company's management.
Between April 23, 1997 and May 23, 1997, the Parent and Senior Lifestyle
conducted their due diligence review of the Company. During this period, the
parties and their respective outside counsel proceeded to negotiate and resolve
issues regarding the form of the proposed transaction agreement.
On May 23, 1997, the Parent submitted a revised proposal (including the
Parent's comments to the proposed form of transaction agreement). The Parent's
revised proposal, subject to certain closing conditions set forth in the form of
the proposed transaction agreement negotiated by counsel to the parties and the
review by the Parent of certain schedules to the proposed transaction agreement,
was to acquire the Company in a two-step tender offer and merger at a price per
Share of $11.00 in cash. The Parent noted in its revised proposal that its offer
would not be subject to any financing contingencies.
On May 28, 1997, representatives of the Company contacted the Parent to
inform the Parent that its proposal would be disadvantaged if it did not raise
the per Share consideration if had offered from $11.00 to $11.50. Later that
day, the Parent contacted representatives of Smith Barney to inform it that the
Parent would agree to pay $11.50 in cash for each Share.
Later that same day, Smith Barney, at the direction of the Company's Board
of Directors, informed the Parent that the Company's Board of Directors had
voted to approve the Merger Agreement, including the Offer and the Merger.
Following the conclusion of the meeting of the Company's Board of
Directors, the Stock Option and the Voting and Tender Agreement were finalized.
On May 30, 1997, the Company issued a press release announcing the
execution of the Merger Agreement.
On June 5, 1997, the Purchaser commenced the Offer.
12. PURPOSE OF THE OFFER, MERGER, PLANS FOR THE COMPANY.
Purpose. The purpose of the Offer and the Merger is for the Parent to
acquire control of, and the entire equity interest in, the Company. The Offer is
intended to increase the likelihood that the Merger will be effected as promptly
as practicable. As soon as practicable following the purchase of Shares pursuant
to the Offer, the Purchaser intends, pursuant to the Merger Agreement, to
consummate the Merger. The Merger, if so consummated, would involve the
conversion of each of the then outstanding Shares, other than Shares held by
Holders who properly exercise their dissenters' rights, into the right to
receive cash in an amount equal to the price per Share paid in the Offer.
If for any reason the Merger is not consummated, the Parent and the
Purchaser reserve the right to acquire additional Shares following the
expiration of the Offer through private purchases, market transactions, tender
or exchange offers or otherwise on terms and at prices that may be more or less
favorable than those of the Offer or, subject to any applicable legal
restrictions, to dispose of any or all Shares acquired by the Parent and the
Purchaser.
Set forth below is a summary of the material provisions of the Merger
Agreement, a copy of which is filed as Exhibit (c)(1) to the Schedule 14D-1.
Such Exhibit should be available for inspection and copies should be obtainable,
in the manner set forth in Section 8 (except that it will not be available at
the regional offices of the Commission). The following summary is qualified in
its entirety by reference to the Merger Agreement.
17
<PAGE> 20
The Offer. In the Merger Agreement, the Purchaser has agreed, subject to
certain conditions, to commence a cash tender offer to purchase all of the
Shares for $11.50 per Share. The Merger Agreement provides that, without the
consent of the Company, the Purchaser will not (a) decrease the purchase price
so that it is less than $11.50 per Share, (b) change the form of consideration
payable in the Offer, (c) decrease the number of Shares sought in the Offer, (d)
change or impose additional conditions to the Offer set forth in Section 14
hereof, or (e) otherwise amend the Offer in any manner adverse to the holders of
Shares. The Offer shall initially expire 20 business days after the date of its
commencement; provided, however, that, unless the Merger Agreement is terminated
in accordance with Article VIII thereof (other than due to the failure to
satisfy the Minimum Condition or the failure to occur of the expiration or
termination of any applicable waiting period under the HSR Act, in which case
the Offer (whether or not previously extended in accordance with the terms of
the Merger Agreement) shall expire on such date of termination), the Parent and
the Purchaser will be obligated to extend the Expiration Date of the Offer from
time to time to the earlier of (i) the date on which the Purchaser purchases or
becomes obligated to purchase, pursuant to the Offer, that number of Shares that
would represent at least a majority of the outstanding Shares of the Company on
a fully diluted basis and (ii) the date 35 business days after the date of its
commencement. In addition, the Purchaser may, without the consent of the
Company, extend the Offer (i) if at the then scheduled expiration date of the
Offer any of the conditions to the Purchaser's obligations to accept for payment
and pay for Shares shall not be satisfied or waived, until up to such time as
such conditions are satisfied or waived and (ii) for any period required by any
rule, regulation, interpretation or position of the Commission or its staff
applicable to the Offer.
The Merger. The Merger Agreement provides that, following the satisfaction
or waiver of the conditions set forth therein, the Purchaser will be merged with
and into the Company, with the Company continuing as the surviving corporation,
and each then outstanding Share (other than Shares held in the treasury of the
Company, Shares owned by the Parent, the Purchaser or any other subsidiary of
the Parent or of the Company, or Shares held by Holders who properly exercise
their dissenters' rights under the DGCL) will be converted into the right to the
Offer Price in cash, without interest. If at any time during the period between
the date of the Merger Agreement and the date the Shares are accepted for
payment pursuant to the Offer or the Effective Time any change in the Shares
shall occur, including by reason of any reclassification, recapitalization,
stock dividend, stock split or combination, exchange or readjustment of Shares
or any stock dividend thereon with the record date during such period, the Offer
Price will be appropriately adjusted. Except in the case of a "short-form"
merger as described below, under the DGCL the affirmative vote of holders of a
majority of the outstanding Shares (including any Shares owned by the Purchaser)
will be required to approve the Merger.
Notwithstanding the foregoing, the Parent may elect at any time prior to
the consummation of the Merger, instead of merging the Purchaser with and into
the Company, to merge the Company with and into the Purchaser; in which case the
Company shall not be deemed to have breached any of its representations,
warranties, covenants or agreements set forth in the Merger Agreement solely by
reason of such action. In such event, the Merger Agreement will be deemed
modified to reflect the merger of the Purchaser with and into the Company, and
if requested by the Parent, the Company has agreed to execute an appropriate
amendment to the Merger Agreement to reflect such occurrence. In addition, the
Parent may elect to substitute a wholly owned subsidiary for the Purchaser as a
constituent corporation of the Merger, and in such event, the Merger Agreement
will be deemed modified to reflect such occurrence, and if requested by the
Parent, the Company has agreed to execute an appropriate amendment to the Merger
Agreement to reflect such occurrence.
The Merger Agreement provides that the Company will, if required by
applicable law in order to consummate the Merger, take all action necessary in
accordance with the DGCL and its Certificate of Incorporation and Bylaws to
convene a meeting of its stockholders as soon as practicable following the
consummation of the Offer for the purpose of approving the Merger contemplated
thereby. The Company, if required by applicable law, shall prepare and file with
the Commission
18
<PAGE> 21
under the Exchange Act a proxy statement with respect to the meeting of
stockholders described above (the "Proxy Statement"). The Parent, the Purchaser
and the Company have agreed to cooperate with each other in the preparation of
the Proxy Statement, and the Company has agreed to notify the Parent of the
receipt of any comments of the Commission, or requests for additional
information or amendments, with respect to the Proxy Statement. Each of the
Parent, the Purchaser and the Company has agreed to use its reasonable best
efforts to respond promptly to all such comments or requests by the Commission.
As promptly as practicable after the Proxy Statement has been approved by the
Commission, the Company shall cause the Proxy Statement to be mailed to the
Company's stockholders. At such meeting, all of the Shares then owned by the
Parent, the Purchaser or any other subsidiary of the Parent will be voted to
approve the Merger. In addition, the Company has agreed that its Board of
Directors shall recommend the Company's stockholders vote to approve the Merger
and shall use its best efforts to solicit from stockholders of the Company
proxies in favor of the Merger.
The DGCL also provides that if a parent company owns at least 90% of each
class of stock of a subsidiary, the parent company can effect a "short-form"
merger with that subsidiary without a stockholder vote. Accordingly, if, as a
result of the Offer, the exercise of the Stock Option or otherwise, the
Purchaser acquires or controls the voting power of at least 90% of the
outstanding Shares, the Purchaser will be able, and intends, to effect the
Merger without a stockholder vote.
Representations and Warranties. The Merger Agreement contains
representations and warranties by the Company with respect to, among other
things, its organization and the organization and ownership of its subsidiaries,
its capitalization, its corporate power and governmental authorization to enter
into the Merger Agreement, its filings with the Commission, its financial
statements, and the absence of certain changes in its business. The Company has
also represented and warranted that consummation of the transactions
contemplated by the Merger Agreement do not contravene the Certificate of
Incorporation and By-Laws of the Company, any applicable laws or any agreements
or instruments binding on the Company, and will not give rise to any lien on the
assets of the Company or its subsidiaries (except as expressly provided in the
Merger Agreement). Other representations and warranties in the Merger Agreement
pertain to the information supplied by the Company in connection with the Offer,
the Company's employee benefit plans and other compensation arrangements, the
absence of certain litigation with respect to the Company, compliance by the
Company with applicable law, including environmental laws, tax matters, the
inapplicability of state anti-takeover statutes, including Section 203 of the
DGCL, insurance matters and real estate matters, and the vote required to
approve the Merger. The Merger Agreement also contains representations and
warranties with respect to the extent of its equity interests in other entities,
any brokerage fees payable as a result of the consummation of the Offer and the
Merger and the opinion of its financial advisors with respect to the fairness of
the consideration to be received pursuant to the Offer and Merger Agreement, and
the absence of any Company (including its subsidiaries) "anti-takeover" plan
which would impede execution of the contemplated transactions.
The Merger Agreement also contains representations and warranties by the
Parent with respect to, among other things, the organization of the Purchaser
and the Parent, their authority to enter into the Merger Agreement, the
information supplied by them in connection with the Offer and their financial
ability to purchase the Shares. The Merger Agreement also contains
representations and warranties by the Purchaser and the Parent which address any
required consents under any applicable provisions of the HSR Act, the Exchange
Act, the Securities Act of 1933, as amended, and the regulations thereunder and
applicable state securities laws. Other representations and warranties by the
Purchaser and the Parent state that execution of the Merger Agreement by the
Parent and the Purchaser will not contravene the limited partnership agreement
of the Parent or any bylaws of the Purchaser, violate any applicable law, rule,
regulation or order that is binding upon either the Parent or any of its
subsidiaries, give rise to any rights to termination or loss of benefit to which
the Parent and its subsidiaries is entitled, or result in a lien on any material
asset of the Parent or its subsidiaries (except as expressly provided in the
Merger Agreement).
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Covenants of the Company. In the Merger Agreement, the Company has agreed,
until the Effective Time of the Merger, that, among other things, without the
prior written consent of the Parent and subject to certain other limited
exceptions set forth in the Merger Agreement, it will not, or permit any of its
subsidiaries to, (i) adopt or propose any change in its Certificate of
Incorporation, Bylaws or comparable charter or other organization documents,
(ii) acquire, agree to acquire, lease or manage (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 material assets or
(z) any long term care or assisted living facility, (iii) sell, lease, license,
mortgage or otherwise encumber or subject to any lien or otherwise dispose of
any of its properties or assets or stock or other ownership interest in any of
its properties, subject to certain exceptions set forth in the Merger Agreement,
(iv) declare, set aside for payment or pay any dividend or make any distribution
of money or property in respect of its capital stock, (v) (x) issue or deliver
or sell, or authorize or propose the issuance, delivery or sale of, any capital
stock of the Company or any of its subsidiaries or any security convertible into
or exercisable into such capital stock (other than the issuance of shares of
common stock upon the exercise of certain options described in the Merger
Agreement, (y) split, combine or reclassify any capital stock of the Company or
any of its subsidiaries or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for shares of capital
stock and (z) except as required or permitted by the Merger Agreement,
repurchase, redeem or otherwise acquire an shares of capital stock of the
Company or any of its subsidiaries or any security thereof or any rights,
warrants or options to acquire any such shares or other securities, (vi) except
as permitted by the Merger Agreement, amend, modify or terminate any material
contract or agreement, (vii) (x) except as contemplated by the Merger Agreement,
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, guarantee the debt securities of another person,
enter into any "keep well" or other agreement to maintain any financial
statement condition of another person or (y) make any loans, advances or capital
contributions to, or investments in, any other person, other than the Company or
any direct or indirect wholly owned subsidiary of the Company, (viii), except as
contemplated by the Merger Agreement, increase the compensation payable to its
officers, directors or key employees, grant any termination or severance pay to
such persons, or enter into an employment, severance or consulting agreement
with any current or former director, officer or other employee of the Company or
any of the Company's subsidiaries enter into, establish, adopt or amend any
collective bargaining, bonus, profit sharing, thrift, compensation stock option,
restricted stock, pension, retirement, deferred compensation, employment
termination, severance or other plan, agreement, trust, fund, policy or
arrangement for the benefit of any current or former director, officer or
employee, (ix) except as disclosed in any filings made with the Commission or as
may be required as a result in a change in law or in generally accepted
accounting principles or a change in order to comply with Commission
requirements, change any of its accounting procedures or policies, and (x),
except as contemplated by the Merger Agreement, make any payments or
distributions to, or enter into any contracts or agreements with, IHS and its
officers, directors and affiliates. In addition, the Company has agreed to use
its reasonable best efforts to ensure that it and each of its subsidiaries will,
use its reasonable best efforts to keep or cause to be kept its insurance
policies (or substantial equivalents) in such amounts duly in force until the
Effective Time and will give the Parent notice of any material change in such
insurance policies, and the Company has agreed, except as permitted by the
Merger Agreement, (a) not to permit its subsidiaries to make any individual or
series of related expenditures (whether capital or otherwise) of over $250,000
or enter into any contract that is not terminable by the Company without penalty
upon 30 days' notice; (b) not to permit any of its subsidiaries to agree to
commit to any of the foregoing; and (c) not to permit any of its subsidiaries to
take or agree to commit to take any action that would make any representation or
warranty of the Company under the Merger Agreement inaccurate in any material
respect at, or as of any time prior to the Effective Time or which is reasonably
likely to result in a delay in consummation of the Offer or
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<PAGE> 23
the Merger, including delaying the effectiveness of the Proxy Statement, if any,
and the mailing thereof.
Notwithstanding the foregoing, the Company and its subsidiaries are
permitted to take commercially reasonable actions after consultation with the
Parent in connection with certain agreed upon acquisition and development
projects, including but not limited to, entering into agreements related to the
purchase and development of properties or facilities and entering into financing
arrangements related to these projects (provided that prior to entering into
such financing arrangements, the Parent shall have an opportunity to provide
financing for such arrangements on terms which are comparable to Company's
proposed financing), and entering into guarantees in connection with such
projects, and performing their obligations under any agreements relating to the
foregoing.
Prohibition on Solicitation. Pursuant to the Merger Agreement, the Company
has agreed that the Company and its subsidiaries will not, and will use their
reasonable best efforts to cause their officers, directors, employees or other
agents not to, directly or indirectly, (i) take any action to solicit or
initiate any Company Acquisition Proposal (as defined below) or (ii) unless
otherwise required in accordance with the fiduciary duties of the Board of
Directors under applicable law as advised by independent legal counsel to the
Company, engage in negotiations with, or disclose any nonpublic information
relating to the Company or its subsidiaries or afford access to the properties,
books or records of the Company or any of its subsidiaries to, any person that
may be considering making, or has made, a Company Acquisition Proposal or has
agreed to endorse any Company Acquisition Proposal (other than the Merger). The
Company has agreed that it will promptly as reasonably practicable notify the
Parent after receipt of any Company Acquisition Proposal or any indication that
any person is considering making a Company Acquisition Proposal or any request
for nonpublic information relating to the Company or any of its subsidiaries or
for access to the properties, books or records of the Company or any of its
subsidiaries by any person that may be considering making, or has made, a
Company Acquisition Proposal or that the Company intends to engage in
negotiations with, or provide information to, any such person. In addition, the
Company has agreed that it will promptly as reasonably practicable provide the
Parent with the identity of such person and a reasonable description of such
Company Acquisition Proposal.
The term "Company Acquisition Proposal" means any offer, proposal for, or
any indication of interest in, (i) a merger, share exchange or business
combination or similar transaction, (ii) any sale, lease, exchange, transfer or
other disposition of 25% of more of the assets of the Company and its
subsidiaries, taken as a whole, in a single transaction or series of
transactions (whether or not related) or (iii) any tender offer or exchange
offer for 25% or more of the outstanding shares of capital stock of the Company
involving the Company or any of its Subsidiaries or the acquisition of a
substantial portion of the assets of, the Company or any of its subsidiaries,
other than the transactions contemplated in the Merger Agreement.
The Company has agreed to immediately cease and cause to be terminated, its
existing solicitation, activity, discussions or negotiations with any parties
conducted by prior to the date of the Merger Agreement by the Company or any of
its representatives with respect to a Company Acquisition Proposal.
Access to Information. Pursuant to the Merger Agreement, from the date of
the Merger Agreement to the Effective Time, the Company will provide to the
Parent and its authorized agents access to the offices, properties, books and
records of the Company and its Subsidiaries and will furnish to the Parent and
its authorized agents such financial and operating data and other information
reasonably requested on behalf of the Parent and will instruct the Company's
employees, counsel and financial advisors to cooperate with the Parent in its
investigation of the business of the Company and its subsidiaries; provided that
no investigation pursuant to the these provisions shall affect any
representation or warranty given by the Company to the Parent under the Merger
Agreement. Notwithstanding the foregoing, the Company shall not be required to
provide any information which it reasonably believes it may not provide to the
Parent by reason of applicable
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law, rules or regulations, which constitutes information protected by
attorney/client privilege, or which the Company or any subsidiary is required to
keep confidential by reason of contract, agreement or understanding with third
parties; provided that the Company gives the Parent notice that it is
withholding such information.
Reasonable Best Efforts. Subject to the terms and conditions of the Merger
Agreement, each party has agreed to use its reasonable best efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all things
necessary, proper and advisable under applicable laws and regulations to
consummate the transactions contemplated by the Merger Agreement.
Board of Directors. The Merger Agreement provides that, upon the purchase
of Shares pursuant to the Offer, the Purchaser will be entitled to designate
such number of directors on the Company's Board of Directors as is equal to the
product of (rounded to the next whole number) of (a) the total number of
directors on the Company's Board of Directors and (b) the percentage that the
aggregate number of Shares purchased in the Offer bears to the number of Shares
outstanding. The Company will promptly, at the request of the Purchaser,
increase the size of the Board of Directors and/or exercise its reasonable best
efforts to obtain the resignations of such number of its current directors as is
necessary to enable the Purchaser's designees to be elected to the Board of
Directors, and will cause the Purchaser's designees to be so elected.
Treatment of Stock Options. Pursuant to the Merger Agreement, the Company
has agreed to (a) terminate the Company's 1996 Stock Incentive Plan and 1996
Stock Option Plan (collectively, the "Company Option Plans") immediately prior
to the Effective Time without prejudice to the rights of the holders of options
(the "Options") awarded pursuant thereto and (b) grant no additional Options
under the Company Option Plans. The Company has also agreed to obtain the
consent of each holder of an Option (whether or not then exercisable) under the
Company Option Plans at the Effective Time to the cancellation of such holder's
Options (without regard to the exercise price of such Option), to take effect
immediately prior to the Effective Time. Each such consent shall require the
Company to pay, as soon as practicable following the Effective Time, in respect
of each Option, an amount equal to the excess, if any, of the price per Share
paid in the Offer over the exercise price of such Option, multiplied by the
number of shares of Company Common Stock subject to such Option. Notwithstanding
the foregoing, payment may be withheld in respect of any Option until the
consent of the holder thereof to its cancellation as contemplated hereby is
obtained.
Employee Benefit Plans. Pursuant to the Merger Agreement, from and after
the Effective Time, the Parent has agreed that it will, and will cause the
surviving corporation of the Merger, to honor in accordance with their terms,
the employment, severance, indemnification or similar agreements and the
Company's employee benefits plan; provided, however, that nothing set forth in
the Merger Agreement shall preclude the Parent or any of its affiliates from
having the right to terminate the employment of any employee of the Company
employed by the Company immediately prior to the Effective Time, with or without
cause, or to amend or to terminate any employee benefit plans of the Parent
("Parent Benefit Plans") established, maintained or contributed to by the Parent
or any of its affiliates after the Effective Time. The Parent has acknowledged
that the consummation of the Merger will result in a "change of control" under
the Company's employment agreements, the Company Option Plans and the Company's
Supplemental Employee Retirement Plan. Following the Effective Time, the Parent
and its subsidiaries will provide benefits to employees employed by the Company
immediately prior to the Effective Time (i) no less favorable than those
provided by the Parent and its affiliates to similarly situated employees
employed by companies in substantially similar businesses to that engaged by the
Company and (ii) no less commercially favorable than those generally provided to
similarly situated employees in the industry. With respect to the Parent Benefit
Plans, the Parent and the Surviving Corporation shall provide to all Company
Employees, from and after the Effective Time, credit for all service with and
compensation by the Company and its affiliates and predecessors prior to the
effective time of the Merger for all purposes for which such service was
recognized by the Company prior to the Effective Time, but without duplication
of benefits. To the extent Parent Benefit Plans provide medical, dental or other
welfare benefits, the
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Parent shall use its best efforts to cause such plan to waive any pre-existing
conditions and actively-at-work exclusions with respect to employees of the
Company prior to the Effective Time and to provide that any expenses incurred on
or before the Effective Time by or on behalf of any employees of the Company
prior to the Effective Time shall be taken into account under the Parent Benefit
Plans for purposes of satisfying applicable deductible, coinsurance and maximum
out-of-pocket provisions. If any employee is terminated following the purchase
of shares pursuant to the Offer, the employee shall be paid for his accrued but
unused vacation time for periods prior to the Effective Time.
Indemnification and Insurance. Pursuant to the Merger Agreement, from and
after the Effective Time, (a) the Parent has agreed to indemnify, defend and
hold harmless the present and former officers and directors of the Company and
its subsidiaries against all losses, claims, damages and liability in respect of
acts or omissions occurring at or prior to the Effective Time, (b) the surviving
corporation of the Merger will defend and hold harmless the present and former
officers and directors of the Company and its subsidiaries, to the fullest
extent provided by law, against all losses, claims, damages and liability in
respect of acts or omissions occurring at or prior to the Effective Time. The
Parent has agreed to also cause the surviving corporation of the Merger (and its
successors) to establish and maintain provisions in its Certificate of
Incorporation and Bylaws concerning indemnification and exoneration of the
Company's former and present officers, directors and employees and agents that
are no less favorable to those persons that the provisions of the Company's
Certificate of Incorporation and Bylaws in effect as of the date of the Merger
Agreement. In addition, the Parent has agreed to cause the Company for a period
of six years from the Effective Time to maintain in effect the Company's current
directors' liability insurance (provided the Company may substitute policies of
at least the same coverage containing terms and conditions no less favorable
than those of the Company's current policy) covering those persons who are
currently covered by the Company's directors' liability insurance policies (and
provided that the Parent shall only be obligated to maintain such insurance to
the extent available at annual premiums during such period not in excess of 150%
of the per annum rate of the aggregate annual premiums paid by the Company for
such insurance as of the date of the Merger Agreement).
Conditions to Merger. The respective obligation of each party to the Merger
Agreement to effect the Merger shall be subject to the satisfaction, prior to
the closing of the transactions contemplated by the Merger Agreement, of the
following conditions: (a) if necessary under applicable law, the Merger shall
have been adopted by the requisite vote of the stockholders of the Company in
accordance with the DGCL, (b) no provision of any applicable domestic law or
regulation and no judgment, injunction, order or decree of a court or
governmental agency or authority of competent jurisdiction which has the effect
of making the Merger illegal or shall otherwise restrain or prohibit the
consummation of the Merger (each party agreeing to use its best efforts,
including appeals to higher courts, to have any judgment, injunction, order or
decree lifted); and (c) all consents, authorizations, orders and approvals of
(or filings or registrations with) any governmental commission, board or other
regulatory body required in connection with the execution, delivery and
performance of the Merger Agreement shall have been obtained or made, except for
filings in connection with the Merger an any other documents required to be
filed after the Effective Time and except where the failure to have obtained or
made any such consent, authorization, order, approval, filing or registration
would not make the Merger illegal or have a Company Material Adverse Effect or
Parent Material Adverse Effect (as that term is defined below), as the case may
be.
Termination. The Merger Agreement may be terminated at any time prior to
the effective time of the Merger (i) by mutual consent of the Parent and the
Company; (ii) by either the Company or the Parent if the Merger has not been
consummated on or before the earlier of (A) the forty-sixth business day after
the first public announcement of the execution of the Merger Agreement and (B)
August 15, 1997 (provided that such right shall not be available to any party
whose failure to fulfill any of its obligations under the Merger Agreement has
been the cause of or resulted in the
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failure to consummate the Merger by such date), (iii) by either the Company or
the Parent, if there exists any applicable domestic law, rule or regulation that
makes consummation of the Merger illegal or if any final and nonappealable
judgment, injunction, order or decrees of a court or governmental agency or
authority restrains or prohibits the consummation of the Merger, (iv) by either
the Company or the Parent, if the stockholder approval contemplated by the
Merger Agreement has not been obtained by reason of the failure to obtain the
requisite vote upon a vote at a duly held meeting of stockholders or at any
adjournment thereof, (v) by either the Company or the Parent, if (x) there has
been a breach by the other party of any representation or warranty in the Merger
Agreement that would have a Parent Material Adverse Effect or a Company Material
Adverse Effect, as the case may be; or (y) there has been a material breach of
any of the covenants or agreements set forth in the Merger Agreement on the part
of the other party, which breach is not curable, or if curable is not so cured
within 30 days after written notice of such breach is given by the terminating
party to the other party, (vi) by either the Company or the Parent, if the
Company shall have received a Company Acquisition Proposal and the Company's
Board of Directors has determined in good faith that such proposal represents a
more attractive financial alternative that provides greater immediate value for
the Company's stockholders than the Offer and the Merger; (vii) by the Company,
if the Offer has not been timely commenced (except as a result of actions or
omissions of the Company in accordance with the Merger Agreement) provided that
such right must be exercised prior to the commencement of the Offer; (viii) by
the Parent, if the Board of Directors of the Company has failed to recommend, or
has withdrawn, modified or amended in any material respects its approval or
recommendation of the Offer or the Merger or has resolved to do any of the
foregoing; or (ix) by the Parent or the Company, if as a result of the failure
of any of the conditions of the Offer (set forth in Section 14 below), the Offer
shall have terminated or expired without the Purchaser having purchased any
Shares pursuant to the Offer (provided that such right is not available to any
party whose failure to fulfill any of its obligation under the Merger Agreement
results in the failure of any such condition).
The term "Company Material Adverse Effect" means any change or effect that
is or is reasonably likely to be materially adverse to the condition (financial
or otherwise), business, assets or results of operations, of the Company and its
subsidiaries taken as a whole or adversely affects the ability of the Company to
consummate the transactions contemplated by the Merger Agreement in any material
respect or materially impairs or delays the Company's ability to perform its
obligations under the Merger Agreement. The term "Parent Material Adverse
Effect" means any change or effect that is or is reasonably likely to be
materially adverse to the condition (financial or otherwise), business, assets
or results of operations, of the Parent and its subsidiaries taken as a whole or
adversely effects the ability of the Parent to consummate the transactions
contemplated by the Merger Agreement in any material respect or materially
impairs or delays the Parent's ability to perform its obligations under the
Merger Agreement.
In the event of the termination of the Merger Agreement, the Merger
Agreement shall forthwith become void and of no effect and there shall be no
liability on the part of any party thereto except as described under "Fees and
Expenses" below; provided, however, that nothing in the Merger Agreement will
relieve any party from liability for any willful breach thereof before
termination.
Fees and Expenses. The Merger Agreement provides that, except as provided
in the following paragraph, all fees and expenses incurred in connection with
the Offer, the Merger, the Merger Agreement and the transactions contemplated
thereby will be paid by the party incurring such fees or expenses, whether or
not the Offer or the Merger is consummated.
Under the Merger Agreement the Company will pay, or cause to be paid, in
same day funds, to the Parent the sum of (a) all of Parent's out-of-pocket fees
and expenses incurred or paid by or on behalf of the Parent in connection with
the Merger or the consummation of any of the transactions contemplated by the
Merger Agreement, including all HSR Act filing fees, fees and expenses of
counsel, commercial banks, investment banking firms, accountants, experts,
environmental consultants and other consultants to the Parent (the "Expenses")
in an amount not to exceed $1,000,000
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and (b) $2,000,000 (the "Termination Fee") upon demand if (i) the Merger
Agreement is terminated in accordance with the provisions described in clause
(vi) or clause (viii) under the heading "Termination" above or (ii) the Merger
Agreement is terminated in accordance with the provisions described in clause
(ix) under the heading "Termination" above and at the time of such termination
(x) the Minimum Condition has not been satisfied and (y) a Company Acquisition
Proposal existed.
Any amounts payable as Expenses and Termination Fees pursuant to the Merger
Agreement shall be payable as promptly as practicable following termination of
the Merger Agreement, and, if the Company is the party seeking to terminate the
Merger Agreement, as a condition thereto.
Amendment. Any provision of the Merger Agreement may be amended or waived
prior to the Effective Time (as set forth in the Merger Agreement) if, and only
if, such amendment is in writing and signed, in the case of an amendment, by the
Company, the Parent and the Purchaser or, in the case of a waiver, by the party
against whom the waiver is to be effective; provided that (i) any waiver or
amendment shall be effective against a party only if the board of directors of
such party approves such waiver or amendment and (ii) after the adoption of the
Merger Agreement by the stockholders of the company, no such amendment or waiver
shall, without the further approval of such stockholders and each party's board
of directors alter or change (x) the amount or kind of consideration to be
received in exchange for any shares of capital stock of the Company, (y) any
term of the certificate of incorporation of the Surviving Corporation or (z) any
of the terms or conditions of the Merger Agreement if such alteration or change
would adversely affect the holders of any shares of capital stock of the
Company. Notwithstanding any provision included under this heading "Amendment"
to the contrary, no provision of the Merger Agreement may be waived by the
Company or amended following the purchase by the Parent or the Purchaser of
Shares pursuant to the Offer unless such amendment or waiver is approved by the
affirmative vote of a majority of the directors of the Company other than the
directors designated by the Purchaser (as contemplated in the Merger Agreement).
No failure or delay by any party in exercising any right, power or
privilege under the Merger Agreement shall operate as a waiver thereof and nor
shall any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. The
rights and remedies provided under the Merger Agreement shall be cumulative and
not exclusive of any rights or remedies provided by law.
Assignment. Subject to certain exceptions, the Merger Agreement shall be
binding upon and inure to the benefit of the parties thereto and their
respective successors and assigns, provided that no party may assign, delegate
or otherwise transfer any of its rights or obligations under the Merger
Agreement without the consent of the other parties thereto.
Related Agreements. In connection with the Offer, the Merger and the other
transactions contemplated by the Merger Agreement (i) the Parent, the Purchaser
and the Company entered into a Stock Option Agreement dated as of May 29, 1997
(previously described as the "Stock Option") and (ii) the Parent, the Purchaser
and IHS entered into a Voting and Tender Agreement dated as of May 29, 1997
(previously described as the "Voting and Tender Agreement").
Pursuant to the Stock Option, the Company granted the Purchaser the option
to purchase up to 32,000,000 Shares provided that the Purchaser may only
exercise the Stock Option in respect of at least that number of authorized but
unissued Shares which, when added to the number of Shares owned by the Purchaser
immediately prior to its exercise of the Stock Option, would result in the
Purchaser owning 90% of the Shares outstanding immediately after its exercise of
the Stock Option. The Purchaser may exercise the Stock Option at any time within
six business days after the acceptance for payment by the Purchaser of Shares
pursuant to the Offer. The Stock Option terminates upon the termination of the
Merger Agreement. If the Stock Option is exercised, the Purchaser will be able
to effect the Merger as a "short-form" merger without the vote of Holders,
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regardless of whether Holders of 90% of the Shares tender in the Offer.
Purchaser intends to exercise the Stock Option if Holders of less than 90% of
the Shares tender in the Offer.
Pursuant to the Voting and Tender Agreement, IHS has agreed (i) to tender
for sale to the Purchaser, pursuant to the terms of the Offer, IHS's Shares then
owned of record or beneficially by IHS and (ii) that during the time that the
Voting and Tender Agreement is in effect, IHS shall not give, sell, assign,
hypothecate, pledge, encumber, grant a security in or otherwise dispose of, any
Shares, or any right, title or interest therein or thereto, except to the
Purchaser pursuant to the Voting and Tender Agreement. In addition, IHS has
agreed that during the time that the Voting and Tender Agreement is in effect,
at any meeting of the stockholders of the Company, however called, and in any
action by consent of the stockholders of the Company, IHS shall vote the Shares
(i) in favor of the Merger, the Merger Agreement (as amended from time to time)
and the transactions contemplated by the Merger Agreement and (ii) against any
proposal for any recapitalization, merger, sale of assets or other business
combination between the Company and any person or entity (other than the Merger)
or any other action or agreement that would result in a breach of any covenant,
representation or warranty or any other obligation or agreement of the Company
under the Merger Agreement or which could result in any of the conditions to the
Company's obligations under the Merger Agreement not being fulfilled. The Voting
and Tender Agreement also contains covenants of IHS relating to, among other
things, certain properties which are leased by the Company from IHS and certain
obligations of IHS to which certain of the Company's properties are subject. The
Voting and Tender Agreement will terminate upon the termination of the Merger
Agreement.
Appraisal Rights. Holders of Shares do not have appraisal rights as a
result of the Offer. However, if the Merger is consummated, holders of Shares at
the Effective Time will have certain rights pursuant to the provisions of
Section 262 of the DGCL ("Section 262") to dissent and demand appraisal of their
Shares. Under Section 262, dissenting stockholders who comply with the
applicable statutory procedures will be entitled to receive a judicial
determination of the fair value of their Shares (exclusive of any element of
value arising from the accomplishment or expectation of the proposed Merger) and
to receive payment of such fair value in cash, together with a fair rate of
interest, if any. Any such judicial determination of the fair value of Shares
could be based upon factors other than, or in addition to, the price per Share
to be paid in the Merger or the market value of the Shares. The value so
determined could be more or less than the price per Share to be paid in the
Merger. The foregoing summary of Section 262 does not purport to be complete and
is qualified in its entirety by reference to Section 262.
Going Private Transactions. The Commission has adopted Rule 13e-3 under the
Exchange Act which is applicable to certain "going private" transactions and
which may under certain circumstances be applicable to the Merger. However, Rule
13e-3 would be inapplicable if (a) the Shares are deregistered under the
Exchange Act prior to the Merger or (b) such Merger is consummated within one
year after the purchase of the Shares pursuant to the Offer and such Merger
provided for Holders to receive cash for their Shares in an amount at least
equal to the Offer Price. If applicable, Rule 13e-3 requires, among other
things, that certain financial information concerning the fairness of the
proposed transaction and the consideration offered to minority stockholders in
such transaction be filed with the Commission and disclosed to stockholders
prior to the consummation of the Merger. The Parent does not believe Rule 13e-3
would apply.
Plans for the Company after the Offer. Upon completion of the Offer, the
Parent intends to conduct a detailed review of the Company and its assets,
corporate structure, dividend policy, capitalization, operations, properties,
policies, management and personnel and consider, subject to the terms of the
Merger Agreement, what, if any, changes would be desirable in light of the
circumstances which then exist. Such changes could include changes in the
Company's business, corporate structure, certificate of incorporation, bylaws,
capitalization, Board of Directors, management or dividend policy.
26
<PAGE> 29
Upon completion of the Offer, the Parent presently intends to enter into a
management arrangement with an affiliate of Senior Lifestyle pursuant to which
such affiliate would manage the day-to-day operations of the Company's
facilities. The Parent may acquire an equity interest in such affiliate of
Senior Lifestyle. In addition, the Parent and Senior Lifestyle are presently in
discussion regarding the possible sale of an equity interest in the Company to
Senior Lifestyle following consummation of the Merger for the same price per
Share paid by the Purchaser in the Offer.
Further, the Parent is presently in discussions with Bridge Street Real
Estate Fund 1997, L.P. ("Bridge Street") and Stone Street Real Estate Fund 1997,
L.P. ("Stone Street"), funds affiliated with the Parent established to make
investments for the benefit of certain employees, limited partners and managing
directors and their spouses of Goldman, Sachs and other operating companies of
GS Group, to sell, at or following the completion of the Offer, up to an
aggregate of up to $3 million of equity in the Company to Bridge Street and
Stone Street for the same price per Share paid by the Purchaser in the Offer.
In the future, the Parent may seek to refinance any outstanding
indebtedness of the Company, enter into new financing arrangements and incur new
debt, sell equity in the Company, purchase new assets or sell some or all of the
Company's existing assets.
Except as described in this Offer to Purchase, neither the Parent nor the
Purchaser has any present plans or proposals that would result in an
extraordinary corporate transaction, such as a merger, reorganization,
liquidation, relocation of operations, or sale or transfer of assets, involving
the Company or any of its subsidiaries, or any material changes in the Company's
corporate structure, business or composition of its management or personnel.
13. DIVIDENDS AND DISTRIBUTIONS.
If at any time during the period between the date of the Merger Agreement
and the date Shares are accepted for payment pursuant to the Offer or the
Effective Time of the Merger, any change in the Shares shall occur, including by
reason of any reclassification, recapitalization, stock split or combination,
exchange or readjustment of shares, or any stock dividend thereon with the
record date during such period, then, without prejudice to the Purchaser's
rights under Sections 1 and 14 hereof, the price per share to be paid to the
Holders of the Shares in the Offer and the Merger, as the case may be, shall be
appropriately adjusted.
In the Merger Agreement, the Company has agreed not to take the actions set
forth in this Section 13 without the consent of Parent.
14. CERTAIN CONDITIONS OF THE OFFER.
Notwithstanding any other term of the Offer or the Merger Agreement, the
Purchaser shall not be required to accept for payment or pay for, subject to any
applicable rules and regulations of the Commission, including Rule 14e-1(c) of
the Exchange Act, any Shares not theretofore accepted for payment or paid for
and may terminate or amend the Offer as to such Shares unless (i) the Minimum
Condition shall have been satisfied and (ii) any waiting period under the HSR
Act applicable to the purchase of Shares pursuant to the Offer shall have
expired or been terminated. Furthermore, notwithstanding any other term of the
Offer or the Merger Agreement, the Purchaser shall not be required to accept for
payment or, subject as aforesaid, to pay for any Shares not theretofore accepted
for payment or paid for, and may terminate or amend the Offer if at any time on
or after the date of the Merger Agreement and before the acceptance of such
Shares for payment or the payment therefor, any of the following conditions
exist or shall occur and remain in effect:
(a) there shall have been instituted or pending any action or
proceeding by any court, governmental, regulatory or administrative agency
or authority that (i) seeks to challenge the acquisition by the Purchaser
of Shares pursuant to the Offer, restrain, prohibit or delay the making or
consummation of the Offer or the Merger, or obtain any material damages in
27
<PAGE> 30
connection therewith, (ii) seeks to make the purchase of or payment for
some or all of the Shares pursuant to the Offer or the Merger illegal,
(iii) seeks to impose material limitations on the ability of the Parent and
the Purchaser (or any of their affiliates) effectively to acquire or hold,
or to require the Parent and the Purchaser or the Company or any of their
respective affiliates or subsidiaries to dispose of or hold separate, any
material portion of the assets or the business of the Parent and its
subsidiaries taken as a whole or the Company and its subsidiaries taken as
a whole, or (iv) seeks to impose material limitations on the ability of the
Purchaser (or its affiliates) to exercise full rights of ownership of the
Shares purchased by it, including, without limitations, the right to vote
the shares purchased by it on all matters properly presented to the
stockholders of the Company; or
(b) there shall have been promulgated, enacted, entered, enforced or
deemed applicable to the Offer or the Merger, by any state, federal or
foreign government or governmental authority or by any court, domestic or
foreign, any statute (other than the HSR Act), rule, regulation, judgment,
decree, order or injunction, that, in the reasonable judgment of the Parent
and the Purchaser, might, directly or indirectly, result in any of the
consequences referred to in clauses (i) through (iv) of subsection (a)
above; or
(c) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on any national securities
exchange or in the over-the-counter market in the United States, (ii) the
declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States, or (iii) the commencement of a war,
armed hostilities or other international or national calamity directly or
indirectly involving the United States; or
(d) the Company and the Parent shall have reached an agreement or
understanding that the Offer or the Merger Agreement be terminated or the
Merger Agreement shall have been terminated in accordance with its terms;
or
(e) (i) any of the representations and warranties made by the Company
in the Agreement shall not have been true and correct in all material
respects when made, or shall thereafter have ceased to be true and correct
in all material respects as of such later date (other than representations
and warranties made as of a specified date) or (ii) any of the
representations and warranties made by the Company in the Merger Agreement
shall not have been true and correct when made, or shall thereafter have
ceased to be true and correct as if made as of such later date (other than
representations and warranties made as of a specified date), in each case,
without giving effect to any materiality standard contained in such
representation or warranty (including "Company Material Adverse Effect" as
previously defined), except to the extent that any such failure to be true
and correct, individually and in the aggregate with all such other
failures, would not have a Company Material Adverse Effect, or the Company
shall not in all material respects have performed each obligation and
agreement and complied with each covenant to be performed and complied with
by it under the Merger Agreement; or
(f) the Company's Board of Directors shall have modified or amended
its recommendation of the Offer in any manner adverse to the Parent and the
Purchaser or shall have withdrawn its recommendation of the Offer, or shall
have recommended acceptance of any Company Acquisition Proposal or shall
have resolved to do any of the foregoing; or
(g) (i) any corporation, entity or "group" (as defined in Section
13(d)(3) of the Exchange Act) ("person"), other than the Parent, shall have
acquired beneficial ownership of 50% or more of Shares, or shall have been
granted any options or rights, conditional or otherwise, to acquire a total
of 50% or more of Shares; (ii) any new group shall have been formed that
beneficially owns 50% or more of Shares; or (iii) any person (other than
the Parent or one or more of its affiliates) shall have entered into an
agreement in principle or definitive agreement with the Company with
respect to a tender or exchange offer for any Shares or a merger,
consolidation or other business combination with or involving the Company;
or
28
<PAGE> 31
(h) the Parent shall have received the consent of Health Care Property
Investors ("HCPI") on behalf of itself and its affiliates to the
consummation (the "Consummation") of the Offer, the Merger and the other
transactions contemplated by the Merger Agreement and the waiver of any
rights ("Rights") HCPI might have under agreements with the Company to
terminate or exercise any rights to terminate such agreements or any other
rights that would be triggered as a result of a change of control of the
Company; provided that no consent shall be required from HCPI if such
consent is not required under such agreements for the Consummation and no
such Rights exist.
The foregoing conditions are for the sole benefit of the Parent and may be
asserted by the Parent, in whole or in part, at any time and from time to time,
in the reasonable judgment of the Parent regardless of the circumstances giving
rise to any such condition (other than a breach by the Parent or the Purchaser).
The failure by the Parent at any time to exercise any of the foregoing rights
will not be deemed a waiver of any right, the waiver of such right with respect
to any particular facts or circumstances shall not be deemed a waiver with
respect to any other facts or circumstances, and each right will be deemed an
ongoing right that may be asserted at any time and from time to time. Should the
Offer be terminated pursuant to the foregoing provisions, all tendered Shares
not theretofore accepted for payment shall be returned forthwith by the
Depositary to the tendering Holders.
15. CERTAIN LEGAL MATTERS.
General. Except as set forth in this Section 15, based on the examination
of publicly available filings by the Company with the Commission, other publicly
available information concerning the Company and materials which have been
provided to the Parent or the Purchaser by the Company, the Purchaser is not
aware of any license or regulatory permit that appears to be material to the
business of the Company that is likely to be adversely affected by the
Purchaser's acquisition of Shares pursuant to the Offer or, except as set forth
below, of any approval or any other action by any domestic or foreign
governmental or administrative authority that would be required prior to the
acquisition of Shares by the Purchaser pursuant to the Offer. However, should
any such approval or other action be required, it is currently contemplated that
such approval or action would be sought. Except as permitted by the condition
described in Section 14, there is no current intent to delay the purchase of
Shares tendered pursuant to the Offer pending the outcome of any such matter.
There can be no assurance that any such approval or other action, if needed,
would be obtained without substantial conditions or that adverse consequences
might not result to the Company's business or that certain parts of the
Company's business might not have to be disposed of in the event that such
approvals were not obtained or such other actions were not taken. The
Purchaser's obligation under the Offer to purchase Shares is subject to certain
conditions. See Section 14.
State Takeover Laws. A number of states throughout the United States have
enacted takeover statutes that purport, in varying degrees, to be applicable to
attempts to acquire securities of corporations that are incorporated or have
assets, stockholders, executive offices or places of business in such states. In
Edgar v. MITE Corp., the Supreme Court of the United States held that the
Illinois Business Takeover Act, which involved state securities laws that made
the takeover of certain corporations more difficult, imposed a substantial
burden on interstate commerce and therefore was unconstitutional. In CTS Corp.
v. Dynamics Corp. of America, however, the Supreme Court of the United States
held that a state may, as a matter of corporate law and, in particular, those
laws concerning corporate governance, constitutionally disqualify a potential
acquiror from voting on the affairs of a target corporation without prior
approval of the remaining stockholders, provided that such laws were applicable
only under certain conditions.
Section 203 of the DGCL prohibits a Delaware corporation such as the
Company from engaging in a "Business Combination" (defined as a variety of
transactions, including mergers, as set forth below) with an "Interested
Stockholder" (defined generally as a person that is the beneficial owner of 15%
or more of a corporation's outstanding voting stock) for a period of three years
following the
29
<PAGE> 32
date that such person became an Interested Stockholder unless (a) prior to the
date such person became an Interested Stockholder, the board of directors of the
corporation approved either the Business Combination or the transaction that
resulted in the stockholder becoming an Interested Stockholder, (b) upon
consummation of the transaction that resulted in the stockholder becoming an
Interested Stockholder, the Interested Stockholder owned at least 85% of the
voting stock of the corporation outstanding at the time the transaction
commenced, excluding stock hold by directors who are also officers of the
corporation and employee stock ownership plans that do not provide employees
with the right to determine confidentially whether shares held subject to the
plan will be tendered in a tender or exchange offer or (c) on or subsequent to
the date such person became an Interested Stockholder, the Business Combination
is approved by the board of directors of the corporation and authorized at a
meeting of Holders, and not by written consent, by the affirmative vote of the
holders of at least 66 2/3% of the outstanding voting stock of the corporation
not owned by the Interested Stockholder. Under the Merger Agreement, the Board
of Directors of the Company has taken such action sufficient to exempt the
Merger from Section 203 of the DGCL pursuant to (a) above.
Except as described in this Offer to Purchase, the Parent and the Purchaser
have not complied with any state takeover laws. Should any government official
or third party seek to apply any state takeover law to the Offer other than
those described in this Offer to Purchase, the Parent and the Purchaser will
take such action as then appears desirable and currently anticipate that they
will contest the validity or applicability of such statute in appropriate court
proceedings.
If it is asserted that one or more state takeover laws other than those
described in this Offer to Purchase apply to the Offer and it is not determined
by all appropriate courts that such act or acts do not apply or are invalid as
applied to the Offer, the Parent and the Purchaser might be required to file
certain information with, or receive approvals from, the relevant state
authorities. In addition, if enjoined, the Purchaser might be unable to accept
for payment any Shares tendered pursuant to the Offer, or be delayed in
consummating the Offer. In such case, the Purchaser may not be obligated to
accept for payment any Shares tendered. See Section 14.
Antitrust Laws. Under the provisions of the HSR Act applicable to the
Offer, the acquisition of Shares under the Offer may not be consummated until
the expiration of a 15-calendar day waiting period following the filing by the
Parent of a Notification and Report Form with respect to the Offer, unless the
Parent receives a request for additional information or documentary material
from the Antitrust Division of the Department of Justice (the "Antitrust
Division") or the Federal Trade Commission (the "FTC") or unless early
termination of the waiting period is granted. If, within the initial 15-calendar
day waiting period, either the Antitrust Division or the FTC requests additional
information or material from the Parent concerning the Offer, the waiting period
will be extended and would expire at 11:59 p.m., New York City time, on the
tenth calendar day after the date of substantial compliance by the Parent with
such request. Only one extension of the waiting period pursuant to a request for
additional information is authorized by the HSR Act. Thereafter, such waiting
period may be extended only by court order or with the consent of the Parent. In
practice, complying with a request for additional information or material can
take a significant amount of time. Pursuant to the HSR Act, the Parent will
file, as promptly as practicable on or following the date hereof with the
Antitrust Division and the FTC, a Notification and Report Form with respect to
the proposed purchase of Shares pursuant to the Offer.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as the proposed acquisition of the
Company by the Purchaser. At any time before or after the Purchaser's
acquisition of Shares pursuant to the Offer, the Antitrust Division or the FTC
could take such action under the antitrust laws as it deems necessary or
desirable in the public interest, including seeking to enjoin the purchase of
Shares pursuant to the Offer or the consummation of the proposed Merger or
seeking the divestiture of Shares acquired by the Purchaser or the divestiture
of substantial assets of the Company or its subsidiaries or the Parent or its
subsidiaries. Private parties may also bring legal action under the antitrust
laws under certain circumstances.
30
<PAGE> 33
Based upon an examination of publicly available information relating to the
business in which the Parent and the Company are engaged, the Parent and the
Purchaser believe that the acquisition of Shares by the Purchaser will not
violate the antitrust laws. There can be no assurance that a challenge to the
Offer on antitrust grounds will not be made or, if such a challenge is made, of
the result thereof.
Federal Reserve Board Regulations. The margin regulations promulgated by
the Federal Reserve Board place restrictions on the amount of credit that may be
extended for the purpose of purchasing margin stock (including the Shares) if
such credit is secured by directly or indirectly by margin stock. The Purchaser
and the Parent believe that the financing of the acquisition of the Shares will
not be subject to the margin regulations.
16. FEES AND EXPENSES.
Goldman, Sachs are acting as Dealer Managers in connection with the Offer
and have provided certain financial advisory services in connection with the
acquisition of the Shares. The Purchaser has agreed to compensate Goldman, Sachs
for its financial advisory services and to reimburse Goldman, Sachs for
out-of-pocket expenses including those incurred in connection with Goldman,
Sachs' activities as Dealer Managers and including the fees and disbursements of
its legal counsel, and to indemnify Goldman, Sachs against certain liabilities
and expenses in connection with its financial advisory services and its
activities as Dealer Managers, including certain liabilities under federal
securities laws.
The Purchaser has retained ChaseMellon Shareholder Services, L.L.C. to act
as Depositary and MacKenzie Partners, Inc. to serve as Information Agent in
connection with the Offer. The Purchaser has agreed to pay each of the
Depositary and the Information Agent reasonable and customary compensation for
their services in connection with the Offer, plus reimbursement for
out-of-pocket expenses, and has agreed to indemnify each of them against certain
liabilities and expenses in connection therewith, including certain liabilities
under the federal securities laws. Goldman, Sachs has agreed to act as Dealer
Managers without additional compensation, except as set forth in the preceding
paragraph.
Neither the Purchaser nor the Parent will pay any fees or commissions to
any broker or dealer or other person (other than the Information Agent) in
connection with the solicitation of tenders of Shares pursuant to the Offer.
Brokers, dealers, commercial banks and trust companies will be reimbursed by the
Purchaser for customary mailing and handling expenses incurred by them in
forwarding material to their customers.
17. MISCELLANEOUS.
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares in any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the laws of such
jurisdiction. However, the Purchaser may, in its sole discretion, take such
action as it may deem necessary to make the Offer in any such jurisdiction and
extend the Offer to holders of Shares in such jurisdiction.
Neither the Purchaser nor the Parent is aware of any jurisdiction in which
the making of the Offer or the acceptance of Shares in connection therewith
would not be in compliance with the laws of such jurisdiction. Consequently, the
Offer is currently being made to all holders of Shares. To the extent the
Purchaser or the Parent becomes aware of any law that would limit the class of
offers in the Offer, the Purchaser will amend the Offer and, depending on the
timing of such amendment, if any, will extend the Offer to provide adequate
dissemination of such information to holders of Shares prior to the expiration
of the Offer.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF THE PURCHASER OR THE PARENT NOT CONTAINED IN THIS
OFFER TO PURCHASE OR IN THE LETTER OF
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<PAGE> 34
TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED.
The Purchaser has filed with the Commission the Schedule 14D-1 (including
exhibits) pursuant to Rule 14d-3 under the Exchange Act, furnishing certain
additional information with respect to the Offer, and may file amendments
thereto. Such Schedule 14D-1 and any amendments thereto, including exhibits, may
be examined and copies may be obtained from the principal office of the
Commission in Washington, D.C. in the manner set forth in Section 8. No person
has been authorized to give any information or make any representation on behalf
of the Purchaser not contained in this Offer to Purchase or in the Letter of
Transmittal and, if given or made, such information or representation must not
be relied upon as having been authorized.
SLC ACQUISITION CORP.
June 5, 1997
32
<PAGE> 35
SCHEDULE I
(1) The name of each director and each executive officer of WH Advisors,
Inc. is set forth below. The business address of each person listed below is 85
Broad Street, New York, New York 10004 except G. Douglas Gunn, Richard E. Georgi
III and Todd A. Williams. The business address of G. Douglas Gunn and Todd A.
Williams is 100 Crescent Court, Dallas, Texas 75201 and the business address of
Richard E. Georgi is 133 Fleet Street, London EC4A 2BB, England. Each person is
a citizen of the United States of America. The present principal occupation or
employment of each person listed below and such person's five-year employment
history is set forth next to his or her name.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ----------------------------- --------------------------------------------------------------
<S> <C>
Daniel M. Neidich, Daniel M. Neidich is the co-head of the Real Estate Principal
President Investment Area at Goldman, Sachs & Co. and Chairman of the
Whitehall Investment Committee. He has been a Managing
Director at Goldman, Sachs & Co. since November 1996. Mr.
Neidich was a general partner of Goldman, Sachs & Co. from
prior to 1992 until November 1996.
David T. Hamamoto, David T. Hamamoto is the co-head of the Real Estate Principal
Vice President, Investment Area at Goldman, Sachs & Co. He has been a Managing
Assistant Treasurer Director at Goldman, Sachs & Co. since November 1996. Mr.
Hamamoto was a general partner of Goldman, Sachs & Co. from
November 1994 until November 1996. Mr. Hamamoto was a Vice
President of Goldman, Sachs & Co. from prior to 1992 until
November 1996.
Stuart M. Rothenberg, Stuart M. Rothenberg has been a Managing Director at Goldman,
Vice President, Director Sachs & Co. since November 1996. Mr. Rothenberg was a Vice
President in the Real Estate Principal Investment Area at
Goldman, Sachs & Co. from prior to 1992 until November 1996.
Richard E. Georgi III, Richard E. Georgi III has been an Executive Director in the
Vice President Real Estate Principal Investment Area at Goldman, Sachs
International since June 1996. Mr. Georgi was an Associate at
Goldman, Sachs International and Goldman, Sachs & Co. from
prior to 1992 until 1996.
G. Douglas Gunn, G. Douglas Gunn has been a Vice President in the Real Estate
Vice President Principal Investment Area at Goldman, Sachs & Co. since June
1995. From 1993 until June 1995, Mr. Gunn was a Portfolio
Manager at Goldman, Sachs & Co. Prior to 1993, Mr. Gunn was a
Vice President at Rosewood Property Co., 500 Crescent Court,
Dallas, Texas 75201.
Michael K. Klingher, Michael K. Klingher is a Vice President in the Real Estate
Vice President Principal Investment Area at Goldman, Sachs & Co. He has been
a Vice President at Goldman, Sachs & Co. since prior to 1992.
Kevin D. Naughton, Kevin D. Naughton is a Vice President in the Real Estate
Vice President, Principal Investment Area at Goldman, Sachs & Co. He has been
Secretary, a Vice President at Goldman, Sachs & Co. since June 1993. Mr.
Treasurer Naughton was an Associate at Goldman, Sachs & Co. from prior
to 1992 until June 1993.
Elizabeth A. O'Brien, Elizabeth A. O'Brien is a Vice President in the Real Estate
Vice President, Principal Investment Area at Goldman, Sachs & Co. She has been
Assistant Secretary a Vice President at Goldman, Sachs & Co. since June 1995. Ms.
O'Brien was an associate at Goldman, Sachs & Co. from
September 1993 until June 1995. From prior to 1992 until 1993,
Ms. O'Brien was an Associate of Latham & Watkins, at 885 Third
Ave., New York, New York.
</TABLE>
S-1
<PAGE> 36
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ----------------------------- --------------------------------------------------------------
<S> <C>
Ralph F. Rosenberg, Ralph F. Rosenberg has been a Vice President in the Real
Vice President, Estate Principal Investment Area at Goldman, Sachs & Co. since
Assistant Secretary June 1994. Mr. Rosenberg was an Associate at Goldman, Sachs &
Co. from prior to 1992 until June 1994.
Edward M. Siskind, Edward M. Siskind has been a Vice President in the Real Estate
Vice President, Principal Investment Area at Goldman, Sachs & Co. since June
Assistant Treasurer 1995. Mr. Siskind was an associate at Goldman, Sachs & Co.
from prior to 1992 until June 1995.
David M. Weil, David M. Weil is a Vice President in the Real Estate Principal
Vice President Investment Area at Goldman, Sachs & Co. He has been a Vice
President at Goldman, Sachs & Co. since June 1994. Mr. Weil
was an Associate at Goldman, Sachs & Co., from October 1993
until June 1994. From prior to 1992 until 1993, Mr. Weil was
an associate at Ivins Phillips & Barker, at 1700 Pennsylvania
Avenue, N.W., Washington, D.C.
Todd A. Williams, Todd A. Williams is a Vice President in the Real Estate
Vice President, Principal Investment Area at Goldman, Sachs & Co. He has been
Assistant Secretary a Vice President at Goldman, Sachs & Co. since June 1993. He
was an Associate at Goldman, Sachs & Co. since prior to 1992.
</TABLE>
(2) The name of each director and each executive officer of SLC Acquisition
Corp. is set forth below. Unless otherwise indicated, the business address of
each person listed below is 85 Broad Street, New York, New York 10004. Unless
otherwise indicated, each person is a citizen of the United States of America.
The present principal occupation or employment of each person listed below and
such person's five-year employment history is set forth next to his or her name.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
MATERIAL POSITIONS HELD DURING THE PAST FIVE
NAME YEARS
- --------------------------------------------- ---------------------------------------------
<S> <C>
Daniel M. Neidich, See paragraph 1 above
President, Assistant Secretary,
Assistant Treasurer, Director
David T. Hamamoto, See paragraph 1 above
Vice-President, Assistant Secretary,
Assistant Treasurer, Director
Stuart Rothenberg, See paragraph 1 above
Vice-President, Assistant Secretary,
Assistant Treasurer, Director
Ralph F. Rosenberg, See paragraph 1 above
Vice-President, Assistant Secretary,
Assistant Treasurer, Director
Elizabeth A. O'Brien, See paragraph 1 above
Vice-President, Secretary,
Assistant Treasurer, Director
David M. Weil, See paragraph 1 above
Vice-President, Treasurer,
Assistant Secretary, Director
</TABLE>
S-2
<PAGE> 37
SCHEDULE II
The name of each director and each member of the executive committee of the
Goldman Sachs Corporation and of each member of the executive committee of the
Goldman Sachs Group, L.P. is set forth below.
The business address of each person listed below except John A. Thain and
John L. Thornton is 85 Broad Street, New York, New York 10004. The business
address of John A. Thain is 133 Fleet Street, London EC4A2BB, England. The
business address of John L. Thornton is 3 Garden Rd., Central, Hong Kong. Each
person is a citizen of the United States of America. The present principal
occupation or employment of each of the listed persons is a managing director of
Goldman, Sachs & Co. or another Goldman Sachs operating entity and as a member
of the executive committee.
Jon S. Corzine, Henry M. Paulson, Jr., Roy J. Zuckerberg, Robert J. Hurst, John
A. Thain, John L. Thornton
S-3
<PAGE> 38
Facsimile copies of the Letter of Transmittal will be accepted. The Letter
of Transmittal, Share Certificates and any other required documents should be
sent by each stockholder of the Company or his or her broker, dealer, commercial
bank, trust company or other nominee to the Depositary as follows:
The Depositary for the Offer is:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<S> <C> <C>
By Mail: By Hand By Overnight Delivery:
Reorganization Department Reorganization Department Reorganization Department
P.O. Box 3301 120 Broadway 85 Challenger Road
South Hackensack, NJ 07606 13th Floor Mail Drop-Reorg.
New York, NY 10271 Ridgefield Park, NJ 07660
By Facsimile Confirm Facsimile by Telephone:
(for Eligible Institutions): (201) 296-4860
(201) 329-8936
</TABLE>
DELIVERY OF THE LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE TO A NUMBER OTHER THAN AS
SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY TO THE DEPOSITARY.
Questions or requests for assistance may be directed to the Information
Agent at the address and telephone number set forth below. Additional copies of
this Offer to Purchase, the Letter of Transmittal and other tender offer
materials may be obtained from the Information Agent as set forth below, and
will be furnished promptly at the Purchaser's expense. Holders may also contact
their brokers, dealers, commercial banks or trust companies or other nominees
for assistance concerning the Offer.
THE INFORMATION AGENT FOR THE OFFER IS:
[MACKENZIE PARTERS, INC. LOGO]
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Call Collect)
CALL TOLL-FREE (800) 322-2885
<PAGE> 1
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
INTEGRATED LIVING COMMUNITIES, INC.
PURSUANT TO THE OFFER TO PURCHASE
DATED JUNE 5, 1997
BY
SLC ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
WHITEHALL STREET REAL ESTATE LIMITED PARTNERSHIP VII
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW
YORK CITY TIME, ON WEDNESDAY, JULY 2, 1997 UNLESS THE OFFER IS EXTENDED
The Depositary for the Offer is:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<S> <C> <C>
By Mail: By Hand By Overnight Delivery:
Reorganization Department Reorganization Department Reorganization Department
P.O. Box 3301 120 Broadway 85 Challenger Road
South Hackensack, NJ 07606 13th Floor Mail Drop-Reorg.
New York, NY 10271 Ridgefield Park, NJ 07660
By Facsimile Confirm Facsimile by Telephone:
(for Eligible Institutions): (201) 296-4860
(201) 329-8936
</TABLE>
YOUR BANK OR BROKER CAN ASSIST YOU IN COMPLETING THIS LETTER OF
TRANSMITTAL. THE INSTRUCTIONS ENCLOSED WITH THIS LETTER OF TRANSMITTAL MUST BE
FOLLOWED AND SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS
COMPLETED. QUESTIONS AND REQUESTS FOR ADDITIONAL COPIES OF THE OFFER TO PURCHASE
(AS DEFINED BELOW) AND THIS LETTER OF TRANSMITTAL MAY BE DIRECTED TO THE
INFORMATION AGENT AS INDICATED IN INSTRUCTION 9.
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION OR TELEX
NUMBER OTHER THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE VALID DELIVERY.
<PAGE> 2
This Letter of Transmittal is to be completed by stockholders if
certificates for Shares (as defined below) are to be forwarded herewith or,
unless an Agent's Message (as defined in the Offer to Purchase) is utilized, if
tenders of Shares are to be made by book-entry transfer into the account of
ChaseMellon Shareholder Services, L.L.C. as Depositary (the "Depositary") at The
Depository Trust Company ("DTC") or the Philadelphia Depository Trust Company
("PDTC") (each a "Book-Entry Transfer Facility" and, collectively, the
"Book-Entry Transfer Facilities") pursuant to the procedures set forth in
Section 3 of the Offer to Purchase. Stockholders who tender Shares by book-entry
transfer are referred to herein as "Book-Entry Stockholders." Holders of Shares
whose certificates for such Shares (the "Share Certificates") are not
immediately available or who cannot deliver their Share Certificates and all
other required documents to the Depositary prior to the Expiration Date (as
defined in Section 1 of the Offer to Purchase), or who cannot complete the
procedure for book-entry transfer on a timely basis, must tender their Shares
according to the guaranteed delivery procedure set forth in Section 3 of the
Offer to Purchase. See Instruction 2. DELIVERY OF DOCUMENTS TO A BOOK-ENTRY
TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
- ---------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) CERTIFICATE(S) AND SHARE(S)
APPEAR(S) ON CERTIFICATE(S) TENDERED (ATTACH ADDITIONAL SIGNED LIST IF NECESSARY)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SHARES TOTAL NUMBER OF
CERTIFICATE(S) SHARES REPRESENTED NUMBER OF SHARES
NUMBER(S)* BY CERTIFICATE(S)* TENDERED**
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
TOTAL SHARES
======================================================
</TABLE>
- --------------------------------------------------------------------------------
* Need not be completed by book-entry stockholders.
** Unless otherwise indicated, all Shares represented by certificates
delivered to the Depositary will be deemed to have been tendered. See
Instruction 5.
- --------------------------------------------------------------------------------
[ ] CHECK HERE IF SHARES ARE BEING TENDERED BY BOOK-ENTRY TRANSFER MADE TO THE
ACCOUNT MAINTAINED BY THE DEPOSITARY WITH ONE OF THE BOOK-ENTRY TRANSFER
FACILITIES AND COMPLETE THE FOLLOWING:
Name of Tendering Institution
------------------------------------------------
Check Box of Applicable Book-Entry Transfer Facility:
(check one) [ ] DTC [ ] PDTC
Account Number Transaction Code Number
------------------- -------------------
[ ] CHECK HERE IF SHARES ARE BEING TENDERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s)
--------------------------------------------
Window Ticket Number (if any)
----------------------------------------------
Date of Execution of Notice of Guaranteed Delivery
-------------------------
Name of Institution which Guaranteed Delivery
------------------------------
2
<PAGE> 3
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to SLC Acquisition Corp., a Delaware
corporation (the "Purchaser"), the above-described shares of common stock, $.01
par value (the "Shares"), of Integrated Living Communities, Inc., a Delaware
corporation (the "Company"), at a purchase price of $11.50 per Share, net to the
seller in cash, upon the terms and subject to the conditions set forth in the
Offer to Purchase dated June 5, 1997 and any amendments or supplements thereto
(the "Offer to Purchase"), and in this Letter of Transmittal (which, together
with any amendments or supplements thereto, collectively constitute the
"Offer"), receipt of which is hereby acknowledged. The undersigned understands
that the Purchaser reserves the right, with the written consent of the Company,
to transfer or assign, in whole or from time to time in part, the right to
purchase all or any portion of the Shares tendered pursuant to the Offer.
Subject to, and effective upon, acceptance for payment for the Shares
tendered herewith in accordance with the terms and conditions of the Offer, the
undersigned hereby sells, assigns and transfers to, or upon the order of, the
Purchaser all right, title and interest in and to all of the Shares that are
being tendered hereby and any and all noncash dividends, distributions
(including additional Shares) or rights declared, paid or issued with respect to
the tendered Shares on or after June 5, 1997 and payable or distributable to the
undersigned on a date prior to the transfer to the name of the Purchaser or a
nominee or transferee of the Purchaser on the Company's stock transfer records
of the Shares tendered herewith (a "Distribution"). The undersigned hereby
appoints the Depositary the true and lawful agent and attorney-in-fact of the
undersigned with respect to such Shares (and any Distribution) with full power
of substitution (such power of attorney being deemed to be an irrevocable power
coupled with an interest) to (a) deliver such Share Certificates (and any
Distribution) or transfer ownership of such Shares (and any Distribution) on the
account books maintained by a Book-Entry Transfer Facility, together in either
case with appropriate evidence of transfer and authenticity, to the Depositary
for the account of the Purchaser, (b) present such Shares (and any Distribution)
for transfer on the books of the Company, and receive all benefits and otherwise
exercise all rights of beneficial ownership of such Shares (and any
Distribution), all in accordance with the terms and subject to the conditions of
the Offer.
The undersigned irrevocably appoints designees of the Purchaser as such
stockholder's proxy, each with full power of substitution to the full extent of
such stockholder's rights with respect to the shares tendered by such
stockholder and accepted for payment by the Purchaser and with respect to any
Distribution. Such appointment will be effective when, and only to the extent
that, the Purchaser accepts such Shares for payment. Upon such acceptance for
payment, all prior proxies given by such stockholder with respect to such Shares
(and, if applicable, such other shares and securities) will be revoked without
further action, and no subsequent proxies may be given nor any subsequent
written consents executed (and if given or executed, will not be deemed
effective). The designees of the Purchaser will be empowered to exercise all
voting and other rights of such stockholder as they in their sole discretion may
deem proper at any annual or special meeting of the Company's stockholders or
any adjournment or postponement thereof, by written consent in lieu of any such
meeting or otherwise. The Purchaser reserves the right to require that, in order
for Shares to be deemed validly tendered, immediately upon the Purchaser's
payment for such Shares, the Purchaser must be able to exercise full voting
rights with respect to such Shares.
The undersigned hereby represents and warrants that (a) the undersigned has
full power and authority to tender, sell, assign and transfer the Shares
tendered hereby (and any Distribution) and (b) when the Shares are accepted for
payment by the Purchaser, the Purchaser will acquire good, marketable and
unencumbered title to such Shares (and any Distribution), free and clear of all
liens, restrictions, charges and encumbrances, and the same will not be subject
to any adverse claim. The undersigned, upon request, will execute and deliver
any additional documents deemed by the Depositary or the Purchaser to be
necessary or desirable to complete the sale, assignment and transfer of the
Shares tendered hereby (and any Distribution). In addition, the undersigned
shall promptly remit and transfer to the Depositary for the account of the
Purchaser any and all Distributions in respect of the Shares tendered hereby,
accompanied by appropriate documentation of transfer, and pending such
remittance or appropriate assurance thereof, the Purchaser will be, subject to
applicable law, entitled to all rights and privileges as owner of such
Distribution and may withhold the entire purchase price or deduct from the
purchase price the amount or value thereof, as determined by the Purchaser in
its sole discretion.
3
<PAGE> 4
All authority herein conferred or agreed to be conferred shall not be
affected by and shall survive the death or incapacity of the undersigned and any
obligation of the undersigned hereunder shall be binding upon the heirs,
personal representatives, executors, administrators, successors and assigns of
the undersigned.
Tenders of Shares made pursuant to the Offer are irrevocable, except that
Shares tendered pursuant to the Offer may be withdrawn at any time prior to the
Expiration Date and, unless theretofore accepted for payment by the Purchaser
pursuant to the Offer, may also be withdrawn at any time on or after August 4,
1997. See Section 4 of the Offer to Purchase.
The undersigned understands that tenders of Shares pursuant to any of the
procedures described in Section 3 of the Offer to Purchase and in the
instructions hereto will constitute a binding agreement between the undersigned
and the Purchaser upon the terms and subject to the conditions set forth in the
Offer, including the undersigned's representations that the undersigned owns the
Shares being tendered.
Unless otherwise indicated herein under "Special Payment Instructions,"
please mail the check for the purchase price and/or issue or return any
certificate(s) for Shares not tendered or not accepted for payment (and
accompanying documents, as appropriate) to the address(es) of the registered
holder(s) appearing under "Description of Shares Tendered." In the event that
both the Special Delivery Instructions and Special Payment Instructions are
completed, please issue the check for the purchase price and/or issue or return
any certificate(s) for Shares not tendered or accepted for payment in the name
of, and deliver such check and/or such certificate to, the person or persons so
indicated.
The undersigned recognizes that the Purchaser has no obligation, pursuant
to the Special Payment Instructions, to transfer any Shares from the name(s) of
the registered holder(s) thereof if the Purchaser does not accept for payment
any of the Shares so tendered.
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 6, 7 AND 8)
To be completed ONLY if certificate(s) for Shares not tendered or not
accepted for payment and/or the check for the purchase price of Shares accepted
for payment are to be issued in the name of someone other than the undersigned.
Issue [ ] check [ ] certificate(s) to:
Name
-----------------------------------------------------
(PLEASE PRINT)
Address
--------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
(INCLUDE ZIP CODE)
- ---------------------------------------------------------
TAX IDENTIFICATION OR SOCIAL SECURITY NO.
(SEE SUBSTITUTE FORM W-9 INCLUDED HEREIN.)
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 6, 7 AND 8)
To be completed ONLY if certificate(s) for Shares not tendered or not
accepted for payment and/or the check for the purchase price of Shares accepted
for payment are to be mailed to someone other than the undersigned, or to the
undersigned at an address other than that shown above.
Mail [ ] check [ ] certificate(s) to:
Name
-----------------------------------------------------
(PLEASE PRINT)
Address
--------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
(INCLUDE ZIP CODE)
- ---------------------------------------------------------
TAX IDENTIFICATION OR SOCIAL SECURITY NO.
(SEE SUBSTITUTE FORM W-9 INCLUDED HEREIN.)
4
<PAGE> 5
- --------------------------------------------------------------------------------
IMPORTANT
STOCKHOLDERS SIGN HERE
(Please Complete Substitute Form W-9 Included
Herein)
------------------------------------------------
------------------------------------------------
SIGNATURE(S) OF HOLDER(S)
Dated: ______________________ , 1997
(Must be signed by the registered holder(s)
exactly as name(s) appear(s) on certificate(s)
or on a security position listing or by
person(s) authorized to become registered
holder(s) by certificates and documents
transmitted herewith. If signature is by a
trustee, executor, administrator, guardian,
attorney-in-fact, officer of a corporation or
another acting in a fiduciary or representative
capacity, please set forth full title and see
Instruction 6).
Name(s)
----------------------------------------
------------------------------------------------
(PLEASE TYPE OR PRINT)
Capacity (full title)
---------------------------
Address
------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number
-----------------
Tax Identification or Social Security No.
-------
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED -- SEE INSTRUCTIONS 1 AND 6)
Authorized Signature
----------------------------
Name
--------------------------------------------
(PLEASE TYPE OR PRINT)
Title
-------------------------------------------
Name of Firm
-----------------------------------
Address
----------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number
-----------------
Dated , 1997
-------------------------------------
- --------------------------------------------------------------------------------
5
<PAGE> 6
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. No signature guarantee on this Letter of
Transmittal is required (i) if this Letter of Transmittal is signed by the
registered holder(s) of Shares (which term, for purposes of this document, shall
include any participant in a Book-Entry Transfer Facility whose name appears on
a security position listing as the owner of Share(s)), unless such holder has
completed either the box entitled "Special Payment Instructions" or the box
entitled "Special Delivery Instructions" included herein or (ii) if such Shares
are tendered for the account of a participant in the Security Transfer Agents
Medallion Program, the New York Stock Exchange Medallion Signature Guarantee
Program or the Stock Exchange Medallion Program (each of the foregoing being
referred to as an "Eligible Institution"). In all other cases, all signatures on
this Letter of Transmittal must be guaranteed by an Eligible Institution. See
Instruction 6.
2. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES. This Letter of
Transmittal is to be completed either if certificates are to be forwarded
herewith or, unless an Agent's Message is utilized, if tenders are to be made
pursuant to the procedure for tender by book-entry transfer set forth in Section
3 of the Offer to Purchase. SHARE CERTIFICATES, OR TIMELY CONFIRMATION (A
"BOOK-ENTRY CONFIRMATION") OF A BOOK-ENTRY TRANSFER OF SUCH SHARES INTO THE
DEPOSITARY'S ACCOUNT AT A BOOK-ENTRY TRANSFER FACILITY, AS WELL AS THIS LETTER
OF TRANSMITTAL (OR A FACSIMILE HEREOF), PROPERLY COMPLETED AND DULY EXECUTED,
WITH ANY REQUIRED SIGNATURE GUARANTEES AND ANY OTHER DOCUMENTS REQUIRED BY THIS
LETTER OF TRANSMITTAL, MUST BE RECEIVED BY THE DEPOSITARY AT ONE OF ITS
ADDRESSES SET FORTH HEREIN PRIOR TO THE EXPIRATION DATE. Stockholders whose
Share Certificates are not immediately available, or who cannot deliver their
Share Certificates and all other required documents to the Depositary prior to
the Expiration Date, or who cannot complete the procedure for delivery by
book-entry transfer on a timely basis, may tender their Shares by properly
completing and duly executing a Notice of Guaranteed Delivery pursuant to the
guaranteed delivery procedure set forth in Section 3 of the Offer to Purchase.
Pursuant to such procedure: (i) such tender must be made by or through an
Eligible Institution; (ii) a properly completed and duly executed Notice of
Guaranteed Delivery, substantially in the form made available by the Purchaser
(with any required signature guarantees) must be received by the Depositary
prior to the Expiration Date; and (iii) the Share Certificates (or a Book-Entry
Confirmation) representing all tendered Shares, in proper form for transfer, in
each case together with the Letter of Transmittal (or, in the case of an
Eligible Institution, a facsimile hereof), properly completed and duly executed,
together with any required signature guarantees, or, in the case of a book-entry
transfer, an Agent's Message (as defined in Section 3 of the Offer to Purchase)
and any other documents required by this Letter of Transmittal, must be received
by the Depositary within three National Association of Securities Dealers
Automated Quotation -- National Market trading days after the date of execution
of such Notice of Guaranteed Delivery.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES AND ALL OTHER REQUIRED
DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER FACILITY, IS AT
THE OPTION AND RISK OF THE TENDERING STOCKHOLDER. IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
3. NO CONDITIONAL TENDERS. No alternative, conditional or contingent
tenders will be accepted and no fractional Shares will be purchased. All
tendering stockholders, by execution of this Letter of Transmittal (or a
facsimile thereof), waive any right to receive any notice of the acceptance of
their Shares for payment.
4. INADEQUATE SPACE. If the space herein is inadequate, the certificate
numbers and/or the number of Shares should be listed on a separate signed
schedule attached hereto.
5. PARTIAL TENDERS. (NOT APPLICABLE TO BOOK-ENTRY-STOCKHOLDERS.) If fewer
than all the Shares evidenced by any Share Certificate submitted are to be
tendered, fill in the number of Shares which are to be tendered in the box
entitled "Number of Shares Tendered." In such cases, new Share Certificates for
the Shares that were evidenced by your old Share Certificates, but were not
tendered by you, will be sent to you, unless otherwise provided in the
appropriate box on this Letter of Transmittal, as soon as practicable after the
purchase of Shares pursuant to the Offer. All Shares represented by Share
Certificates delivered to the Depositary will be deemed to have been tendered
unless otherwise indicated.
6. SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written on
the face of the certificate without alteration, enlargement or any change
whatsoever.
6
<PAGE> 7
If any of the Shares tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any of the tendered Shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal as there are different registrations of certificates.
If this Letter of Transmittal or any certificate or stock power is signed
by a trustee, executor, administrator, attorney-in-fact, officer of a
corporation or another acting in a fiduciary or representative capacity, such
person should so indicate when signing, and proper evidence satisfactory to the
Purchaser of such person's authority so to act must be submitted.
When this Letter of Transmittal is signed by the registered holder(s) of
the Shares listed and transmitted hereby, no endorsements of certificates or
separate stock powers are required unless payment of the purchase price for
Shares is to be made to or certificates for Shares not tendered or purchased are
to be issued in the name of a person other than the registered holder(s).
Signatures on such certificates or stock powers must be guaranteed by an
Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the certificate(s) listed, the certificate(s) must be
endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name(s) of the registered holder(s) appear on the certificate(s).
Signatures on such certificates or stock powers must be guaranteed by an
Eligible Institution.
7. STOCK TRANSFER TAXES. Except as provided in this Instruction 7, the
Purchaser will pay any stock transfer taxes with respect to the transfer and
sale of the purchased Shares pursuant to the Offer. If, however, payment of the
purchase price is to be made to, or (in the circumstances permitted hereby and
if applicable) if certificates for Shares not tendered or purchased are to be
registered in the name of, any person other than the registered holder, or if
tendered certificates are registered in the name of any person other than the
person(s) signing this Letter of Transmittal, the amount of stock transfer taxes
(whether imposed on the registered holder or such person) payable on account of
the transfer to such person will be deducted from the purchase price if
satisfactory evidence of the payment of such taxes, or exemption therefrom, is
not submitted. Except as provided in this Instruction 7, it will not be
necessary for transfer tax stamps to be affixed to the certificate(s) listed in
this Letter of Transmittal.
8. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check is to be issued in
the name of, and/or certificates for Shares not tendered or not accepted for
payment are to be issued or returned to, a person other than the signer of this
Letter of Transmittal, or if a check and/or such certificates are to be mailed
to a person other than the signer of this Letter of Transmittal or to an address
other than that shown in this Letter of Transmittal, the appropriate boxes on
this Letter of Transmittal should be completed.
9. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions or requests for
assistance may be directed to the Information Agent at the addresses and
telephone number set forth below. Additional copies of the Offer to Purchase,
this Letter of Transmittal and the Notice of Guaranteed Delivery may also be
obtained from the Information Agent or brokers, dealers, commercial banks or
trust companies.
10. WAIVER OF CONDITIONS. The conditions of the Offer may be waived by the
Purchaser, in whole or in part, at any time and from time to time in the
Purchaser's sole discretion. See Section 14 of the Offer to Purchaser.
11. SUBSTITUTE FORM W-9. The tendering stockholder generally is required to
provide the Depositary with a correct Taxpayer Identification Number ("TIN"),
generally the stockholder's social security or federal employer identification
number, on Substitute Form W-9 contained herein. Failure to provide the
information on the form may subject the tendering stockholder to 31% federal
income tax withholding on the payment of the purchase price for Shares. The box
in Part I of the Substitute Form W-9 may be checked if the stockholder has not
been issued a TIN and has applied for a number or intends to apply for a number
in the near future. If the box in Part I is checked and the Depositary is not
provided with a TIN within 60 days, the Depositary will thereafter withhold 31%
of any purchase price payment made for Shares before a TIN is provided to the
Depositary.
12. LOST, DESTROYED OR STOLEN CERTIFICATES. If any of the certificates for
the Shares have been lost, destroyed, stolen, misplaced or mutilated, you may
contact the Company's transfer agent, American Stock and Transfer Company at
(718) 921-8381.
7
<PAGE> 8
IMPORTANT TAX INFORMATION
Under federal income tax law, a tendering stockholder whose tendered shares
are accepted for purchase generally is required by law to provide the Depositary
(as payer) with such stockholder's correct TIN on Substitute Form W-9 contained
herein. If such stockholder is an individual, the TIN is such stockholder's
social security number. If the Depositary is not provided with the correct TIN,
the stockholder may be subject to a $50 penalty imposed by the Internal Revenue
Service (the "IRS"). In addition, payments that are made to any stockholder with
respect to Shares pursuant to the Offer may be subject to backup withholding.
Certain stockholders (including, among others, corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, that stockholder must submit a statement, signed under penalties of
perjury, attesting to that individual's exempt status. Such statements can be
obtained from the Depositary. See the enclosed Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9 for additional
instructions.
If backup withholding applies, the Depositary is required to withhold 31%
of any payments made to the stockholder. Backup withholding is not an additional
tax. Rather, the tax liability of persons subject to backup withholding will be
reduced by the amount of tax withheld. If withholding results in an overpayment
of taxes, a refund may be obtained from the IRS.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments of the purchase price for Shares,
each tendering stockholder generally is required to notify the Depositary of his
or her correct TIN by completing the Substitute Form W-9 contained herein,
certifying that the TIN provided on Substitute Form W-9 is correct (or that such
stockholder is awaiting a TIN), and that (1) such stockholder has not been
notified by the Internal Revenue Service that such stockholder is subject to
backup withholding as a result of a failure to report all interest or dividends,
or (2) the Internal Revenue Service has notified such stockholder that such
stockholder is no longer subject to backup withholding (see Part II of
Substitute Form W-9).
WHAT NUMBER TO GIVE THE DEPOSITARY
The stockholder is required to give the Depositary the social security
number or employer identification number of the record holder of the Shares. If
the Shares are in more than one name or are not in the name of the actual owner,
consult the enclosed Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9 for additional guidance on which number to report.
IMPORTANT: IF A STOCKHOLDER DESIRES TO ACCEPT THE OFFER, THIS LETTER OF
TRANSMITTAL (OR A FACSIMILE HEREOF), TOGETHER WITH CERTIFICATES OR CONFIRMATION
OF BOOK-ENTRY TRANSFER AND ALL OTHER REQUIRED DOCUMENTS, OR THE NOTICE OF
GUARANTEED DELIVERY, MUST BE RECEIVED BY THE DEPOSITARY PRIOR TO THE EXPIRATION
DATE.
For additional information, please contact:
[MACKENZIE PARTNERS, INC. LOGO]
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Call Collect)
or
CALL TOLL-FREE (800) 322-2885
8
<PAGE> 9
PAYER'S NAME: CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
- --------------------------------------------------------------------------------
SUBSTITUTE PART I -- Taxpayer Identification Number --
Please enter your correct number in the
FORM W-9 appropriate box. NOTE: If the account is
DEPARTMENT OF THE TREASURY more than one name, see chart on the
INTERNAL REVENUE SERVICE enclosed form, Guidelines for Certification
of Taxpayer Identification on Substitute
Form W-9, for guidance on which number
to enter.
---------------------------------------------
-------------------------------
Social Security Number OR
OR
----------------------------
Employer Identification
Number
If you do not have a TIN, see the
instructions "How to Get a TIN"
and Check the box below.
TIN Applied For [ ]
---------------------------------------------
PAYER'S REQUEST FOR TAXPAYER
IDENTIFICATION NUMBER (TIN) PART II -- For Payees Exempt from Backup
AND CERTIFICATION Withholding (See instructions)
- --------------------------------------------------------------------------------
PART III CERTIFICATION -- Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification Number
(or I am waiting for a number to be issued to me), and
(2) I am not subject to backup withholding because: (a) I am exempt from
backup withholding, or (b) I have not been notified by the Internal
Revenue Service (the "IRS") that I am subject to backup withholding.
Please indicate the taxpayer's name associated with the TIN if other than
the first name appearing in the registration.
CERTIFICATION INSTRUCTIONS: You must cross out Item (2) above if you have been
notified by the IRS that you are subject to backup withholding because of
underreporting interest on dividends on your tax return. However, if after
being notified by the IRS that you were subject to backup withholding you
received another notification from the IRS that you are no longer subject to
backup withholding, do not cross out Item (2) above.
- --------------------------------------------------------------------------------
SIGNATURE ____________________________________ DATE _______________, 1997
- --------------------------------------------------------------------------------
(Signature(s) of Registered Owner(s) or Authorized Agent) Your signature is
both acknowledgment of the exchange and certification of your taxpayer
identification number.)
- --------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF
ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW THE ENCLOSED
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON
SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
<PAGE> 1
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER. -- Social Security numbers have nine digits separated by two hyphens:
i.e., 000-00-0000. Employer identification numbers have nine digits separated by
only one hyphen: i.e., 00-0000000. The table below will help determine the
number to give the payer.
<TABLE>
<Caption)
- ----------------------------------------------------------- --------------------------------------------------------------
GIVE THE GIVE THE EMPLOYER
FOR THIS TYPE OF ACCOUNT: SOCIAL SECURITY FOR THIS TYPE OF IDENTIFICATION
NUMBER OF -- ACCOUNT: NUMBER OF --
- ----------------------------------------------------------- --------------------------------------------------------------
<S> <C> <C> <C>
1. An individual's account The individual 8. Sole proprietorship The Owner4
account
2. Two or more individuals The actual owner 9. A valid trust, estate, or Legal entity (Do not furnish
(joint account) of the account or, pension trust the identifying number of
if combined funds, the personal representative
the first individual or trustee unless the legal
on the account1 entity itself is not
designated in the account
3. Husband and wife The actual owner of the title)5
(joint account) account or, if joint
funds, either person1 10. Corporate account The corporation
4. Custodian account of The minor2 11. Religious, charitable, The organization
a minor (Uniform or edu cational organization
Gift to Minors Act) account
5. Adult and minor The adult or, if 12. Partnership account held The partnership
(joint account) the minor is the only in the name of the business
contributor, the minor1
13. Association, club, or The organization
6. Account in the name The ward, minor, or other tax-exempt
of guardian or incompetent person3 organization
committee for a
designated ward, 14. A broker or registered The broker or nominee
minor, or nominee
incompetent person
15. Account with the Department The public entity
7. a. The usual revocable The grantor-trustee1 of Agriculture in the name
savings trust account of a public entity (such as a
(grantor is also State or local government,
trustee) school district or prison)
that receives agricultural
b. So-called trust The actual owner1 program payments
account that is
not a legal or
valid trust under
State law
- ----------------------------------------------------------- --------------------------------------------------------------
</TABLE>
1 List first and circle the name of the person whose number you furnish.
2 Circle the minor's name and furnish the minor's social security number.
3 Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
4 Show your individual name. You may also enter your business name. You may use
either your Social Security number or your Employer Identification number.
5 List first and circle the name of the legal trust, estate, or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE> 2
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number (for business and all other
entities) (for individuals), at the local office of the Social Security
Administration or the Internal Revenue Service (the "IRS") and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include the
following:
- - A corporation.
- - A financial institution.
- - An organization exempt from tax under section 501(a), or an individual
retirement plan.
- - The United States or any agency or instrumentality thereof.
- - A State, the District of Columbia, a possession of the United States, or any
subdivision or instrumentality thereof.
- - A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
- - An international organization or any agency, or instrumentality thereof.
- - A registered dealer in securities or commodities in the U.S. or a possession
of the U.S.
- - A real estate investment trust.
- - A common trust fund operated by a bank under section 584(a) of the Code.
- - An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1) of the Code.
- - An entity registered at all times under the Investment Company Act of 1940.
- - A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
- - Payments to nonresident aliens subject to withholding under section 1441 of
the Code.
- - Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
- - Payments of patronage dividends where the amount received is not paid in
money.
- - Payments made by certain foreign organizations.
- - Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
- - Payments of interest on obligations issued by individuals.
Note: You may be subject to backup withholding if this interest is $600 or
more and is paid in the course of the payer's trade or business and you have
not provided your correct taxpayer identification number to the payer.
- - Payments of tax-exempt interest (including exempt-interest dividends under
section 852 of the Code).
- - Payments described in Section 6049(b)(5) of the Code to nonresident aliens.
- - Payments on tax-free covenant bonds under Section 1451 of the Code.
- - Payments made by certain foreign organizations.
- - Payments made to a nominee.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, SIGN AND DATE THE
FORM AND RETURN IT TO THE PAYER. IF YOU ARE A NON-RESIDENT ALIEN OR A FOREIGN
ENTITY NOT SUBJECT TO BACKUP WITHHOLDING, FILE WITH PAYER COMPLETED INTERNAL
REVENUE FORM W-(CERTIFICATE OF FOREIGN STATUS).
Certain payments other than interest, dividends, and patronage dividends, that
are not subject to information reporting are also not subject to backup
withholding. For details, see Sections 604?, 6041(a), 6045, 6050A and 6050N of
the Code and the regulation promulgated thereunder.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. The IRS uses the numbers for identification
purposes. Payers must be given the numbers whether or not recipients are
required to file tax returns. Payers must generally withhold 31% of taxable
interest, dividend, and certain other payments to a payee who does not furnish a
taxpayer identification number to a payer. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail
to furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX
CONSULTANT OR THE INTERNAL REVENUE SERVICE
<PAGE> 1
Exhibit (a)(4)
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares. The Offer is being made solely by the Offer to Purchase dated
June 5, 1997 and the related Letter of Transmittal, and any amendments and
supplements thereto, and is not being made to, nor will tenders be accepted from
or on behalf of, holders of Shares tendering in any jurisdiction in which the
making of the Offer or the acceptance thereof would not be in compliance with
the laws of such jurisdiction. In those jurisdictions where securities, blue sky
or other laws require the Offer to be made by a licensed broker or dealer, the
Offer shall be deemed to be made on behalf of the Purchaser by one or more
registered brokers or dealers licensed under the laws of such jurisdictions.
Notice of Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
Integrated Living Communities, Inc.
at
$11.50 Net Per Share
by
SLC Acquisition Corp.
a wholly owned subsidiary of
Whitehall Street Real Estate Limited Partnership VII
SLC Acquisition Corp., a Delaware corporation (the "Purchaser"), a
wholly owned subsidiary of Whitehall Street Real Estate Limited Partnership VII,
a Delaware limited partnership (the "Parent"), is offering to purchase all of
the outstanding shares of common stock, $.01 par value (the "Shares"), of
Integrated Living Communities, Inc., a Delaware corporation (the "Company"), at
a purchase price of $11.50 per Share, net to the seller in cash, upon the terms
and subject to the conditions set forth in the Offer to Purchase dated June 5,
1997 (the "Offer to Purchase") and in the related Letter of Transmittal (which,
together with any amendments or supplements thereto or to the Offer to Purchase,
collectively constitute the "Offer").
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON JULY 2, 1997, UNLESS THE OFFER IS EXTENDED.
The Offer is conditioned upon, among other things, (i) there being
validly tendered and not withdrawn prior to the Expiration Date (as defined
below), that number of Shares that would represent a majority of all outstanding
Shares (determined on a fully diluted basis) on the date of purchase (the
"Minimum Condition"), (ii) the expiration or termination of any waiting period
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and
the regulations thereunder (the "HSR Act") and (iii) the satisfaction of other
conditions to the Offer described in Section 14 of the Offer to Purchase.
The Offer is being made pursuant to an Agreement and Plan of Merger
dated as of May 29, 1997 (the "Merger Agreement"), among Parent, the Purchaser
and the Company, pursuant to which, after the expiration of the Offer and the
satisfaction of the conditions contained in the Merger Agreement and in
accordance with the relevant provisions of the Delaware General Corporation Law
(the "DGCL"), the Purchaser will be merged into the Company or, at Parent's
election, the Company will be merged into the Purchaser (the "Merger") and each
outstanding Share, other than Shares held by the Purchaser, Parent or any other
subsidiary of Parent, and Shares held by stockholders who perfect any available
appraisal rights under the DGCL, will be canceled and converted into the right
to receive an amount in cash without interest equal to the price per Share paid
pursuant to the Offer.
The Board of Directors of the Company has unanimously approved the
Merger Agreement and the transactions contemplated thereby and determined that
the Offer and the Merger are fair to, and in the best interest of, the
stockholders of the Company, and recommends that stockholders accept the Offer
and tender their Shares to the Purchaser pursuant to the Offer.
For purposes of the Offer, the Purchaser will be deemed to have
accepted for payment, and thereby purchased, Shares validly tendered and not
withdrawn as, if and when the Purchaser gives oral or written notice to
ChaseMellon Shareholder Services, L.L.C., which is acting as the depositary (the
"Depositary"), of the Purchaser's acceptance for payment of such Shares pursuant
to the Offer. Upon the terms and subject to the conditions of the Offer, payment
for Shares accepted for payment pursuant to the Offer will be made by deposit of
the purchase price with the Depositary, which will act as agent for tendering
stockholders for the purpose of receiving payments from the Purchaser and
transmitting such payments to stockholders whose Shares have been accepted for
payment. Under no circumstances will interest on the purchase price for tendered
Shares be paid, regardless of any delay in making the payment after the
Expiration Date. In all cases, payment for Shares tendered and accepted for
payment pursuant to the Offer will be made only after timely receipt by the
Depositary of (i) certificates representing such Shares ("Share Certificates"),
or timely confirmation (a "Book-Entry Confirmation") of a book-entry transfer of
such Shares into the Depositary's account at The Depository Trust Company, or
the Philadelphia Depository Trust Company (each a "Book-Entry Transfer
Facility," and collectively the "Book-Entry Transfer Facilities") pursuant to
the procedures set forth in Section 3 of the Offer to Purchase, (ii) the Letter
of Transmittal (or a facsimile thereof), properly completed and duly executed,
with any required signature guarantees or, in the case of a book-entry transfer,
an Agent's Message (as defined in Section 3 of the Offer to Purchase), and (iii)
any other documents required by the Letter of Transmittal.
Upon the terms and subject to the conditions of the Offer (including,
if the Offer is extended or amended, the terms and conditions of any extension
or amendment), the Purchaser will accept for payment and pay for all Shares
which are validly tendered on or prior to the Expiration Date and not withdrawn
as provided in Section 4 of the Offer to Purchase. The term "Expiration Date"
shall mean 12:00 midnight, New York City time, on July 2, 1997, unless and until
the Purchaser, pursuant to the terms of the Merger Agreement, shall have
extended the period of time for which the Offer is open, in which event
"Expiration Date" shall mean the latest time and date at which the Offer, as so
extended by the Purchaser, shall expire. The Offer shall initially expire 20
business days after the date of its commencement; provided, however, that,
unless the Merger Agreement is terminated in accordance with Article VIII
thereof (other than due to the failure to satisfy the Minimum Condition or the
failure to occur of the expiration or termination of any applicable waiting
period under the HSR Act, in which case the Offer (whether or not previously
extended in accordance with the terms of the Merger Agreement) shall expire on
such date of termination), the Purchaser will be obligated to extend the
Expiration Date of the Offer from time to time to the earlier of (i) the date on
which the Purchaser purchases or becomes obligated to purchase, pursuant to the
Offer, that number of Shares that would represent at least a majority of the
outstanding Shares of the Company on a fully diluted basis and (ii) the date 35
business days after the date of its commencement. In addition, the Purchaser
may, without the consent of the Company, extend the Offer (i) if at the then
scheduled expiration date of the Offer any of the conditions to the Purchaser's
obligations to accept for payment and pay for Shares shall not be satisfied or
waived, until such time as such conditions are satisfied or waived and (ii) for
any period required by any rule, regulation, interpretation or position of the
Securities and Exchange Commission or its staff applicable to the Offer. Any
such extension will be followed as promptly as practicable by a public
announcement thereof, such announcement to be made no later than 9:00 a.m., New
York City time, on the next business day after the previously scheduled
Expiration Date. During any such extension, all Shares previously tendered and
not withdrawn will remain subject to the Offer, without prejudice to the rights
of tendering stockholders to withdraw such stockholder's Shares prior to the
then scheduled Expiration Date.
Tenders of Shares made pursuant to the Offer are irrevocable except
that such Shares may be withdrawn at any time prior to 12:00 midnight, New York
City time, on July 2, 1997 (or the latest time and date at which the Offer, if
extended by the Purchaser, shall expire) and, unless theretofore accepted for
payment by the Purchaser pursuant to the Offer, may also be withdrawn at any
time on or after August 4, 1997. For a withdrawal to be effective, a written,
telegraphic, telex or facsimile transmission notice of withdrawal must be timely
received by the Depositary at one of its addresses set forth on the back cover
of the Offer to Purchase. Any notice of withdrawal must specify the name of the
person who tendered the Shares to be withdrawn, the number of Shares to be
withdrawn and the name of the registered holder, if different from that of the
person who tendered such Shares. If certificates evidencing Shares to be
withdrawn have been delivered or otherwise identified to the Depositary, then,
prior to the physical release of such certificates, the serial number shown on
such certificates must be submitted to the Depositary and the signature(s) on
the notice of withdrawal must be guaranteed by an Eligible Institution (as
defined in Section 3 of the Offer to Purchase) unless such Shares have been
tendered for the account of any Eligible Institution (as defined in Section 3 of
the Offer to Purchase). If Shares have been tendered pursuant to the procedure
for book-entry transfer as set forth in Section 3 of the Offer to Purchase, any
notice of withdrawal must specify the name and number of the account at the
Book-Entry Transfer Facility to be credited with the withdrawn Shares and
otherwise comply with such Book-Entry Transfer Facility's procedures. All
questions as to the form and validity (including the time of receipt) of any
notice of withdrawal will be determined by the Purchaser, in its sole
discretion, whose determination will be final and binding.
The information required to be disclosed by Rule 14d-6(e)(1)(vii) of
the General Rules and Regulations under the Securities Exchange Act of 1934, as
amended, is contained in the Offer to Purchase and is incorporated herein by
reference.
The Company has provided the Purchaser with the Company's stockholder
list and security position listings for the purpose of disseminating the Offer
to holders of the Shares. The Offer to Purchase and the related Letter of
Transmittal are being mailed to the record holders of Shares whose names appear
on the Company's stockholder list and will be furnished to brokers, dealers,
commercial banks, trust companies and similar persons whose names, or the names
of whose nominees, appear on the stockholder list or, if applicable, who are
listed as participants in a clearing agency's security position listing for
subsequent transmittal to beneficial owners of Shares.
The Offer to Purchase and the related Letter of Transmittal contain
important information which holders of Shares should read before making any
decision with respect to the Offer.
Requests for assistance or for additional copies of the Offer to
Purchase and the related Letter of Transmittal and all other tender offer
materials may be directed to the Information Agent as set forth below, and
copies will be furnished promptly at the Purchaser's expense. The Purchaser will
not pay any fees or commissions to any broker or dealer or any other person
(other than the Information Agent) for soliciting tenders of Shares pursuant to
the Offer.
The Information Agent for the Offer is:
[MacKenzie Logo]
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (call collect)
or
Call Toll-Free (800) 322-2885
The Dealer Managers for the Offer are:
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
June 5, 1997
<PAGE> 1
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
OF
INTEGRATED LIVING COMMUNITIES, INC.
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
As set forth in Section 3 of the Offer to Purchase (as defined below), this
instrument or one substantially equivalent hereto must be used to accept the
Offer (as defined below) if (i) certificates for Shares (as defined below) are
not immediately available, (ii) the certificates for Shares and all other
required documents cannot be delivered to the Depositary prior to the Expiration
Date (as defined in Section 1 of the Offer to Purchase) or (iii) if the
procedure for delivery by book-entry transfer cannot be completed on a timely
basis. This instrument may be delivered by hand or transmitted by telegram,
telex, facsimile transmission or mail to the Depositary.
The Depositary for the Offer is:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<S> <C> <C>
By Mail: By Hand: By Overnight Delivery:
Reorganization Department Reorganization Department Reorganization Department
P.O. Box 3301 120 Broadway 85 Challenger Road
South Hackensack, NJ 07606 13th Floor Mail Drop-Reorg.
New York, NY 10271 Ridgefield Park, NJ 07660
By Facsimile Confirm Facsimile by Telephone:
(for Eligible Institutions): (201) 296-4860
(201) 329-8936
</TABLE>
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR
TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION OR TELEX NUMBER OTHER
THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE VALID DELIVERY.
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an "Eligible Institution"
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box on the Letter of Transmittal.
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tenders to SLC Acquisition Corp., a Delaware
corporation (the "Purchaser"), upon the terms and subject to the conditions set
forth in the Offer to Purchase dated June 5, 1997 (the "Offer to Purchase") and
in the related Letter of Transmittal (which, together with any amendments or
supplements thereto, collectively constitute the "Offer"), receipt of which is
hereby acknowledged, the number of shares of common stock, $.01 par value (the
"Shares") indicated below of Integrated Living Communities, Inc., a Delaware
corporation, pursuant to the guaranteed delivery procedure set forth in Section
3 of the Offer to Purchase.
Name(s)
--------------------------------------
Signature(s)
--------------------------------------
Address(es)
--------------------------------------
Zip Code
--------------------------------------
Area Code & Tel. No(s).:
--------------------------------------
Please Type or Print
Number of Shares ______________________ Names of Record Holder(s):
Certificate Nos. (If Available)
(Check one if Shares will
be tendered by book-entry transfer)
[ ] The Depository Trust Company
[ ] Philadelphia Depository Trust
Company
Dated
- ---------------------------------------------------------
2
<PAGE> 3
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a participant in the Security Transfer Agents Medallion
Program, the New York Stock Exchange Medallion Signature Guarantee Program or
the Stock Exchange Medallion Program, guarantees delivery to the Depositary of
either the certificates evidencing all tendered Shares, in proper form for
transfer, or delivery of Shares pursuant to the procedure for book-entry
transfer into the Depositary's account at The Depository Trust Company or the
Philadelphia Depository Trust Company (each a "Book-Entry Transfer Facility"),
in either case together with the Letter of Transmittal (or a facsimile thereof),
properly completed and duly executed, with any required signature guarantees or,
in the case of a book-entry transfer, an Agent's Message (as defined in Section
3 of the offer to Purchase), and any other required documents, all within three
National Association of Securities Dealers Automated Quotation-National Market
trading days after the date hereof.
<TABLE>
<S> <C>
_________________________________ _________________________________
Name of Firm Name (Please Type or Print)
_________________________________ _________________________________
Address Title
_________________________________ _________________________________
Zip Code Authorized Signature
_________________________________ _________________________________
Area Code and Tel. No. Dated
</TABLE>
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS FORM -- CERTIFICATES ARE TO
BE DELIVERED WITH YOUR LETTER OF TRANSMITTAL.
3
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OF THE OUTSTANDING SHARES OF COMMON STOCK
OF
INTEGRATED LIVING COMMUNITIES, INC.
AT
$11.50 NET PER SHARE
BY
SLC ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
WHITEHALL STREET REAL ESTATE LIMITED PARTNERSHIP VII
THE OFFER AND WITHDRAWAL RIGHTS
WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME,
ON WEDNESDAY, JULY 2, 1997 UNLESS THE OFFER IS EXTENDED
To Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees:
We are asking you to contact your clients for whom you hold shares of
common stock, $.01 par value (the "Shares"), of Integrated Living Communities,
Inc., a Delaware corporation (the "Company"). Please bring to their attention as
promptly as possible the offer being made by SLC Acquisition Corp. (the
"Purchaser"), a Delaware corporation and a wholly owned subsidiary of Whitehall
Street Real Estate Limited Partnership VII, a Delaware limited partnership
("Parent"), to purchase all of the outstanding Shares, at a purchase price of
$11.50 per Share, net to the seller in cash, upon the terms and subject to the
conditions set forth in the Offer to Purchase dated June 5, 1997 (the "Offer to
Purchase") and in the related Letter of Transmittal (which, together with any
amendments or supplements thereto and to the Offer to Purchase, collectively
constitute the "Offer").
Enclosed for your information and for forwarding to your clients, for whose
account you hold Shares registered in your name or in the name of your nominee,
or who hold Shares registered in their own names, are copies of the following
documents:
1. The Offer to Purchase dated June 5, 1997;
2. The Letter of Transmittal to be used in accepting the Offer.
Facsimile copies of the Letter of Transmittal may be used to accept the
Offer;
3. A printed form of letter which may be sent to your clients for
whose account you hold Shares in your name or in the name of your nominee,
with space provided for obtaining such clients' instructions with regard to
the Offer;
4. A Notice of Guaranteed Delivery to be used to accept the Offer if
certificates for Shares are not immediately available or if the procedure
for book-entry transfer cannot be completed on a timely basis;
5. Guidelines of the Internal Revenue Service for certification of
Taxpayer Identification Number on Substitute Form W-9; and
6. Return envelope addressed to ChaseMellon Shareholder Services,
L.L.C., the Depositary.
<PAGE> 2
We are asking you to contact your clients for whom you hold Shares
registered in your name (or in the name of your nominee) or who hold Shares
registered in their own names. Please bring the Offer to their attention as
promptly as possible. The Purchaser will not pay any fees or commissions to any
broker or dealer or any other person (other than the Information Agent) for
soliciting tenders of Shares pursuant to the Offer. You will be reimbursed by
the Purchaser for customary mailing expenses incurred by you in forwarding any
of the enclosed materials to your clients. The Purchaser will pay or cause to be
paid any stock transfer taxes payable on the sale and transfer of Shares to it
or its order, except as otherwise provided in Instruction 7 of the Letter of
Transmittal.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS WILL
EXPIRE AT 12:00 MIDNIGHT, NEW YORK TIME, ON WEDNESDAY, JULY 2, 1997 UNLESS THE
OFFER IS EXTENDED.
In order to take advantage of the Offer, (i) a duly executed and properly
completed Letter of Transmittal and, if necessary, any other required documents
should be sent to the Depositary and (ii) either certificates representing the
tendered Shares should be delivered to the Depositary, or such Shares should be
tendered by book-entry transfer into the Depositary's account at one of the
Book-Entry Transfer Facilities (as described in the Offer to Purchase), all in
accordance with the instructions set forth in the Letter of Transmittal and the
Offer to Purchase.
If holders of Shares wish to tender, but it is impracticable for them to
forward their certificates or other required documents to the Depositary prior
to the expiration of the Offer or to comply with the book-entry transfer
procedures on a timely basis, a tender may be effected by following the
guaranteed delivery procedures specified in Section 3 of the Offer to Purchase.
Any inquiries you may have with respect to the Offer should be addressed to
the Information Agent at the address and telephone number set forth on the back
cover page of the Offer to Purchase.
Additional copies of the above documents may be obtained from the
Information Agent, at the address and telephone number set forth on the back
cover of the Offer to Purchase.
Very truly yours,
SLC ACQUISITION CORP.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR
ANY PERSON THE AGENT OF THE PURCHASER, THE PARENT, THE COMPANY OR THE
DEPOSITARY, OR AS AGENT OF ANY AFFILIATE OF ANY OF THEM, OR AUTHORIZE YOU OR ANY
OTHER PERSON TO MAKE ANY STATEMENTS ON BEHALF OF ANY OF THEM WITH RESPECT TO, OR
USE ANY DOCUMENT IN CONNECTION WITH, THE OFFER, EXCEPT FOR STATEMENTS EXPRESSLY
MADE IN THE OFFER TO PURCHASE OR THE LETTER OF TRANSMITTAL AND THE DOCUMENTS
INCLUDED HEREWITH.
2
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OF THE OUTSTANDING SHARES OF COMMON STOCK
OF
INTEGRATED LIVING COMMUNITIES, INC.
AT
$11.50 NET PER SHARE
BY
SLC ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY
OF
WHITEHALL STREET REAL ESTATE LIMITED PARTNERSHIP VII
THE OFFER AND WITHDRAWAL RIGHTS
WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME,
ON WEDNESDAY, JULY 2, 1997 UNLESS THE OFFER IS EXTENDED.
To our Clients:
Enclosed for your consideration is an Offer to Purchase dated, June 5, 1997
(the "Offer to Purchase"), and the related Letter of Transmittal relating to an
offer by SLC Acquisition Corp., a Delaware corporation (the "Purchaser"), and a
wholly owned subsidiary of Whitehall Street Real Estate Limited Partnership VII,
a Delaware limited partnership ("Parent"), to purchase all of the outstanding
shares of common stock, $.01 par value (the "Shares"), of Integrated Living
Communities, Inc., a Delaware corporation (the "Company"), at a purchase price
of $11.50 per Share, net to the seller in cash, upon the terms and subject to
the conditions set forth in the Offer to Purchase and in the related Letter of
Transmittal (which, together with any amendments or supplements thereto,
collectively constitute the "Offer"). We are the holder of record of Shares held
by us for your account. A TENDER OF SUCH SHARES CAN BE MADE ONLY BY US AS THE
HOLDER OF RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS
FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER
SHARES HELD BY US FOR YOUR ACCOUNT.
We request instructions as to whether you wish to have us tender on your
behalf any or all of such Shares held by us for your account, pursuant to the
terms and conditions set forth in the Offer to Purchase.
Your attention is invited to the following:
1. The tender price is $11.50 per Share, net to you in cash.
2. The Offer is being made for all of the outstanding Shares.
3. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW
YORK CITY TIME, ON WEDNESDAY, JULY 2, 1997 UNLESS THE OFFER IS EXTENDED.
(4) The Offer is conditioned upon, among other things, (i) there being
validly tendered and not withdrawn prior to the expiration of the Offer
that number of Shares which constitutes at least a majority of the
outstanding Shares of the Company on a fully-diluted basis on the date of
purchase, (ii) the expiration or termination of any waiting period under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and
the regulations thereunder applicable to the purchase of Shares pursuant to
the Offer and (iii) the satisfaction of the other conditions described in
Section 14 of the Offer to Purchase.
<PAGE> 2
5. Tendering stockholders will not be obligated to pay brokerage fees
or commissions or, except as set forth in Instruction 7 of the Letter of
Transmittal, stock transfer taxes on the purchase of Shares pursuant to the
Offer. However, Federal income tax backup withholding at a rate of 31% may
be required, unless an exemption is provided or unless the required
taxpayer identification information is provided. (See Instruction 11 to the
Letter of Transmittal).
6. Notwithstanding any other provision of the Offer, payment for
Shares accepted for payment pursuant to the Offer will in all cases be made
only after timely receipt by the Depositary of (a) certificates for Shares
pursuant to the procedures set forth in Section 3 of the Offer to Purchase,
or timely Book-Entry Confirmation (as defined in the Offer to Purchase)
with respect to such Shares, (b) the Letter of Transmittal (or a manually
signed facsimile thereof), properly completed and duly executed, with any
required signature guarantees or, in the case of a book-entry transfer, an
Agent's Message (as defined in Section 3 of the Offer to Purchase), and (c)
any other documents required by the Letter of Transmittal. Accordingly,
payment may not be made to all tendering stockholders at the same time
depending upon when certificates representing Shares or Book-Entry
Confirmations are actually received by the Depositary.
If you wish to have us tender any or all of the Shares held by us for your
account, please instruct us by completing, executing and returning to us the
instruction form contained in this letter. If you authorize us to tender your
Shares, all such Shares will be tendered unless otherwise specified in such
instruction form. YOUR INSTRUCTION SHOULD BE FORWARDED TO US IN AMPLE TIME TO
PERMIT US TO SUBMIT A TENDER ON YOUR BEHALF PRIOR TO THE EXPIRATION OF THE
OFFER.
The Offer is made solely by the Offer to Purchase and the related Letter of
Transmittal and is being made to all holders of Shares. The Offer is not being
made to, nor will tenders be accepted from, or on behalf of holders of Shares
residing in any jurisdiction in which the making or acceptance thereof would not
be in compliance with the laws of such jurisdiction.
2
<PAGE> 3
INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE
ALL OF THE OUTSTANDING SHARES OF COMMON STOCK
OF
INTEGRATED LIVING COMMUNITIES, INC.
The undersigned acknowledge(s) receipt of your letter enclosing the Offer
to Purchase dated June 5, 1997 (the "Offer to Purchase") and the related Letter
of Transmittal pursuant to an offer by SLC Acquisition Corp., a Delaware
corporation, to purchase all of the outstanding shares of common stock, $.01 par
value (the "Shares") of Integrated Living Communities, Inc., a Delaware
corporation.
This will instruct you to tender the number of Shares indicated below (or,
if no number is indicated below, all Shares which are held by you for the
account of the undersigned), upon the terms and subject to the conditions set
forth in the Offer to Purchase and in the related Letter of Transmittal
furnished to the undersigned.
Number of Shares SIGN HERE
to be tendered
Shares** --------------------------------------
- ------------------ Signature
--------------------------------------
Please print name(s)
--------------------------------------
--------------------------------------
Address
--------------------------------------
Area Code and Telephone Number
--------------------------------------
Tax Identification or
Social Security Number(s)
Dated: , 1997
-------------------------
- ---------------
** Unless otherwise indicated, it will be assumed that all Shares held by us for
your account are to be tendered.
3
<PAGE> 1
Exhibit (a) 8
INTEGRATED LIVING COMMUNITIES, INC.
TO BE ACQUIRED BY WHITEHALL STREET REAL ESTATE FUND
Contact: Contact:
Integrated Living Communities, Inc. Senior Lifestyle Corporation
John B. Poole, Chief Financial Officer William B. Kaplan, Chairman/CEO
(941) 947-7252 (773) 878-6333
Rob Stobo, Treasurer
(941) 947-7266
Bonita Springs, FL - (May 30, 1997) - Integrated Living Communities ("ILC")
today announced that it has entered into a definitive agreement with Whitehall
Street Real Estate Limited Partnership VII ("Whitehall"), whereby an affiliate
of Whitehall will acquire all outstanding shares of ILC common stock at $11.50
per share through a cash tender offer to commence within five business days to
be followed by a merger. The tender offer and the merger will be subject to
customary conditions, including the tender of a majority of ILC's fully diluted
shares and the obtaining of any necessary regulatory and third party approvals.
Whitehall, an affiliate of Goldman, Sachs & Co., is a $1.35 billion
discretionary real estate investment fund which invests in real estate
opportunities worldwide. It is expected that following the acquisition, ILC's
properties will be operated with Senior Lifestyle Corporation ("SLC"). SLC,
based in Chicago, has been a developer, operator, and owner of seniors housing,
retirement, and assisted living facilities for over 12 years. Currently,
Whitehall and SLC together control properties containing approximately 3,600
units and have more than 1,600 units under development. ILC is a major provider
of assisted living and related services and is traded on the NASDAQ exchange
under the symbol "ILCC". Currently, ILC operates 24 buildings with over 2,500
beds and has 15 facilities under construction with over 1,200 beds.
Bill Kaplan, Chairman of SLC stated, "The agreement with ILC will position SLC
as one of the largest operators of seniors housing and assisted living in the
country. Combined, the two companies will operate over 6,100 beds and have more
than 2,800 beds under construction."
Ed Komp, President and CEO of ILC added, "The combined expertise of ILC and SLC
will ensure that ILC's standard of high quality care will continue in our
facilities. Additionally, the Board of Directors of ILC believes this agreement
offers ILC's shareholders an excellent return on their investment."
<PAGE> 2
Smith Barney Inc. represented ILC in this transaction.
Goldman, Sachs & Co. represented Whitehall in this transaction, and will act as
dealer-manager in the tender offer.
# # #
<PAGE> 1
Exhibit (b)
The Goldman Sachs Group, L.P.
85 Broad Street
New York, NY 10004
June 3, 1997
Whitehall Street Real Estate Limited
Partnership VII
85 Broad Street
New York, NY 10004
Attention: Michael K. Klingher
Dear Sirs:
You have advised The Goldman Sachs Group, L.P. ("GS Group")
that you have executed an Agreement and Plan of Merger dated as of May 29, 1997
(the "Merger Agreement"), among Integrated Living Communities, Inc., a Delaware
corporation (the "Company"), Whitehall Street Real Estate Limited Partnership
VII, a Delaware limited partnership (the "Parent"), and SLC Acquisition Corp., a
Delaware corporation (the "Purchaser"), pursuant to which the Purchaser will
make an offer to purchase (the "Offer") all of the issued and outstanding shares
of the Company and will thereafter merge with the Company (the "Merger").
Subject to the terms and conditions referred to in this
letter, GS Group is willing to make available to the Parent a secured loan
facility (the "Facility") of up to a maximum amount of $20.0 million, the
proceeds of which will be used for the Offer and the Merger and to pay
transaction expenses related to the Offer and the Merger. The Facility would be
provided pursuant to the terms of a credit agreement and other definitive loan
documentation substantially in the form of Exhibit A attached hereto.
The Parent shall give GS Group written or telecopy notice (or
telephone notice promptly confirmed in writing or by telecopy) not later than
12:00
<PAGE> 2
2
noon, New York City time, one business day prior to a proposed borrowing under
the Facility.
The obligation of GS Group to provide the Facility shall be
subject to the execution of definitive documentation with respect thereto and
further subject to the conditions that (i) since December 31, 1996, there shall
not have occurred any Company Material Adverse Effect (as such term is defined
in the Merger Agreement) and (ii) the Offer shall have been consummated in
accordance with its terms without any waiver or amendment of any material
condition thereto by the Parent or the Purchaser (other than with the consent of
GS Group).
You agree to indemnify and hold harmless GS Group, its
partners, officers and employees (each, an "indemnified person") in connection
with any losses, claims, damages, liabilities or other expenses to which such
indemnified persons may become subject, insofar as such losses, claims, damages,
liabilities (or actions or other proceedings commenced or threatened in respect
thereof) or other expenses arise out of or in any way relate to or result from
the Offer and/or the Merger, this letter, or the extension of the Facility
contemplated by this letter, or in any way arise from any use or intended use of
this letter or the proceeds of the Facility contemplated by this letter, and you
agree to reimburse such indemnified persons for any legal or other expenses
incurred in connection with investigating, defending or participating in any
such loss, claim, damage, liability or action or other proceeding (whether or
not such indemnified person is a party to any action or proceeding out of which
any such expenses arise), provided that you shall have no obligation hereunder
to indemnify any indemnified person for any loss, claim, damage, liability or
expense to the extent the same resulted from the gross negligence or willful
misconduct of any indemnified person as finally and judicially decided. Promptly
upon receipt by any indemnified person of notice of any claim or the
commencement of any action with respect to which it has decided to seek
indemnification hereunder, any indemnified person will notify the Parent in
writing of such claim or action. This letter is furnished for your benefit only,
and may not be relied upon by any other person or entity.
The provisions of the immediately preceding paragraph shall
survive any termination of this letter. Nothing contained in the immediately
preceding paragraph shall preclude you from commencing any action for breach by
GS Group of its contractual obligations under the loan documents and you are
under no obligation to indemnify GS Group for damages which may be recovered by
reason of such action.
You are not authorized to show or disclose this letter or the
contents hereof, in any public filing or announcement or to any other person or
entity other than your legal and financial advisors in connection with your
evaluation of this letter until such time as you have accepted this letter.
<PAGE> 3
3
If you are in agreement with the foregoing, please sign and
return to GS Group (including by way of facsimile) the enclosed copy of this
letter. If you decline to take the foregoing actions, you are directed to
immediately return this letter, to GS Group as promptly as possible. This letter
may be executed in any number of counterparts, and by the different parties
hereto on separate counterparts, each of which when executed and delivered shall
be an original, but all of which shall together constitute one and the same
instrument. This letter shall be governed by and construed in accordance with
the laws of the State of New York.
Our offer pursuant to this letter shall terminate at 5:00 p.m.
(New York City time) on June 6, 1997, unless you shall have executed and
delivered to us (including by way of facsimile) this letter, or unless GS Group
agrees, in its sole discretion, to extend the offer beyond the expiry date. In
addition, unless extended in writing at the sole discretion of GS Group, all
obligations of GS Group under this letter shall expire automatically, without
further act and regardless of cause or circumstances, if a loan under the
Facility is not made on or before September 3, 1997.
Very truly yours,
THE GOLDMAN SACHS GROUP, L.P.
By: The Goldman Sachs Corporation,
General Partner
By: /s/ David Viniar
------------------------------------
Name: David Viniar
Title: Executive Vice President
ACCEPTED AND AGREED AS OF
THE DATE FIRST ABOVE WRITTEN:
WHITEHALL STREET REAL ESTATE
LIMITED PARTNERSHIP VII
By: WH Advisors, L.P. VII,
General Partner
By: WH Advisors, Inc. VII,
General Partner
By: /s/ Elizabeth A. O'Brien
------------------------------
Name: Elizabeth A. O'Brien
Title: Vice President
<PAGE> 4
Exhibit A
LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of ________, 1997 ( the "Loan
Agreement"), is among WHITEHALL STREET REAL ESTATE LIMITED PARTNERSHIP VII, a
Delaware limited partnership (the "Borrower"), and THE GOLDMAN SACHS GROUP,
L.P., a Delaware limited partnership (the "Lender").
W I T N E S S E T H:
WHEREAS, the Borrower has requested that the Lender extend a
loan on a secured basis in the amount of $_______________;
WHEREAS, the Lender has agreed to make the requested loan to
the Borrower on the terms and conditions hereinafter set forth;
NOW, THEREFORE, IT IS AGREED:
SECTION 1
DEFINITIONS AND ACCOUNTING TERMS
1.01 Definitions. As used herein, the following terms shall
have the meanings herein specified unless the context otherwise requires.
Defined terms herein shall include in the singular number, the plural and in the
plural, the singular:
"Affiliate" means, with respect to any Person, any other
Person directly or indirectly controlling (including but not limited to
all partners, directors and officers of such Person), controlled by or
under direct or indirect common control with such Person. A Person
shall be deemed to control a corporation or a partnership if such
Person possesses, directly or indirectly, the power (i) to vote 10% or
more of the securities having ordinary voting power for the election of
directors of such corporation or to vote 10% or more of the partnership
interests of such partnership or (ii) to direct or cause direction of
the management and policies of such corporation or partnership, whether
through the ownership of voting securities, as managing or general
partner, by contract or otherwise.
"Asset" means any real, personal or intangible property owned
by
<PAGE> 5
the Borrower.
"Available Contribution" shall have the meaning given to such
term in Article I of the Borrower's Partnership Agreement, without
regard to any modifications or amendments to the Borrower's Partnership
Agreement occurring subsequent to the date hereof.
"Borrower" means Whitehall Street Real Estate Limited
Partnership VII, a Delaware limited partnership.
"Borrower's Partnership Agreement" means that certain Amended
and Restated Agreement of Limited Partnership of Whitehall Street Real
Estate Limited Partnership VII, dated as of April 1, 1996.
"Business Day" means any day other than a Saturday, or Sunday,
a legal holiday in New York, New York or a day on which banking
institutions are authorized by law or other governmental action to
close; provided, however, if the applicable day relates to the
determination of the Interest Reset Date, a "Business Day" means a day
upon which banks are open for the transaction of business in London,
England and New York, New York and dealings in U.S. dollar deposits are
also carried on in the London interbank Eurodollar market.
"Cash Equivalents" means (i) securities issued or directly and
fully guaranteed or insured by the United States of America or any
agency or instrumentality thereof (provided that the full faith and
credit of the United States of America is pledged in support thereof)
having maturities of not more than six months from the date of
acquisition, (ii) U.S. dollar denominated time deposits and
certificates of deposit, acceptable to the Lender, of any bank whose
short-term commercial paper rating from S&P is at least A-1 or the
equivalent thereof or from Moody's is at least P-1 or the equivalent
thereof (any such bank being an "Approved Bank"), in each case with
maturities of not more than six months from the date of acquisition,
(iii) commercial paper and variable or fixed rate notes issued by any
Approved Bank or any variable rate notes issued by, or guaranteed by,
any domestic corporation rated A-1 (or the equivalent thereof) or
better by S&P or P-1 (or the equivalent thereof) or better by Moody's
and maturing within six months of the date of acquisition, and (iv)
short term notes, bonds and other obligations having short term
unsecured debt ratings of A-1 (or the equivalent thereof) or better by
S&P or P-1 (or the equivalent thereof) or better by Moody's.
"Closing Date" shall mean the Funding Date.
-2-
<PAGE> 6
"Code" means the Internal Revenue Code of 1986, as amended
from time to time.
"Commercial Paper Rate" means the per annum rate published in
the Wall Street Journal on any Interest Reset Date for thirty (30) day
commercial paper sold through dealers by major corporations rated A1
(or the equivalent thereof) by S&P or P1 (or the equivalent thereof) by
Moody's.
"Default" means any event, act or condition which with notice
or lapse of time, or both, would constitute an Event of Default.
"Demand Note" means the Promissory Demand Note, dated
________________ from SLC Acquisition Corp. to the Borrower.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated and
the rulings issued thereunder.
"ERISA Affiliate" means each person (as defined in Section
3(9) of ERISA) which together with the Borrower or any Subsidiary of
the Borrower would be deemed to be a member of the same "controlled
group" within the meaning of Section 414(b), (c), (m) and (o) of the
Code.
"Event of Default" has the meaning specified in Section 7.
"Funding Date" means the date on which the Lender advances the
Loan pursuant to the terms of Section 2.01 hereof.
"Funding Notice" shall have the meaning given to such term in
Section 4.02 of the Borrower's Partnership Agreement, without regard to
any modifications or amendments to the Borrower's Partnership Agreement
occurring subsequent to the date hereof.
"General Partner" means WH Advisors, L.P. VII, a Delaware
limited partnership.
"Generally Accepted Accounting Principles" or "generally
accepted accounting principles" means generally accepted accounting
principles in the United States in effect as of the date of this Loan
Agreement.
"Indebtedness" means, with respect to any Person, without
duplication, (i) all indebtedness for borrowed money, (ii) the deferred
purchase price of assets or services which in accordance with generally
-3-
<PAGE> 7
accepted accounting principles would be shown to be a liability (or on
the liability side of a balance sheet), (iii) the maximum amount of all
letters of credit issued or acceptance facilities established for the
account of such Person and, without duplication, all drafts drawn
thereunder (other than letters of credit (x) supporting other
Indebtedness of a Borrower, or (y) offset by a like amount of cash or
government securities held in escrow to secure such letters of credit
and draws thereunder), (iv) all capitalized lease obligations, (v) all
Indebtedness of another Person secured by any lien on any property of a
Borrower, whether or not such indebtedness has been assumed, (vi) all
obligations under take-or-pay or similar arrangements or under interest
rate, currency, or commodities agreements, and (vii) indebtedness
created or arising under any conditional sale or title retention
agreement; but specifically excluding from the foregoing trade payables
and accrued expenses arising or incurred in the ordinary course of
business.
"Interest Reset Date" means the date that is thirty (30) days
after (i) the Closing Date or (ii) the last Interest Reset Date,
whichever is applicable, and if such date shall not be a Business Day,
then the date that is the next succeeding Business Day.
"LIBO Rate" means either (A) the rate per annum for U.S.
dollar deposits with a one-month maturity in the London interbank
Eurodollar market appearing on Telerate Page 3750 as of 11:00 A.M.
London time on the day that is two (2) Business Days before (i) the
Closing Date or (ii) the applicable Interest Reset Date, whichever is
applicable, or (B) if the rate referred to in the preceding
subparagraph (A) is not available or cannot be determined, the rate of
interest per annum as determined by the Lender to be the average
(rounded upward to the nearest whole multiple of 1/100 of 1% per annum,
if such average is not such a multiple) of the rates per annum at which
deposits in United States dollars are offered to the Lender in the
London interbank Eurodollar market at 11:00 a.m. (London time), in each
case two (2) Business Days before the Closing Date or the applicable
Interest Reset Date, whichever is applicable, in an amount
substantially equal to the then outstanding balance of the Loan and for
a period equal to one month.
"Lien" means any mortgage, pledge, hypothecation, assignment,
deposit arrangement, security interest, encumbrance, lien (statutory or
otherwise), preference, priority or charge of any kind (including any
agreement to give any of the foregoing, any conditional sale or other
title retention agreement, any financing or similar statement or notice
perfecting a security interest under the Uniform Commercial Code as
adopted and in effect in the relevant jurisdiction, or other similar
recording
-4-
<PAGE> 8
or notice statute, and any lease in the nature thereof).
"Limited Partners" means the limited partners of the Borrower.
"Loan" means the loan made hereunder.
"Loan Documents" means this Loan Agreement, the Note and the
Security Agreement.
"Maturity Date" shall mean the date that is ninety (90) days
after the date hereof.
"Moody's" means Moody's Investors Service, Inc.
"Net Disposition Proceeds" means (i) the proceeds of any sale,
compromise, discounted payoff or other disposition of an Asset after
payment of any actual out-of-pocket expenses associated with such
disposition, and (ii) any payments received by Borrower under the
Demand Note.
"Note" means the promissory note of the Borrower in favor of
the Lender evidencing the Loan and provided in accordance with Section
2.03, as such promissory note may be amended, modified, supplemented or
replaced from time to time.
"Permitted Investments" means cash and Cash Equivalents.
"Permitted Liens" means (i) Liens created by, under or in
connection with this Loan Agreement or the other Loan Documents in
favor of the Lender; (ii) Liens for taxes not yet due or Liens for
taxes being contested in good faith by appropriate proceedings for
which adequate reserves have been established (and as to which the
property subject to such lien is not yet subject to foreclosure, sale
or loss on account thereof); (iii) Liens in respect of property imposed
by law arising in the ordinary course of business such as
materialmen's, mechanics', warehousemen's and other like Liens provided
that such Liens secure only amounts not yet due and payable or amounts
being contested in good faith by appropriate proceedings for which
adequate reserves have been established (and as to which the property
subject to such lien is not yet subject to foreclosure, sale or loss on
account thereof); (iv) pledges or deposits made to secure payment under
worker's compensation insurance, unemployment insurance, pensions,
social security programs, public liability laws or similar legislation;
(v) Liens arising from good faith deposits in connection with or to
secure performance of tenders, statutory obligations, surety and
-5-
<PAGE> 9
appeal bonds, bids, leases, contracts, performance and return-of-money
bonds and other similar obligations incurred in the ordinary course of
business (other than obligations in respect of the payment of borrowed
money); (vi) easements, rights-of-way, restrictions (including zoning
restrictions), defects or irregularities in title and other similar
charges or encumbrances not, in any material respect, interfering with
the ordinary conduct of business of the Borrower; (vii) leases or
subleases granted to others, whether existing now or hereafter entered
into, in the ordinary course of business, not interfering in any
material respect with the business or operations of the Borrower; and
(viii) any attachment or judgment lien, unless the judgment it secures
shall not, within 30 days after the entry thereof, have been discharged
or execution thereof stayed pending appeal, or shall not have been
discharged within 30 days after the expiration of any such stay.
"Person" means any individual, partnership, joint venture,
firm, corporation, association, trust or other enterprise (whether or
not incorporated), or any government or political subdivision or any
agency, department or instrumentality thereof.
"Plan" means any multiemployer or single-employer plan as
defined in Section 4001 of ERISA, which is maintained, or at any time
during the five calendar years preceding the date of this Loan
Agreement was maintained, for employees of any one of the Borrower, any
Subsidiary or an ERISA Affiliate.
"Regulation D" means Regulation D of the Board of Governors of
the Federal Reserve System as from time to time in effect and any
successor to all or a portion thereof establishing reserve
requirements.
"Regulation G" means Regulation G of the Board of Governors of
the Federal Reserve System as from time to time in effect and any
successor to all or a portion thereof establishing margin requirements.
"Regulation U" means Regulation U of the Board of Governors of
the Federal Reserve System as from time to time in effect and any
successor to all or a portion thereof establishing margin requirements.
"Regulation X" means Regulation X of the Board of Governors of
the Federal Reserve System as from time to time in effect and any
successor to all or a portion thereof establishing margin requirements.
"Security Agreement" means the security agreement, dated as of
the date hereof, between the Lender and the Borrower pursuant to which
-6-
<PAGE> 10
the Borrower has granted the Lender a lien on certain assets of the
Borrower as collateral security for the obligations of the Borrower
under this Loan Agreement, as such security agreement may be amended,
modified, supplemented or replaced from time to time.
"SLC" means SLC Acquisition Corp., a Delaware corporation.
"S&P" means Standard & Poor's Corporation.
"Subsidiary" means (i) any corporation more than 25% of whose
stock of any class or classes having by the terms thereof ordinary
voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such Person
directly or indirectly through Subsidiaries, and (ii) any partnership,
association, joint venture or other entity in which such Person
directly or indirectly through Subsidiaries has more than 25% equity
interest at any time.
"Unallocated Contributions" shall mean the aggregate of all
Available Contributions minus (i) the full amount of all Indebtedness
(other than the Loan) that is owed by (x) the Borrower, or (y) any
Subsidiary of the Borrower to the extent that the holder of such
Indebtedness has recourse to Available Contributions of the Borrower,
and (ii) the purchase price that the Borrower, any general partner of
the Borrower, any Subsidiary of the Borrower or any general partner of
such Subsidiary has agreed, pursuant to a binding contract, to pay for
any asset acquisition that has not yet closed (or, if a lesser amount,
the portion of such purchase price that such entity is required by
contract to fund, either directly or indirectly, to the seller of such
assets), excluding from the purchase price any indebtedness which any
such purchaser has agreed to take subject to or which is otherwise part
of the consideration provided that the same is not Indebtedness of
Borrower.
1.02 Computation of Time Periods. For purposes of computation
of periods of time hereunder, the word "from" means "from and including" and the
words "to" and "until" each mean "to but excluding."
1.03 Accounting Terms. Accounting terms used but not otherwise
defined herein shall have the meanings provided by, and be construed in
accordance with, generally accepted accounting principles.
-7-
<PAGE> 11
SECTION 2
LOAN
2.01 Disbursement of Loan; Maturity Date. Subject to and upon
the terms and conditions hereinafter set forth, the Lender agrees to make a loan
to the Borrower in the amount of ____________________________________
($____________). The Lender will make the Loan available to the Borrower upon
satisfaction of the conditions set forth in Section 3.01 hereof by making a wire
transfer at the direction of the Borrower on or before ________, 1997. The
Borrower agrees to repay the Loan (together with all outstanding interest
thereon) in full on the Maturity Date.
2.02 Interest. Subject to the terms of Section 2.07 hereof,
the principal balance outstanding under the Loan from time to time shall bear
interest at a rate per annum equal to the LIBO Rate plus two and one-half of one
percent (2.5%). The interest rate shall be set two (2) Business Days prior to
the Closing Date and two (2) Business Days prior to each Interest Reset Date.
Notwithstanding the foregoing, upon the occurrence and during the continuance of
an Event of Default, the principal of and, to the extent permitted by law,
interest on the Loan shall bear interest, payable on demand, at a rate equal to
2% per annum in excess of the rate otherwise applicable hereunder. Except as
otherwise provided herein, accrued interest shall be payable in arrears on the
Maturity Date.
2.03 Note. The Loan shall be evidenced by a duly executed
promissory note of the Borrower to the Lender dated as of the Closing Date
substantially in the form of Exhibit A.
2.04 Prepayments.
(a) Voluntary Prepayments. The Borrower shall have the right
to prepay the Loan at any time in whole or in part without premium or
penalty; provided, however, such prepayments not made on an Interest
Reset Date shall require reimbursement of Lender for any break funding
costs in accordance with Section 2.08 hereof. Voluntary prepayments on
the Loan shall be applied first to accrued but unpaid interest and then
to the principal balance of the Loan. Amounts prepaid on the Loan
hereunder may not be reborrowed.
(b) Mandatory Prepayments. The Borrower hereby agrees to make
prepayments to the Lender for application to the Loan, immediately upon
receipt thereof, in an amount equal to any Net Disposition Proceeds
received by the Borrower.
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<PAGE> 12
2.05 Late Payment Fee. Should any principal payment required
under Section 2.04(b) be in default for more than fifteen (15) days, there may
be imposed, to the extent permitted by law, a delinquency charge not to exceed
four percent (4%) of such amount in default. In addition, at the Lender's
option, any overdue interest, fees and charges may, for purposes of computing
and accruing interest, be deemed to be a part of the principal balance thereof
and interest shall accrue thereon on a daily compounded basis after such date
(at the applicable rate, including any default rate provided for in Section
2.02).
2.06 Payments and Computations. All payments hereunder shall
be made to the Lender in U.S. dollars in immediately available funds at its
offices in New York, New York not later than 2:00 P.M., New York time, on the
date when due. Payments received after such time shall be deemed to have been
received on the next succeeding Business Day. Whenever any payment hereunder
shall be stated to be due on a day that is not a Business Day, the due date
thereof shall be extended to the next succeeding Business Day (subject to
accrual of interest and fees for the period of such extension). All computations
of interest and fees shall be made on the basis of a 360-day year for the actual
number of days elapsed. Interest shall accrue from and include the date of the
Loan, but exclude the date of payment.
2.07 Unavailability, etc. In the event that, (a) the Lender
shall have determined in good faith after reasonable investigation that dollar
deposits in the principal amount of the Loan are not generally available in the
London interbank Eurodollar market or (b) reasonable means do not exist for
ascertaining the LIBO Rate, then, if the Lender so elects by notice to the
Borrower, the interest rate applicable to the then outstanding principal balance
of the Loan shall be converted to the then applicable Commercial Paper Rate, or
such other rate as to which the parties may agree. If the Lender elects to
convert the interest rate applicable to the Loan to the Commercial Paper Rate
pursuant to the terms of this Section 2.07, the Borrower may, by notice to the
Lender, require that the Lender furnish to the Borrower a statement setting
forth the basis for such election.
2.08 Break Funding Costs. The Borrower agrees that it will
reimburse the Lender on demand for any loss incurred or to be incurred by it in
the reemployment of the funds released by any prepayment of any principal
balance of the Loan if such prepayment occurs other than on an Interest Reset
Date. Such loss shall be the difference as reasonably determined by the Lender
between the amount that would have been realized by the Lender for the remainder
of such interest period based on the LIBO Rate applicable for such interest
period (without regard to the applicable spread over the LIBO Rate referred to
in Section 2.02) and any lesser amount that would be realized by the
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<PAGE> 13
Lender in reemploying the funds received in prepayment by making a loan of the
same type (but utilizing the then applicable LIBO Rate) in the principal amount
prepaid during the period from the date of prepayment to the next succeeding
Interest Reset Date.
SECTION 3
CONDITIONS PRECEDENT TO LOAN DISBURSEMENTS
3.01 Loan Disbursements. The obligation of the Lender to make
the Loan is subject, at the time of making the Loan, to satisfaction of the
condition (in form and substance acceptable to the Lender) that after giving
effect to the Loan, there shall exist no Default or Event of Default and all
representations and warranties contained herein or in the other Loan Documents
shall be true and correct in all material respects.
SECTION 4
REPRESENTATIONS AND WARRANTIES
The Borrower hereby represents and warrants to the Lender
that:
4.01 Existence and Power.
(a) It is a limited partnership duly organized, validly
existing and in good standing under the laws of the State of Delaware,
and is in good standing as a foreign limited partnership in each other
jurisdiction where ownership of its properties or the conduct of its
business requires it to be so, and has all power and authority under
such laws and its partnership agreement and all material governmental
licenses, authorizations, consents and approvals required to carry on
its business as now conducted.
(b) Its general partner is a limited partnership duly
organized, validly existing and in good standing under the laws of the
State of Delaware, and is in good standing as a foreign limited
partnership in each other jurisdiction where ownership of its
properties or the conduct of its business requires it to be so, and has
all power and authority under such laws and its partnership agreement
and all material governmental licenses, authorizations, consents and
approvals required to carry on its business as now conducted.
(c) The general partner of the general partner of the
Borrower, (i) is duly incorporated, validly existing and in good
standing under the
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<PAGE> 14
laws of the State of Delaware, (ii) has all corporate power pursuant to
proper authorization to enable it to act as the general partner of the
Borrower's general partner, and to enter into the Loan Documents on the
Borrower's behalf, and (iii) is duly qualified to do business and is in
good standing in each other jurisdiction where it is required to be
qualified in order to act as the general partner of the general partner
of the Borrower.
4.02 Authorization. It has the power and authority to enter
into this Loan Agreement and the other Loan Documents, and to perform its
obligations under and consummate the transactions contemplated by such Loan
Documents and has by proper action duly authorized the execution and delivery of
the Loan Documents.
4.03 No Conflicts or Consents. Neither the execution and
delivery of the Loan Documents, nor the consummation of the transactions
contemplated therein, nor performance of and compliance with the terms and
provisions thereof will (i) violate or conflict with any provision of the
Borrower's Partnership Agreement or other governance document, (ii) violate any
law, regulation (including without limitation Regulation U or Regulation X),
order, writ, judgment, injunction, decree or permit applicable to it, (iii)
violate or materially conflict with contractual provisions of, or cause an event
of default under, any indenture, loan agreement, mortgage, deed of trust,
contract or other agreement or instrument to which it is a party or by which it
may be bound, or (iv) result in or require the creation of any lien, security
interest or other charge or encumbrance (other than those contemplated in or in
connection with the Loan Documents) upon or with respect to the Borrower's
properties.
4.04 Consents. No consent, approval, authorization or order
of, or filing, registration or qualification with, any court or governmental
authority or other Person is required in connection with the execution, delivery
or performance of this Loan Agreement or any other Loan Documents.
4.05 Enforceable Obligations. This Loan Agreement and the
other Loan Documents have been duly executed and delivered by the Borrower, and
constitute legal, valid and binding obligations of the Borrower enforceable in
accordance with their respective terms.
4.06 No Default. No Default or Event of Default presently
exists.
4.07 Liens. Except for Permitted Liens, it has good and
marketable title to all of its properties and assets free and clear of all
liens, encumbrances, mortgages, pledges, security interests and other adverse
claims of any nature.
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<PAGE> 15
4.08 [Intentionally omitted].
4.09 Litigation. There are no actions, suits or legal,
equitable, arbitration or administrative proceedings pending or, to the
knowledge of the Borrower, threatened against the Borrower that, if adversely
determined, would have a material adverse effect on the financial condition of
the Borrower.
4.10 Material Agreements. The Borrower is not in default in
any material respect under any contract, lease, loan agreement, indenture,
mortgage, security agreement or other material agreement or obligation to which
it is a party or by which any of its properties is bound.
4.11 Compliance with Law. It is in compliance in all material
respects with all laws, rules, regulations, orders and decrees (including
without limitation environmental laws) applicable to it, or to its properties.
4.12 ERISA. It has not established, nor does it plan to
establish, any Plan.
4.13 Use of Proceeds; Margin Stock. The proceeds of the Loan
hereunder will be used solely for the purpose of making a loan to SLC. None of
such proceeds will be used for the purpose of purchasing or carrying any "margin
stock" as defined in Regulation U, Regulation X or Regulation G, or for the
purpose of reducing or retiring any Indebtedness which was originally incurred
to purchase or carry "margin stock" or for any other purpose which might
constitute this transaction a "purpose credit" within the meaning of Regulation
U, Regulation X or Regulation G. The Borrower does not own "margin stock".
4.14 Government Regulation. It is not subject to regulation
under the Public Utility Holding Company Act of 1935, the Federal Power Act, or
the Interstate Commerce Act, each as amended. In addition, neither the Borrower
nor any of its Subsidiaries is (i) an "investment company" required to be
registered under the Investment Company Act of 1940, as amended, and is not
controlled by such a company, or (ii) a "holding company," or a "Subsidiary
company" of a "holding company," or an "affiliate" of a "holding company" or of
a "Subsidiary" of a "holding company," within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
4.15 Hazardous Substances. Except for substances lawfully used
by the Borrower or its tenants in the operation of the businesses conducted at
any real property owned or leased by the Borrower, to the Borrower' knowledge
(without investigation), the real properties owned and leased by the Borrower
are free from "hazardous substances" as defined in the Comprehensive
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<PAGE> 16
Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C.
Section 9601 et seq., as amended, and the regulations promulgated thereunder to
the extent the presence of such substances would violate applicable law; no
portion of any such real property is subject to federal, state or local
regulation or liability because of the presence of stored, leaked or spilled
petroleum products, waste materials or debris, "PCB'S" or PCB items (as defined
in 40 C.F.R. Section 763.63), underground storage tanks, friable "asbestos" (as
defined in 40 C.F.R. Section 763.63) or the past or present accumulation,
spillage or leakage of any such substance; the Borrower is in substantial
compliance with all federal, state and local requirements relating to protection
of health or the environment in connection with the operation of its businesses;
and the Borrower does not know of any complaint or investigation regarding the
presence of hazardous substances at or on any such real property.
SECTION 5
AFFIRMATIVE COVENANTS
The Borrower hereby covenants and agrees that so long as this
Loan Agreement is in effect and until the Loan, together with interest, fees and
other obligations hereunder, has been paid in full:
5.01 Information Covenants. The Borrower will furnish, or
cause to be furnished, to the Lender such financial statements, operating
statements, bank statements, auditors' reports or other information as the
Lender may request within ten (10) Business Days after such request.
5.02 Preservation of Existence and Franchises. The Borrower
will do or cause to be done all things necessary to preserve and keep in full
force and effect its existence, rights, franchises and authority.
5.03 Books, Records and Inspections. The Borrower will keep
complete and accurate books and records of its transactions in accordance with
good accounting practices on the basis of generally accepted accounting
principles applied on a consistent basis (including the establishment and
maintenance of appropriate reserves). The Borrower will permit on reasonable
notice officers or designated representatives of the Lender to visit and inspect
its books of account and records and any of its properties or assets (in
whomever's possession) and to discuss the affairs, finances and accounts of the
Borrower with, and be advised as to the same by, its officers, directors and
independent accountants.
5.04 Compliance with Law. The Borrower will comply in all
material respects with all applicable laws, rules, regulations and orders of,
and
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<PAGE> 17
all applicable restrictions imposed by, all applicable governmental bodies,
foreign or domestic, or authorities and agencies thereof (including
quasi-governmental authorities and agencies), in respect of the conduct of its
business and the ownership of its property (including applicable statutes,
regulations, orders and restrictions relating to environmental standards and
controls).
5.05 Insurance. The Borrower will at all times maintain in
full force and effect insurance (including worker's compensation insurance,
liability insurance, casualty insurance and business interruption insurance) in
such amounts, covering such risks and liabilities and with such deductibles or
self-insurance retentions as are in accordance with normal industry practice.
5.06 Maintenance of Property. The Borrower will maintain and
preserve its properties and assets (in whomsoever's possession as it may be) in
good repair, working order and condition, normal wear and tear excepted, and
will make, or cause to be made, in such properties and assets from time to time
all repairs, renewals, replacements, extensions, additions, betterments and
improvements thereto as may be needed or proper, to the extent and in the manner
customary for companies in similar businesses.
5.07 Outstanding Subscriptions. The Borrower will cause the
Unallocated Contributions to at all times equal or exceed an amount that is 105%
of the then outstanding balance of the Loan.
5.08 Funding Notices. The Borrower agrees that it will deliver
to Limited Partners such Funding Notices as may be necessary to cause the
Borrower to have funds sufficient to satisfy its obligations to the Lender
hereunder.
5.09 Reliance on Available Contributions. The General Partner,
pursuant to the terms of Section 2.04 of the Borrower's Partnership Agreement,
hereby authorizes the Lender to rely on the Available Contributions in extending
the Loan hereunder.
SECTION 6
NEGATIVE COVENANTS
The Borrower hereby covenants and agrees that so long as this
Loan Agreement is in effect and until the Loan, together with interest, fees and
other obligations hereunder, have been paid in full:
6.01 Indebtedness. The Borrower will not contract, create,
incur, assume or permit to exist any Indebtedness if, upon incurring such
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<PAGE> 18
Indebtedness, the Unallocated Contributions would be less than 105% of the then
outstanding balance on the Loan.
6.02 Governing Documents. The Borrower will not modify its
Partnership Agreement in a manner that would impair or limit the ability of the
Borrower to satisfy its obligations hereunder and under the other Loan
Documents.
6.03 Consolidation, Merger, Sale or Purchase of Assets, etc.
The Borrower will not dissolve, liquidate, or wind up its affairs.
6.04 Sale and Leaseback. The Borrower will not enter into any
arrangement pursuant to which it will lease back, as lessee, any property (real,
personal, mixed, tangible or intangible) previously owned by it and sold or
otherwise transferred or disposed of, directly or indirectly, to the
owner-lessor of such property.
SECTION 7
EVENTS OF DEFAULT
7.01 Events of Default. Upon the occurrence of any of the
following specified events (each an "Event of Default"):
(a) Payment. The Borrower shall (i) default in the payment
when due of any principal under the Note (including any mandatory
prepayment required hereunder), or (ii) default, and such default shall
continue for five (5) or more days, in the payment when due of any
interest required with respect to the Note, or of any fees or other
amounts owing hereunder, under any of the other Loan Documents or in
connection herewith; or
(b) Representations. Any representation, warranty or statement
made or deemed to be made by the Borrower herein, or by the Borrower in
any of the other Loan Documents or in any statement or certificate
delivered or required to be delivered pursuant hereto or thereto shall
prove untrue in any material respect on the date as of which it was
deemed to have been made; or
(c) Covenants. The Borrower shall (i) default in the due
performance or observance of any term, covenant or agreement contained
in Section 5.07, Section 5.08, Section 5.09 or Sections 6.01 through
6.04, inclusive, or (ii) default in the due performance or observance
by it of any term, covenant or agreement (other than those referred to
in subsections (a), (b) or (c) (i) of this Section 7.01) contained
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<PAGE> 19
in this Loan Agreement and such default referred to in this
subparagraph (ii) shall continue unremedied for a period of at least
thirty (30) days or, if such default can not be cured within thirty
(30) days and the Borrower is at all times diligently pursuing the cure
thereof, such default shall continue unremedied for a period of at
least ninety (90) days; or
(d) Other Loan Documents. (i) The Borrower shall default in
the due performance or observance of any term, covenant or agreement in
any of the other Loan Documents (subject to applicable grace or cure
periods, if any), or (ii) any Loan Document shall fail to be in full
force and effect or to give the Lender the rights, powers and
privileges purported to be created thereby (except insofar as such
rights, powers and privileges are contrary to applicable public policy
and except to the extent such failure is due to the acts of the
Lender); or
(e) Bankruptcy, etc. The Borrower or any general partner of
the Borrower shall commence a voluntary case concerning itself under
the Bankruptcy Code in Title 11 of the United States Code (as amended,
modified, succeeded or replaced from time to time, the "Bankruptcy
Code"); or an involuntary case is commenced against the Borrower or any
general partner of the Borrower under the Bankruptcy Code and the
petition is not dismissed within sixty (60) days after the commencement
of the case; or a custodian (as defined in the Bankruptcy Code) is
appointed for, or takes charge of, all or substantially all of the
property of the Borrower or any general partner of the Borrower; or the
Borrower or any general partner of the Borrower commences any other
proceeding under any reorganization, arrangement, adjustment of the
debt, relief of creditors, dissolution, insolvency or similar law of
any jurisdiction whether now or hereafter in effect relating to the
Borrower or any general partner of the Borrower; or there is commenced
against the Borrower or any general partner of the Borrower any such
proceeding which remains undismissed for a period of sixty (60) days;
or the Borrower or any general partner of the Borrower is adjudicated
insolvent or bankrupt; or any order of relief or other order approving
any such case or proceeding is entered; or the Borrower or any general
partner of the Borrower suffers appointment of any custodian or the
like for it or for any substantial part of its property to continue
unchanged or unstayed for a period of thirty (30) days; or the Borrower
or any general partner of the Borrower makes a general assignment for
the benefit of creditors; or any partnership action is taken by the
Borrower or any general partner of the Borrower for the purpose of
effecting any of the foregoing; or
(f) Defaults under Other Agreements. An event of default
(after expiration of all applicable notice or cure periods) shall occur
with respect
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to any other Indebtedness of the Borrower owed to the Lender or any
Indebtedness of the Borrower shall be declared due and payable prior to
the stated maturity thereof or is not paid at the Stated Maturity
thereof (after giving effect to any applicable grace period) and the
holder of such Indebtedness shall have recourse against the Borrower
personally; or
(g) Judgments. One or more final judgments or decrees shall be
entered against the Borrower or any of its subsidiaries involving a
liability for which the creditor has recourse against the Borrower
personally of $250,000 or more in any instance, or $500,000 or more in
the aggregate for all such judgments and decrees collectively (not paid
or fully covered by insurance provided by a carrier who has
acknowledged coverage), and any such judgments or decrees shall not
have been vacated, discharged, paid or stayed or bonded pending appeal
within the time permitted to appeal therefrom;
then, in any such event, and at any time thereafter, the Lender may by written
notice to the Borrower take any of the following actions without prejudice to
the rights of the Lender to enforce its claims against the Borrower except as
otherwise specifically provided for herein:
(i) Acceleration of Loans. Declare the unpaid
principal of and any accrued interest in respect of the Loan and the
Note to be due whereupon the same shall be immediately due and payable
without presentment, demand, protest or other notice of any kind, all
of which are hereby waived by each of the Borrower; and
(ii) Enforcement of Rights. Enforce any and all Liens
and security interests in favor of the Lender in respect of the Note
and the Loan and other amounts due, including without limitation all
rights and interests created and existing under the Loan Documents and
all rights of set-off;
provided, however, that, notwithstanding the foregoing, if an Event of Default
specified in Section 7.01(e) shall occur, then the Note and the Loan shall
immediately become due and payable without the giving of any notice or other
action by the Lender.
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<PAGE> 21
SECTION 8
MISCELLANEOUS
8.01 Notices. Except as otherwise expressly provided herein,
all notices and other communications shall have been duly given and shall be
effective (i) when delivered, (ii) the day following the day on which the same
has been delivered prepaid to a reputable national overnight air courier
service, or (iii) the third Business Day following the day on which the same is
sent by certified or registered mail, postage prepaid, in each case to the
respective parties at the address set forth below, or at such other address as
such party may specify by written notice to the other parties hereto:
if to the Borrower:
Whitehall Street Real Estate Limited
Partnership VII
Bowling Green Station
P.O. Box 478
New York NY 10274-0478
Attention: David M. Weil
Telephone: (212) 902-3191
if to the Lender:
The Goldman Sachs Group, L.P.
85 Broad Street
New York, New York 10004
Attn: David A. Viniar
Telephone: (212) 902-5419
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<PAGE> 22
9.02 No Waiver; Remedies Cumulative. No failure or delay on
the part of the Lender in exercising any right, power or privilege hereunder or
under any other Loan Document and no course of dealing between the Borrower and
the Lender shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, power or privilege hereunder or under any other Loan
Document preclude any other or further exercise thereof or the exercise of any
other right, power or privilege hereunder or thereunder. The rights and remedies
provided herein are cumulative and not exclusive of any rights or remedies that
the Lender would otherwise have. No notice to or demand on the Borrower in any
case shall entitle the Borrower to any other or further notice or demand in
similar or other circumstances or constitute a waiver of the rights of the
Lender to any other or further action in any circumstances without notice or
demand.
9.03 Amendments, Waivers and Consents. Neither this Loan
Agreement nor any other Loan Document, nor any of the terms hereof or thereof,
may be amended, changed, waived, discharged or terminated unless such amendment,
change, waiver, discharge or termination is approved or consented to in writing
by the Lender. Any such amendment, change, waiver, discharge or termination
shall be effective only in the specific instance and for the specific purpose
for which given. This Agreement shall be binding upon, and shall inure to the
benefit of, the parties hereto and their respective successors and assigns;
provided, however, that the Borrower shall not assign its rights or delegate its
duties hereunder or under the Note without the Lender's prior written consent
and any purported assignment in derogation of this Section shall be null and
void, and provided, further, that the Lender may delegate and assign all of its
obligation rights hereunder to a partnership, corporation, trust or other
organization in whatever form that succeeds to all or substantially all of the
Lender's assets and business and that assumes such obligations by contract,
operation of law or otherwise. Upon any such delegation and assumption of
obligations, the Lender shall be relieved of and fully discharged from all
obligations hereunder, whether such obligations arose before or after such
delegation and assumption.
9.04 Counterparts. This Loan Agreement may be executed in any
number of counterparts, each of which where so executed and delivered shall be
an original, but all of which shall constitute one and the same instrument.
9.05 Headings. The headings of the sections and subsections
hereof are provided for convenience only and shall not in any way affect the
meaning or construction of any provision of this Loan Agreement.
9.06 Survival. All representations, warranties and indemnities
set forth herein shall survive the execution and delivery of this Loan
Agreement, and
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<PAGE> 23
the making of the Loan, the repayment of the Loan and other obligations and the
termination of the commitments hereunder.
9.07 Governing Law; Submission to Jurisdiction; Venue.
(a) THIS LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE
GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK.
(b) THE BORROWER HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL
BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR
RELATING TO THIS LOAN AGREEMENT, ANY OF THE OTHER LOAN DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED THEREBY.
9.08 Severability. If any provision of any of the Loan
Documents is determined to be illegal, invalid or unenforceable, such provision
shall be fully severable and the remaining provisions shall remain in full force
and effect and shall be construed without giving effect to the illegal, invalid
or unenforceable provisions.
9.09 Entirety. This Loan Agreement together with the other
Loan Documents represents the entire agreement of the parties hereto and
thereto, and supersede all prior agreements and understandings, oral or written,
if any.
[Remainder of page intentionally left blank]
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<PAGE> 24
IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Loan Agreement to be duly executed and delivered as of the
date first above written.
WHITEHALL STREET REAL ESTATE LIMITED
PARTNERSHIP VII, a Delaware limited partnership
By: WH ADVISORS, L.P. VII, its General Partner
By: WH ADVISORS, INC. VII, its
General Partner
By: __________________________________
Name:
Title:
THE GOLDMAN SACHS GROUP, L.P.
BY: THE GOLDMAN SACHS CORPORATION, its
General Partner
By:____________________________________________________
Name:
Title:
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<PAGE> 25
EXHIBIT A
SECURED PROMISSORY NOTE
$_____________ ___________, 1997
FOR VALUE RECEIVED, WHITEHALL STREET REAL ESTATE LIMITED
PARTNERSHIP VII, a Delaware limited partnership (the "Borrower"), hereby
promises to pay to the order of THE GOLDMAN SACHS GROUP, L.P., a Delaware
limited partnership (the "Lender"), at its offices in New York, New York (or at
such other place or places as the Lender may designate) the principal sum of
_____________________________________________________________________
________________________ ($_____________), pursuant to the terms and conditions
of that certain Loan Agreement dated as of the date hereof among the Borrower
and the Lender, as amended, modified or replaced from time to time (as so
amended, modified or replaced, the "Loan Agreement"; all the terms, conditions,
definitions and covenants contained in the Loan Agreement are expressly made a
part hereof in the same manner and with the same effect as if set forth herein
at length, any holder of this Note being entitled to the benefits and remedies
provided for in the Loan Agreement).
The Lender has agreed to make a loan to the Borrower as
provided in Section 2 of the Loan Agreement. The outstanding principal balance
hereof and all interest due thereon shall be due and payable in full on the
Maturity Date; provided, however, certain mandatory prepayments are required as
provided in Section 2.04(b) of the Loan Agreement.
This Note shall bear interest on the outstanding balance
hereof as provided in Section 2.02 of the Loan Agreement. Interest accrued on
the Loan hereunder shall be paid on the Maturity Date, as provided in Section
2.02 of the Loan Agreement.
In the event the amounts owing under this Note shall be
accelerated in accordance with the terms of the Loan Agreement, the amounts
owing hereunder shall become immediately due and payable without presentation,
demand, protest or notice of any kind, all of which are hereby expressly waived.
Further, in the event amounts owing hereunder are not paid when due (including
any stated or accelerated maturity), the Borrower agrees to pay promptly upon
demand, in addition to principal, interest and other amounts owing hereunder,
all costs of collection, including reasonable attorneys' fees.
This Note is secured by that certain Security Agreement, dated
as of the date hereof, between the Borrower and the Lender.
<PAGE> 26
IN WITNESS WHEREOF, the Borrower has caused this Note to be
executed as of the date first above written.
WHITEHALL STREET REAL ESTATE LIMITED
PARTNERSHIP VII, a Delaware limited partnership
By: WH ADVISORS, L.P. VII, its General Partner
By: WH ADVISORS, INC. VII, its
General Partner
By:_________________________________________
Name:
Title:
<PAGE> 27
Exhibit B
SECURED PROMISSORY NOTE
$__________ ___________, 1997
FOR VALUE RECEIVED, WHITEHALL STREET REAL ESTATE LIMITED
PARTNERSHIP VII, a Delaware limited partnership (the "Borrower"), hereby
promises to pay to the order of THE GOLDMAN SACHS GROUP, L.P., a Delaware
limited partnership (the "Lender"), at its offices in New York, New York (or at
such other place or places as the Lender may designate) the principal sum of
_____________________________________________________________________
($_________________), pursuant to the terms and conditions of that certain Loan
Agreement dated as of the date hereof among the Borrower and the Lender, as
amended, modified or replaced from time to time (as so amended, modified or
replaced, the "Loan Agreement"; all the terms, conditions, definitions and
covenants contained in the Loan Agreement are expressly made a part hereof in
the same manner and with the same effect as if set forth herein at length, any
holder of this Note being entitled to the benefits and remedies provided for in
the Loan Agreement).
The Lender has agreed to make a loan to the Borrower as
provided in Section 2 of the Loan Agreement. The outstanding principal balance
hereof and all interest due thereon shall be due and payable in full on the
Maturity Date; provided, however, certain mandatory prepayments are required as
provided in Section 2.04(b) of the Loan Agreement.
This Note shall bear interest on the outstanding balance
hereof as provided in Section 2.02 of the Loan Agreement. Interest accrued on
the Loan hereunder shall be paid on the Maturity Date, as provided in Section
2.02 of the Loan Agreement.
In the event the amounts owing under this Note shall be
accelerated in accordance with the terms of the Loan Agreement, the amounts
owing hereunder shall become immediately due and payable without presentation,
demand, protest or notice of any kind, all of which are hereby expressly waived.
Further, in the event amounts owing hereunder are not paid when due (including
any stated or accelerated maturity), the Borrower agrees to pay promptly upon
demand, in addition to principal, interest and other amounts owing hereunder,
all costs of collection, including reasonable attorneys' fees.
This Note is secured by that certain Security Agreement, dated
as of the date hereof, between the Borrower and the Lender.
<PAGE> 28
IN WITNESS WHEREOF, the Borrower has caused this Note to be
executed as of the date first above written.
WHITEHALL STREET REAL ESTATE LIMITED
PARTNERSHIP VII, a Delaware limited partnership
By: WH ADVISORS, L.P. VII, its General Partner
By: WH ADVISORS, INC. VII, its
General Partner
By:______________________________________
Name:
Title:
2
<PAGE> 29
Exhibit C
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (the "Agreement" or "Security
Agreement"), dated as of _____________, 1997 by and among WHITEHALL STREET REAL
ESTATE LIMITED PARTNERSHIP VII, a Delaware limited partnership (the "Borrower")
and THE GOLDMAN SACHS GROUP, L.P., a Delaware limited partnership (the
"Lender").
W I T N E S S E T H:
WHEREAS, the Lender has agreed to extend a loan to Borrower
pursuant to the terms of a Loan Agreement, dated as of the date hereof, between
the Lender and the Borrower (the "Loan Agreement").
NOW, THEREFORE, for and in consideration of the premises and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto agree as follows:
1. Definitions. Terms used but not otherwise defined herein
shall have the meanings provided in the Loan Agreement; provided, however, that
terms which are defined in the Code shall have the meaning provided in the Code
unless specifically provided otherwise herein or in the Loan Agreement.
As used herein:
"Available Contribution" has the meaning given to such term in
the Partnership Agreement.
"Called Contribution" has the meaning given to such term in
the Partnership Agreement.
"Cash Collateral Account" has the meaning given to such term
in Section 4(c) hereof.
"Code" means the Uniform Commercial Code as enacted in the
State of New York and any successor statute(s) thereto.
"Collateral" means Subscription Assets in a sufficient amount
to permit the Borrower to deliver Funding Notices to Limited Partners
and to collect the Called Contributions from such Limited Partners
required by such Funding Notices in an aggregate amount (taking into
account the Available Contributions under the Partnership Agreement)
equal to 105%
<PAGE> 30
of the balance outstanding under the Loan from time to time.
"Default" has the meaning given to such term in the Loan
Agreement.
"Event of Default" has the meaning given to such term in the
Loan Agreement.
"Funding Notice" has the meaning given to such term in Section
4.02 of the Partnership Agreement.
"Limited Partner" has the meaning given to such term in the
Partnership Agreement.
"Loan Agreement" has the meaning given to such term in the
Recitals hereto.
"Partnership Agreement" means that certain Amended and
Restated Agreement of Limited Partnership of the Borrower, dated as of
April 1, 1996.
"Percentage" has the meaning given to such term in Section
2.04 of the Partnership Agreement.
"Permitted Liens " has the meaning given to such term in the
Loan Agreement.
"Secured Obligations" means, without duplication, (i) all
indebtedness, obligations and liabilities of the Borrower under or in
connection with (A) the Loan Agreement, (B) the Note, or (C) this
Agreement and (ii) all expenses and charges, legal and otherwise,
reasonably incurred by the Lender in collecting or enforcing any of
such indebtedness, obligations and liabilities or in realizing on or
protecting any security therefor, including without limitation the
security afforded hereunder, together with any and all modifications,
extensions, renewals and/or substitutions thereof.
"Subscription Assets" means all rights of the Borrower to
deliver a Funding Notice to a Limited Partner pursuant to the terms of
the Partner ship Agreement (including specifically without limitation
Article IV and Section 6.01 thereof) and to collect the Called
Contribution from such Limited Partner required by such Funding Notice
in accordance with the terms of the Partnership Agreement.
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<PAGE> 31
2. Grant of Security Interest in the Collateral. To secure the
prompt payment or performance in full when due, whether by lapse of time,
acceleration or otherwise, of the Secured Obligations, the Borrower hereby
grants to the Lender a first priority security interest in all right, title and
interest of the Borrower, whether now existing or hereafter acquired or arising,
in and to the Collateral and the proceeds thereof.
3. General Representations, Warranties, Covenants and
Agreements. So long as any Secured Obligations or any obligation to extend any
such Secured Obligations remain outstanding, the Borrower hereby represents and
warrants to, and covenants and agrees with, the Lender that:
(a) Location of Collateral. As of the date hereof, the chief
executive office and chief place of business of the Borrower is as
shown on Schedule A and the Borrower has no other executive offices or
places of business other than those listed on said Schedule A.
(b) Priority. The Collateral and every part thereof is and
will be free and clear of all security interests, liens (including
without limitation mechanics, laborers and statutory liens),
attachments, levies, encumbrances of every kind, nature and description
and whether voluntary or involuntary, and licenses for the use thereof
except for (i) the security interest of the Lender therein, and (ii)
Permitted Liens. The Borrower agrees that it will warrant and defend
the Collateral against any claims and demands (other than the Permitted
Liens) of all persons at any time claiming the same or any interest in
the Collateral adverse to the Lender.
(c) Payment of Taxes and Charges. The Borrower agrees that it
will pay promptly when due all taxes, assessments, and governmental
charges and levies upon or against the Collateral in each case before
the same become delinquent and before penalties accrue thereon, unless
and to the extent that the same are being contested in good faith by
appropriate proceedings.
(d) Disposition. The Borrower agrees that it will not sell,
transfer or otherwise dispose of any portion of, or rights or interests
in, the Collateral, except with the prior written consent of the
Lender.
(e) Perfection of Security Interest. The Borrower represents
that this Agreement creates a valid first priority security interest in
the Collateral securing payment and performance of the Secured
Obligations and that all filings and other action necessary to perfect
such security interest have been taken or shall be promptly taken. The
Borrower
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<PAGE> 32
agrees to execute and deliver to the Lender such further agreements and
assignments or other instruments and to do all such other things as the
Lender may reasonably deem necessary or appropriate to assure to the
Lender its security interest hereunder, including such financing
statement or statements or amendments thereof or supplements thereto or
other instruments as the Lender may from time to time reasonably
require in order to comply with the Code. The Borrower hereby agrees
that a carbon, photographic or other reproduction of this Agreement or
any such financing statement is sufficient for filing as a financing
statement by the Lender without notice thereof to the Borrower wherever
the Lender in its sole discretion desires to file the same.
(f) Advances by the Lender. On failure of the Borrower to
perform any of the covenants and agreements herein contained, the
Lender may, at its option, perform the same and in so doing may expend
such sums as the Lender may reasonably deem advisable in the
performance thereof, including without limitation the payment of any
taxes, liens and encumbrances, expenditures made in defending against
any adverse claim and all other expenditures that the Lender may be
compelled to make by operation of law or that the Lender may make by
agreement or otherwise for the protection of the security hereof. All
such sums and amounts so expended shall be repayable by the Borrower
immediately without notice or demand, shall constitute additional
Secured Obligations and shall bear interest from the date said amounts
are expended at the default rate of interest provided for in Section
2.02 of the Loan Agreement. No such performance of any covenant or
agreement by the Lender on behalf of the Borrower, and no such advance
or expenditure therefor, shall relieve the Borrower of any default
under the terms of this Agreement. After an Event of Default, the
Lender is authorized to charge any depository account of the Borrower
maintained with the Lender for the amount of such sums and amounts so
expended by the Lender.
4. Special Provisions Regarding Collateral.
(a) Chief Executive Office. The Borrower will not maintain a
place of business at which any material portion of its assets or
operations is located or conducted, respectively, or an executive
office at a location other than those specified on Schedule A without
first providing the Lender thirty (30) days' prior written notice of
its intent to do so.
(b) Chief Executive Office. The Borrower agrees that it will
keep all of its books and records relating to the Collateral only at
its chief executive office as specified on Schedule A. Further, the
Borrower agrees that it will promptly inform the Lender of any change
in the identity of all or
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<PAGE> 33
any part of the Collateral that might require new filings or other
action to assure continued perfection of the interests granted hereby.
(c) Cash Collateral Account. Upon the occurrence and during
the continuation of any Event of Default, the Lender may establish an
account in the name of (and under the exclusive control of) the Lender
(the "Cash Collateral Account") and the Borrower agrees that it will,
at the request of the Lender, direct or cause each of the Called
Contributions to be placed in the Cash Collateral Account until such
account shall contain funds equal to or greater than the balance
outstanding under the Note (including any accrued and unpaid interest
thereon).
5. Lender's Right to Deliver Funding Notices;
Power of Attorney.
(a) Upon the occurrence and during the continuance of an Event
of Default, the Lender shall have the right to deliver Funding Notices
to Limited Partners in the name of the Borrower or the General Partner
from time to time for Called Contributions in an amount not in excess
of the balance outstanding under the Note (including any accrued and
unpaid interest thereon and any other amounts due and owing by the
Borrower to the Lender), to direct the Limited Partners to make payment
of Called Contributions (up to the balance outstanding under the Loan,
including all accrued and unpaid interest thereon and any other amounts
due and owing by the Borrower to the Lender) directly to the Lender in
satisfaction of the Secured Obligations or to deposit the Called
Contribution of such Limited Partner in the Cash Collateral Account, to
endorse over to the Lender the Borrower's name on any checks, notes,
acceptances, money orders, drafts or other forms of payment or security
that may come into the Lender's possession (and the General Partner
hereby waives notice of presentment, protest and non-payment of any
instrument so endorsed), to sign the Borrower's name on claims to
enforce collection of such Called Contributions, all to the end of
making payment of such Called Contributions to the Lender in
satisfaction of the Secured Obligations, and to otherwise do all things
necessary to carry out this Agreement, and all to the extent of the
Lender's interest in the Collateral granted pursuant to the terms of
this Agreement. After the occurrence and during the continuance of an
Event of Default, in the event the Borrower or the General Partner (or
any Person acting for or in concert with such persons) shall,
notwithstanding the existence of the Cash Collateral Account and the
direction to the Limited Partners set forth in Sections 4(c) and 5,
receive any monies, checks, drafts or other similar negotiable items of
payments made with respect to any Funding Notice, the Borrower, General
Partner or such Person shall receive the same in trust and shall
deliver to the
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<PAGE> 34
Lender (or to a depositary designated by the Lender) in original form
and on the date of receipt thereof, all checks, drafts, notes, money
orders, acceptances, cash and other evidences of indebtedness.
(b) In addition to any other powers of attorney contained
herein, the Borrower and the General Partner appoints the Lender, its
nominee, or any other person whom the Lender may designate, as the
Borrower's or General Partner's attorney in fact, with full power, to
take any and all of the foregoing actions set forth in Section 5(a)
hereof only upon the occurrence and during the continuance of an Event
of Default and subject to the limitations set forth in Section 5(a)
hereof. To the extent permitted by applicable law, the Borrower and
General Partner hereby ratifies and approves all acts of any such
attorney and agrees that neither the Lender nor any such attorney will
be liable for any acts or omissions nor for any error of judgment or
mistake of fact or law other than their gross negligence or willful
misconduct. The foregoing power of attorney, being coupled with an
interest, is irrevocable until the Secured Obligations have been fully
satisfied. The Lender may file one or more financing statements
disclosing its security interest in any or all of the Collateral
without either of the Borrower's signature appearing thereon. The
Borrower also hereby grants the Lender a power of attorney to execute
any such financing statement, or amendments and supplements to
financing statements, on behalf of the Borrower without notice thereof
to the Borrower, which power of attorney is coupled with an interest
and is irrevocable until the Secured Obligations have been fully
satisfied.
6. Remedies upon Event of Default.
(a) General Remedies. Upon the occurrence and during the
continuation of any Event of Default, the Lender shall have, in
addition to all other rights provided herein (including without
limitation those rights provided in Sections 4(c), 5 and 6(b) hereof)
or by law, the rights and remedies of a secured party under the Code
(regardless of whether the Code is the law of the jurisdiction where
the rights or remedies are asserted and regardless of whether the Code
applies to the Collateral), and further the Lender may, without demand
and without advertisement, notice, hearing or process of law, all of
which the Borrower hereby waives to the extent permitted by law, at any
time or times, sell and deliver any or all Collateral held by or for it
at public or private sale, for cash, upon credit or otherwise, at such
prices and upon such terms as the Lender deems advisable, in its sole
discretion, provided that said disposition complies with any and all
mandatory legal requirements and is commercially reasonable in all
respects. In addition to all other sums due the Lender hereunder, the
Borrower agrees that it will pay the Lender all reasonable
-6-
<PAGE> 35
costs and expenses incurred by the Lender, including reasonable
attorneys' fees and court costs, in obtaining or liquidating the
Collateral, in enforcing payment of Secured Obligations, or in the
prosecution or defense of any action or proceeding by or against the
Lender, or the Borrower concerning any matter arising out of or
connected with this Agreement or the Collateral or Secured Obligations,
including without limitation any of the foregoing arising in, arising
under or related to a case under the United States Bankruptcy Code. To
the extent the rights of notice cannot be legally waived hereunder, the
Borrower agrees that any requirement of reasonable notice shall be met
if such notice is personally served on or mailed, postage prepaid, to
the Borrower in accordance with Section 8(b) hereof at least 10 days
before the time of sale or other event giving rise to the requirement
of such notice. The Lender shall not be obligated to make any sale or
other disposition of the Collateral regardless of notice having been
given. To the extent permitted by law, the Lender may be the purchaser
at any such sale. To the extent permitted by applicable law, the
Borrower hereby waives all of its rights of redemption from any such
sale. Subject to the provisions of applicable law, the Lender may
postpone or cause the postponement of the sale of all or any portion of
the Collateral by announcement at the time and place of such sale, and
such sale may, without further notice, to the extent permitted by law,
be made at the time and place to which the sale was postponed or the
Lender may further postpone such sale by announcement made at such
time and place.
(b) Additional Remedy. In addition the foregoing, upon the
occurrence and during the continuance of any Event of Default, the
Lender shall have the right, in its own name or in the name of the
Borrower or of the General Partner, to institute legal proceedings to
collect any Called Contribution that has not been timely paid by a
Limited Partner in an amount not in excess of such Limited Partner's
pro rata share (based on its Percentage) of the Collateral.
(c) Nonexclusive Nature of Remedies. Failure by the Lender to
exercise any right, remedy or option under this Agreement or any other
agreement between the Lender and the Borrower, or provided by law, or
delay by the Lender in exercising the same, shall not operate as a
waiver; no waiver hereunder shall be effective unless it is in writing,
signed by the party against whom such waiver is sought to be enforced
and then only to the extent specifically stated. To the extent
permitted by law, neither the Lender, nor any party acting as attorney
for the Lender, shall be liable hereunder for any acts or omissions or
for any error of judgment or mistake of fact or law other than their
gross negligence or willful misconduct. The rights and remedies of the
Lender under this Agreement shall
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<PAGE> 36
be cumulative and not exclusive of any other right or remedy which the
Lender may have. The Lender, by anything herein or in any assignment or
otherwise, does not assume any of the General Partner's obligations
under the Borrower's Partnership Agreement or otherwise, and the Lender
shall not be responsible in any way for the performance by such General
Partner of any of the terms and conditions thereof or hereof.
7. Continuing Agreement. This Agreement shall be a continuing
agreement in every respect and shall remain in full force and effect until all
of the Secured Obligations have been fully paid and satisfied. Upon the
termination of this Agreement, the Lender shall, upon the request and at the
expense of the Borrower, forthwith release all of its liens and security
interests hereunder and execute any documents necessary to effectuate such
release, including UCC-3 termination statements. Notwithstanding the foregoing
all releases and indemnities provided hereunder shall survive termination of
this Agreement.
8. Miscellaneous.
(a) This Agreement and the provisions hereof may be waived,
amended, modified, changed, discharged or terminated only by an
instrument in writing and signed by the Borrower and the Lender. This
Agreement shall create a continuing security interest in the Collateral
and shall be binding upon the Borrower, its successors and assigns and
shall inure, together with the rights and remedies of the Lender
hereunder, to the benefit of the Lender and its successors and assigns;
provided, however, that the Borrower shall not assign its rights or
delegate its duties hereunder without the Lender's prior written
consent and any purported assignment in derogation of this section
shall be null and void. Without limiting the generality of the
foregoing, the Lender may assign or otherwise transfer all or any
portion of the Secured Obligations to any other person or entity, and
such other person or entity shall thereupon become vested with all of
the benefits in respect thereof granted to the Lender herein, subject,
however, to the provisions of the Loan Agreement.
(b) All communications provided for herein shall be in
writing, except as otherwise specifically provided for hereinabove, and
shall be given in accordance with Section 8.01 of the Loan Agreement.
(c) In the event that any provision hereof shall be deemed to
be invalid by reason of the operation of any law or by reason of the
interpretation placed thereon by any court, this Agreement shall be
construed as not containing such provision with respect to any
jurisdiction where such law or interpretation is operative, and the
invalidity of such provision shall not affect the validity of any
remaining provision hereof,
-8-
<PAGE> 37
and any and all other provisions hereof which are otherwise lawful and
valid shall remain in full force and effect.
(d) THIS AGREEMENT AND ALL MATTERS RELATING HERETO SHALL BE
GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.
TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE BORROWER HEREBY
IRREVOCABLY WAIVES THE DEFENSE OF AN INCONVENIENT FORUM TO MAINTENANCE
OF ANY ACTION OR PROCEEDING BY THE LENDER IN SUCH COURTS. THE BORROWER
HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY.
(e) The headings in this instrument are for convenience of
reference only and shall not limit or otherwise affect the meaning of
any provision hereof.
(f) This Agreement may be executed in any number of
counterparts and by different parties hereto on separate counterparts,
each constituting an original, but all together one and the same
instrument.
[Remainder of page intentionally left blank]
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<PAGE> 38
IN WITNESS WHEREOF, the Borrower has caused this Agreement to
be duly executed as of the date first above written.
WHITEHALL STREET REAL ESTATE LIMITED
PARTNERSHIP VII, a Delaware limited partnership
By: WH ADVISORS, L.P. VII, its General Partner
By: WH ADVISORS, INC. VII, its
General Partner
By: __________________________________
Name:
Title:
The undersigned General Partner joins in
this Security Agreement for the purpose of
agreeing to the provisions relating to the
General Partner contained in Sections 5 and
6 hereof.
WH ADVISORS, L.P. VII, a Delaware Limited
Partnership
By: WH ADVISORS, INC. VII, its
General Partner
By:_______________________________________
Name:
Title:
<PAGE> 39
Accepted and agreed to as of the date first above written.
THE GOLDMAN SACHS GROUP, L.P.
BY: THE GOLDMAN SACHS CORPORATION,
its General Partner
By:______________________________
Name:
Title:
<PAGE> 40
SCHEDULE A
to
Security Agreement
Chief Executive Office
and Chief Place of Business
Whitehall Street Real Estate Limited Partnership VII
Bowling Green Station
P.O. Box 478
New York, NY 10274-0478
Attention: Kevin D. Naughton
Telephone: (212) 902-9873
<PAGE> 1
EXHIBIT (c) 1
AGREEMENT AND PLAN OF MERGER
dated as of
May 29, 1997
among
INTEGRATED LIVING COMMUNITIES, INC.,
WHITEHALL STREET REAL ESTATE LIMITED PARTNERSHIP VII
and
SLC Acquisition Corp.
<PAGE> 2
TABLE OF CONTENTS
PAGE
----
ARTICLE I THE OFFER...................................................... 2
SECTION 1.01. The Offer.......................................... 2
SECTION 1.02. Company Actions.................................... 3
ARTICLE II THE MERGER.................................................... 5
SECTION 2.01. The Merger......................................... 5
SECTION 2.02. Conversion of Shares............................... 6
SECTION 2.03. Exchange of Certificates........................... 6
SECTION 2.04. Stock Options...................................... 8
SECTION 2.05. Dissenting Shares.................................. 8
SECTION 2.06. Adjustments........................................ 9
ARTICLE III THE SURVIVING CORPORATION; DIRECTORS AND
OFFICERS............................................ 9
SECTION 3.01. Certificate of Incorporation....................... 9
SECTION 3.02. Bylaws............................................. 10
SECTION 3.03. Directors and Officers............................. 10
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE
COMPANY............................................. 10
SECTION 4.01. Corporate Existence and Power...................... 10
SECTION 4.02. Corporate Authorization............................ 10
SECTION 4.03. Governmental Authorization......................... 11
SECTION 4.04. Non-Contravention.................................. 11
SECTION 4.05. Capitalization..................................... 11
SECTION 4.06. Subsidiaries....................................... 12
SECTION 4.07. Reports............................................ 13
SECTION 4.08. Financial Statements............................... 14
SECTION 4.09. Proxy Statement; Offer Documents; Schedule
14D-1; Schedule 14D-9.............................. 14
SECTION 4.10. Absence of Certain Changes......................... 15
SECTION 4.11. Litigation......................................... 17
SECTION 4.12. Certificate of Incorporation and Bylaws............ 17
SECTION 4.13. ERISA.............................................. 17
SECTION 4.14. Taxes.............................................. 19
SECTION 4.15. Finders and Investment Bankers..................... 19
SECTION 4.16. Opinion of Financial Advisor....................... 19
SECTION 4.17. Vote Required...................................... 19
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<PAGE> 3
SECTION 4.18. Anti-takeover Plan; State Takeover Statutes........ 20
SECTION 4.19. Environmental Matters.............................. 20
SECTION 4.20. Title to Properties; Absence of Liens
and Encumbrances; Leases; Condition of Facilities 21
SECTION 4.21. Compliance with Laws; Government Approvals......... 23
SECTION 4.22. Undisclosed Liabilities............................ 23
SECTION 4.23. Insurance. ........................................ 23
SECTION 4.24. Absence of Sensitive Payments...................... 24
SECTION 4.25. Affiliate Transactions............................. 24
SECTION 4.26. Contracts. ........................................ 24
SECTION 4.27. Offer Price. ...................................... 25
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT...................... 25
SECTION 5.01. Corporate Existence and Power...................... 25
SECTION 5.02. Corporate Authorization............................ 26
SECTION 5.03. Governmental Authorization......................... 26
SECTION 5.04. Non-Contravention.................................. 26
SECTION 5.05. Proxy Statement; Offer Documents; Schedule
14D-1; Schedule 14D-9......................... 27
SECTION 5.06. Financing. ........................................ 27
ARTICLE VI COVENANTS..................................................... 28
SECTION 6.01. Conduct of the Company............................. 28
SECTION 6.02. Access to Information.............................. 31
SECTION 6.03. Other Offers. ..................................... 32
SECTION 6.04. Notices of Certain Events.......................... 33
SECTION 6.05. Merger Subsidiary.................................. 33
SECTION 6.06. Director and Officer Liability..................... 33
SECTION 6.07. Employee Benefits.................................. 34
SECTION 6.08. Board Representation............................... 35
SECTION 6.09. Meeting of the Company's Stockholders.............. 35
SECTION 6.10. Proxy Statement.................................... 36
SECTION 6.11. Best Efforts....................................... 36
SECTION 6.12. Public Announcements............................... 37
SECTION 6.13. Further Assurances................................. 37
ARTICLE VII CONDITIONS TO THE MERGER..................................... 37
SECTION 7.01. Conditions to the Obligations of Each Party........ 37
ARTICLE VIII TERMINATION.................................................. 38
SECTION 8.01. Termination........................................ 38
SECTION 8.02. Effect of Termination.............................. 39
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<PAGE> 4
ARTICLE IX MISCELLANEOUS.................................................. 39
SECTION 9.01. Notices............................................ 39
SECTION 9.02. Survival of Representations and Warranties and
Agreements......................................... 41
SECTION 9.03. Amendments; No Waivers............................. 41
SECTION 9.04. Fees and Expenses.................................. 41
SECTION 9.05. Successors and Assigns............................. 42
SECTION 9.06. Governing Law...................................... 42
SECTION 9.07. Counterparts; Effectiveness........................ 42
SECTION 9.08. Entire Agreement................................... 42
SECTION 9.09. Headings........................................... 43
SECTION 9.10. Severability....................................... 43
SECTION 9.11. Specific Performance............................... 43
<PAGE> 5
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of May 29, 1997, among
INTEGRATED LIVING COMMUNITIES, INC., a Delaware corporation (the "Company"),
WHITEHALL STREET REAL ESTATE LIMITED PARTNERSHIP VII, a Delaware limited
partnership ("Parent"), and SLC ACQUISITION CORP., a Delaware corporation and a
wholly owned subsidiary of Parent ("Merger Subsidiary").
BACKGROUND
The respective Boards of Directors of Parent, Merger
Subsidiary and the Company have each approved the acquisition of the Company by
Parent on the terms and subject to the conditions set forth in this Agreement.
In furtherance of such acquisition, Parent proposes to cause
Merger Subsidiary to make a tender offer to purchase all the issued and
outstanding shares of the Company's Common Stock, par value $.01 per share
("Company Common Stock"), at a price of $11.50 per share net to the seller in
cash, without interest, upon the terms and subject to the conditions set forth
in this Agreement (such tender offer, as it may be amended and supplemented from
time to time as permitted under this Agreement, the "Offer"); and the Board of
Directors of the Company has adopted resolutions approving the Offer and
recommending that the Company's stockholders accept the Offer.
The respective Boards of Directors of Parent, Merger
Subsidiary and the Company have each approved, upon terms and subject to the
conditions set forth in this Agreement, the merger of Merger Subsidiary with and
into the Company (the "Merger"), whereby each issued and outstanding share of
Company Common Stock not owned directly or indirectly by Parent or the Company,
except shares of Company Common Stock held by persons who object to the Merger
and comply with all provisions of Delaware law concerning the right of
stockholders to dissent from the Merger and require appraisal of their shares of
Company Common Stock, will be converted into the right to receive per share
consideration paid pursuant to the Offer.
Concurrently with the execution of this Agreement and in order
to induce Parent to enter into this Agreement, on the date hereof, Parent,
Merger Subsidiary and Integrated Health Systems, Inc., a Delaware corporation
and the holder of approximately 37% of the outstanding shares of Company Common
Stock ("IHS"), have entered into a Voting and Tender Agreement (the "Tender
Agreement").
<PAGE> 6
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth
herein, the parties hereto agree as follows:
ARTICLE I
THE OFFER
SECTION 1.01. The Offer. (a) Subject to the provisions of this
Agreement, as promptly as practicable (but in no event later than five business
days after the date of the first public announcement of the execution of this
Agreement), Merger Subsidiary shall, and Parent shall cause Merger Subsidiary
to, commence, within the meaning of Rule 14d-2 under the Securities Exchange Act
of 1934 and the rules and regulations promulgated thereunder (the "Exchange
Act"), the Offer. The obligation of Merger Subsidiary to, and of Parent to cause
Merger Subsidiary to, consummate the Offer and accept for payment and pay for
any shares of Common Stock tendered shall be subject only to the satisfaction of
the conditions set forth in Annex I and to the terms and conditions of this
Agreement; provided that the Minimum Condition (as defined in Annex I) may not
be waived by Parent and Subsidiary without the Company's consent. As used
herein, "business day" means any day other than a Saturday, Sunday or a federal
holiday, and consists of the time period from 12:01 a.m. through 12:00 midnight,
New York City time.
(b) On the date of commencement of the Offer, Parent and
Merger Subsidiary shall file with the Securities and Exchange Commission (the
"SEC") with respect to the Offer a Tender Offer Statement on Schedule 14D-1 (as
amended and supplemented from time to time, the "Schedule 14D-1"), which shall
comply in all material respects with the provisions of applicable federal
securities laws, and shall contain the offer to purchase relating to the Offer
and forms of the related letter of transmittal and other appropriate documents
(which documents, as amended or supplemented from time to time, are referred to
herein collectively as the "Offer Documents").
(c) The Offer shall initially expire 20 business days after
the date of its commencement; provided, however, that, unless this Agreement is
terminated in accordance with Article VIII (other than due to the failure to
satisfy the Minimum Condition or the failure to occur of the expiration or
termination of applicable waiting periods under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 (the "HSR Act")), in which case the Offer (whether or
not previously extended in accordance with
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the terms hereof) shall expire on such date of termination, Parent and Merger
Subsidiary shall be obligated to extend the expiration date of the Offer from
time to time to the earlier of (i) the date on which Merger Subsidiary purchases
or becomes obligated to purchase, pursuant to the Offer, that number of shares
of Company Common Stock that would represent at least a majority of the
outstanding shares of Company Common Stock on a fully diluted basis and (ii) the
date 35 business days after the date of its commencement. Merger Subsidiary may
in its sole discretion increase the price per share of Company Common Stock
payable in the Offer, but neither Parent nor Merger Subsidiary shall, without
the prior written consent of the Company, decrease the price per share of Common
Stock payable in the Offer, change the form of consideration payable in the
Offer, decrease the number of shares of Common Stock sought pursuant to the
Offer, change or impose additional conditions to the Offer or otherwise amend
the Offer in any manner adverse to the Company's stockholders. Notwithstanding
the foregoing, Merger Subsidiary may from time to time, without the consent of
the Company, extend the Offer (i) if at the then scheduled expiration date of
the Offer any of the conditions to Merger Subsidiary's obligation to accept for
payment and pay for shares of Common Stock shall not be satisfied or waived,
until up to such time as such conditions are satisfied or waived and (ii) for
any period required by any rule, regulation, interpretation or position of the
SEC or its staff applicable to the Offer. Subject to the terms and conditions of
the Offer and this Agreement, Merger Subsidiary shall, and Parent shall cause
Merger Subsidiary to, accept for payment and pay for shares of Common Stock
validly tendered and not withdrawn pursuant to the Offer as soon as possible
after the expiration thereof.
(d) Parent shall provide or cause to be provided to Merger
Subsidiary on a timely basis the funds necessary to purchase any shares of
Common Stock that Merger Subsidiary becomes obligated to purchase pursuant to
the Offer.
SECTION 1.02. Company Actions. (a) The Company hereby approves
of and consents to the Offer and represents that (i) the Board of Directors of
the Company, at a meeting duly called and held, has adopted resolutions (A)
determining that this Agreement and the terms of each of the Offer and the
Merger are fair to and in the best interests of the Company's stockholders, (B)
approving the Offer, the Merger and this Agreement and acknowledging that such
approval is effective for purposes of Section 203 of the Delaware General
Corporation Law ("Delaware Law") and (C) recommending acceptance of the Offer
and approval of the Merger and this Agreement by the Company's stockholders and
(ii) the Company's financial advisor, Smith Barney Inc. ("Smith Barney"), has
delivered to the Board of Directors of the Company an opinion to the effect
that, as of the date of this Agreement, the consideration to be received by the
holders of Company Common Stock (other than Parent, IHS or their respective
affiliates) in the Offer and the Merger, taken together, is fair to such holders
from a financial point of view. The Company hereby consents to the inclusion in
the Offer Documents of the recommendation of the Board of Directors of the
Company described in the first sentence
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<PAGE> 8
of this Section 1.02(a) and represents that it has obtained all necessary
consents to permit the inclusion of the fairness opinion of Smith Barney in the
Offer Documents and the Proxy Statement (as defined below).
(b) The Company shall file with the SEC on the date of
commencement of the Offer a Solicitation/Recommendation Statement on Schedule
14D-9 (as amended and supplemented from time to time, the "Schedule 14D-9") and
shall disseminate the Schedule 14D-9 to stockholders of the Company as required
by Rule 14D-9 promulgated under the Exchange Act. To the extent practicable, the
Company shall cooperate with Parent and Merger Subsidiary in mailing or
otherwise disseminating the Schedule 14D-9 with the appropriate Offer Documents
to the Company's stockholders. The Schedule 14D-9 shall comply in all material
respects with the provisions of applicable federal securities laws. The Company
shall deliver copies of the proposed form of the Schedule 14D-9 to Parent within
a reasonable time prior to the filing thereof with the SEC for review and
comment by Parent and its counsel (who shall provide any comments thereon as
soon as practicable). The Company agrees to provide in writing to Parent and its
counsel, promptly after receipt thereof, any comments that the Company or its
counsel may receive from the SEC or its staff with respect to the Schedule
14D-9. The Company shall promptly correct any information in the Schedule 14D-9
that shall become false or misleading in any material respect, and shall take
all steps necessary to cause the Schedule 14D-9 as so corrected to be filed with
the SEC and disseminated to the stockholders of the Company as and to the extent
required by applicable laws.
(c) In connection with the Offer, the Company shall promptly
furnish Parent with (or cause Parent to be furnished with) mailing labels,
security position listings and any available listing or computer file containing
the names and addresses of the record holders of the shares of Common Stock as
of a recent date, and of those persons becoming record holders after such date,
and shall furnish Parent with such information and assistance as Parent or its
agents may reasonably request in communicating the Offer to the stockholders of
the Company. Subject to the requirements of applicable law, and except for such
steps as are necessary to disseminate the Offer Documents and any other
documents necessary to consummate the Merger, Parent and Merger Subsidiary
shall, and shall cause each of their affiliates to, hold in confidence the
information contained in any of such labels, listings and files, use such
information only in connection with the Offer and the Merger, and, if this
Agreement is terminated, deliver to the Company all copies of such information
or extracts therefrom then in their possession or under their control.
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ARTICLE II
THE MERGER
SECTION 2.01. The Merger. (a) Upon the terms and subject to
the conditions hereof, and in accordance with the relevant provisions of
Delaware Law, Merger Subsidiary shall be merged with and into the Company as
soon as practicable following the satisfaction or waiver, if permissible, of the
conditions set forth in Article VII. Following the Merger, the Company shall
continue as the surviving corporation (the "Surviving Corporation") and shall
continue its existence under the laws of the State of Delaware, and the separate
corporate existence of Merger Subsidiary shall cease. Notwithstanding the
foregoing, Parent may elect at any time prior to the consummation of the Merger,
instead of merging Merger Subsidiary with and into the Company as provided
above, to merge the Company with and into Merger Subsidiary; provided, however,
that the Company shall not be deemed to have breached any of its
representations, warranties, covenants or agreements set forth in this Agreement
solely by reason of such election. In such event, this Agreement shall be deemed
modified to reflect the foregoing, and if requested by Parent, the Company
agrees to execute an appropriate amendment to this Agreement in order to reflect
the foregoing. At the election of Parent, any wholly-owned subsidiary of Parent
may be substituted for Merger Subsidiary as a constituent corporation in the
Merger. In such event, this Agreement shall be deemed modified to reflect the
foregoing, and if requested by Parent, the Company agrees to execute an
appropriate amendment to this Agreement in order to reflect the foregoing.
(b) As soon as practicable following the satisfaction or
waiver of the conditions set forth in Article VII, the Merger shall be
consummated by filing with the Secretary of State of the State of Delaware a
certificate of merger or other appropriate documents (in any case, the
"Certificate of Merger") in accordance with Delaware Law. The Merger shall
become effective at such time as the Certificate of Merger is duly filed, or at
such other time as Merger Subsidiary and the Company shall specify in the
Certificate of Merger (the time the Merger becomes effective being the
"Effective Time").
(c) The Merger shall have the effect specified under Delaware
Law. As of the Effective Time, the Company shall be a wholly-owned subsidiary of
Parent.
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<PAGE> 10
SECTION 2.02. Conversion of Shares. At the Effective Time, by
virtue of the Merger and without any action on the part of Parent, Merger
Subsidiary, the Company or the holders of any of the following securities:
(a) each share of Company Common Stock held by the
Company or any subsidiary of the Company as treasury stock and
each issued and outstanding share of Company Common Stock
owned by Parent, Merger Subsidiary or any other subsidiary of
Parent shall be cancelled and retired and shall cease to
exist, and no payment or consideration shall be made with
respect thereto;
(b) each issued and outstanding share of Company
Common Stock, other than (i) shares of Common Stock referred
to in paragraph (a) above and (ii) Dissenting Shares (as
defined in Section 2.05) shall be converted into the right to
receive from the Surviving Corporation an amount in cash,
without interest, equal to the price per share of Common Stock
paid pursuant to the Offer (the "Merger Consideration"). At
the Effective Time, all such shares of Company Common Stock
shall no longer be outstanding and shall automatically be
cancelled and retired and shall cease to exist, and each
holder of a certificate representing any such shares of
Company Common Stock shall cease to have any rights with
respect thereto, except the right to receive the Merger
Consideration, without interest; and
(c) each issued and outstanding share of capital
stock of Merger Subsidiary shall be converted into one fully
paid and nonassessable share of common stock, par value $0.01,
of the Surviving Corporation.
SECTION 2.03. Exchange of Certificates. (a) Prior to the
Effective Time, Parent shall appoint a bank or trust company to act as
disbursing agent (the "Disbursing Agent") for the payment of Merger
Consideration upon surrender of certificates representing the shares of Company
Common Stock. Parent will enter into a disbursing agent agreement with the
Disbursing Agent, in form and substance reasonably acceptable to the Company,
and at such times, and from time to time, as the Disbursing Agent requires funds
to make the payments pursuant to Section 2.02, Parent shall deposit or cause to
be deposited with the Disbursing Agent cash in an aggregate amount necessary to
make the payments pursuant to Section 2.02 to holders of shares of Company
Common Stock (such amounts being hereinafter referred to as the "Exchange
Fund").
(b) Promptly after the Effective Time, the Surviving
Corporation shall cause the Disbursing Agent to mail to each person who was a
record holder as of the
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Effective Time of an outstanding certificate or certificates which immediately
prior to the Effective Time represented shares of Company Common Stock (the
"Certificates"), and whose shares were converted into the right to receive
Merger Consideration pursuant to Section 2.02, a form of letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss and title
to the Certificates shall pass, only upon proper delivery of the Certificates to
the Disbursing Agent) and instructions for use in effecting the surrender of the
Certificates in exchange for payment of the Merger Consideration. Upon surrender
to the Disbursing Agent of a Certificate, together with such letter of
transmittal duly executed and such other documents as may be reasonably required
by the Disbursing Agent, the holder of such Certificate shall be paid promptly
in exchange therefor cash in an amount equal to the product of the number of
shares of Company Common Stock represented by such Certificate multiplied by the
Merger Consideration, and such Certificate shall forthwith be canceled. No
interest will be paid or accrued on the cash payable upon the surrender of the
Certificates. If payment is to be made to a person other than the person in
whose name the Certificate surrendered is registered, it shall be a condition of
payment that the Certificate so surrendered be properly endorsed or otherwise be
in proper form for transfer and that the person requesting such payment pay any
transfer or other taxes required by reason of the payment to a person other than
the registered holder of the Certificate surrendered or establish to the
satisfaction of the Surviving Corporation that such tax has been paid or is not
applicable. Until surrendered in accordance with the provisions of this Section
2.03, each Certificate (other than Certificates representing shares of Company
Common Stock owned by Parent, Merger Subsidiary or any other subsidiary of
Parent, shares of Company Common Stock held in the treasury of the Company, and
Dissenting Shares) shall represent for all purposes only the right to receive
the Merger Consideration in cash multiplied by the number of shares of Company
Common Stock evidenced by such Certificate, without any interest thereon.
(c) At and after the Effective Time, there shall be no
registration of transfers of shares of Company Common Stock which were
outstanding immediately prior to the Effective Time on the stock transfer books
of the Surviving Corporation. From and after the Effective Time, the holders of
shares of Company Common Stock outstanding immediately prior to the Effective
Time shall cease to have any rights with respect to such shares of Company
Common Stock except as otherwise provided in this Agreement or by applicable
law. All cash paid upon the surrender of Certificates in accordance with the
terms of this Article II shall be deemed to have been paid in full satisfaction
of all rights pertaining to the shares of Company Common Stock previously
represented by such Certificates. If, after the Effective Time, Certificates are
presented to the Surviving Corporation for any reason, such Certificates shall
be cancelled and exchanged for cash as provided in this Article II. At the close
of business on the day of the Effective Time the stock ledger of the Company
shall be closed.
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(d) At any time more than six months after the Effective Time,
the Surviving Corporation shall be entitled to require the Disbursing Agent to
deliver to it any funds which had been made available to the Disbursing Agent
and not disbursed in exchange for Certificates (including, without limitation,
all interest and other income received by the Disbursing Agent in respect of all
such funds). Thereafter, holders of shares of Company Common Stock shall look
only to the Surviving Corporation (subject to the terms of this Agreement,
abandoned property, escheat and other similar laws) as general creditors thereof
with respect to any Merger Consideration that may be payable, without interest,
upon due surrender of the Certificates held by them. If any Certificates shall
not have been surrendered prior to three years after the Effective Time (or
immediately prior to such time on which any payment in respect hereof would
otherwise escheat or become the property of any governmental unit or agency),
the payment in respect of such Certificates shall, to the extent permitted by
applicable law, become the property of the Surviving Corporation, free and clear
of all claims or interest of any person previously entitled thereto.
Notwithstanding the foregoing, none of Parent, the Company, the Surviving
Corporation nor the Disbursing Agent shall be liable to any holder of a share of
Company Common Stock for any Merger Consideration delivered in respect of such
share of Company Common Stock to a public official pursuant to any abandoned
property, escheat or other similar law.
SECTION 2.04. Stock Options. The Company shall (a) terminate
the Company's 1996 Stock Incentive Plan and 1996 Stock Option Plan
(collectively, the "Company Option Plans") immediately prior to the Effective
Time without prejudice to the rights of the holders of options (the "Options")
awarded pursuant thereto and (b) grant no additional Options under the Company
Option Plans. The Company shall obtain the consent of each holder of an Option
(whether or not then exercisable) under the Company Option Plans at the
Effective Time to the cancellation of such holder's Options (without regard to
the exercise price of such Option), to take effect immediately prior to the
Effective Time. Each such consent shall require the Company to pay, as soon as
practicable following the Effective Time, in respect of each Option, an amount
equal to the excess, if any, of the Merger Consideration over the exercise price
of such Option, multiplied by the number of shares of Company Common Stock
subject to such Option. Notwithstanding the foregoing, payment may be withheld
in respect of any Option until the consent of the holder thereof to its
cancellation as contemplated hereby is obtained. The Company has obtained
consents from the holders of Options listed on Schedule 2.04 to the cancellation
of their Options contemplated by this Section.
SECTION 2.05. Dissenting Shares. (a) Notwithstanding anything
in this Agreement to the contrary, shares of Company Common Stock that are held
by any record holder who has not voted in favor of the Merger or consented
thereto in writing and who has demanded appraisal rights in accordance with
Section 262 of Delaware Law (the "Dissenting Shares") shall not be converted
into the right to receive the Merger
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Consideration but shall become the right to receive such consideration as may be
determined to be due in respect of such Dissenting Shares pursuant to Delaware
Law; provided, however, that any holder of Dissenting Shares who shall have
failed to perfect or shall have withdrawn or lost his rights to appraisal of
such Dissenting Shares, in each case under Delaware Law, shall forfeit the right
to appraisal of such Dissenting Shares, and such Dissenting Shares shall be
deemed to have been converted into the right to receive, as of the Effective
Time, the Merger Consideration without interest. Notwithstanding anything to the
contrary contained in this Section, if the Merger is rescinded or abandoned,
then the right of any stockholder to be paid the fair value of such
stockholder's Dissenting Shares shall cease. The Surviving Corporation shall
comply with all of its obligations under Delaware Law with respect to holders of
Dissenting Shares.
(b) The Company shall give Parent (i) prompt notice of any
demands for appraisal, and any withdrawals of such demands, received by the
Company and any other related instruments served pursuant to Delaware Law and
received by the Company, and (ii) the opportunity to direct all negotiations and
proceedings with respect to demands for appraisal under Delaware Law. The
Company shall not, except with the prior written consent of Parent, make any
payment with respect to any demands for appraisal or negotiate, offer to settle
or settle any such demands.
SECTION 2.06. Adjustments. (a) If at any time during the
period between the date of this Agreement and the date shares of Company Common
Stock are accepted for payment pursuant to the Offer or the Effective Time, any
change in the outstanding shares of Company Common Stock shall occur, including
by reason of any reclassification, recapitalization, stock dividend, stock split
or combination, exchange or readjustment of shares, or any stock dividend
thereon with the record date during such period, the price per share to be paid
to holders of Company Common Stock in the Offer and the Merger, as the case may
be, shall be appropriately adjusted.
ARTICLE III
THE SURVIVING CORPORATION; DIRECTORS AND OFFICERS
SECTION 3.01. Certificate of Incorporation. The Surviving
Corporation shall adopt the certificate of incorporation of the Merger
Subsidiary in effect at the Effective Time as the certificate of incorporation
of the Surviving Corporation until amended in accordance with applicable law;
provided, however, that at the Effective Time, Article I of such certificate
shall be amended by virtue of this Agreement to read as follows: "The name of
the corporation is Integrated Living Communities, Inc."
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SECTION 3.02. Bylaws. The Surviving Corporation shall adopt the bylaws
of Merger Subsidiary in effect at the Effective Time as the bylaws of the
Surviving Corporation until amended in accordance with applicable law.
SECTION 3.03. Directors and Officers. The directors and officers of
Merger Subsidiary immediately prior to the Effective Time shall be the directors
and officers, respectively, of the Surviving Corporation as of the Effective
Time.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
The Company represents and warrants to Parent that:
SECTION 4.01. Corporate Existence and Power. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware, and has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
substantially as now conducted, except where the failure to do so would not
have, individually or in the aggregate, a Company Material Adverse Effect. For
purposes of this Agreement, the term "Company Material Adverse Effect" means any
change or effect that is or is reasonably likely to be materially adverse to the
condition (financial or otherwise), business, assets or results of operations,
of the Company and its Subsidiaries (as defined in Section 4.06(a) hereof) taken
as a whole or adversely affects the ability of the Company to consummate the
transactions contemplated by this Agreement in any material respect or
materially impairs or delays the Company's ability to perform its obligations
hereunder. The Company is duly qualified to do business as a foreign corporation
and is in good standing in each jurisdiction where the character of the property
owned or leased by it or the nature of its activities makes such qualification
necessary, except for those jurisdictions where the failure to be so qualified
would not have, individually or in the aggregate, a Company Material Adverse
Effect.
SECTION 4.02. Corporate Authorization. The execution, delivery and
performance by the Company of this Agreement and the consummation of the Merger
by the Company are within the Company's corporate power and authority and,
except for any required approval by the Company's stockholders in connection
with the consummation of the Merger, have been duly authorized by all necessary
corporate action on the part of the Company. This Agreement has been duly
executed and delivered by the Company and, assuming the due authorization,
execution and delivery thereof by Parent and Merger Subsidiary, constitutes a
legal, valid and binding agreement of the Company.
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SECTION 4.03. Governmental Authorization. The execution, delivery and
performance by the Company of this Agreement and the consummation of the Merger
by the Company do not require any consent, approval, authorization or permit of
or other action by, or filing with, any governmental body, agency, official or
authority other than (i) the filing of appropriate merger documents in
accordance with Delaware Law and (ii) compliance with applicable requirements of
the HSR Act, the Exchange Act, and any applicable state securities or "blue sky"
laws, except for filings and approvals which are not required prior to the
consummation of the Merger and where the failure of any such action to be taken
or filing to be made would not have, individually or in the aggregate, a Company
Material Adverse Effect or prevent or delay consummation of the Merger.
SECTION 4.04. Non-Contravention. The execution, delivery and
performance by the Company of this Agreement and the consummation of the Merger
and the other transactions contemplated hereby by the Company do not and will
not (i) contravene or conflict with the Certificate of Incorporation or By-Laws
of the Company, (ii) assuming compliance with the matters referred to in Section
4.03, contravene or conflict with or constitute a violation of any provision of
any law, rule, regulation, judgment, injunction, order or decree binding upon or
applicable to the Company or any of its Subsidiaries, (iii) constitute a default
under or give rise to a right of termination, cancellation or acceleration of
any right or obligation or to the loss of any benefit or material adverse
modification of the effect (including an increase in the price paid by, or cost
to, the Company or any of its Subsidiaries) of, or under any provision of any
agreement or other instrument to which the Company is a party or that is binding
upon the Company or any of its Subsidiaries or their properties or assets or any
license, franchise, permit or other similar authorization held by the Company or
any of its Subsidiaries, or (iv) result in the creation or imposition of any
Lien on any asset of the Company or any of its Subsidiaries, except with respect
to clauses (iii) and (iv) as set forth in Schedule 4.04 and except for any
occurrences or results referred to in clauses (ii), (iii), and (iv) that would
not have, individually or in the aggregate, a Company Material Adverse Effect or
prevent or delay consummation of the Merger. For purposes of this Agreement,
"Lien" means, with respect to any asset, any mortgage, lien, pledge, charge,
security interest or encumbrance or right of another to or adverse claim of any
kind in respect of such asset.
SECTION 4.05. Capitalization. (a) The authorized capital stock of the
Company consists of (i) 100,000,000 shares of Company Common Stock, of which, as
of the date hereof, (A) 6,697,900 shares were issued and outstanding and (B)
831,750 shares were reserved for issuance upon exercise of options issued
pursuant to the Company Option Plans and (ii) 5,000,000 shares of preferred
stock, $.01 par value per share, none of which are outstanding. Except as
described in this Section 4.05 or in Schedule 4.05, as of the date of this
Agreement, no shares of capital stock of the Company are reserved for
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issuance for any purpose. Since May 5, 1997, no shares of capital stock have
been issued by the Company except pursuant to options for which shares are
adequately reserved under subclause (B) of clause (i) of this paragraph (a).
Except as set forth in Schedule 4.05, the Company has not granted any options
for, or other rights to purchase, any shares of capital stock of the Company.
Each of the issued shares of capital stock of the Company is duly authorized,
validly issued and fully paid and nonassessable, and has not been issued in
violation of (nor are any of the authorized shares of capital stock subject to)
any preemptive or similar rights created by statute, the Certificate of
Incorporation or Bylaws of the Company, or any agreement to which the Company is
a party or is bound.
(b) Except as set forth in paragraph (a) above, there are no options,
warrants or other rights, agreements, arrangements or commitments of any
character to which the Company is a party relating to the issued or unissued
capital stock of the Company or obligating the Company to grant, issue or sell
any shares of the capital stock of the Company. Except as set forth in Schedule
4.05, there are no obligations, contingent or otherwise, of the Company to (i)
repurchase, redeem or otherwise acquire any shares of Company Common Stock or
other capital stock of the Company, or the capital stock or other equity
interests of any Subsidiary of the Company; or (ii) (other than advances to
Subsidiaries in the ordinary course of business) provide material funds to, or
make any material investment in (in the form of a loan, capital contribution or
otherwise), or provide any guarantee with respect to the obligations of, any
Subsidiary of the Company or any other Person, except as permitted by Section
6.01 in respect of certain acquisition and development activities. There are no
outstanding stock appreciation rights or similar derivative securities or rights
of the Company or any of its Subsidiaries. There are no bonds, debentures, notes
or other indebtedness of the Company having the right to vote (or convertible
into, or exchangeable for, securities having the right to vote) on any matters
on which stockholders of the Company may vote. For purposes of this Agreement,
"Person" means any natural person, corporation, business trust, joint venture,
association, company, partnership, limited liability company or other entity, or
any government, or any agency or political subdivision thereof.
(c) The Company has delivered to Parent complete and correct copies of
the Company Option Plans and all forms of Options issued pursuant to the Company
Option Plans, including all amendments thereto. Schedule 4.05 is a complete and
correct list setting forth as of the date hereof, (i) the number of Options
outstanding, (ii) the dates on which such options were granted and (iii) the
exercise price of each outstanding Option.
SECTION 4.06. Subsidiaries. (a) Each Subsidiary of the Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of its jurisdiction of incorporation or is a partnership duly constituted
under its governing law,
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has all requisite corporate or partnership power and authority to own, lease and
operate its properties and to carry on its business substantially as now
conducted and is duly qualified to do business as a foreign corporation or
partnership and is in good standing in each jurisdiction where the character of
the property owned or leased by it or the nature of its activities makes such
qualification necessary, except where failure to be so would not have,
individually or in the aggregate, a Company Material Adverse Effect. All
Subsidiaries of the Company are set forth on Schedule 4.06. For purposes of this
Agreement, "Subsidiary" of any Person means (i) any corporation or other entity
of which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions are directly or indirectly owned by such Person, (ii) any partnership
of which such Person is a general partner and (iii) any limited liability
company of which such Person owns a majority of the membership interests in or
is its managing Member.
(b) Except as set forth on Schedule 4.06, each Subsidiary of the
Company is wholly-owned by the Company, directly or indirectly, free and clear
of any Lien and free and clear of any other limitation or restriction (including
any restriction on the right to vote, sell or otherwise dispose of such capital
stock or other ownership interests). Except as set forth in the Company SEC
Reports or on Schedule 4.06, there are no outstanding (i) securities of the
Company or any of its Subsidiaries convertible into or exchangeable for shares
of capital stock or other voting securities or ownership interests in any such
Subsidiary of the Company, or (ii) options or other rights to acquire from the
Company or any of its Subsidiaries, and no other obligation of the Company or
any of its Subsidiaries to issue, any capital stock, voting securities or other
ownership interests in, or any securities convertible into or exchangeable for
any capital stock, voting securities or ownership interests in, any such
Subsidiary of the Company (the items in clauses (i) and (ii) being referred to
collectively as the "Company Subsidiary Securities"). There are no outstanding
obligations of the Company or any of such Subsidiaries to repurchase, redeem or
otherwise acquire any outstanding Company Subsidiary Securities.
(c) Except as disclosed on Schedule 4.06, the Company does not directly
or indirectly own any equity or similar interest in, or any interest convertible
into or exchangeable or exercisable for any equity or similar interest in, any
corporation, partnership, joint venture or other business association or entity.
SECTION 4.07. Reports. Since December 31, 1996, the Company and its
Subsidiaries have timely filed (i) all forms, reports, statements and other
documents required to be filed with (A) the SEC, including without limitation
(1) all Annual Reports on Form 10-K, (2) all Quarterly Reports on Form 10-Q, (3)
all proxy statements relating to meetings of stockholders (whether annual or
special), (4) all Current Reports on Form 8-K and (5) all other reports,
schedules, registration statements or other documents
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(collectively referred to as the "Company SEC Reports"), and (B) any other
applicable state securities authorities and (ii) all forms, reports, statements
and other documents required to be filed with any other applicable federal or
state regulatory authorities, including, without limitation, state insurance and
health regulatory authorities, except where the failure to file any such forms,
reports, statements or other documents would not have a Company Material Adverse
Effect (all such forms, reports, statements and other documents in clauses (i)
and (ii) of this Section 4.07 being referred to herein, collectively, as the
"Company Reports"). The Company Reports (i) have been made available to Parent,
(ii) were prepared in all material respects in accordance with the requirements
of applicable law (including, with respect to the Company SEC Reports, the
Securities Act of 1933 and the rules and regulations promulgated thereunder (the
"Securities Act") or the Exchange Act, as the case may be) and (iii) did not at
the time they were filed contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.
SECTION 4.08. Financial Statements. The audited consolidated financial
statements and unaudited consolidated interim financial statements of the
Company and its consolidated Subsidiaries included in the Company SEC Reports,
including reports on Forms 10-K and 10-Q, comply as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, were prepared in accordance with
generally accepted accounting principles applied on a consistent basis (except
as may be indicated in the notes thereto), and fairly present the consolidated
financial position of the Company and its consolidated Subsidiaries as of the
dates thereof and their consolidated results of operations and cash flows for
the periods then ended (subject, in the case of any unaudited interim financial
statements, to normal year-end adjustments, none of which would have,
individually or in the aggregate, a Company Material Adverse Effect).
SECTION 4.09. Proxy Statement; Offer Documents; Schedule 14D-1;
Schedule 14D-9. (a) The Schedule 14D-9 will not, at the time filed with the SEC,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except that no representation is made by the Company with respect to
information supplied by Parent or Merger Subsidiary in writing specifically for
inclusion in the Schedule 14D-9.
(b) The Proxy Statement and the information supplied by the Company in
writing specifically for inclusion or incorporation by reference in the Schedule
14D-1 and the Offer Documents will not, in the case of the Schedule 14D-1 and
the Offer Documents, at the time filed with the SEC, or, in the case of the
Proxy Statement, at the time it is mailed to the Company's stockholders, at the
time of the special meeting of the
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stockholders of the Company to approve the Merger (the "Meeting") or at the
Effective Time, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading, except that no representation is made by the Company with
respect to information supplied by Parent or Merger Subsidiary in writing
specifically for inclusion or incorporation by reference in the Proxy Statement.
The letter to stockholders, notice of meeting, proxy statement and form of
proxy, or the information statement, as the case may be, if any, to be
distributed to stockholders of the Company in connection with the Merger, or any
schedule required to be filed with the SEC in connection therewith, are
collectively referred to as the "Proxy Statement." If, prior to the Effective
Time, any event relating to the Company or any of its subsidiaries or any of
their affiliates, officers or directors is discovered by the Company that should
be set forth in an amendment of or supplement to the Schedule 14D-1 or the Offer
Documents, the Company will promptly inform Parent. The Proxy Statement and any
amendments or supplements thereto will, when filed, comply as to form in all
material respects with the applicable requirements of the Exchange Act.
SECTION 4.10. Absence of Certain Changes. Except as disclosed in
Schedule 4.10, since December 31, 1996 (a) except as permitted by Section 6.01
in respect of certain acquisition and development activities or as described in
any Company SEC Report, the Company and its Subsidiaries have conducted their
business in all material respects in the ordinary course consistent with past
practices, (b) except as described in any Company SEC Report, there has not been
any event or events having, individually or in the aggregate, a Company Material
Adverse Effect (provided, however, that changes affecting the health care
industry generally or in the subacute healthcare or assisted living communities
industries, generally, changes in the economies of the jurisdictions in which
the Company or its Subsidiaries conduct business, and any changes in the
condition, business, operations or financial results of the Company and its
Subsidiaries taken as a whole that are caused primarily or substantially by such
changes or events or as a result of the announcement of this Agreement and the
transactions contemplated hereby or by the deferral or termination of
development activities in anticipation of, or required by, this Agreement shall
not be deemed to be a Company Material Adverse Effect and no Company Material
Adverse Effect shall be deemed to have occurred as a result of the payment by
the Company of costs, expenses, fees or similar charges incurred by its
contemplation, negotiation, execution or consummation of this Agreement, up to
the amounts set forth in Schedule 4.10), (c) there has not been any declaration,
setting aside or payment of any dividend or other distribution with respect to
any shares of capital stock of the Company, or any repurchase, redemption or
other acquisition by the Company or any of its Subsidiaries of any outstanding
shares of capital stock or other securities of, or other ownership interests in,
the Company or any of its Subsidiaries or any split, combination or
reclassification of any of any of the Company's
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capital stock or issuance or authorization relating to the issuance of any other
securities in respect of, in lieu of or in substitution for shares of the
Company's capital stock, (d) there has not been any amendment of any material
term of any outstanding security of the Company or any of its Subsidiaries, (e)
except as reflected in the Company's Quarterly Report on Form 10-Q for the
quarter ending March 31, 1997, there has not been any incurrence, assumption or
guarantee by the Company or any of its Subsidiaries of any indebtedness for
borrowed money or any other agreement or arrangement entered into by the Company
or any of its Subsidiaries having the economic effect of any of the foregoing,
except (i) accounts payable of the Company or any of its Subsidiaries incurred
in the ordinary course of business consistent with past practice, (ii) pursuant
to loan and other financing agreements disclosed in the SEC Reports or Schedule
4.10, or (iii) in connection with acquisition and development activity prior to
April 30, 1997 which is reflected in the Company's unaudited balance sheet as at
April 30, 1997 previously delivered to Parent; (f) there has not been any
creation or assumption by the Company or any of its Subsidiaries of any Lien on
any material asset other than in the ordinary course of business consistent with
past practices (including the sale, pledging or assignment of receivables)
except in connection with indebtedness referred to in clause (e); (g) there has
not been any change in any method of accounting or accounting practice by the
Company or any of its Subsidiaries, except for any such change required by
reason of a concurrent change in generally accepted accounting principles or to
conform a Subsidiary's accounting policies and practices to those of the
Company; (h) except as disclosed in any Company SEC Report or in Schedules
4.05(a), 4.10(h) or 6.07 to this Agreement, there has not been any (i) grant of
any severance or termination pay to any director, executive officer or key
employee of the Company or any of its Subsidiaries, (ii) entering into of any
employment, deferred compensation or other similar agreement (or any amendment
to any such existing agreement) with any director, executive officer or key
employee of the Company or any of its Subsidiaries, (iii) increase in benefits
payable under any existing severance or termination pay policies or employment
agreements with any director, executive officer or key employee, or (iv)
increase in compensation, bonus or other benefits payable to directors,
executive, officers or key employees of the Company or any of its Subsidiaries;
(i) there has not been any sale or transfer by the Company of any of the assets
of the Company (other than sales or transfers of immaterial assets in the
ordinary course of business), cancellation of any material debts or claims or
waiver of any material rights by the Company; (j) there has not been any
amendment to the Company's Certificate of Incorporation or Bylaws; (k) the
Company has not made any loans, advances or capital contributions to or
investments in, any other person, other than to any direct or indirect
wholly-owned Subsidiary of the Company and other than travel and entertainment
advances to employees of the Company in the ordinary course of business
consistent with past practices or in connection with development projects
disclosed to Parent; (l) except for this Agreement and any other agreement
executed and delivered pursuant to this Agreement, the Company has not entered
into any material transaction or
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<PAGE> 21
incurred any material expenditure other than in the ordinary course of business
or permitted under other Sections of this Agreement or in connection with the
transactions contemplated hereby or in connection with development projects
disclosed to Parent; and (m) except as specifically contemplated by Schedule
4.10, there have not been any payments or other distributions by the Company or
any of its Subsidiaries to IHS or any of its officers, directors or affiliates,
except for compensation for service as a director or officer as disclosed in the
Company SEC Reports.
SECTION 4.11. Litigation. Except as described in any Company SEC
Report, there is no action, suit, investigation or proceeding pending or, to the
best of the Company's knowledge, threatened against the Company or any of its
Subsidiaries or to which any of their respective properties, assets or rights
are reasonably likely to be subject before any court or arbitrator or any
governmental body, agency or official which would reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse Effect, nor
is there any judgment, decree, injunction, rule or order of any court or
arbitrator or any governmental body, agency or official outstanding against the
Company or any of its Subsidiaries which would have, individually or in the
aggregate, a Company Material Adverse Effect.
SECTION 4.12. Certificate of Incorporation and Bylaws. The Company has
heretofore furnished to Parent complete and correct copies of the Certificates
of Incorporation and the Bylaws or the equivalent organizational documents, in
each case as amended or restated, of the Company and each of its Subsidiaries.
SECTION 4.13. ERISA. (a) "Employee Plans" shall mean each "employee
benefit plan," as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974 ("ERISA"), which (i) is subject to any provision of ERISA
and (ii) is maintained, administered or contributed to by the Company or any
affiliate (as defined below) and covers any employee or former employee of the
Company or any affiliate or under which the Company or any affiliate has any
liability. For purposes of this Section and Section 4.13, "affiliate" of any
Person means any other Person which, together with such Person, would be treated
as a single employer under Section 414 of the Internal Revenue Code of 1986, as
amended (the "Code").
(b) No Employee Plan constitutes a "multiemployer plan," as defined in
Section 3(37) of ERISA, and no Employee Plan is subject to Title IV of ERISA.
Neither the Company nor any of its affiliates has incurred, nor are they
reasonably likely to incur, any liability under Title IV of ERISA arising in
connection with the termination of, or complete or partial withdrawal from, any
plan previously covered by Title IV of ERISA that would have, individually or in
the aggregate, a Company Material Adverse Effect. No transaction or holding of
any asset under or in connection with any Employee Plan has or will make the
Company or any of its Subsidiaries or any officer or director of the
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<PAGE> 22
Company or any of its Subsidiaries subject to any liability under Section 502(i)
of ERISA or liable for any tax pursuant to Section 4975 of the Code that would
have, individually or in the aggregate, a Company Material Adverse Effect.
(c) Except to the extent it would not have, individually or in the
aggregate, a Company Material Adverse Effect, (i) each Employee Plan that is
intended to be qualified under Section 401(a) of the Code is the subject of a
favorable determination letter issued by the Internal Revenue Service relating
to its qualified status, and, to the Company's knowledge, nothing has occurred
that would adversely effect the qualified status of any such plan, and (ii) each
Employee Plan has been maintained in compliance with its terms and with the
requirements prescribed by any and all statutes, orders, final rules and final
regulations, including but not limited to ERISA and the Code, which are
applicable to such Employee Plan.
(d) "Benefit Arrangement" shall mean each employment, severance or
other similar contract, arrangement or policy and each plan or arrangement
(written or oral) providing for compensation, bonus, profit-sharing, stock
option, or other stock related rights or other forms of incentive or deferred
compensation, which (i) is not an Employee Plan, (ii) is entered into,
maintained or contributed to, as the case may be, by the Company or any of its
affiliates, and (iii) covers any employee or former employee of the Company or
any of its affiliates. Except to the extent that it would not have, individually
or in the aggregate, a Company Material Adverse Effect, each Benefit Arrangement
has been maintained in compliance with its terms and with the requirements
prescribed by any and all statutes, orders, rules and regulations that are
applicable to such Benefit Arrangement.
(e) With respect to each Employee Plan and Benefit Arrangement (where
applicable): the Company has made available to Parent complete and accurate
copies of the following: (i) all plan texts and agreements; (ii) all material
employee communications (including summary plan descriptions); (iii) the most
recent annual report; (iv) the most recent annual and periodic accounting of
plan assets; (v) the most recent determination letter received from the IRS; and
(vi) the most recent actuarial valuation.
(f) Except as set forth on Schedule 4.13, the consummation of the
transactions contemplated by this Agreement will not (i) entitle any individual
to severance pay, (ii) accelerate the time of payment or vesting of, or increase
the amount of, compensation due to any individual or (iii) result in the payment
of an amount that will be taken into account in determining whether there is an
"excess parachute payment" under Section 280G(b)(1) of the Code.
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(g) The Company has received the consent of each participant in the
Company's SERP to the amendments to the SERP attached hereto as Schedule 4.13(g)
and has previously provided Parent with a copy of such consents.
SECTION 4.14. Taxes. Except for such matters that would not have,
individually or in the aggregate, a Company Material Adverse Effect, (a) the
Company and its Subsidiaries have timely filed all returns and reports required
to be filed by them with any taxing authority with respect to taxes, taking into
account any extension of time to file granted to or obtained on behalf of the
Company and its Subsidiaries, (b) all taxes required to be paid with respect to
the periods covered by such returns or reports that are due prior to the
Effective Time have been paid or will be paid prior to the Effective Time, (c)
no deficiency for any material amount of tax has been asserted or assessed by a
taxing authority against the Company or any of its Subsidiaries and remains
unpaid, (d) all liability for taxes of the Company or any of its Subsidiaries
that are or will become due or payable with respect to periods covered by the
financial statements referred to in Section 4.08 have been paid or adequately
reserved for on such financial statements in accordance with generally accepted
accounting principles and (e) the Company and its Subsidiaries have withheld and
paid all taxes required to have been withheld or paid in connection with amounts
paid to any employee, independent contractor, creditor, stockholder or other
third party.
SECTION 4.15. Finders and Investment Bankers. Except for Smith Barney,
whose fees will be paid by the Company pursuant to an engagement letter, a copy
of which has previously been provided to Parent, there is no investment banker,
broker, finder or other intermediary which has been retained by or is authorized
to act on behalf of the Company or any of its Subsidiaries who might be entitled
to any fee or commission in connection with the transactions contemplated by
this Agreement. Neither the Company nor any of its Subsidiaries has entered into
any contract, arrangement or understanding to pay any fee or commission to any
investment banker, broker, finder or other intermediary on behalf of any
significant stockholders of the Company in their capacity as stockholders of the
Company in connection with the transactions contemplated by this Agreement.
SECTION 4.16. Opinion of Financial Advisor. The Board of Directors of
the Company has received the opinion of Smith Barney, a copy of which has been
provided to Parent, to the effect that, as of the date of this Agreement, the
consideration to be received in the Offer and the Merger, taken together, by the
holders of Company Common Stock (other than Parent or its affiliates) is fair to
such holders from a financial point of view.
SECTION 4.17. Vote Required. The only vote of the holders of any class
or series of Company capital stock necessary to approve the Merger is the
affirmative
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vote of the holders of a majority of the outstanding shares of the Company
Common Stock.
SECTION 4.18. Anti-takeover Plan; State Takeover Statutes. Neither the
Company nor any Subsidiary has in effect any plan, scheme, device or
arrangement, commonly or colloquially known as a "poison pill" or
"anti-takeover" plan or any similar plan, scheme, device or arrangement. The
Board of Directors of the Company has approved the Offer, the Merger, the Tender
Agreement, and this Agreement and has agreed (unless otherwise required in
accordance with fiduciary duties of the Board of Directors under applicable law
as advised by independent legal counsel to the Company) to recommend that
holders of shares of Company Common Stock tender their shares in the Offer and
vote their shares in favor of the Merger; such approval is sufficient to render
inapplicable to the Offer, the Merger, and this Agreement and the transactions
contemplated by this Agreement the provisions of Section 203 of Delaware Law. To
the best of the Company's knowledge, no other state takeover statute or similar
statute or regulation applies or purports to apply to the Offer, the Merger,
this Agreement, or any of the transactions contemplated by this Agreement.
SECTION 4.19. Environmental Matters. Except as set forth on Schedule
4.19 or in the Company SEC Reports (including the notes to the financial
statements attached thereto), to the Knowledge of the Company, (A) the Company
and each of its Subsidiaries has obtained and is in material compliance with the
terms and conditions of all permits, licenses and other authorizations required
under applicable Environmental Laws; (B) the Company and each of its
Subsidiaries is in material compliance with all applicable Environmental Laws;
(C) none of the Company or any of its Subsidiaries has (and to the Company's
Knowledge, IHS has not) received written notice of any past or present events,
conditions, circumstances, activities, practices or incidents that have resulted
in or threatened to result in any common law or legal liability of the Company
or any Subsidiary or otherwise form the basis of any claim, action, suit or
proceeding, hearing or investigation against the Company or any Subsidiary under
any Environmental Laws; and (D) the Company has no liabilities and there are no
circumstances or events related to the Company or its properties, assets or
business that are reasonably likely to result in any such liability under any
Environmental Laws, except to the extent that any of the matters addressed in
clauses (A) through (D) above would not, individually or in the aggregate,
constitute a Company Material Adverse Effect. As used herein, (i) Knowledge
means actual knowledge without independent investigation, and (ii)
"Environmental Laws" means all federal, state and local statutes, regulations
and ordinances concerning pollution and protection of the environment,
including, without limitation all those relating to the presence, use,
production, distribution, labeling, testing, processing, discharge, release,
threatened release, control, or cleanup of any hazardous materials, substances
or wastes, as such statutes, regulations and ordinances are enacted and in
effect at or prior to the Closing. The Company has made available to Parent
true,
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complete and correct copies of all environmental reports, including, to the
extent they exist, Phase I and Phase II Environmental Reports, in its possession
relating to the Company or its properties or assets.
SECTION 4.20. Title to Properties; Absence of Liens and Encumbrances;
Leases; Condition of Facilities. (a) Except as set forth in Schedule 4.20(a),
the Company and its Subsidiaries have good and insurable title to all of their
real properties and interests in real properties (fee simple title as to real
properties owned by the Company or its Subsidiaries) set forth on Schedule
4.20(a) and good title to all their other properties and assets, tangible and
intangible, including all of the buildings, structures and other improvements
located on such real properties, free and clear of all claims, encumbrances and
other title defects other than (i) as specifically disclosed in the consolidated
balance sheet of the Company at March 31, 1997, (ii) any liens for taxes not yet
due and payable or being contested in good faith by appropriate proceedings for
which adequate reserves have been provided in the consolidated balance sheet of
the Company at March 31, 1997, (iii) Liens and other title defects disclosed on
the title policies or title reports for the real properties owned by the Company
and its Subsidiaries provided to Parent and (iv) such imperfections of title,
covenants, restrictions, easements and other non-monetary encumbrances, if any,
as do not, individually or in the aggregate, materially detract from the value
or materially interfere with the present use of any of the properties of the
Company or any of its Subsidiaries or otherwise would not have, individually or
in the aggregate, a Company Material Adverse Effect. The real property listed on
Schedule 4.20(a) constitutes all of the real property owned by the Company and
its Subsidiaries.
(b) The leases pursuant to which the Company or any of its Subsidiaries
leases any real or personal property are (i) valid and binding on the Company or
the applicable Subsidiary and (ii), to the knowledge of the Company, valid and
binding on all other respective parties to such leases in accordance with their
respective terms. There are not under such leases any existing breaches,
defaults, events of default by the Company or a Subsidiary or events which with
notice and/or lapse of time would constitute a breach, default or event of
default by the Company or a Subsidiary, nor does the Company know, nor has the
Company received notice of, or made a claim with respect to, any breach or
default, the consequences of which would have, individually or in the aggregate,
a material adverse effect on the aggregate value of the properties of the
Company and its Subsidiaries or a Company Material Adverse Effect. Except as set
forth in Schedule 4.20(b), none of the rights of the Company or its Subsidiaries
under any such leases is subject to termination or modification as a result of
the transactions contemplated hereby, except where such modification or
termination would not have, individually or in the aggregate, a Company Material
Adverse Effect. The Company has provided Parent with true, correct and complete
copies of all of the leases, subleases, licenses, overleases and other similar
agreements (including all modifications,
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amendments and supplements thereto) with respect to real property leased by the
Company or its Subsidiaries, requiring, in each case, rental payments on real
property of over $75,000 per year. Schedule 4.20(b) lists all such documents.
(c) To the knowledge of the Company, each of the facilities owned,
leased or managed by the Company or its Subsidiaries (each such facility, a
"Facility") is in all material respects suitable for its current and intended
use and is in all material respects in proper condition for such use.
(d) With respect to the properties set forth on Schedule 4.20(d), there
has not been any event and no condition exists which has resulted in a material
loss in the value of such property which is not covered by insurance (subject to
deductibles) or which renders such property unfit for its intended use. The
transactions contemplated by that certain Purchase and Sale Agreement dated as
of April 28, 1997 among Cherry Hills Club Partners, a California limited
partnership, Integrated Management Carrington Point, Inc., a Delaware
corporation, and Integrated Living Communities, Inc., a Delaware corporation,
have been consummated without any waiver or amendment of any material terms or
conditions by the Company.
(e) Schedule 4.20(e) is a true, correct and complete schedule of all
parcels of real property owned by the Company and its Subsidiaries which
constitute condominium units. The Company has heretofore delivered to, or has
caused the applicable Subsidiary to delivery to, Parent true, correct and
complete copies of all condominium declarations, by-laws and other condominium
association documents relating to each such unit (including all modifications,
amendments and supplements to any of the foregoing). Neither the Company nor any
Subsidiary is in default under any of the foregoing documents which default,
individually or in the aggregate with all other such defaults, would have a
Company Material Adverse Effect.
(f) Schedule 4.20(f)(1) is a correct and complete schedule of (i) all
facilities ("Contract Facilities") which the Company or its Subsidiaries are
obligated, or have the right, to purchase or lease which are now not owned or
leased by the Companies and its Subsidiaries and (ii) all such facilities, and
all facilities included in Schedule 4.20(a) or 4.20(b), which are not fully
constructed and operational. Schedule 4.20(f)(2) is a correct and complete
schedule of the purchase and sale agreements, development agreements, purchase
options and other similar agreements relating to the Contract Facilities.
Neither the Company nor any Subsidiary nor, to the best knowledge of the
Company, any other party to any such agreement is in default thereunder which
default, individually or in the aggregate would have a Company Material Adverse
Effect. True, correct and complete copies of all such agreements have been made
available to Parent.
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SECTION 4.21. Compliance with Laws; Government Approvals. The business
of the Company and its Subsidiaries has been operated in compliance with all
laws, ordinances, regulations and orders of all governmental entities, except
for violations which would not have, individually or in the aggregate, a Company
Material Adverse Effect. The Company and its Subsidiaries have all permits,
certificates, licenses, approvals, consents and other authorizations of all
governmental agencies (collectively, "Government Approvals"), whether Federal,
state or local, required by law with respect to the operation of their
businesses, except those the absence of which would not have, individually or in
the aggregate, a Company Material Adverse Effect or prevent or delay
consummation of the Merger. All such Government Approvals are in full force and
effect, and the Company and its Subsidiaries are in compliance in all material
respects with all conditions and requirements of the Government Approvals and
with all rules and regulations relating thereto. The Company has not received
any notices of violations of any Federal, state and local laws, regulations and
ordinances relating to its business and operations, including the Occupational
Safety and Health Act, the Americans with Disabilities Act, any applicable
Medicare or Medicaid, statutes and regulations, and any applicable law for
reimbursement for assisted living care or other type of care provided at each
Facility, license, certificate of need, ordinance, or governmental or regulatory
rule or regulation, whether Federal, state, local or foreign, to which the
Company's business, operations, assets or properties is subject and no notice of
any pending inspection of or violation of any such law, regulation or ordinance
has been received by the Company which, in the case of any of the foregoing, if
it were determined that a violation had occurred, would have a Company Material
Adverse Effect.
SECTION 4.22. Undisclosed Liabilities. Except as and to the extent
reflected, reserved against or otherwise disclosed in the Company's consolidated
balance sheet at December 31, 1996 (including the notes thereto), or as set
forth in Schedule 4.22, neither the Company nor any of its Subsidiaries had, at
December 31, 1996, any liabilities or obligations of any kind, whether accrued,
absolute, asserted or unasserted, contingent or otherwise, whether or not such
liabilities would have been required to be disclosed on a balance sheet prepared
in accordance with generally accepted accounting principles consistently
applied, which would have, individually or in the aggregate, a Company Material
Adverse Effect.
SECTION 4.23. Insurance. The Company maintains, and has maintained,
without interruption, during its existence, policies or binders of insurance
covering such risk, and events, including personal injury, property damage and
general liability in amounts the Company reasonably believes adequate for its
business and operations and except as set forth on Schedule 4.23, such policies
shall not terminate as a result of the consummation of the transactions
contemplated hereby.
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SECTION 4.24. Absence of Sensitive Payments. To the Company's
knowledge, none of the Company, or any Subsidiary or affiliate or any officer or
director of any of them acting alone or together, has performed any of the
following acts, except to the extent that such acts, individually or
collectively, would not have a Company Material Adverse Effect: (i) the making
of any contribution, payment, remuneration, gift or other form of economic
benefit (a "Payment") to or for the private use of any governmental official,
employee or agent where the Payment or the purpose of the Payment was illegal
under the laws of the United States or the jurisdiction in which such payment
was made, (ii) the establishment or maintenance of any unrecorded fund, asset or
liability for any purpose or the making of any false or artificial entries on
its books, (iii) the making of any Payment to any person or the receipt of any
Payment with the intention or understanding that any part of the Payment was to
be used for any purpose other than that described in the documents supporting
the Payment, or (iv) the giving of any Payment to, or the receipt of any Payment
from, any person who was or could have been in a position to help or hinder the
business of the Company or any Subsidiary (or assist the Company or any
Subsidiary in connection with any actual or proposed transaction) which (A)
would reasonably have been expected to subject the Company or any Subsidiary to
any damage or penalty in any civil, criminal or governmental litigation or
proceeding, (B) if not given in the past, would have had a Company Material
Adverse Effect or (C) if it had not continued in the future, would have had a
Company Material Adverse Effect.
SECTION 4.25. Affiliate Transactions. Except to the extent disclosed in
any Company SEC Report, there are no other transactions, agreements,
arrangements or understandings between the Company or its Subsidiaries, on the
one hand, and the Company's Affiliates (other than wholly-owned Subsidiaries of
the Company) or other Persons, on the other hand, that would be required to be
disclosed under Item 404 of Regulation S-K under the Securities Act. For
purposes of this Agreement, the term "Affiliate," when used with respect to any
Person, means any other Person directly or indirectly controlling, controlled
by, or under common control with such Person. As used in the definition of
"Affiliate," the term "control" means possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise.
SECTION 4.26. Contracts. There is no contract, agreement or
understanding required to be described in or filed as an exhibit to any Company
SEC Report that is not described in or filed as required by the Securities Act
or the Exchange Act, as the case may be. Except as would not individually or in
the aggregate have a Company Material Adverse Effect, all such contracts,
agreements and understandings are valid and binding and are in full force and
effect and enforceable in accordance with their respective terms other than
contracts, agreements or understandings which are by their terms no longer in
force or effect. Except as disclosed in
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Schedule 4.04 or 4.26 to this Agreement, no approval or consent of, or notice
to, any Person is needed in order that such contract, agreement or understanding
shall continue in full force and effect in accordance with its terms without
penalty, acceleration or rights of early termination following the consummation
of the transactions contemplated by this Agreement. Except to the extent any of
the following would not individually or in the aggregate have a Company Material
Adverse Effect, the Company is not in violation or breach of or default under
any such contract, agreement or understanding, nor to the Company's knowledge is
any other party to any such contract, agreement or understanding. Except as set
forth in the Company SEC Reports or as set forth in Schedule 4.26, the Company
is not a party to any contracts, agreements or arrangements (including leases of
real property) (i) restricting the ability of the Company or any of its
Subsidiaries to compete or engage in business or guarantees of indebtedness of
any person (other than a Subsidiary) or (ii) with IHS or any of its officers,
directors or affiliates which are not terminable by the Company without penalty
on no more than 30-days' written notice. Except under contracts disclosed
pursuant to the preceding sentence or except as disclosed on Schedule 4.26, IHS
or its affiliates do not provide any services or benefits to the Company and its
Subsidiaries the absence of which individually or in the aggregate would have a
Company Material Adverse Effect.
SECTION 4.27. Offer Price. The price per share of Company Common Stock
to be paid pursuant to the Offer and Merger is no less than the price per share
of Company Common Stock offered to be paid by any of the other participants in
the auction for the Company conducted by the Company with the assistance of
Smith Barney Inc.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF PARENT
Parent represents and warrants to the Company that:
SECTION 5.01. Corporate Existence and Power. Parent is a limited
partnership duly organized, validly existing and in good standing under the laws
of the State of Delaware, and Merger Subsidiary is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware, and each of them has all requisite partnership or corporate power
and authority to own, lease and operate its properties and to carry on its
business substantially as now conducted, except where the failure to do so would
not have, individually or in the aggregate, a Parent Material Adverse Effect.
For purposes hereof, the term "Parent Material Adverse Effect" means any change
or effect that is or is reasonably likely to be materially adverse to the
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condition (financial or otherwise), business, assets or results of operations,
of the Parent and its Subsidiaries taken as a whole or adversely effects the
ability of the Parent to consummate the transactions contemplated by this
Agreement in any material respect or materially impairs or delays the Parent's
ability to perform its obligations hereunder. Parent is duly qualified to do
business as a foreign limited partnership and is in good standing in each
jurisdiction where the character of the property owned or leased by it or the
nature of its activities makes such qualification necessary, except for those
jurisdictions where the failure to be so qualified would not have, individually
or in the aggregate, a Parent Material Adverse Effect. Merger Subsidiary has not
engaged and will not engage in any activities other than in connection with or
as contemplated by this Agreement and the transactions contemplated hereby.
SECTION 5.02. Corporate Authorization. The execution, delivery and
performance by each of Parent and Merger Subsidiary of this Agreement and the
consummation of the Merger by Merger Subsidiary are within the partnership or
corporate powers and authority, as the case may be, of each of Parent and Merger
Subsidiary and have been duly authorized by all necessary partnership or
corporate action, as the case may be, on the part of each of Parent and Merger
Subsidiary. Each of Parent, as sole stockholder of Merger Subsidiary, and the
Board of Directors of Merger Subsidiary has approved the Merger and no further
corporate or stockholder action is required on the part of Merger Subsidiary in
connection with the consummation of the Merger other than the filing of a
certificate of merger as contemplated by this Agreement. This Agreement has been
duly executed and delivered by Parent and Merger Subsidiary and, assuming the
due authorization, execution and delivery thereof by the Company, constitutes a
legal, valid and binding agreement of each of Parent and Merger Subsidiary.
SECTION 5.03. Governmental Authorization. The execution, delivery and
performance by Parent and Merger Subsidiary of this Agreement and the
consummation of the Merger by Merger Subsidiary do not require any consent,
approval, authorization or permit of or other action by or filing with, any
governmental body, agency, official or authority other than (i) as set forth on
Schedule 5.03, (ii) the filing of appropriate merger documents in accordance
with Delaware Law and (iii) compliance with any applicable requirements of the
HSR Act, the Exchange Act, the Securities Act, any applicable state securities
or "blue sky" laws, except for filings not required prior to consummation of the
Merger and where the failure of any such action to be taken or filing to be made
would not have, individually or in the aggregate, a Parent Material Adverse
Effect or prevent or delay consummation of the Merger.
SECTION 5.04. Non-Contravention. The execution, delivery and
performance by each of Parent and Merger Subsidiary of this Agreement and the
consummation of the Merger by Merger Subsidiary do not and will not (i)
contravene or conflict with the limited partnership agreement of Parent or the
certificate of
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incorporation or bylaws of Merger Subsidiary, (ii) assuming compliance with the
matters referred to in Section 5.03, contravene or conflict with or constitute a
violation of any provision of law, rule, regulation, judgment, injunction, order
or decree binding upon or applicable to Parent or any of its Subsidiaries, (iii)
constitute a default under or give rise to any right of termination,
cancellation or acceleration of any right or obligation of Parent or any of its
Subsidiaries or to a loss of any benefit to which Parent or any of its
Subsidiaries is entitled under any provision of any material agreement or other
instrument binding upon Parent or any of its Subsidiaries, their property or
assets or any license, franchise, permit or other similar authorization held by
Parent or any of its Subsidiaries, or (iv) result in the creation or imposition
of any Lien on any material asset of Parent or any of its Subsidiaries, except
for any occurrences or results referred to in clauses (ii), (iii) and (iv) which
would not have, individually or in the aggregate, a Parent Material Adverse
Effect or prevent or delay consummation of the Merger.
SECTION 5.05. Proxy Statement; Offer Documents; Schedule 14D-1;
Schedule 14D-9. (a) The Schedule 14D-1 and the Offer Documents will not, in the
case of the Schedule 14D-1, at the time filed with the SEC, and, in the case of
the Offer Documents, when first published, sent or given to the stockholders of
the Company, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading, except that no representation is made by Parent or Merger
Subsidiary with respect to information supplied by the Company in writing
specifically for inclusion in the Schedule 14D-1 or the Offer Documents.
(b) None of the information supplied by Parent, Merger Subsidiary and
their respective affiliates in writing specifically for inclusion or
incorporation by reference in the Schedule 14D-9 and/or the Proxy Statement
will, in the case of the Schedule 14D-9, at the time filed with the SEC, or, in
the case of the Proxy Statement, at the time the Proxy Statement is mailed to
the Company's stockholders, at the time of the Meeting or at the Effective Time,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. If, prior to the Effective Time, any event relating to Parent,
Merger Subsidiary or any of their affiliates, officers or directors is
discovered by Parent that should be set forth in an amendment of or supplement
to the Schedule 14D-9 or the Proxy Statement, Parent will promptly inform the
Company.
SECTION 5.06. Financing. Parent and Merger Subsidiary have
unconditional access to and will have, sufficient funds to enable them to
consummate the Offer and the Merger on the terms contemplated by this Agreement.
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ARTICLE VI
COVENANTS
SECTION 6.01. Conduct of the Company. Except as expressly contemplated
by this Agreement, from the date hereof until the Effective Time, the Company
and its Subsidiaries shall conduct their business in the ordinary course
consistent with past practice and shall use their best efforts to preserve
intact their business organizations and relationships with third parties and to
keep available the services of their present officers and key employees. Except
as otherwise approved in writing by Parent or as expressly contemplated by this
Agreement, and without limiting the generality of the foregoing, from the date
hereof until the Effective Time:
(a) the Company shall not, and shall not permit any
of its Subsidiaries to, adopt or propose any change in its
Certificate of Incorporation or Bylaws or comparable charter
or other organization documents;
(b) the Company shall not, and shall not permit any
of its Subsidiaries to, acquire or agree to acquire, lease or
manage (i) by merging or consolidating with, or by purchasing
a substantial portion of the assets of, or by any other
manner, any business or any corporation, partnership, joint
venture, association or other business organization or
division thereof or (ii) any assets, other than assets that
are immaterial to the Company and its Subsidiaries taken as a
whole and except for purchases in the ordinary course of
business consistent with past practice, or (iii) any long term
care or assisted living facility;
(c) the Company will not, and will not permit its
Subsidiaries to, sell, lease, license, mortgage or otherwise
encumber or subject to any Lien or otherwise dispose of any of
its properties or assets, or stock or other ownership interest
in any of its properties or subsidiaries other than (i) in the
ordinary course of business consistent with past practice (ii)
pursuant to any agreements existing as of the date hereof,
which agreements are set forth on Schedule 4.20 to this
Agreement, (iii) any Liens for taxes not yet due and payable
or being contested in good faith by appropriate proceedings
for which adequate reserves have been provided in the
consolidated balance sheet of the Company at March 31, 1997
and (iv) such mechanics and similar liens, if any, as do not
materially detract from the value of any of such properties,
assets, stock or ownership interests or materially interfere
with the present use of any of such properties or assets;
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(d) the Company shall not declare, set aside, or pay
any dividends or make any distributions on Company Common
Stock;
(e) the Company shall not, and shall not permit any
of its Subsidiaries to, (i) issue, deliver or sell, or
authorize or propose the issuance, delivery or sale of, any
capital stock of the Company or any Company Subsidiary
Securities, or any security convertible into or exercisable
for either of the foregoing other than the issuance of shares
of Company Common Stock upon the exercise of Options as
described in Section 4.05, (ii) split, combine or reclassify
any capital stock of the Company or any of its Subsidiaries or
issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for shares of
capital stock of the Company or any of its Subsidiaries or
(iii) except as required or permitted by this Agreement or as
disclosed in Section 4.05, repurchase, redeem or otherwise
acquire any shares of capital stock of the Company or any of
its Subsidiaries or any other securities thereof or any
rights, warrants or options to acquire any such shares or
other securities;
(f) except as otherwise expressly permitted hereby,
the Company will not make any commitment or enter into, or
amend, modify, or terminate any contract or agreement material
to the Company and its Subsidiaries taken as a whole except in
the ordinary course of business consistent with past practice;
(g) (i) except as contemplated by Schedule 6.01(g),
the Company will not, and will not permit any of its
Subsidiaries to, incur any indebtedness for borrowed money or
guarantee any such indebtedness of another person, issue or
sell any debt securities or warrants or other rights to
acquire any debt securities of the Company or any of its
Subsidiaries, guarantee any debt securities of another person,
enter into any "keep well" or other agreement to maintain any
financial statement condition of another person or enter into
any arrangement having the economic effect of any of the
foregoing, except for borrowings under its line of credit for
working capital purposes and the endorsement of checks in the
normal course of business; or (ii) make any loans, advances or
capital contributions to, or investments in, any other person,
other than to the Company or any direct or indirect wholly
owned subsidiary of the Company and other than travel and
entertainment advances to employees in the ordinary course of
business consistent with past practice;
(h) except as contemplated by Schedule 6.01(h), the
Company will not, and will not permit any of its Subsidiaries
to, (i) increase the
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compensation payable or to become payable to its officers,
directors or key employees, (ii) grant any severance or
termination pay to officers, directors or key employees; (iii)
enter into any employment, severance or consulting agreement
with any current or former director, officer or other employee
of the Company or any Subsidiary, or (iv) establish, adopt,
enter into or amend, any collective bargaining, bonus, profit
sharing, thrift, compensation stock option, restricted stock,
pension, retirement, deferred compensation, employment
termination, severance or other plan, agreement, trust, fund,
policy or arrangement for the benefit of any current or former
director, officer or employee;
(i) except as disclosed in the Company SEC Reports
and except as may be required as a result of a change in law
or in generally accepted accounting principles or a change in
order to comply with SEC requirements, the Company will not,
and will not permit any of its Subsidiaries to, change any of
its accounting policies or its procedures (including, without
limitation, procedures with respect to the payment of accounts
payable and collection of accounts receivable);
(j) the Company will not, and will not permit its
Subsidiaries to, (i) except as specifically contemplated by
Schedule 6.01(j) make any payments or other distributions to
IHS, its officers, directors or affiliates except pursuant to
existing compensation arrangements for directors or officers
of the Company or (ii) enter into any contracts, agreements or
understandings with IHS, its officers, directors or
affiliates;
(k) the Company will, and the Company will use its
reasonable best efforts to ensure that it and each of its
Subsidiaries will, use its reasonable best efforts to keep or
cause to be kept its insurance policies (or substantial
equivalents) in such amounts duly in force until the Effective
Time and will give Parent notice of any material change in its
insurance policies;
(l) except as permitted by the last paragraph of
Section 6.01 in respect of certain acquisition or development
activities or in connection with the expenses incurred or to
be incurred in connection with this Agreement and the
transactions contemplated hereby as set forth in Schedule
4.10(b) or in connection with the payment of corporate
administrative and overhead expenses consistent with past
practice, or with the Parent's consent, which is not to be
unreasonably withheld, the Company will not, and will not
permit its Subsidiaries to, make any individual or series of
related expenditures (whether capital or otherwise) of
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over $250,000 or enter into any contract that is not
terminable by the Company without penalty upon 30 days notice;
(m) the Company will not, and will not permit any of
its Subsidiaries to, agree or commit to do any of the
foregoing; and
(n) the Company will not, and will not permit any of
its Subsidiaries to, take or agree to commit to take any
action that would make any representation and warranty of the
Company hereunder inaccurate in any material respect at, or as
of any time prior to, the Effective Time or which is
reasonably likely to result in a delay in consummation of the
Offer or the Merger, including delaying the effectiveness of
the Proxy Statement, if any, and the mailing thereof.
Notwithstanding anything in this Section to the contrary, the Company and its
Subsidiaries are permitted to take commercially reasonable actions after
consultation with Parent in connection with the acquisition and development
projects set forth in Schedule 6.01 hereto, including, but not limited to,
entering into agreements relating to the purchase and development of properties
or facilities, entering into arrangements for the financing of these projects
(provided, that prior to entering into such arrangements, the Company shall
provide Parent with the opportunity to provide financing for such project on
terms which are comparable to the effective interest rate, maturity and
otherwise to the Company's proposed financing), to enter into guarantees in
connection with such projects, and to perform their obligations under any
agreements relating to the foregoing.
SECTION 6.02. Access to Information. From the date hereof until the
Effective Time, the Company shall give Parent, its counsel, financial advisors,
auditors and other authorized representatives reasonable access to the offices,
properties, books and records of the Company and its Subsidiaries, will furnish
to Parent, its counsel, financial advisors, auditors and other authorized
representatives such financial and operating data and other information as such
Persons may reasonably request and will instruct the Company's employees,
counsel and financial advisors to cooperate with Parent in its investigation of
the business of the Company and its Subsidiaries; provided that no investigation
pursuant to this Section shall affect any representation or warranty given by
the Company to Parent hereunder. All nonpublic information provided to, or
obtained by, Parent in connection with the transactions contemplated hereby
shall be "Information" for purposes of the Confidentiality Agreement previously
executed by or on behalf of Parent and the Company (the "Confidentiality
Agreement"); provided, however, that notwithstanding anything to the contrary
contained in the Confidentiality Agreement or this Agreement, nothing shall
prohibit Parent or Merger Subsidiary from including, after prior consultation
with the Company, in the Schedule 14D-1, the Offer to
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Purchase, the other Tender Offer Documents or the Proxy Statement, any
information that based on the advice of counsel to Parent is required to be
disclosed therein in connection with the purchase of shares of Company Common
Stock or the solicitation of proxies in connection with the Offer and the
Merger, respectively. Notwithstanding the foregoing, the Company shall not be
required to provide any information which it reasonably believes it may not
provide to Parent by reason of applicable law, rules or regulations, which
constitutes information protected by attorney/client privilege, or which the
Company or any Subsidiary is required to keep confidential by reason of
contract, agreement or understanding with third parties; provided that the
Company gives the Parent notice of the fact that it is withholding information
pursuant to this Section 6.02.
SECTION 6.03. Other Offers. From the date hereof until the termination
of this Agreement, the Company and its Subsidiaries will not, and will use their
reasonable best efforts to cause their officers, directors, employees or other
agents not to, directly or indirectly, (i) take any action to solicit or
initiate any Company Acquisition Proposal (as defined below) or (ii) unless
otherwise required in accordance with the fiduciary duties of the Board of
Directors under applicable law as advised by independent legal counsel to the
Company, engage in negotiations with, or disclose any nonpublic information
relating to the Company or any of its Subsidiaries or afford access to the
properties, books or records of the Company or any of its Subsidiaries to, any
Person that may be considering making, or has made, a Company Acquisition
Proposal or has agreed to endorse any Company Acquisition Proposal (other than
the Merger). (Nothing herein shall prohibit the Company from amending or waiving
the provisions of confidentiality agreements it has entered into with third
persons in respect of the ability of such persons to submit a Company
Acquisition Proposal to the Company or its stockholders.) The Company will
promptly as reasonably practicable notify Parent after receipt of any Company
Acquisition Proposal or any indication that any Person is considering making a
Company Acquisition Proposal or any request for nonpublic information relating
to the Company or any of its Subsidiaries or for access to the properties, books
or records of the Company or any of its Subsidiaries by any Person that may be
considering making, or has made, a Company Acquisition Proposal or that the
Company intends to engage in negotiations with, or to provide information to any
such Person. The Company shall as promptly as reasonably practicable provide
Parent with the identity of such Person and a reasonable description of such
Company Acquisition Proposal. For purposes of this Agreement, "Company
Acquisition Proposal" means any offer or proposal for, or any indication of
interest in, (i) a merger, share exchange or business combination or similar
transaction, (ii) any sale, lease, exchange, transfer or other disposition of
25% or more of the assets of the Company and its Subsidiaries, taken as a whole,
in a single transaction or series of transactions (whether or not related) or
(iii) any tender offer or exchange offer for 25% or more of the outstanding
shares of capital stock of the Company involving the Company or any of its
Subsidiaries or the acquisition of a substantial portion of the assets
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of, the Company or any of its Subsidiaries, other than the transactions
contemplated by this Agreement. The Company shall immediately cease and cause to
be terminated, its existing solicitation, activity, discussions or negotiations
with any parties conducted heretofore by the Company or any of its
representatives with respect to a Company Acquisition Proposal.
SECTION 6.04. Notices of Certain Events. (a) The Company shall
promptly as reasonably practicable notify Parent of: (i) any notice or other
communication from any Person alleging that the consent of such Person (or
another Person) is or may be required in connection with the transactions
contemplated by this Agreement; (ii) any notice or other communication from any
governmental or regulatory agency or authority in connection with the
transactions contemplated by this Agreement; (iii) any actions, suits, claims,
investigations or proceedings commenced or, to the best of its knowledge
threatened against, relating to or involving or otherwise affecting the Company
or any of its Subsidiaries that, if pending on the date of this Agreement, would
have been required to have been disclosed pursuant to Section 4.11 or which
relate to the consummation of the transactions contemplated by this Agreement;
and (iv) of any fact or occurrence between the date of this Agreement and the
Effective Time of which it becomes aware which makes any of its representations
contained in this Agreement untrue or causes any breach of its obligations under
this Agreement.
(b) Each of Parent and Merger Subsidiary shall promptly as reasonably
practicable notify the Company of: (i) any notice or other communication from
any Person alleging that the consent of such Person (or other Person) is or may
be required in connection with the transactions contemplated by this Agreement,
(ii) any notice or other communication from any governmental or regulatory
agency or authority in connection with the transactions contemplated by this
Agreement; and (iii) of any fact or occurrence between the date of this
Agreement and the Effective Time of which it becomes aware which makes any of
its representations contained in this Agreement untrue or causes any breach of
its obligations under this Agreement.
SECTION 6.05. Merger Subsidiary. Parent will take all action necessary
(a) to cause Merger Subsidiary to perform its obligations under this Agreement
and to commence the Offer and consummate the Merger on the terms and conditions
set forth in this Agreement and, to the extent permitted under Delaware Law, in
accordance with Section 253 of Delaware Law as promptly as reasonably
practicable following completion of the Offer and (b) to ensure that, prior to
the Effective Time, Merger Subsidiary shall not conduct any business or make any
investments other than as specifically contemplated by this Agreement.
SECTION 6.06. Director and Officer Liability. From and after the
Effective Time, (a) Parent shall indemnify, defend and hold harmless the present
and
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former officers and directors of the Company and its Subsidiaries against all
losses, claims, damages and liability in respect of acts or omissions occurring
at or prior to the Effective Time and (b) the Surviving Corporation shall
indemnify, defend and hold harmless to the fullest extent permitted by law the
present and former officers and directors of the Company and its Subsidiaries
against all losses, claims, damages and liability in respect of acts or
omissions occurring at or prior to the Effective Time. Parent shall cause the
Surviving Corporation (and its successors) to establish and maintain provisions
in its Certificate of Incorporation and Bylaws concerning the indemnification
and exoneration of the Company's former and present officers, directors,
employees and agents that are no less favorable to those persons than the
provisions of the Company's Certificate of Incorporation and Bylaws in effect on
the date hereof. For at least six years after the Effective Time, Parent will,
without any lapse in coverage, provide officers' and directors' liability
insurance in respect of acts or omissions occurring prior to the Effective Time
covering each such Person currently covered by the Company's officers' and
directors' liability insurance policy on terms with respect to coverage and
amount no less favorable than those of such policy in effect on the date hereof;
provided, that Parent shall only be obligated to maintain such insurance to the
extent available at annual premiums during such period not in excess of 150% of
the per annum rate of the aggregate annual premium currently paid by the Company
for such insurance on the date of this Agreement. Parent shall cause the
Surviving Corporation to reimburse all expenses, including reasonable attorney's
fees, incurred by any Person to enforce the obligations of Parent and Surviving
Corporation under this Section 6.06.
SECTION 6.07. Employee Benefits. From and after the Effective Time,
Parent will and will cause the Surviving Corporation to honor in accordance with
their terms, the employment, severance, indemnification or similar agreements
and the Employee Retention Plan disclosed in Schedule 6.07 between the Company
and certain employees (the "Employment Agreements") and all the Employee Plans
and Benefit Arrangements; provided, however, that nothing herein shall preclude
the Parent or any of its affiliates from having the right to terminate the
employment of any Company Employee (as defined below), with or without cause, or
to amend or to terminate any employee benefit plan of Parent ("Parent Benefit
Plan") established, maintained or contributed to by the Parent or any of its
affiliates after the Effective Time. Parent hereby acknowledges that the
consummation of the Merger will result in a "change of control" under the
Employment Agreements, the Company Option Plans and the Company's Supplemental
Employee Retirement Plan. Following the Effective Time, Parent and its
Subsidiaries will provide benefits to employees employed by the Company
immediately prior to the Effective Time ("Company Employees") (i) no less
favorable than those provided by Parent and its affiliates to similarly situated
employees employed by companies in substantially similar businesses to that
engaged by the Company and (ii) no less commercially favorable than those
generally provided to similarly situated employees
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in the industry. With respect to the Parent Benefit Plans, Parent and the
Surviving Corporation shall provide to all Company Employees, from and after the
Effective Time, credit for all service with and compensation by the Company and
its affiliates and predecessors prior to the Effective Time for all purposes for
which such service was recognized by the Company prior to the Effective Time,
but without duplication of benefits. To the extent Parent Benefit Plans provide
medical, dental or other welfare benefits, Parent shall use its best efforts to
cause such plans to waive any pre-existing conditions and actively-at-work
exclusions with respect to Company Employees and to provide that any expenses
incurred on or before the Effective Time by or on behalf of any Company
Employees shall be taken into account under the Parent Benefit Plans for
purposes of satisfying applicable deductible, coinsurance and maximum
out-of-pocket provisions. If any employee is terminated following the purchase
of shares pursuant to the Offer, the employee shall be paid for his accrued but
unused vacation time for periods prior to the Effective Time.
SECTION 6.08. Board Representation. Promptly upon the purchase of
shares of Company Common Stock pursuant to the Offer, Merger Subsidiary shall be
entitled to designate such number of directors, rounded up to the next whole
number, to serve on the Board of Directors of the Company as will give Merger
Subsidiary, subject to compliance with Section 14(f) of the Exchange Act and the
rules and regulations promulgated thereunder, representation on the Board of
Directors of the Company equal to the product of (a) the total number of
directors on the Board of Directors and (b) the percentage that the number of
shares of Common Stock purchased by Merger Subsidiary bears to the number of
shares of Common Stock outstanding, and the Company shall, upon request by
Merger Subsidiary, promptly increase the size of the Board of Directors and/or
exercise its reasonable best efforts to secure the resignations of such number
of directors as is necessary to enable Merger Subsidiary's designees to be
elected to the Board of Directors and shall cause Merger Subsidiary's designees
to be so elected. The Company shall take, at its expense, all action required
pursuant to Section 14(f) and Rule 14f-1 in order to fulfill its obligations
under this Section 6.08 and shall include in the Schedule 14D-9 or otherwise
timely mail to its stockholders such information with respect to the Company and
its officers and directors as is required by Section 14(f) and Rule 14f-1 in
order to fulfill its obligations under this Section 6.08. Prior to the mailing
of the Schedule 14D-9 to the Company's stockholders, Parent will supply to the
Company in writing and be solely responsible for any information with respect to
itself and its or Merger Subsidiary's nominees, officers, directors and
affiliates required by Section 14(f) and Rule 14f-1.
SECTION 6.09. Meeting of the Company's Stockholders. (a) If required by
applicable law in order to consummate the Merger, the Company shall take all
action necessary in accordance with Delaware Law and its Certificate of
Incorporation and Bylaws to convene the Meeting as promptly as practicable
following the purchase of
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shares of Common Stock in the Offer. At the Meeting, all of the shares of Common
Stock then owned by Parent, Merger Subsidiary or any other subsidiary of Parent
shall be voted to approve the Merger and this Agreement (subject to applicable
law). The Board of Directors of the Company shall recommend that the Company's
stockholders vote to approve the Merger and this Agreement if such vote is
sought, shall use its best efforts to solicit from stockholders of the Company
proxies in favor of the Merger and shall take all other action in its judgment
necessary and appropriate to secure the vote of stockholders required by
Delaware Law to effect the Merger.
(b) Parent and Merger Subsidiary shall not, and shall cause their
subsidiaries not to, sell, transfer, assign, encumber or otherwise dispose of
the shares of Company Common Stock acquired pursuant to the Offer or otherwise
prior to the earlier of the Meeting and the Effective Time; provided, however,
that this Section 6.09(b) shall not apply to the sale, transfer, assignment,
encumbrance or other disposition of any or all of such shares of Company Common
Stock in transactions solely involving Parent, Merger Subsidiary and/or one or
more of their wholly-owned subsidiaries.
SECTION 6.10. Proxy Statement. If required under applicable law, the
Company shall prepare the Proxy Statement, file it with the SEC under the
Exchange Act as promptly as practicable after Merger Subsidiary purchases shares
of Company Common Stock pursuant to the Offer, and use all reasonable efforts to
have the Proxy Statement cleared by the SEC. Parent, Merger Subsidiary and the
Company shall cooperate with each other in the preparation of the Proxy
Statement, and the Company shall notify Parent of the receipt of any comments of
the SEC with respect to the Proxy Statement and of any requests by the SEC for
any amendment or supplement thereto or for additional information and shall
provide to Parent promptly copies of all correspondence between the Company or
any representative of the Company and the SEC. The Company shall give Parent and
its counsel the opportunity to review the Proxy Statement prior to its being
filed with the SEC and shall give Parent and its counsel the opportunity to
review all amendments and supplements to the Proxy Statement and all responses
to requests for additional information and replies to comments prior to their
being filed with, or sent to, the SEC. Each of the Company, Parent and Merger
Subsidiary agrees to use its reasonable best efforts, after consultation with
the other parties hereto to respond promptly to all such comments of and
requests by the SEC. As promptly as practicable after the Proxy Statement has
been cleared by the SEC, the Company shall mail the Proxy Statement to the
stockholders of the Company.
SECTION 6.11. Best Efforts. Subject to the terms and conditions of
this Agreement, each party will use its reasonable best efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate the transactions contemplated by this Agreement.
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SECTION 6.12. Public Announcements. Parent and the Company will
consult with each other before issuing any press release or making any public
statement with respect to this Agreement and the transactions contemplated
hereby and, except as may be required by applicable law or any listing agreement
with the NASDAQ National Market, will not issue any such press release or make
any such public statement prior to such consultation.
SECTION 6.13. Further Assurances. At and after the Effective Time, the
officers and directors of the Surviving Corporation shall be authorized to
execute and deliver, in the name and on behalf of the Company or Merger
Subsidiary, any deeds, bills of sale, assignments or assurances and to take and
do, in the name and on behalf of the Company or Merger Subsidiary, any other
actions and things to vest, perfect or confirm of record or otherwise in the
Surviving Corporation any and all right, title and interest in, to and under any
of the rights, properties or assets of the Company acquired or to be acquired by
the Surviving Corporation as a result of, or in connection with, the Merger.
ARTICLE VII
CONDITIONS TO THE MERGER
SECTION 7.01. Conditions to the Obligations of Each Party. The
obligations of the Company, Parent and Merger Subsidiary to consummate the
Merger are subject to the satisfaction of the following conditions:
(i) if approval of the Merger by the holders of
Company Common Stock is required by applicable law, this
Agreement and the Merger shall have been adopted by the
requisite vote of the stockholders of the Company in
accordance with Delaware Law;
(ii) no provision of any applicable domestic law or
regulation and no judgment, injunction, order or decree of a
court or governmental agency or authority of competent
jurisdiction which has the effect of making the Merger illegal
or shall otherwise restrain or prohibit the consummation of
the Merger (each party agreeing to use its best efforts,
including appeals to higher courts, to have any judgment,
injunction, order or decree lifted); and
(iii) all consents, authorizations, orders and
approvals of (or filings or registrations with) any
governmental commission, board or other regulatory body
required in connection with the execution, delivery and
performance of this Agreement shall have been obtained or
made, except for filings in connection with the Merger and any
other documents required to be filed after the Effective Time
and except where the failure to have
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obtained or made any such consent, authorization, order
approval, filing or registration would not make the Merger
illegal or have a Company Material Adverse Effect or a Parent
Material Adverse Effect, as the case may be.
ARTICLE VIII
TERMINATION
SECTION 8.01. Termination. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time (notwithstanding
any approval of this Agreement by the stockholders of the Company or Parent):
(i) by mutual written consent of the Company and Parent;
(ii) by either the Company or Parent, if the Offer has not
been consummated on or before the earlier of (A) the forty-sixth
business day after the first public announcement of the execution of
this Agreement and (B) August 15, 1997 (provided that the right to
terminate this Agreement under this clause (ii) shall not be available
to any party whose failure to fulfill any of its obligations under this
Agreement has been the cause of or resulted in the failure to
consummate the Merger by such date);
(iii) by either the Company or Parent, if there shall be any
applicable domestic law, rule or regulation that makes consummation of
the Merger illegal or if any judgment, injunction, order or decree of a
court or governmental agency or authority of competent jurisdiction
shall restrain or prohibit the consummation of the Merger, and such
judgment, injunction, order or decree shall become final and
nonappealable;
(iv) by either the Company or Parent, if the stockholder
approval referred to in Section 7.01(i) shall not have been obtained by
reason of the failure to obtain the requisite vote upon a vote at a
duly held meeting of stockholders or at any adjournment thereof;
(v) by either the Company or Parent, if (x) there has been a
breach by the other party of any representation or warranty contained
in this Agreement which would have a Parent Material Adverse Effect or
Company Material Adverse Effect, as the case may be, or (y) there has
been a material breach of any of the covenants or agreements set forth
in this Agreement on the part of the other party, which breach is not
curable or, if curable, is not cured within 30 days after written
notice of such breach is given by the terminating party to the other
party;
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(vi) by the Company or Parent, if the Company shall have
received a Company Acquisition Proposal, and the Company's Board of
Directors shall have determined in good faith that such Company
Acquisition Proposal represents a more attractive financial alternative
that provides greater immediate value for the Company's stockholders
than the Offer and the Merger; or
(vii) by the Company, if the Offer has not been timely
commenced (except as a result of actions or omissions of the Company in
accordance with Section 1.01) provided that such right of termination
shall have been exercised by the Company prior to the commencement of
the Offer;
(viii) by the Parent if the Board of Directors of the Company
shall have failed to recommend, or shall have withdrawn, modified or
amended in any material respects its approval or recommendations of the
Offer or the Merger or shall have resolved to do any of the foregoing;
or
(ix) by Parent or the Company if as the result of the failure
of any of the conditions set forth in Annex I hereto, the Offer shall
have terminated or expired in accordance with its terms without Merger
Subsidiary having purchased any shares of Company Common Stock pursuant
to the Offer; provided, however, that the right to terminate this
Agreement pursuant to this Section 8.01(ix) shall not be available to
any party whose failure to fulfill any of its obligations under this
Agreement results in the failure of any such condition.
SECTION 8.02. Effect of Termination. If this Agreement is terminated
pursuant to Section 8.01, this Agreement shall become void and of no effect with
no liability on the part of any party hereto and all rights and obligations of
any party hereto will cease, except that (a) the agreements contained in Section
9.04 and the last sentence of Section 6.02 shall survive the termination hereof
and (b) the parties shall be liable for any willful breaches hereof.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Notices. All notices, requests and other communications
to any party hereunder shall be in writing (including telecopy, telex or similar
writing) and shall be given,
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if to Parent or Merger Subsidiary, to:
Whitehall Street Real Estate Limited Partnership VII
c/o Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Telephone: (212) 902-1000
Telecopy: (212) 357-5505
Attention: Michael K. Klingher
with a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019
Telephone: (212) 373-3000
Telecopy: (212) 757-3990
Attention: Robert B. Schumer, Esq.
if to the Company, to:
Bernwood Centre
Suite 10
Bonita Springs, Florida 34135
Telephone: (941) 947-7200
Telecopy: (941) 947 7219
Attention: Geralyn A. Kidera, Esq.
Vice President and General Counsel
with a copy to:
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004
Telephone: (212) 859-8112
Telecopy: (212) 859-4000
Attention: Peter Golden, Esq.
or such other address or telex or telecopy number as such party may hereafter
specify for the purpose by notice to the other parties hereto. Each such notice,
request or other communication shall be effective (i) if given by telex, when
such telex is transmitted to the telex number specified in this Section and the
appropriate answerback is received or (ii) if given by any other means, when
delivered at the address specified in this Section.
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<PAGE> 45
SECTION 9.02. Survival of Representations and Warranties and
Agreements. The representations and warranties and agreements contained herein
and in any certificate or other writing delivered pursuant hereto shall not
survive the Effective Time, except Sections 6.06, 6.07, 6.13 and Articles I and
II.
SECTION 9.03. Amendments; No Waivers. (a) Any provision of
this Agreement may be amended or waived prior to the Effective Time if, and only
if, such amendment or waiver is in writing and signed, in the case of an
amendment, by the Company, Parent and Merger Subsidiary or, in the case of a
waiver, by the party against whom the waiver is to be effective; provided that
(i) any waiver or amendment shall be effective against a party only if the Board
of Directors of such party approves such waiver or amendment and (ii) after the
adoption of this Agreement by the stockholders of the Company, no such amendment
or waiver shall, without the further approval of such stockholders and each
party's Board of Directors alter or change (x) the amount or kind of
consideration to be received in exchange for any shares of capital stock of the
Company, (y) any term of the certificate of incorporation of the Surviving
Corporation or (z) any of the terms or conditions of this Agreement if such
alteration or change would adversely affect the holders of any shares of capital
stock of the Company. Notwithstanding any provision of this Section 9.03 to the
contrary, no provision of this Agreement may be waived by the Company or amended
following the purchase by Parent or Merger Subsidiary of shares of Company
Common Stock pursuant to the Offer unless such amendment or waiver is approved
by the affirmative vote of a majority of the directors of the Company other than
directors designated by Merger Subsidiary as contemplated by Section 6.08.
(b) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 9.04. Fees and Expenses. All costs and expenses incurred in
connection with this Agreement shall be paid by the party incurring such cost or
expense, except that Parent shall pay all costs and expenses except as provided
in paragraph (b) below.
(b) The Company will pay, or cause to be paid, in same day funds to
Parent the sum of (i) Parent's Expenses (as defined below) up to a maximum
amount of $1,000,000 and (ii) $2,000,000 (the "Termination Fee") upon demand if
(a) this Agreement is terminated under Section 8.01(vi) or Section 8.01(viii);
or (b) this Agreement is terminated under Section 8.01(ix) and at the time of
such termination (x) the Minimum Condition has not been satisfied and (y) a
Company Acquisition
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<PAGE> 46
Proposal existed. "Expenses" means documented out-of-pocket fees and
expenses incurred or paid by or on behalf of Parent in connection with the
Merger or the consummation of any of the transactions contemplated by this
Agreement, including without limitation all HSR Act filing fees, fees and
expenses of counsel, commercial banks, investment banking firms, accountants,
experts, environmental consultants, and other consultants to Parent.
(c) Any amounts payable pursuant to Section 9.04(b) shall be payable
as promptly as practicable following termination of this Agreement and, if the
Company is the party seeking to terminate this Agreement, as a condition
thereto.
SECTION 9.05. Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, provided that no party may assign, delegate
or otherwise transfer any of its rights or obligations under this Agreement
without the consent of the other parties hereto, except as permitted by Section
6.09(b) (and which transfer shall not relieve Parent and Merger Sub of their
obligations hereunder in the event of a breach by their transferee).
SECTION 9.06. Governing Law. This Agreement shall be construed in
accordance with and governed by the law of the State of Delaware.
SECTION 9.07. Counterparts; Effectiveness. This Agreement may be signed
in any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement shall become effective when each party hereto shall have received
counterparts hereof signed by all of the other parties hereto.
SECTION 9.08. Entire Agreement. This Agreement and the Confidentiality
Agreement constitute the entire agreement between the parties with respect to
the subject matter hereof and supersede all prior agreements, understandings and
negotiations, both written and oral, between the parties with respect to the
subject matter of this Agreement. No representation, inducement, promise,
understanding, condition or warranty not set forth herein has been made or
relied upon by either party hereto. Neither this Agreement nor any provision
hereof is intended to confer upon any Person other than the parties hereto any
rights or remedies hereunder except for the provisions of Section 6.06, which
are intended for the benefit of the Company's former and present officers,
directors, employees and agents, the provisions of Articles I and II, which are
intended for the benefit of the Company's stockholders, including holders of
Company Options, the provisions of Section 6.07, which are intended for the
benefit of the parties to the Employment Agreements and Employee Plans, as the
case may be, therein.
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<PAGE> 47
SECTION 9.09. Headings. The headings contained in this Agreement are
for reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
SECTION 9.10. Severability. If any term or other provision of this
Agreement is invalid, illegal or unenforceable, all other provisions of this
Agreement shall remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party.
SECTION 9.11. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any of the provisions of this
Agreement were not to be performed in accordance with the terms hereof and that
the parties shall be entitled to specific performance of the terms hereof in
addition to any other remedies at law or in equity.
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<PAGE> 48
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
INTEGRATED LIVING COMMUNITIES INC.
By: /s/ EDWARD J. KOMP
-------------------------------
Title: President and Chief
Executive Officer
WHITEHALL STREET REAL ESTATE
LIMITED PARTNERSHIP VII
By: WH ADVISORS, L.P. VII
General Partner
By: WH ADVISORS, INC. VII
General Partner
By: /s/ DAVID T. HAMAMOTO
-------------------------------
Title: Vice President
SLC ACQUISITION CORP.
By: /s/ RONALD BERNSTEIN
-------------------------------
Title: Vice President
<PAGE> 49
ANNEX I
CONDITIONS TO THE OFFER. Notwithstanding any other term of the Offer or
this Agreement, Merger Subsidiary shall not be required to accept for payment or
pay for, subject to any applicable rules and regulations of the SEC, including
Rule 14e-l(c) of the Exchange Act, any shares of Company Common Stock not
theretofore accepted for payment or paid for and may terminate or amend the
Offer as to such shares of Company Common Stock unless (i) there shall have been
validly tendered and not withdrawn prior to the expiration of the Offer that
number of shares of Company Common Stock that would represent at least a
majority of the outstanding shares of Company Common Stock on a fully diluted
basis (the "Minimum Condition") and (ii) any waiting period under the HSR Act
applicable to the purchase of shares of Company Common Stock pursuant to the
Offer shall have expired or been terminated. Furthermore, notwithstanding any
other term of the Offer or the Agreement, Merger Subsidiary shall not be
required to accept for payment or, subject as aforesaid, to pay for any shares
of Company Common Stock not theretofore accepted for payment or paid for, and
may terminate or amend the Offer if at any time on or after the date of this
Agreement and before the acceptance of such shares of Company Common Stock for
payment or the payment therefor, any of the following conditions exist or shall
occur and remain in effect:
(a) there shall have been instituted or pending any action or
proceeding by any court, governmental, regulatory or administrative
agency or authority that (i) seeks to challenge the acquisition by
Merger Subsidiary of shares of Company Common Stock pursuant to the
Offer, restrain, prohibit or delay the making or consummation of the
Offer or the Merger, or obtain any material damages in connection
therewith, (ii) seeks to make the purchase of or payment for some or
all of the shares of Common Stock pursuant to the Offer or the Merger
illegal, (iii) seeks to impose material limitations on the ability of
Parent and Merger Subsidiary (or any of their affiliates) effectively
to acquire or hold, or to require Parent and Merger Subsidiary or the
Company or any of their respective affiliates or subsidiaries to
dispose of or hold separate, any material portion of the assets or the
business of Parent and its subsidiaries taken as a whole or the Company
and its subsidiaries taken as a whole, or (iv) seeks to impose material
limitations on the ability of Merger Subsidiary (or its affiliates) to
exercise full rights of ownership of the shares of Company Common Stock
purchased by it, including, without limitation, the right to vote the
shares purchased by it on all matters properly presented to the
stockholders of the Company; or
(b) there shall have been promulgated, enacted, entered,
enforced or deemed applicable to the Offer or the Merger, by any state,
federal or foreign government or governmental authority or by any
court, domestic or foreign, any statute (other than the HSR Act), rule,
regulation, judgment, decree, order or
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<PAGE> 50
injunction, that, in the reasonable judgment of Parent and Merger
Subsidiary, might, directly or indirectly, result in any of the
consequences referred to in clauses (i) through (iv) of subsection (a)
above; or
(c) there shall have occurred (i) any general suspension of
trading in, or limitation on prices for, securities on any national
securities exchange or in the over-the-counter market in the United
States, (ii) the declaration of a banking moratorium or any suspension
of payments in respect of banks in the United States, or (iii) the
commencement of a war, armed hostilities or other international or
national calamity directly or indirectly involving the United States;
or
(d) the Company and Parent shall have reached an agreement or
understanding that the Offer or the Agreement be terminated or the
Agreement shall have been terminated in accordance with its terms; or
(e) (i) any of the representations and warranties made by the
Company in the Agreement shall not be true and correct in all material
respects when made, or shall thereafter have ceased to be true and
correct in all material respects as of such later date (other than
representations and warranties made as of a specified date) or (ii) any
of the representations and warranties made by the Company in the
Agreement shall not have been true and correct when made, or shall
thereafter have ceased to be true and correct as if made as of such
later date (other than representations and warranties made as of a
specified date), in each case, without giving effect to any materiality
standard contained in such representation or warranty (including
"Company Material Adverse Effect"), except to the extent that any such
failure to be true and correct, individually and in the aggregate with
all such other failures, would not have a Company Material Adverse
Effect, or the Company shall not in all material respects have
performed each obligation and agreement and complied with each covenant
to be performed and complied with by it under the Agreement; or
(f) the Company's Board of Directors shall have modified or
amended its recommendation of the Offer in any manner adverse to Parent
and Merger Subsidiary or shall have withdrawn its recommendation of the
Offer, or shall have recommended acceptance of any Company Acquisition
Proposal or shall have resolved to do any of the foregoing; or
(g) (i) any corporation, entity or "group" (as defined in
Section 13(d)(3) of the Exchange Act) ("person"), other than Parent,
shall have acquired beneficial ownership of 50% or more of the
outstanding shares of Company Common Stock, or shall have been granted
any options or rights, conditional or otherwise, to acquire a total of
50% or more of the outstanding shares of Company Common
I-2
<PAGE> 51
Stock; (ii) any new group shall have been formed that beneficially owns
50% or more of the outstanding shares of Company Common Stock; or (iii)
any person (other than Parent or one or more of its affiliates) shall
have entered into an agreement in principle or definitive agreement
with the Company with respect to a tender or exchange offer for any
shares of Company Common Stock or a merger, consolidation or other
business combination with or involving the Company; or
(h) Parent shall have received the consent of Health Care
Property Investors ("HCPI") on behalf of itself and its affiliates to
the consummation (the "Consummation") of the Offer, the Merger and the
other transactions contemplated by the Agreement and the waiver of any
rights ("Rights") HCPI might have under agreements with the Company to
terminate or exercise any rights to terminate such agreements or any
other rights that would be triggered as a result of a change of control
of the Company; provided that no consent shall be required from HCPI if
such consent is not required under such agreements for the Consummation
and no such Rights exist.
The foregoing conditions are for the sole benefit of Parent and may be
asserted by Parent, in whole or in part, at any time and from time to time, in
the reasonable judgment of Parent regardless of the circumstances giving rise to
any such condition (other than a breach by Parent or Merger Subsidiary). The
failure by Parent at any time to exercise any of the foregoing rights will not
be deemed a waiver of any right, the waiver of such right with respect to any
particular facts or circumstances shall not be deemed a waiver with respect to
any other facts or circumstances, and each right will be deemed an ongoing right
that may be asserted at any time and from time to time.
Should the Offer be terminated pursuant to the foregoing provisions,
all tendered shares of Company Common Stock not theretofore accepted for payment
shall be returned forthwith by the Disbursing Agent to the tendering
stockholders.
I-3
<PAGE> 1
Exhibit (c) 2
SHORT FORM MERGER OPTION AGREEMENT
AGREEMENT, dated as of May 29, 1997 among Integrated Living
Communities, Inc., a Delaware corporation (the "Company"), SLC Acquisition
Corp., a Delaware corporation ("Sub"), and Whitehall Street Real Estate Limited
Partnership VII, a Delaware limited partnership ("Parent").
WHEREAS, concurrently with the execution of this Agreement, the
Company, Sub and Parent are entering into an Agreement and Plan of Merger (the
"Merger Agreement") providing for the making of a tender offer (the "Offer") to
purchase all of the issued and outstanding shares of the Company's Common Stock,
par value $.01 per share (the "Shares") and, following the completion of the
Offer, the merger (the "Merger") of Sub and the Company in which each Share not
purchased pursuant to the Offer (other than shares as to which appraisal rights
are asserted) will be converted into the per share consideration paid pursuant
to the Offer, in accordance with the terms of the Merger Agreement; and
WHEREAS, the Company desires to induce Parent and Sub to enter into the
Merger Agreement and to facilitate the prompt completion of the Merger following
the purchase of Shares pursuant to the Offer;
NOW, THEREFORE, the parties hereto agree as follows:
1. Grant of Option. The Company hereby irrevocably grants to Sub an
option (the "Option") to purchase up to 32,000,000 newly issued Shares (the
"Optioned Shares") for a consideration per share equal to (i) $.01 per Optioned
Share in cash and (ii) a promissory note (a "Note") of Parent in the principal
amount of the price per Share paid in the Offer less $.01, which Note shall (a)
be due and payable 5 years from the date of its issue, (b) bear interest, at the
prime rate in effect from time to time of Citibank N.A., payable annually on
each
<PAGE> 2
anniversary of the date of its issue, and (c) be prepayable at any time without
penalty at Parent's option.
2. Exercise of the Option. The Option may be exercised by Sub at any
time within six business days after the acceptance for payment by Sub of Shares
pursuant to the Offer in accordance with the terms of the Merger Agreement;
provided that Sub may only exercise the Option in respect of at least that
number of Optioned Shares which, when added to the number of Shares purchased
pursuant to the Offer, represents at least 90% of the outstanding Shares, after
giving effect to the issuance of the Optioned Shares. In the event Sub wishes to
exercise the Option, Sub shall give written notice (the "Notice") to the Company
specifying the total number of Optioned Shares it will purchase pursuant to the
exercise, of the Option and a place and a time not less than one day from the
date of the Notice for the closing of such purchase.
3. Payment and Delivery of Certificates. At any closing hereunder: (i)
Sub will make payment to the Company of the aggregate price for the Shares so
purchased by (a) check or wire transfer in the amount of the aggregate cash
consideration to be paid for all such Shares and (b) a Note in the aggregate
principal amount of the consideration to be paid by Note for all such Shares;
and (ii) the Company will deliver to Sub a certificate or certificates
representing the number of Shares so purchased. Each of Sub and the Company
hereby represents to the other party that such person will not offer to sell,
sell or otherwise dispose of, any Shares or Note, as the case may be, acquired
by it pursuant to this Agreement in violation of the Securities Act of 1933, as
amended (the "1933 Act").
4. Covenant. Each of Parent and Sub agrees to consummate the Merger as
promptly as practicable following the closing of the purchase of Optioned Shares
in accordance with Section 253 of the Delaware General Corporation Law.
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<PAGE> 3
5. Representations and Warranties of the Company. The Company hereby
represents and warrants to Parent and Sub as follows:
5.1. The Company has all requisite corporate power and
authority to enter into and perform all of its obligations under this Agreement.
The execution, delivery and performance of this Agreement and all of the
transactions, contemplated hereby have been duly authorized by all necessary
corporate action on the part of the Company. This Agreement has been duly
executed and delivered by the Company.
5.2. The Company has taken all necessary corporate action to
authorize and reserve for issuance 32,000,000 Shares upon exercise of the
Option.
5.3. The Shares to be issued upon due exercise, in whole or in
part, of the Option, when paid for as provided herein, will be duly authorized,
validly issued, fully paid and non-assessable.
5.4. The execution and delivery of this Agreement do not, and
the performance of this Agreement will not, (i) conflict with any provision of
the Company's Certificate of Incorporation or By-Laws, or (ii) violate any law,
rule or regulation, or any judgment, decree or order of any court or
governmental agency or instrumentality, to which the Company or any of its
subsidiaries is subject, or (iii) conflict with, or result in a breach or
violation of, or accelerate the performance required by, or result in early
termination under, or result in any loss of benefits under, the terms of any
agreement, indenture, mortgage or other instrument to which the Company or any
of its subsidiaries is a party or to which any of its or their property is
subject, or constitute a default thereunder or an event which, with the lapse of
time or action by a third party, could result in a default thereunder or the
creation of any lien, charge or encumbrance upon any of the assets or properties
of the Company or any of its subsidiaries, except if the effect of any of the
foregoing contained in subsections (ii) or (iii) above, singly or in the
- 3 -
<PAGE> 4
aggregate, would not be material to the business, financial condition, results
of operations or prospects of the Company and its subsidiaries, considered as a
whole.
6. Representations and Warranties of Parent and Sub. Each of Parent and
Sub hereby represents and warrants to the Company that (i) it has all requisite
power and authority to enter into and perform all of its obligations under this
Agreement, (ii) all of the transactions contemplated hereby have been duly
authorized by all necessary action on the part of Parent and Sub and (iii) this
Agreement has been duly executed and delivered by Parent and Sub.
7. Adjustment Upon Changes in Capitalization. In the event of any
change in the Shares by reason of stock dividends, split-ups, recapitalizations,
combinations, exchanges of shares or the like, the number of Optioned Shares
and/or the purchase price per Optioned Share shall be adjusted appropriately.
8. Termination. This Agreement will terminate upon termination of the
Merger Agreement.
9. Assignment. Without the prior written consent of the Company, this
Agreement shall not be assigned by Sub except to Parent or any direct or
indirect wholly-owned subsidiary of Parent.
10. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given (and shall be deemed to have
been duly received if so given) if personally delivered or sent by registered or
certified mail, postage prepaid, or telecopy addressed to the respective parties
as follows:
- 4 -
<PAGE> 5
If to the Company:
Integrated Living Communities, Inc.
Bernwood Centre
Suite 10
Bonita Springs, Florida 34135
If to Parent or Sub:
Whitehall Street Real Estate Limited Partnership VII
c/o Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
or to such other address as any party may have furnished to the other parties in
writing in accordance herewith.
11. Specific Performance. The Company agrees that damages would be an
inadequate remedy for a breach of the provisions of this Agreement and that this
Agreement may be enforced by injunctive or other equitable relief.
12. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without regard to the
conflict of laws provisions thereof.
13. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement.
IN WITNESS WHEREOF, this Agreement has been executed by duly authorized
officers of each of the parties hereto all as of the date first above written.
INTEGRATED LIVING COMMUNITIES, INC.
By: /s/ EDWARD J. KOMP
---------------------------------
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<PAGE> 6
WHITEHALL REAL ESTATE LIMITED
PARTNERSHIP VII
By: WH Advisors, L.P. VII
General Partner
By: WH Advisors, Inc. VII
General Partner
By: /s/ DAVID T. HAMAMOTO
----------------------------------
SLC ACQUISITION CORP.
By: /s/ RONALD BERNSTEIN
----------------------------------
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<PAGE> 1
EXHIBIT (c)(3)
VOTING AND TENDER AGREEMENT
VOTING AND TENDER AGREEMENT, dated as of May 29, 1997 (this
"Agreement"), between INTEGRATED HEALTH SERVICES, INC. (the "Stockholder"), and
WHITEHALL STREET REAL ESTATE LIMITED PARTNERSHIP VII, a Delaware limited
partnership ("Parent"), and SLC ACQUISITION CORP., a Delaware corporation and
wholly-owned subsidiary of Parent ("Merger Subsidiary").
WHEREAS, Integrated Living Communities, Inc., a Delaware
corporation (the "Company"), Parent and Merger Subsidiary propose to enter into
an Agreement and Plan of Merger, dated as of the date hereof (the "Merger
Agreement"), which provides for, among other things, an offer to purchase by
Merger Subsidiary all of the outstanding shares of common stock, par value $.01
per share, of the Company ("Company Common Stock") followed by the merger of
Merger Subsidiary with the Company (the "Merger");
WHEREAS, as of the date hereof, the Stockholder owns 2,497,900
shares of Company Common Stock; and
WHEREAS, as a condition to the willingness of Parent and
Merger Subsidiary to enter into the Merger Agreement, each of Parent and Merger
Subsidiary has required that the Stockholder agree, and in order to induce
Parent and Merger Subsidiary to enter into the Merger Agreement, the Stockholder
has agreed, to enter into this Agreement with respect to (a) all the shares of
Company Common Stock now owned and which may hereafter be acquired by the
Stockholder (the "Shares") and (b) certain other matters as set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements contained herein, and intending to be legally
bound hereby, the parties hereto hereby agree as follows:
ARTICLE 1
Section 1.1 Tender Agreement. (a) The Stockholder shall tender
for sale to Merger Subsidiary, pursuant to the terms of the Offer (as such term
is described in the Merger Agreement), the Stockholder's Shares then owned of
record or beneficially by the Stockholder and (b) except as provided in clause
(a) above, during the time this Agreement is in effect, the Stockholder shall
not sell, give, assign, hypothecate, pledge, encumber, grant a security interest
in or otherwise dispose of (whether by operation of law or by agreement or
otherwise), any Shares, or any right, title or interest therein or thereto.
<PAGE> 2
2
Section 1.2 Voting Agreement. The Stockholder hereby agrees
that during the time this Agreement is in effect, at any meeting of the
stockholders of the Company, however called, and in any action by consent of the
stockholders of the Company, the Stockholder shall vote the Shares: (a) in favor
of the Merger, the Merger Agreement (as amended from time to time) and the
transactions contemplated by the Merger Agreement and (b) against any proposal
for any recapitalization, merger, sale of assets or other business combination
between the Company and any person or entity (other than the Merger) or any
other action or agreement that would result in a breach of any covenant,
representation or warranty or any other obligation or agreement of the Company
under the Merger Agreement or which could result in any of the conditions to the
Company's obligations under the Merger Agreement not being fulfilled.
Section 1.3 Acknowledgment. The Stockholder acknowledges
receipt and review of a copy of the Merger Agreement.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER
The Stockholder hereby represents and warrants to Parent as
follows:
Section 2.1 Authority Relative to This Agreement. The
Stockholder has all necessary power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by the Stockholder and the consummation by the Stockholder of the transactions
contemplated hereby have been duly and validly authorized by the Stockholder,
and no other proceedings on the part of the Stockholder are necessary to
authorize this Agreement or to consummate such transactions. This Agreement has
been duly and validly executed and delivered by the Stockholder and, assuming
the due authorization, execution and delivery by Parent and Merger Subsidiary,
constitutes a legal, valid and binding obligation of the Stockholder,
enforceable against the Stockholder in accordance with its terms except to the
extent enforceability may be limited by bankruptcy, insolvency, moratorium or
other similar laws affecting creditors' rights generally or by general
principles governing the availability of equitable remedies.
Section 2.2 No Conflict. (a) The execution and delivery of
this Agreement by the Stockholder do not, and the performance of this Agreement
by the Stockholder shall not, (i) conflict with or violate the organizational
documents of the Stockholder, (ii) conflict with or violate any law, rule,
regulation, order, judgment or decree applicable to the Stockholder or by which
the Shares are bound or affected or (iii) result in any breach of or constitute
a default (or an event that with notice or lapse or time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in the creation of a
<PAGE> 3
3
lien or encumbrance on any of the Shares pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which the Stockholder is a party or by which the
Stockholder or the Shares are bound or affected, except, in the case of clauses
(ii) and (iii), for any such conflicts, violations, breaches, defaults or other
occurrences which would not prevent or delay the performance by the Stockholder
of its obligations under this Agreement.
(b) The execution and delivery of this Agreement by the
Stockholder do not, and the performance of this Agreement by the Stockholder
shall not, require any consent, approval, authorization or permit of, or filing
with or notification to, any court or arbitrator or any governmental body,
agency or official except for applicable requirements, if any, of the Securities
Exchange Act of 1934, as amended, and except where the failure to obtain such
consents, approvals, authorizations or permits, or to make such filings or
notifications, would not prevent or delay the performance by the Stockholder of
its obligations under this Agreement.
Section 2.3 Title to the Shares. As of the date hereof, the
Stockholder is the record and beneficial owner of 2,497,900 shares of Company
Common Stock. Such Shares are all the securities of the Company owned, either of
record or beneficially, by the Stockholder and the Stockholder owns no other
rights or interests exercisable for or convertible into any securities of the
Company. The Shares are owned free and clear of all security interests, liens,
claims, pledges, options, rights of first refusal, agreement, limitations on the
Stockholder's voting rights, charges and other encumbrances of any nature
whatsoever. The Stockholder has not appointed or granted any proxy, which
appointment or grant is still effective, with respect to the Shares.
Section 2.4 Indemnification Agreement. That certain
Indemnification Agreement between the Stockholder and the Company dated as of
August 15, 1996 is, and at the Effective Time (as such term is defined in the
Merger Agreement) will be, valid and binding and in full force and effect and
enforceable against the Stockholder in accordance with its terms.
Section 2.5 Offer Price. To the best knowledge of the
Stockholder, the price per share of Company Common Stock to be paid by Parent
pursuant to the Offer and the Merger exceeds the price per share of Company
Common Stock offered to be paid by any of the other participants in the auction
conducted by the Company with the assistance of Smith Barney Inc. pursuant to
the letter attached hereto as Schedule 2.5.
<PAGE> 4
4
ARTICLE 3
COVENANTS OF THE STOCKHOLDER
Section 3.1 No Inconsistent Agreement. The Stockholder hereby
covenants and agrees that, except as contemplated by this Agreement, and the
Merger Agreement, the Stockholder shall not enter into any agreement or grant a
proxy or power of attorney with respect to the Shares which is inconsistent with
this Agreement.
Section 3.2 No Encumbrances. The Stockholder hereby covenants
and agrees that the Stockholder shall not by any action or omission cause any
security interests, liens, claims, pledges, charges, encumbrances, options,
rights of first refusals, agreements, or limitations on the Stockholder's voting
rights, to attach to the Shares to be tendered to the Merger Subsidiary pursuant
to Section 1.1 hereof.
Section 3.3 Certain Additional Agreements of the Stockholder.
(a) Effective at the Effective Time of the Merger, the
Stockholder shall be deemed to have irrevocably waived (x) the provisions of
Article XVI of each of the Litchfield Subleases, to the extent such provisions
provide for the termination of the Litchfield Subleases in the event the
Stockholder purchases the Litchfield Properties (as defined in Section 5.7)
pursuant to the Purchase Option Agreements (as defined in each of the Litchfield
Subleases) and (y) the provisions of the second sentence of Section 10.4 of each
of the Litchfield Subleases. In the event that the Stockholder purchases a
Litchfield Property pursuant to a Purchase Option Agreement and the Company has
not exercised any of the rights provided for in clauses (A), (B) and (C) below,
the applicable Litchfield Sublease (including all renewal options contained
therein) shall continue in full force and effect, provided that such Litchfield
Sublease shall be modified (i) to provide that it is superior to (or that the
lessee thereunder is entitled to a non-disturbance agreement reasonably
satisfactory to the lessee from) any mortgagee of such Litchfield Property and
(iii) in such other respects as shall be reasonably necessary to reflect the
fact that such Litchfield Sublease is no longer subject to any Litchfield
Overlease (as defined in Section 5.7) and that the current financing on the
Litchfield Properties is no longer in effect. In addition, effective at the
Effective Date of the Merger, the Stockholder shall be deemed to have granted to
the Company the following rights:
(A) the right, in the event the Stockholder elects to
purchase any Litchfield Property pursuant to a Purchase Option Agreement, to
purchase such Litchfield Property from the Stockholder (or to require that the
Stockholder designate the Company as the direct purchaser of such Litchfield
Property) (i) for the price payable by Stockholder for such Litchfield Property
under the terms of the Purchase Option Agreement (without taking into account
any credit to which the Stockholder is entitled against such purchase price
except by reason of amounts expended by the
<PAGE> 5
5
Company for capital improvements (the "Capital Improvement Credit") (as such
reductions are provided for in the applicable Purchase Option Agreement) but
without credit for any other deposits for which the Stockholder may have
received a credit when it acquired such Litchfield Property), and (ii) otherwise
on terms generally consistent with those set forth in the Purchase Option
Agreements;
(B) in the event the Stockholder elects not to
exercise the next available renewal option under a Litchfield Overlease, or
during any renewal term under a Litchfield Overlease, to require the Stockholder
to exercise the Option (as defined in each of the Purchase Option Agreements) as
to the applicable Litchfield Property and thereafter to purchase such Litchfield
Property pursuant to the Option at the time designated by the Company (upon
which purchase the Company and the Stockholder shall have the respective rights
set forth in clause (A) hereof); and
(C) in the event the Stockholder elects not to
exercise the next available renewal option under a Litchfield Overlease, or
during any renewal term under a Litchfield Overlease, to require the Stockholder
to assign the applicable Option to the Company or its designee(s) for no
consideration (in which case the Stockholder shall promptly assign such Option
to the Company or its designee pursuant to an instrument reasonably satisfactory
to the Company).
If the Company exercises its rights under clause (C), then, at the time it
acquires the Litchfield Property, the Company shall pay to the Stockholder the
amount of any credit it received against the purchase price for such Litchfield
Property on account of deposits made with respect to such Litchfield Property
(other than the Capital Improvement Credit).
The foregoing provisions of this Section 3.3(a) shall be deemed to be automatic
and self-operative at the Effective Time of the Merger, and the right to
purchase (or be designated as the purchaser of) the Litchfield Properties, or to
receive an assignment of the Options with respect thereto, provided for herein
shall be deemed a present grant of an option; provided, however, that at any
time at or after the Effective Time of the Merger, the Stockholder shall execute
and deliver such separate documents confirming the waiver and options provided
for in this Section as the Company shall reasonably request, each in form
reasonably satisfactory to the Company, and take such other actions as the
Company shall reasonably request to give effect to this Section 3.3 (including
the execution and delivery of a formal amendment to the Litchfield Sublease
giving effect to the provisions of Section 3.3(e) below).
For purposes of this Section 3.3(a) and the other clauses of this Section 3.3
relating to the Litchfield Properties, (i) the term "Stockholder" shall include
those affiliates of the Stockholder named herein which are lessors under the
Litchfield Subleases, and (ii) the term "Company" shall include those affiliates
of the Company named herein which are lessees under the Litchfield Subleases.
<PAGE> 6
6
If the Stockholder intends to exercise the Option with respect to a Litchfield
Property, it shall so certify by notice to the Company, and the Company shall
have the right, exercisable within 30 days after such notice, to exercise its
rights under clauses (A), (B) and (C) above.
In the event a Litchfield Property is purchased by the Company or its designee
as provided in this Section 3.3(a), the applicable Litchfield Overlease shall
terminate upon such purchase.
(b) The Stockholder agrees, effective as of the Effective Time
of the Merger, that it shall give advance notice to the Company if it does not
intend to exercise its renewal option under a Litchfield Overlease. Such notice
shall be given at least thirty (30) days prior to the last day on which the
Option may be exercised with respect to the applicable Litchfield Property. The
Company shall thereupon have the right, exercisable within such thirty-day
period, to exercise its rights under clauses (A), (B) and (C) above. If the
Stockholder fails to give such notice, it shall be required, if the Company
timely exercises its renewal options under the applicable Litchfield Sublease,
to timely exercise the corresponding renewal options under such Litchfield
Overlease.
(c)(i) The Stockholder has delivered to the Company, or shall
promptly hereafter deliver to the Company at its request, true, correct and
complete copies of all Litchfield Overleases (as defined in Section 5.7 hereof)
and all material documents entered into by the Stockholder on any affiliate
thereof in connection therewith, including all amendments and modifications (all
of the foregoing, the "Litchfield Overlease Documents") and true, correct and
complete copies of all loan agreements, mortgages, deeds of trust and other
material loan documents in the Stockholder's possession relating to the
Litchfield Properties, including all amendments and modifications (all of the
foregoing, the "Litchfield Loan Documents"), (ii) each Litchfield Overlease
Document and, to the best of the Stockholder's knowledge, each Litchfield Loan
Document is in full force and effect and (iii) to the best of the Stockholder's
knowledge, no monetary default or material non-monetary default (including, in
either case, a default covering by reason of a cross-default with another
document) exists on the part of any party under any Litchfield Overlease
Document or Litchfield Loan Document.
(d) From and after the Effective Time of the Merger, the
Stockholder shall pay, as and when due, all interest, principal, fees and any
other amounts (collectively, the "Loan Payments") due under the promissory note
in favor of Lincoln National Bank with respect to the Treemont facility in
Dallas, Texas (the "Treemont Note"), the mortgage securing the Treemont Note
(the "Treemont Mortgage") and any other related documentation (collectively, the
"Treemont Loan Documents") and perform all of its other obligations under the
Treemont Loan Documents. Upon the maturity date of the Treemont Note (or the
date of the prepayment thereof in full), the Stockholder shall cause the release
of the Treemont Mortgage and the termination of the other Treemont Loan
Documents. The
<PAGE> 7
7
Stockholder agrees, within 20 days after request by the Company (or such longer
period of time as may be required under the Treemont Loan Documents), to prepay
the Treemont Note in full, provided that in the event of any such request the
Company shall pay the prepayment penalty, if any, required under the Treemont
Loan Documents.
(e) Effective as of the Effective Time of the Merger, the
following amendments shall be deemed made to each of the Litchfield Subleases:
(A) Exhibit D to each of the Litchfield Subleases
shall be deemed modified as provided in Schedule 1 annexed hereto, with such
additional changes as are appropriate to reflect the fact that the Litchfield
Subleases cover only two properties and that the Company is not a party to any
documents relating to the Litchfield Properties (including the Loan Documents)
except the Litchfield Subleases.
(B) The annual Rent (as defined in the Litchfield
Subleases) payable under each Litchfield Sublease shall be deemed modified to be
the Rent payable thereunder on the date hereof (which Rent is $1,244,652 with
respect to the Litchfield Property located in Bradenton, Florida and $478,044
with respect to the Litchfield Property located in Colorado Springs, Colorado),
but subject to escalation on the terms provided in Section 3.3 of the applicable
Litchfield Overlease and plus any "Renewal Rent" payable under the applicable
Litchfield Overlease; and
(C) Section 6.7 shall be deemed amended to require
compliance with obligations in connection with a Loan Refinance (as defined in
each Litchfield Sublease) only to the extent such obligations are non-monetary
in nature and are not materially more burdensome to the Company than the terms
of the Sublease. Subject to the foregoing, the Company acknowledges that the
Stockholder intends to cause a Loan Refinance and agrees to provide reasonable
cooperation (including the provision of such information and the execution and
delivery of such certificates and documents as the Stockholder shall reasonably
request) in order to accomplish such Loan Refinance.
Notwithstanding anything to the contrary contained herein, to the extent that
consents of the lessor under the Litchfield Overleases ("Litchfield") and the
mortgagee of the Litchfield Properties (the "Mortgagee") are not obtained with
respect to the amendments provided for herein or the provisions of the first
sentence of Section 3.3(a), then, subject to the terms of the Litchfield
Overlease Documents and the Litchfield Loan Documents, each of the Company and
the Stockholder shall take such actions, including making payments to the other
in the event of any increase in rental resulting from a Loan Refinance, as are
necessary to put each other in the economic position it would have been in had
such consents been obtained. The Company and the Stockholder shall use
commercially reasonable efforts to obtain all such consents.
(f) Effective as of the Effective Time of the Merger, the
Stockholder agrees that it shall not take any action against the Company or the
<PAGE> 8
8
Litchfield Properties, or exercise any other right or remedy, take any other
action, or withhold any right or benefit to which the Company would otherwise be
entitled, by reason of the occurrence of an Event of Default under Section
11.1(l) of the Litchfield Sublease not caused by the breach by the Company of
any provision of either Litchfield Sublease.
(g) The Stockholder shall enter into such additional
agreements as the Company shall reasonably request in order to effectuate and
preserve the Company's right to the use and occupancy of the Litchfield
Properties under the Litchfield Subleases, and the right to acquire the
Litchfield Properties (or to require the Stockholder to acquire the Litchfield
Properties) pursuant to the Purchase Options, and to ensure that the Company
shall have no responsibilities with respect to the Litchfield Properties other
than as set forth in the Litchfield Subleases and this Agreement.
(h) Following the consummation of the Merger, the Company
(which term, for purposes of this Section 3.3(h), shall mean Integrated Living
Communities, Inc.) or any other direct or indirect parent company of the lessee
under each Litchfield Sublease shall maintain a net worth, determined in
accordance with generally accepted accounting principals, of no less than $20
million dollars. Failure to maintain such net worth shall be deemed a default
under the Litchfield Subleases.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PARENT
Each of Parent and Merger Subsidiary has full right, power and
authority to enter into and perform this Agreement and this Agreement has been
duly authorized, executed and delivered by each of Parent and Merger Subsidiary
and is a valid and binding agreement of each of Parent and Merger Subsidiary
enforceable against each of Parent and Merger Subsidiary in accordance with its
terms.
ARTICLE 5
MISCELLANEOUS
Section 5.1 Termination. This Agreement shall terminate upon
the termination of the Merger Agreement except that the representations and
warranties contained herein shall survive the termination hereof.
Section 5.2 Specific Performance. The parties hereto agree
that irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with the terms hereof and that
the parties shall be entitled to specific performance of the terms hereof, in
addition to any other remedy at law or in equity.
<PAGE> 9
9
Section 5.3 Entire Agreement. This Agreement constitutes the
entire agreement between Parent and the Stockholder with respect to the subject
matter hereof and supersedes all prior agreements and understandings, both
written and oral, between Parent and the Stockholder with respect to the subject
matter hereof.
Section 5.4 Amendment. This Agreement may not be amended
except by an instrument in writing signed by the parties hereto.
Section 5.5 Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule or
law, or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of this Agreement is not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereby shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible to the fullest extent permitted by
applicable law in a mutually acceptable manner in order that the terms of this
Agreement remain as originally contemplated.
Section 5.6 Governing Law. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of New York
regardless of the laws that might otherwise govern under applicable principles
of conflicts of law.
Section 5.7 Indemnification. (a) The Stockholder shall
indemnify and hold harmless each of the Company, Parent and Merger Subsidiary
and their respective directors, officers, employees, affiliates, successors and
assigns (each, an "Indemnified Person") from and against any and all losses,
lawsuits, liabilities (including, without limitation, liability arising under
principles of strict or joint and several liability), damages (including,
without limitation, such amounts as constitute punitive damages), deficiencies,
demands, claims (including, without limitation, demands, allegations, orders or
other actions by governmental agencies or other third parties), actions,
judgments or causes of action, assessments, costs, all amounts paid in
investigation, defense or settlement of any of the foregoing and expenses
(including, without limitation, interest, penalties and reasonable attorneys'
fees and disbursements incurred by the Indemnified Party in any action or
proceeding between the Stockholder and the Indemnified Party or between the
Indemnified Party and any third party or otherwise and all damages arising out
of the loss of the use, enjoyment or occupancy of any real or personal property)
suffered or incurred by such Indemnified Person based upon, arising out of or
otherwise in connection with
(i) any inaccuracy in, or any breach of, any
representation, warranty, covenant or agreement of the Stockholder; or
(ii)(A) the default of the Stockholder or any of its
subsidiaries or affiliates or any of their respective successors or assigns (in
each case, an "IHS Person") as lessee under, or guarantor of, any of the
Litchfield Overleases (as
<PAGE> 10
10
hereinafter defined) or under any document relating to any Litchfield Overlease
(including, without limitation, any "Affiliate Lease," as defined in each of the
Litchfield Overleases) or (B) the default of the owner of any Litchfield
Property (as hereinafter defined) under any mortgage or deed of trust affecting
such Litchfield Property (including, without limitation, a default arising by
reason of a cross default with another document); provided that the foregoing
indemnity shall not apply with respect to any default which arises by reason of
a breach by the Company or any other Indemnified Person of any provision
contained in a Litchfield Sublease (as hereinafter defined);
(iii) any failure of the Stockholder to make all Loan
Payments as required under Section 3.3(d) hereof;
(iv) any other default under the Treemont Loan
Documents or the Treemont Mortgage (other than a default arising by reason of
the actions of the Parent (or its subsidiary) as owner of the Treemont assisted
living facility;
(v) any failure of the Stockholder to cause the
release of the Treemont Mortgage or termination of the Treemont Loan
Documentation, as necessary, as provided for in Section 3.3 hereof;
As used herein, the term "Litchfield Overlease" means any of
those certain leases between Litchfield, as lessor, and one or more affiliates
of the Stockholder, as lessees, pursuant to which such affiliates lease
properties in Bradenton, Florida and Colorado Springs, Colorado (in each case, a
"Litchfield Property").
(b) The indemnity set forth in clause (ii) of Section 5.7(a)
shall become effective at the Effective Time of the Merger and shall survive the
consummation of the Merger but shall automatically terminate as to any
Litchfield Overlease upon the delivery to the Company of non-disturbance
agreements, in recordable form and otherwise reasonably satisfactory in form and
substance to the Company, pursuant to which the lessor under such Litchfield
Overlease, and the mortgagee (or its equivalent) of the property covered by such
Litchfield Overlease, agree that the Company's (or other applicable Indemnified
Person's) use, occupancy and enjoyment of such property under its sublease
thereof (in each case, a "Litchfield Sublease") will not be disturbed
notwithstanding the occurrence of a default of the type hereinabove described.
The Stockholder agrees to use its best efforts to obtain such non-disturbance
agreements with respect to each Litchfield Lease.
Section 5.8 Counterparts. This Agreement may be executed in
any number of counterparts and by the parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement.
<PAGE> 11
11
IN WITNESS WHEREOF, the Stockholder, Parent and Merger
Subsidiary have caused this Agreement to be duly executed on the date hereof.
INTEGRATED HEALTH SERVICES, INC.
By: /s/ Marshall A. Elkins
---------------------------------------------------
Name: Marshall A. Elkins
Title: Executive Vice President and General Counsel
WHITEHALL STREET REAL ESTATE
LIMITED PARTNERSHIP VII
By: WH Advisors, L.P. VII, its General Partner
By: WH Advisors, Inc. VII, its General Partner
By: /s/ Michael K. Klingher
------------------------------------------
Name: Michael K. Klingher
Title: Vice President
SLC ACQUISITION CORP.
By: /s/Michael K. Klingher
-------------------------------------------------
Name: Michael K. Klingher
Title: Vice President
ACCEPTED AND AGREED AS TO SECTION 3.3 ONLY AS OF THE DATE FIRST ABOVE WRITTEN:
INTEGRATED HEALTH SERVICES OF LESTER, INC.
By: /s/ Marshall A. Elkins
---------------------------------------------------
Name: Marshall A. Elkins
Title: Executive Vice President and General Counsel
