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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT PURSUANT TO
SECTION 14(d)(4) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 2)
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KAPSON SENIOR QUARTERS CORP.
(NAME OF SUBJECT COMPANY)
KAPSON SENIOR QUARTERS CORP.
(NAME OF PERSON(S) FILING STATEMENT)
COMMON STOCK, PAR VALUE $.01 PER SHARE
$2.00 CONVERTIBLE EXCHANGEABLE PREFERRED STOCK, PAR VALUE $.01 PER SHARE
(TITLES OF CLASSES OF SECURITIES)
485624100
485624209
(CUSIP NUMBERS OF CLASSES OF SECURITIES)
GLENN KAPLAN
KAPSON SENIOR QUARTERS CORP.
125 FROEHLICH FARM BOULEVARD
WOODBURY, NEW YORK 11797
(516) 921-8900
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON
AUTHORIZED TO RECEIVE NOTICE AND COMMUNICATIONS
ON BEHALF OF THE PERSON(S) FILING STATEMENT)
Copy to:
ARNOLD J. LEVINE, ESQ.
PROSKAUER ROSE LLP
1585 BROADWAY
NEW YORK, NEW YORK 10036-8299
(212) 969-3000
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This Amendment No. 2 amends the Amendment No. 1 to the
Solicitation/Recommendation Statement on Schedule 14D-9 filed on March 17, 1998
by Kapson Senior Quarters Corp., a Delaware corporation (the 'Company'),
relating to the tender offer being made by Prometheus Acquisition Corp., a
Delaware corporation, a wholly owned subsidiary of Prometheus Senior Quarters,
LLC, a Delaware limited liability company, and an affiliate of Lazard Freres
Real Estate Investors, L.L.C., a Delaware limited liability company, to purchase
all of the outstanding shares of common stock, par value $.01 per share, of the
Company and all of the outstanding shares of $2.00 Convertible Exchangeable
Preferred Stock, par value $.01 per share, of the Company.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
Item 9 is hereby amended as follows:
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EXHIBIT NO. DOCUMENT
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Exhibit 1* Amended and Restated Agreement and Plan of Merger, dated as of February 23, 1998, among Prometheus
Senior Quarters, LLC, Prometheus Acquisition Corp. and Kapson Senior Quarters Corp.
Exhibit 2* Pages 5-16 of the Proxy Statement, dated June 23, 1997, of Kapson Senior Quarters Corp.
Exhibit 3* Form of operating agreement among Glenn Kaplan, Wayne L. Kaplan, Evan A. Kaplan and Senior
Quarters Management Corp.
Exhibit 4* Master Management Services Agreement, dated as of September 30, 1997, among Glenn Kaplan, Wayne L.
Kaplan, Evan A. Kaplan and Senior Quarters Management Corp.
Exhibit 5* Interim Management Services Agreement, dated as of September 30, 1997, among Glenn Kaplan, Wayne
L. Kaplan, Evan A. Kaplan and Senior Quarters Management Corp.
Exhibit 6* Letter agreement relating to the indemnification of Glenn Kaplan, Wayne L. Kaplan and Evan A.
Kaplan by Kapson Senior Quarters Corp.
Exhibit 7* Home Health Agency letter agreement, dated February 23, 1998, among Glenn Kaplan, Wayne L. Kaplan,
Evan A. Kaplan, Kapson Senior Quarters Corp., Prometheus Senior Quarters, LLC and Prometheus
Acquisition Corp.
Exhibit 8* Second Amended and Restated Stockholders Agreement, dated as of February 23, 1998, among
Prometheus Senior Quarters, LLC, Glenn Kaplan, Wayne L. Kaplan and Evan A. Kaplan.
Exhibit 9* Amended and Restated Employment Agreement, dated as of February 23, 1998, between Kapson Senior
Quarters Corp. and Glenn Kaplan.
Exhibit 10* Amended and Restated Employment Agreement, dated as of February 23, 1998, between Kapson Senior
Quarters Corp. and Wayne L. Kaplan.
Exhibit 11* Amended and Restated Employment Agreement, dated as of February 23, 1998, between Kapson Senior
Quarters Corp. and Evan A. Kaplan.
Exhibit 12* Amended and Restated Employment Agreement, dated as of February 23, 1998, between Kapson Senior
Quarters Corp. and Raymond DioGuardi.
Exhibit 13* Amended and Restated Escrow Agreement, dated as of February 23, 1998, and related letter agreement
among Glenn Kaplan, Wayne L. Kaplan, Evan A. Kaplan, Kapson Senior Quarters Corp. and Prometheus
Acquisition Corp.
Exhibit 14* Press release, dated February 24, 1998.
Exhibit 15+ Opinion, dated February 23, 1998, of Salomon Smith Barney.
Exhibit 16* Opinion, dated February 23, 1998, of J. P. Morgan Securities Inc.
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*Previously filed.
+Filed herewith.
1
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SIGNATURE
After reasonable 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.
KAPSON SENIOR QUARTERS CORP.
Dated: March 23, 1998 By /s/ GLENN KAPLAN
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Glenn Kaplan
Chairman of the Board and
Chief Executive Officer
2
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EXHIBIT INDEX
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EXHIBIT NO. DOCUMENT
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Exhibit 1* Amended and Restated Agreement and Plan of Merger, dated as of February 23, 1998, among Prometheus
Senior Quarters, LLC, Prometheus Acquisition Corp. and Kapson Senior Quarters Corp.
Exhibit 2* Pages 5-16 of the Proxy Statement, dated June 23, 1997, of Kapson Senior Quarters Corp.
Exhibit 3* Form of operating agreement among Glenn Kaplan, Wayne L. Kaplan, Evan A. Kaplan and Senior
Quarters Management Corp.
Exhibit 4* Master Management Services Agreement, dated as of September 30, 1997, among Glenn Kaplan, Wayne L.
Kaplan, Evan A. Kaplan and Senior Quarters Management Corp.
Exhibit 5* Interim Management Services Agreement, dated as of September 30, 1997, among Glenn Kaplan, Wayne
L. Kaplan, Evan A. Kaplan and Senior Quarters Management Corp.
Exhibit 6* Letter agreement relating to the indemnification of Glenn Kaplan, Wayne L. Kaplan and Evan A.
Kaplan by Kapson Senior Quarters Corp.
Exhibit 7* Home Health Agency letter agreement, dated February 23, 1998, among Glenn Kaplan, Wayne L. Kaplan,
Evan A. Kaplan, Kapson Senior Quarters Corp., Prometheus Senior Quarters, LLC and Prometheus
Acquisition Corp.
Exhibit 8* Second Amended and Restated Stockholders Agreement, dated as of February 23, 1998, among
Prometheus Senior Quarters, LLC, Glenn Kaplan, Wayne L. Kaplan and Evan A. Kaplan.
Exhibit 9* Amended and Restated Employment Agreement, dated as of February 23, 1998, between Kapson Senior
Quarters Corp. and Glenn Kaplan.
Exhibit 10* Amended and Restated Employment Agreement, dated as of February 23, 1998, between Kapson Senior
Quarters Corp. and Wayne L. Kaplan.
Exhibit 11* Amended and Restated Employment Agreement, dated as of February 23, 1998, between Kapson Senior
Quarters Corp. and Evan A. Kaplan.
Exhibit 12* Amended and Restated Employment Agreement, dated as of February 23, 1998, between Kapson Senior
Quarters Corp. and Raymond DioGuardi.
Exhibit 13* Amended and Restated Escrow Agreement, dated as of February 23, 1998, and related letter agreement
among Glenn Kaplan, Wayne L. Kaplan, Evan A. Kaplan, Kapson Senior Quarters Corp. and Prometheus
Acquisition Corp.
Exhibit 14* Press release, dated February 24, 1998, and tombstone advertisement, dated March 2, 1998.
Exhibit 15+ Opinion, dated February 23, 1998, of Salomon Smith Barney.
Exhibit 16* Opinion, dated February 23, 1998, of J. P. Morgan Securities Inc.
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* Previously filed.
+ Filed herewith.
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EXHIBIT 15
Salomon Smith Barney
Seven World Trade Center
New York, New York 10048
212-783-7000
February 23, 1998
Board of Directors
Kapson Senior Quarters Corp.
242 Crossways Park Drive
Woodbury, NY 11797
Ladies and Gentlemen:
You have requested our opinion as investment bankers as to
the fairness, from a financial point of view, to the holders of shares of
common stock, par value $0.01 per share ("Company Common Stock"), and to the
holders of shares of $2.00 Exchangeable Preferred Stock, par value $0.01 per
share ("Company Preferred Stock"), of Kapson Senior Quarters Corp. (the
"Company") of the consideration to be received by such holders in the proposed
acquisition of the Company by Prometheus Senior Quarters LLC ("Acquiror")
pursuant to the Amended and Restated Agreement and Plan of Merger (the
"Amended Agreement"), dated February 23, 1998, among Acquiror, Prometheus
Acquisition Corp. ("Sub") and the Company.
As more specifically set forth in the Amended Agreement, Sub
will commence a tender offer (the "Proposed Tender Offer") to purchase all
outstanding shares of Company Common Stock at a price of $14.50 per share and
all outstanding shares of Company Preferred Stock at a price of $27.93 per
share. Following consummation of the Proposed Tender Offer, Sub will be merged
with and into the Company (the "Proposed Merger" and, collectively with the
Proposed Tender Offer, the "Proposed Transaction") and each then outstanding
share of Company Common Stock and Company Preferred Stock (other than shares
held in the treasury of the Company, shares owned by Acquiror, Sub or any
other direct or indirect subsidiary of Acquiror or of the Company, and shares
as to which appraisal rights have been properly exercised under applicable
law) will be converted into the right to receive, in cash, the amount paid for
a share of Company Common Stock or Company Preferred Stock, as the case may
be, pursuant to the Proposed Tender Offer.
In connection with rendering our opinion, we have reviewed
and analyzed material bearing upon the financial and operating condition and
prospects of the Company including, among other things, the following: (i) the
final draft of the Amended Agreement; (ii) certain publicly available
information concerning the Company, including the Annual Report on Form 10-K
of the Company for the period ended December 31, 1996 and the Quarterly
Reports on Form 10-Q of the Company for the quarters ended March 31, 1997,
June 30, 1997 and September 30, 1997; (iii) the prospectus, dated September
26, 1996, relating to the initial public offering of Company Common Stock;
(iv) the prospectus, dated July 1, 1997, relating to the offering of Company
Preferred Stock; (v) certain internal information of the Company, primarily
financial in
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2
nature, including projections, concerning the business and operations of the
Company furnished to us by the Company for purposes of our analysis; (vi)
certain publicly available information concerning the trading of, and the
trading market for, the Company Common Stock; (vii) certain publicly available
information with respect to certain publicly traded companies that we believe to
be comparable to the Company and the trading markets for certain of such other
companies' securities; and (viii) certain publicly available information
concerning the nature and terms of certain other transactions that we consider
relevant to our inquiry. We have also considered such other information,
financial studies, analyses, investigations and financial, economic and market
criteria that we deemed relevant. We have also discussed the foregoing, as well
as other matters we believe relevant to our inquiry, with the management of the
Company and officers of Acquiror.
In our review and analysis and in arriving at our opinion,
we have assumed and relied upon the accuracy and completeness of all of the
financial and other information provided to us or publicly available and have
neither attempted independently to verify nor assumed any responsibility for
verifying any of such information and have further relied upon the assurances
of management of the Company that they are not aware of any facts that would
make any of such information inaccurate or misleading. We have not conducted a
physical inspection of any of the properties or facilities of the Company, nor
have we made or obtained or assumed any responsibility for making or obtaining
any independent evaluations or appraisals of any of such properties or
facilities, nor have we been furnished with any such evaluations or appraisals.
With respect to projections, we have, upon the advice and consent of management
of the Company, assumed that such projections were reasonably prepared on bases
reflecting the best currently available estimates and judgment of the Company's
management as to the future financial performance of the Company and we express
no view with respect to such projections or the assumptions on which they were
based. We have also assumed that the definitive Amended Agreement will not, when
executed, contain any terms or conditions that differ materially from the terms
and conditions contained in the draft of such document we have reviewed and that
the Proposed Acquisition will be consummated in a timely manner and in
accordance with the terms of the Amended Agreement.
In conducting our analysis and arriving at our opinion as
expressed herein, we have considered such financial and other factors as we
have deemed appropriate under the circumstances including, among others, the
following: (i) the historical and current financial position and results of
operations of the Company; (ii) the business prospects of the Company; (iii)
the terms of the Company Preferred Stock; (iv) the historical and current
market for the Company Common Stock and for the equity securities of certain
other companies that we believe to be comparable to the Company; and (v) the
nature and terms of certain other acquisition
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3
transactions that we believe to be relevant. We have also taken into account
our assessment of general economic, market and financial conditions as well as
our experience in connection with similar transactions and securities
valuation generally. We have also considered the process that resulted in the
negotiation of the Amended Agreement, including the initial discussions with
other potential acquirors. Our opinion necessarily is based upon conditions as
they exist and can be evaluated on the date hereof and we assume no
responsibility to update or revise our opinion based upon circumstances or
events occurring after the date hereof. Our opinion is, in any event, limited
to the fairness, from a financial point of view, of the consideration to be
received by the holders of Company Common Stock and Company Preferred Stock in
the Proposed Tender Offer and the Proposed Merger and does not address the
Company's underlying business decision to effect the Proposed Transaction or
constitute a recommendation to any holder of Company Common Stock or Company
Preferred Stock as to whether such holder should tender such stock in the
Proposed Tender Offer or to any holder of Company Common Stock or Company
Preferred Stock as to how such holder should vote with respect to the Proposed
Merger, if such a vote is taken.
As you are aware, Salomon Brothers Inc, now doing business
as Salomon Smith Barney (collectively with all other entities doing business
as Salomon Smith Barney, "Salomon Smith Barney"), is acting as financial
advisor to the Company in connection with the Proposed Transaction and will
receive a fee for its services, a substantial portion of which is contingent
upon consummation of the Proposed Transaction. Additionally, Salomon Smith
Barney or its affiliates have previously rendered certain investment banking
and financial advisory services to the Company and certain affiliates of
Acquiror, for which we received customary compensation. In addition, in the
ordinary course of our business, Salomon Smith Barney may actively trade the
debt and equity securities of the Company for its own account and for the
accounts of customers and, accordingly, may at any time hold a long or short
position in such securities. Salomon Smith Barney and its affiliates
(including Travelers Group Inc.) may have other business relationships with
the Company or Acquiror.
As you are aware, Salomon Smith Barney has acted as
financial advisor to ARV Assisted Living, Inc. ("ARV") in connection with an
investment by an affiliate of Acquiror in ARV. Salomon Smith Barney has not
advised ARV or the Company concerning the terms of, or the consideration
provided with respect to, the consent provided by ARV to permit Acquiror to
proceed with the Proposed Transaction and this opinion does not address the
fairness or appropriateness of such terms or consideration.
This opinion is intended for the benefit and use of the
Company (including its management and directors) in considering the transaction
to which it relates and may not be
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used by the Company for any other purpose or reproduced, disseminated, quoted or
referred to by the Company at any time, in any manner or for any purpose,
without the prior written consent of Salomon Smith Barney.
Based upon and subject to the foregoing, it is our opinion
as investment bankers that, as of the date hereof, the consideration to be
received by the holders of Company Common Stock and Company Preferred Stock in
the Proposed Tender Offer and the Proposed Merger is fair, from a financial
point of view, to such holders.
Very truly yours,
/s/ Salomon Smith Barney
