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EXHIBIT (d)(1)
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
FORTRESS REGISTERED INVESTMENT TRUST
FORTRESS BROOKDALE ACQUISITION LLC
FBZ ACQUISITION CORP.
AND
BROOKDALE LIVING COMMUNITIES, INC.
JULY 26, 2000
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of July 26, 2000 (this "Agreement"),
by and among Fortress Registered Investment Trust, a Delaware business trust
("Parent"), Fortress Brookdale Acquisition LLC, a Delaware limited liability
company ("Purchaser"), owned by Parent, Health Partners, a Bermuda exempted
partnership ("Health Partners") and certain of their respective affiliates, FBZ
Acquisition Corp., a Delaware corporation and wholly owned subsidiary of
Purchaser ("Acquisition Sub") and Brookdale Living Communities, Inc., a Delaware
corporation (the "Company").
WHEREAS, the managements of Parent and Purchaser and the Committee of
Independent Directors, consisting entirely of nonmanagement directors (the
"Independent Committee"), of the Board of Directors of the Company (the "Board")
have determined that it is advisable and in the best interests of their
respective stockholders and members, as the case may be, for Purchaser to
acquire the Company upon the terms and subject to the conditions set forth
herein;
WHEREAS, in furtherance of such acquisition, Purchaser has agreed to
commence a tender offer (the "Offer") to purchase for cash all of the issued and
outstanding shares of common stock, par value $0.01 per share, of the Company
("Company Common Stock") not already owned by Purchaser or Parent (collectively,
the "Shares"), at a price of $15.25 per share, net to the seller in cash (such
price, or such higher price per share as may be paid in the Offer, being
referred to herein as the "Offer Price"), less any amounts required by law to be
withheld and paid to governmental entities, upon the terms and subject to the
conditions of this Agreement;
WHEREAS, the Board, acting upon the unanimous recommendation of the
Independent Committee, and the respective managements of Parent and Purchaser,
have each approved the making of the Offer, and the Board has determined to
recommend that stockholders of the Company (other than Parent, Purchaser and
their respective affiliates) (the "Stockholders") tender their Shares pursuant
to the Offer;
WHEREAS, Purchaser is the owner of 4,004,350 shares of Company Common
Stock, and Parent and Health Partners have agreed to contribute cash and the
Convertible Note (as hereinafter defined) respectively to Purchaser in order to
facilitate the making of the Offer and the other transactions contemplated by
this Agreement;
WHEREAS, it is further proposed that following the consummation of the
Offer, Purchaser will cause Acquisition Sub to merge with and into the Company
(the "Merger") in accordance with the General Corporation Law of the State of
Delaware, as amended (the "DGCL"); and
WHEREAS, the Independent Committee has determined that this Agreement and
the transactions contemplated hereby, including the Offer and the Merger, are
advisable and in the best interests of the Stockholders, and the Board, acting
upon the unanimous recommendation of the Independent Committee, (i) has approved
the Offer, the Merger, this Agreement and the other transactions contemplated
hereby and (ii) recommends that the Stockholders approve this Agreement and
adopt the Merger;
NOW, THEREFORE, in consideration of the foregoing and the representations,
warranties, covenants and agreements set forth herein, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
THE OFFER AND MERGER
Section 1.1 The Offer. (a) As promptly as practicable (but in no event
prior to Tuesday, August 1, 2000) Purchaser shall commence (within the meaning
of Rule 14d-2 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), the Offer to purchase for cash any and all of the Shares at
the Offer Price. Purchaser shall, on the terms and subject to the prior
satisfaction or waiver of the conditions of the Offer, accept for payment and
pay for all Shares validly tendered and not withdrawn pursuant to the Offer as
soon as it is legally permitted to do so under applicable law. The Offer shall
be
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made by means of an offer to purchase (the "Offer to Purchase") containing the
terms set forth in this Agreement and the other conditions set forth in Annex A
hereto. Purchaser shall not decrease the Offer Price or decrease the number of
Shares sought in the Offer, change the form of consideration to be paid for
Shares pursuant to the Offer, or amend or add any other term or condition of the
Offer (including the conditions set forth in Annex A hereto), in each case, in
any manner adverse to the holders of the Shares without the prior written
consent of the Company. The initial expiration date of the Offer shall be the
twenty-fifth (25th) business day following the date that the Offer is commenced
within the meaning of Rule 14d-2 under the Exchange Act (the "Initial Expiration
Date"). Notwithstanding the foregoing, Purchaser shall, and Parent agrees to
cause Purchaser to, extend the Expiration Date of the Offer from time to time
until 60 days from execution of this Agreement if, and to the extent that, at
the Initial Expiration Date of the Offer, or any extension thereof, all
conditions to the Offer have not been satisfied or waived. In addition, the
Offer Price may be increased and the Offer may be extended to the extent
required by law in connection with such increase in each case without the
consent of the Company. If, immediately prior to the expiration date of the
Offer (as it then may be extended), the Shares tendered and not withdrawn
pursuant to the Offer, together with the Shares then owned by Purchaser,
constitute less than 90% of the outstanding Shares, Purchaser may extend the
Offer for a period not to exceed ten business days, notwithstanding that all
conditions to the Offer are satisfied as of such expiration date of the Offer.
(b) As soon as practicable on the date the Offer is commenced, Parent and
Purchaser shall file with the United States Securities and Exchange Commission
(the "SEC") a Tender Offer Statement on Schedule TO with respect to the Offer
(together with all amendments and supplements thereto and including the exhibits
thereto, the "Schedule TO"). The Schedule TO will include, as exhibits, the
Offer to Purchase and a form of letter of transmittal, summary advertisement and
other ancillary Offer documents (collectively, together with any amendments and
supplements thereto, the "Offer Documents"). The Offer Documents will comply in
all material respects with the provisions of applicable federal securities laws.
Each of Parent and Purchaser further agrees to take all steps necessary to cause
the Offer Documents to be filed with the SEC and to be disseminated to holders
of Shares, in each case as and to the extent required by applicable federal
securities laws. Each of Parent and Purchaser, on the one hand, and the Company,
on the other hand, agrees promptly to correct any information provided by it for
use in the Offer Documents if and to the extent that it shall have become false
and misleading in any material respect and Purchaser further agrees to take all
steps necessary to cause the Offer Documents as so corrected to be filed with
the SEC and to be disseminated to holders of Shares, in each case as and to the
extent required by applicable federal securities laws. The Company and its
outside counsel shall be given a reasonable opportunity to review the initial
Schedule TO (and any amendments thereto) before it is filed with the SEC. In
addition, Parent and Purchaser agree to provide the Company and its counsel in
writing with any comments or other communications, whether written or oral, that
Parent, Purchaser or their outside counsel may receive from time to time from
the SEC or its staff with respect to the Offer Documents promptly after the
receipt of such comments or other communications.
Section 1.2 Company Actions. (a) The Company hereby approves of and
consents to the Offer and represents and warrants that the Independent Committee
has determined that this Agreement and the transactions contemplated hereby,
including the Offer and the Merger, are advisable and in the best interests of
the Stockholders, and the Board, at a meeting duly called and held and acting on
the unanimous recommendation of the Independent Committee, has (i) duly approved
the adoption of this Agreement and the transactions contemplated hereby,
including the Offer and the Merger, (ii) resolved to recommend that the
Stockholders accept the Offer, tender their Shares thereunder and approve this
Agreement and the Merger; provided, however, that such recommendation may be
withdrawn or modified in accordance with the provisions of this Agreement and
(iii) approved the transfer of the Convertible Note from Health Partners to
Purchaser; provided, however, that such approval is conditioned upon Purchaser
actually purchasing Shares pursuant to the Offer.
(b) Concurrently with the commencement of the Offer, the Company shall file
with the SEC a Solicitation/Recommendation Statement on Schedule 14D-9 (together
with all amendments and
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supplements thereto and including the exhibits thereto, the "Schedule 14D-9")
which shall, subject to the provisions of this Agreement, contain the
recommendation referred to in clause (ii) of Section 1.2(a) hereof. The Schedule
14D-9 will comply in all material respects with the provisions of applicable
federal securities laws. The Company further agrees to take all steps necessary
to cause the Schedule 14D-9 to be filed with the SEC and to be disseminated to
holders of Shares, in each case as and to the extent required by applicable
federal securities laws. Each of the Company, on the one hand, and Parent and
Purchaser, on the other hand, agrees promptly to correct any information
provided by it for use in the Schedule 14D-9 if and to the extent that it shall
have become false and misleading in any material respect and the Company further
agrees to take all steps necessary to cause the Schedule 14D-9 as so corrected
to be filed with the SEC and to be disseminated to holders of the Shares, in
each case as and to the extent required by applicable federal securities laws.
Purchaser and its outside counsel shall be given a reasonable opportunity to
review the initial Schedule 14D-9 (and any amendment thereto) before it is filed
with the SEC. In addition, the Company agrees to provide Parent, Purchaser and
their outside counsel in writing with any comments or other communications,
whether written or oral, that the Company or its counsel may receive from time
to time from the SEC or its staff with respect to the Schedule 14D-9 promptly
after the receipt of such comments or other communications.
(c) In connection with the Offer, the Company will promptly furnish or
cause to be furnished to Purchaser mailing labels, security position listings
and any available listing or computer file containing the names and addresses of
the record holders of the Shares as of a recent date, and shall furnish
Purchaser with such additional information (including updated lists of holders
of Shares and their addresses, mailing labels and lists of security positions)
and such other assistance as Purchaser or its agents may reasonably request in
communicating the Offer to the record and beneficial stockholders of the
Company. Except for such steps as are necessary to disseminate the Offer
Documents, Parent and Purchaser shall hold in confidence the information
contained in any of such labels and lists and the additional information
referred to in the preceding sentence, will use such information only in
connection with the Offer, and, if this Agreement is terminated, will promptly
upon request of the Company destroy or cause to be destroyed (or deliver or
cause to be delivered to the Company, if the Company so requests) all copies of
such information then in its possession or the possession of its agents or
representatives.
Section 1.3 Directors. (a) Promptly upon the purchase of and payment for
Shares by Purchaser pursuant to the Offer which, when taken together with the
shares of Company Common Stock otherwise owned by Purchaser, represent at least
a majority of the outstanding shares of Company Common Stock, Purchaser shall be
entitled to designate such number of directors, rounded up to the next whole
number, on the Board equal to the product of the total number of directors on
the Board (giving effect to the directors designated by Purchaser pursuant to
this sentence) multiplied by the percentage that the aggregate number of shares
of Company Common Stock beneficially owned by Purchaser bears to the total
number of shares of Company Common Stock then outstanding minus four (4) (to
give effect to the four seats on the Board presently occupied by Wesley R.
Edens, William B. Doniger, Paul H. Warren and Mark H. Tabak). The Company shall,
upon request of Purchaser, use its reasonable best efforts promptly either to
increase the size of the Board (which, pursuant to the Company's Restated
Certificate of Incorporation, has a maximum number of 11 directors) or, at the
Company's election, secure the resignations of such number of its incumbent
directors, or both, as is necessary to enable Purchaser's designees to be so
elected to the Board, and shall use its reasonable best efforts to cause
Purchaser's designees to be so elected.
(b) The Company's obligations under Section 1.3(a) shall be subject in all
instances to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder. The Company shall promptly take all actions required pursuant to
such Section 14(f) and Rule 14f-1 in order to fulfill its obligations under
Section 1.3(a), including mailing to shareholders the information required by
such Section 14(f) and Rule 14f-1 as is necessary to enable Purchaser's
designees to be elected to the Board, and the Company agrees to make such
mailing with the mailing of Schedule 14D-9 so long as Parent or Purchaser shall
have provided to the Company on a timely basis the information referred to in
the next sentence. Parent or Purchaser will promptly supply the Company, in
writing, any information with respect to either of them
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and their nominees, officers, directors and affiliates required by such Section
14(f) and Rule 14f-1. In the event that Purchaser's designees are elected to the
Board prior to the Effective Time (as defined in Section 1.5 hereof) and
notwithstanding the provisions of Section 1.3(a), until the Effective Time, the
Company shall retain as members of the Board at least three (3) directors who
are directors of the Company on the date hereof (the "Company Designees");
provided that, in such event, if the number of Company Designees shall be
reduced below three (3) for any reason whatsoever, any remaining Company
Designees (or Company Designee, if there be only one remaining) shall be
entitled to designate persons to fill such vacancies who shall be deemed to be
Company Designees for purposes of this Agreement or, if no Company Designee then
remains, the other directors shall designate three (3) persons to fill such
vacancies who shall not be stockholders, affiliates or associates of Parent or
Purchaser, and such persons shall be deemed to be Company Designees for purposes
of this Agreement. Notwithstanding anything in this Agreement to the contrary,
in the event that Purchaser's designees are elected to the Board prior to the
Effective Time, the affirmative vote of a majority of the Company Designees
shall be required for the Company to (i) amend or terminate this Agreement or
agree or consent to any amendment or termination of this Agreement, (ii)
exercise or waive any of the Company's rights, benefits or remedies hereunder,
(iii) extend the time for performance of Parent's and Purchaser's respective
obligations hereunder or (iv) take any other action by the Board under or in
connection with this Agreement other than the actions provided for in Section
1.9 hereof which shall not require the approval of the Company Designees. The
initial Company Designees shall be Wayne D. Boberg, Dr. Bruce L. Gewertz and
Darryl W. Hartley-Leonard.
Section 1.4 The Merger. Subject to the terms and conditions of this
Agreement, at the Effective Time (as defined in Section 1.5 hereof), the
Company, Purchaser and Acquisition Sub shall consummate the Merger pursuant to
which (a) Acquisition Sub or a wholly-owned subsidiary of Acquisition Sub shall
be merged with and into the Company and the separate corporate existence of
Acquisition Sub shall thereupon cease, (b) the Company shall be the successor or
surviving corporation in the Merger (the "Surviving Corporation") and shall
continue to be governed by the laws of the State of Delaware, and (c) the
separate existence of the Company with all its rights, privileges, immunities,
powers and franchises shall continue unaffected by the Merger. Acquisition Sub
may assign its rights under this Agreement to a wholly owned subsidiary of
Acquisition Sub which assumes all applicable obligations of Acquisition Sub
hereunder. Pursuant to the Merger, (x) the Restated Certificate of Incorporation
of the Company, as in effect immediately prior to the Effective Time, shall be
the Restated Certificate of Incorporation of the Surviving Corporation until
thereafter amended as provided by law and such Restated Certificate of
Incorporation, and (y) the Amended and Restated By-laws of the Company, as in
effect immediately prior to the Effective Time, shall be the Amended and
Restated By-laws of the Surviving Corporation until thereafter amended as
provided by law, the Restated Certificate of Incorporation and such Amended and
Restated By-Laws. The Merger shall have the effects set forth in the DGCL.
Section 1.5 Effective Time. As soon as practicable, on the date of the
Closing (as defined in Section 1.6 hereof), or on such other date as the parties
may agree, Purchaser, Acquisition Sub and the Company will cause a certificate
of merger (the "Certificate of Merger") to be executed and filed with the
Secretary of State of Delaware as provided in the DGCL. The Merger shall become
effective on the date on which the Certificate of Merger is duly filed with the
Secretary of State of the State of Delaware or such other subsequent time as is
agreed upon by the parties and specified in the Certificate of Merger (the time
the Merger becomes effective is referred to herein as the "Effective Time").
Section 1.6 Closing. The closing of the Merger (the "Closing") will take
place at 10:00 a.m. (New York time) on a date to be specified by the parties,
which shall be no later than the second business day after satisfaction or
waiver (subject to applicable law) of all of the conditions set forth in Article
VI hereof (the "Closing Date"), at the offices of Skadden, Arps, Slate, Meagher
& Flom LLP, Four Times Square, New York, New York, unless another date or place
is agreed to in writing by the parties hereto.
Section 1.7 Directors and Officers of the Surviving Corporation. The
directors of Acquisition Sub at the Effective Time shall, from and after the
Effective Time, be the directors of the Surviving Corporation until their
successors shall have been duly elected or appointed or qualified or until their
earlier death,
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resignation or removal in accordance with the Surviving Corporation's Restated
Certificate of Incorporation and Amended and Restated By-laws. The officers of
the Company at the Effective Time shall, from and after the Effective Time, be
the officers of the Surviving Corporation until their successors shall have been
duly elected or appointed or qualified or until their earlier death, resignation
or removal in accordance with the Surviving Corporation's Restated Certificate
of Incorporation and Amended and Restated By-laws.
Section 1.8 Subsequent Actions. If at any time after the Effective Time
the Surviving Corporation will consider or be advised that any deeds, bills of
sale, assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of either of the Company or Acquisition Sub acquired or to
be acquired by the Surviving Corporation as a result of, or in connection with,
the Merger or otherwise to carry out this Agreement, the officers and directors
of the Surviving Corporation shall be authorized to execute and deliver, in the
name and on behalf of either the Company or Purchaser, all such deeds, bills of
sale, instruments of conveyance, assignments and assurances and to take and do,
in the name and on behalf of the Company, Purchaser or Acquisition Sub or
otherwise, all such other actions and things as may be necessary or desirable to
vest, perfect or confirm any and all right, title and interest in, to and under
such rights, properties or assets in the Surviving Corporation or otherwise to
carry out this Agreement.
Section 1.9 Stockholders' Meeting; Short-Form Merger. (a) If required by
applicable law in order to consummate the Merger, the Company, acting through
its Board, shall, in accordance with its Restated Certificate of Incorporation
and Amended and Restated By-laws and applicable law:
(i) duly call, give notice of, convene and hold a special meeting of
its stockholders (the "Special Meeting") as soon as practicable following
the acceptance for payment and purchase of Shares by Purchaser pursuant to
the Offer for the purpose of considering and taking action upon the
approval of the Merger and the adoption of this Agreement;
(ii) prepare and file with the SEC a preliminary proxy or information
statement relating to the Merger and this Agreement and use its reasonable
best efforts to obtain and furnish the information required to be included
by the SEC in the Proxy Statement (as hereinafter defined) and, after
consultation with Purchaser, to respond promptly to any comments made by
the SEC with respect to the preliminary proxy or information statement and
cause a definitive proxy or information statement (the "Proxy Statement")
to be mailed to its stockholders;
(iii) include in the Proxy Statement the recommendation of the Board
that stockholders of the Company vote in favor of the approval of the
Merger and the adoption of this Agreement; and
(iv) use its reasonable best efforts to solicit from holders of Shares
proxies in favor of the Merger and take all other action necessary or
advisable to secure any vote or consent of stockholders required by the
DGCL to effect the Merger.
(b) Purchaser agrees that it will promptly provide the Company, in writing,
with the information concerning Parent and Purchaser required to be included in
the Proxy Statement and will vote at the Special Meeting, or cause to be voted
at the Special Meeting, all of the shares of Company Common Stock then owned by
it, Purchaser or any of its other subsidiaries and affiliates in favor of the
approval of the Merger and the adoption of this Agreement.
(c) Notwithstanding the provisions of Section 1.9(a) and (b) hereof, in the
event that Parent, Purchaser and any other subsidiary of Parent (or any of them)
shall collectively acquire at least 90% of the outstanding shares of Company
Common Stock pursuant to the Offer or otherwise (including shares of Company
Common Stock currently owned by Purchaser and its affiliates), the parties
hereto agree to take all necessary and appropriate action to cause the Merger to
become effective promptly after the acceptance for payment of and payment for
Shares by Purchaser pursuant to the Offer without a meeting of stockholders of
the Company, in accordance with Section 253 of the DGCL.
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ARTICLE II
CONVERSION OF SECURITIES
Section 2.1 Conversion of Capital Stock. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holders of any
shares of Company Common Stock or shares of Acquisition Sub (the "Acquisition
Sub Common Stock"):
(a) Acquisition Sub Common Stock. Each issued and outstanding share
of Acquisition Sub Common Stock (or if Acquisition Sub has assigned its
rights hereunder to a wholly owned subsidiary, each issued and outstanding
share of such subsidiary) shall automatically be converted into and become
one fully paid and nonassessable share of common stock of the Surviving
Corporation.
(b) Cancellation of Treasury Stock and Parent-Owned Stock. Each share
of Company Common Stock owned by the Company as treasury stock and each
share of Company Common Stock owned by Purchaser, Acquisition Sub or any
other wholly owned subsidiary of Purchaser (other than shares in trust
accounts, managed accounts, custodial accounts and the like that are
beneficially owned by third parties) shall automatically be cancelled and
retired and shall cease to exist, and no consideration shall be delivered
in exchange therefor.
(c) Conversion of Shares. Each issued and outstanding Share (other
than any Dissenting Shares (if applicable and as defined in Section 2.3
hereof)) shall automatically be converted into the right to receive the
Offer Price, payable to the holder thereof, without interest (the "Merger
Consideration"), less any amounts required by law to be withheld and paid
to governmental entities, upon surrender of the certificate formerly
representing such Share in the manner provided in Section 2.2 hereof. All
such Shares, when so converted, 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 shall cease to have
any rights with respect thereto, except the right to receive the Merger
Consideration therefor upon the surrender of such certificate in accordance
with Section 2.2. Notwithstanding the foregoing, if between the date of
this Agreement and the Effective Time the Shares shall have been changed
into a different number of shares or a different class, by reason of any
stock dividend, subdivision, reclassification, recapitalization, split,
combination or exchange of shares, and such action is in compliance with
Section 5.1 hereof, the Merger Consideration will be correspondingly
adjusted on a per-share basis to reflect such stock dividend, subdivision,
reclassification, recapitalization, split, combination or exchange of
shares.
Section 2.2 Surrender of Certificates. (a) Paying Agent. Purchaser shall
designate a bank or trust company reasonably acceptable to the Company to act as
agent for the holders of Shares in connection with the Merger (the "Paying
Agent") to receive the funds to which holders of Shares shall become entitled
pursuant to Section 2.1(c) hereof. Prior to the Effective Time, Purchaser shall
deposit or cause to be deposited with the Paying Agent such aggregate funds for
timely payment of the consideration to which such holders shall be entitled
hereunder. Such funds shall be invested as directed by Purchaser or the
Surviving Corporation pending payment thereof by the Paying Agent to holders of
the Shares. Earnings from such investments shall be the sole and exclusive
property of Purchaser and the Surviving Corporation, and no part of such
earnings shall accrue to the benefit of holders of the Shares. If the amount of
funds deposited with the Paying Agent by or on behalf of Purchaser is
insufficient to pay all of the amounts required to be paid pursuant to Sections
2.1(c) and 2.3(b) hereof, Purchaser from time to time after the Effective Time
shall take all steps necessary to enable and cause the Surviving Corporation to
legally deposit in trust additional cash with the Paying Agent sufficient to
make all required cash payments.
(b) Surrender Procedures. As soon as reasonably practicable after the
Effective Time but in no event more than three business days thereafter,
Purchaser shall cause the Paying Agent to mail to each holder of record of a
certificate or certificates, which immediately prior to the Effective Time
represented outstanding Shares (the "Certificates"), whose Shares were converted
pursuant to Section 2.1 hereof into the right to receive the Merger
Consideration (i) a letter of transmittal (which shall specify that delivery
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shall be effected, and risk of loss and title to the Certificates shall pass,
only upon delivery of the Certificates to the Paying Agent and shall be in such
form and have such other provisions not inconsistent with this Agreement as
Purchaser and the Company may reasonably specify) and (ii) instructions for use
in effecting the surrender of the Certificates in exchange for payment of the
Merger Consideration. Upon surrender of a Certificate for cancellation to the
Paying Agent or to such other agent or agents as may be appointed by Purchaser,
together with such letter of transmittal, duly executed, the holder of such
Certificate shall be entitled to receive in exchange therefor the Merger
Consideration for each Share formerly represented by such Certificate and the
Certificate so surrendered shall forthwith be cancelled. If payment of the
Merger Consideration is to be made to a person other than the person in whose
name the surrendered Certificate is registered, it shall be a condition of
payment that the Certificate so surrendered shall be properly endorsed or shall
be otherwise in proper form for transfer and that the person requesting such
payment shall have paid any transfer and other taxes required by reason of the
payment of the Merger Consideration to a person other than the registered holder
of the Certificate surrendered or shall have established to the satisfaction of
the Surviving Corporation that such tax either has been paid or is not
applicable. Until surrendered as contemplated by this Section 2.2, each
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive the Merger Consideration in cash as contemplated by
this Section 2.2.
(c) Transfer Books; No Further Ownership Rights in the Shares. At the
Effective Time, the stock transfer books of the Company shall be closed and
thereafter there shall be no further registration of transfers of Shares on the
records of the Company. From and after the Effective Time, the holders of
Certificates evidencing ownership of Shares outstanding immediately prior to the
Effective Time shall cease to have any rights with respect to such Shares,
except as otherwise provided for herein or by applicable law. If, after the
Effective Time, Certificates are presented to the Surviving Corporation for any
reason, they shall be cancelled and exchanged as provided in this Article II.
(d) Termination of Fund; No Liability. At any time following 180 days
after the Effective Time, the Surviving Corporation shall be entitled to require
the Paying Agent to deliver to it any funds (including any interest received
with respect thereto) which had been made available to the Paying Agent and
which have not been disbursed to holders of Certificates, and thereafter such
holders shall be entitled to look to the Surviving Corporation (subject to
abandoned property, escheat or other similar laws) only as general creditors
thereof with respect to the Merger Consideration payable upon due surrender of
their Certificates, without any interest thereon. Notwithstanding the foregoing,
neither the Surviving Corporation nor the Paying Agent shall be liable to any
holder of a Certificate for Merger Consideration delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
(e) Lost Certificates. If any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed and, if required by the
Surviving Corporation, the posting by such person of a bond in such reasonable
amount as the Surviving Corporation may direct or otherwise indemnify the
Surviving Corporation in a manner satisfactory to it against any claim that may
be made against it with respect to such Certificate, the Paying Agent shall pay
in exchange for such lost, stolen, or destroyed Certificate the Merger
Consideration pursuant to this Agreement.
Section 2.3 Dissenting Shares. (a) Notwithstanding any provision of this
Agreement to the contrary, any Shares as to which the holder thereof has
demanded appraisal with respect to the Merger in accordance with Section 262 of
the DGCL and as of the Effective Time has neither effectively withdrawn nor lost
his right to such appraisal ("Dissenting Shares") shall not be converted into or
represent a right to receive cash pursuant to Section 2.1, but the holder
thereof shall be entitled to only such rights as are granted by the DGCL.
(b) Notwithstanding the provisions of Section 2.3(a), if any holder of
Shares who demands appraisal of his Shares under the DGCL effectively withdraws
or loses (through failure to perfect or otherwise) his right to appraisal, then
as of the Effective Time or the occurrence of such event, whichever later
occurs, such holder's Shares shall automatically be converted into and represent
only the right to receive the
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Merger Consideration as provided in Section 2.1(c), without interest, upon
surrender of the Certificate or Certificates representing such Shares pursuant
to Section 2.2.
(c) The Company shall give Purchaser (i) prompt notice of any written
demands for appraisal or payment of the fair value of any Shares, withdrawals of
such demands, and any other instruments served on the Company pursuant to the
DGCL received by the Company in connection therewith and (ii) the opportunity to
direct all negotiations and proceedings with respect to demands for appraisal
under the DGCL. Except with the prior written consent of Purchaser, the Company
shall not voluntarily make any payment with respect to any demands for
appraisal, settle or offer to settle any such demands.
Section 2.4 Option Plans; Warrants. (a) The Company shall use its
reasonable best efforts to cause, at or immediately prior to the Effective Time,
each then outstanding stock option (each, an "Option") granted to certain
employees and directors of the Company under the Brookdale Living Communities,
Inc. Stock Incentive Plan, 1998 Brookdale Living Communities, Inc. Stock
Incentive Plan and 1999 Brookdale Living Communities, Inc. Stock Incentive Plan,
as amended (collectively, the "Option Plans"), whether or not then vested or
exercisable, to be cancelled. In consideration of such cancellation of Options
with an exercise price of less than the Offer Price, the Company (or, at
Parent's option, Purchaser), at or immediately prior to the Effective Time,
shall pay to such holders of Options an amount in respect thereof equal to the
product of (A) the excess, if any, of the Offer Price over the exercise price of
such Options and (B) the number of Shares subject to such vested or unvested
Options immediately prior to their cancellation (such payment to be net of
withholding taxes, if any, and without interest).
(b) The Board or any committee thereof responsible for the administration
of the Option Plans shall take all actions necessary so that all such Option
Plans and Options with strike prices higher than the Offer Price shall terminate
as of the Effective Time.
(c) The Company shall cause, at or immediately prior to the Effective Time,
the Warrants (as hereinafter defined) to be cancelled for no consideration (it
being understood that such cancellation is not a condition to the acceptance for
payment of Shares by Purchaser pursuant to the Offer).
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the SEC Documents (as defined in Section 3.7) or
otherwise disclosed to Parent and Purchaser in a schedule delivered to them at
or prior to the execution hereof (the "Disclosure Schedule"), the Company
represents and warrants to Parent and Purchaser as follows:
Section 3.1 Organization. Each of the Company and its subsidiaries is a
corporation (or, if not a corporation, duly organized), validly existing and in
good standing under the laws of the jurisdiction of its incorporation (or, if
not a corporation, organization) and has all requisite power (or, if a
corporation, corporate power), and authority to own, lease and operate its
properties and to carry on its business as it is now being conducted, except
where the failure to be so organized, existing and in good standing or to have
such power and authority would not have any material adverse effect upon the
Company and its subsidiaries, taken as a whole. Each of the Company and its
subsidiaries is duly qualified or licensed to do business and is in good
standing in each jurisdiction in which the nature of the business conducted by
it makes such qualification or licensing necessary, except where the failure to
be so duly qualified or licensed and in good standing would not have any
material adverse effect upon the Company and its subsidiaries, taken as a whole.
The Company has heretofore delivered to Parent a complete and correct copy of
each of its Restated Certificate of Incorporation and Amended and Restated
By-Laws, as currently in effect, and has heretofore made available to Parent a
complete and correct copy of the equivalent organizational documents of each of
its subsidiaries, as currently in effect.
Section 3.2 Capitalization. (a) As of the date hereof, the authorized
capital stock of the Company consists of 75,000,000 shares of Company Common
Stock and 20,000,000 shares of preferred stock, par value $0.01 per share (the
"Preferred Stock"). As of the close of business on July 25, 2000, (i) 9,926,549
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shares of Company Common Stock were issued and outstanding, (ii) 5,479,452
shares of Company Common Stock were reserved for issuance pursuant to the
conversion of the convertible subordinated notes issued under the Indenture
dated May 14, 1999 (collectively, the "Convertible Note"), (iii) 771,384 shares
of Company Common Stock issuable pursuant to the Option Plans were reserved for
issuance in connection with Options, (iv) 1,724,800 shares of Company Common
Stock were issued and held in the treasury of the Company, (v) 107,256 shares of
Company Common Stock were reserved for issuance pursuant to warrants held by
Banc One Capital Partners IV, Ltd., and 10,000 shares of Company Common Stock
were reserved for issuance pursuant to warrants held by Banc One Capital
Markets, Inc. (collectively, the "Warrants"), and (vi) there were no shares of
Preferred Stock issued and outstanding. All the outstanding shares of the
Company's capital stock are duly authorized, validly issued, fully paid,
non-assessable and free of preemptive rights. Except for the Convertible Notes,
Options and Warrants and the Stockholders Agreement, as amended to date, by and
among the Company, Purchaser and Health Partners, as of the date hereof, there
are no existing (i) options, warrants, calls, subscriptions or other rights,
convertible securities, agreements or commitments of any character obligating
the Company or any of its subsidiaries to issue, transfer or sell any shares of
capital stock or other equity interest in, the Company or any of its
subsidiaries or securities convertible into or exchangeable for such shares or
equity interests, (ii) contractual obligations of the Company or any of its
subsidiaries to repurchase, redeem or otherwise acquire any capital stock of the
Company or any of its subsidiaries or (iii) voting trusts or similar agreements
to which the Company is a party with respect to the voting of the capital stock
of the Company.
(b) All of the outstanding shares of capital stock (or equivalent equity
interests of entities other than corporations) of each of the Company's
subsidiaries are owned of record and beneficially, directly or indirectly, by
the Company.
Section 3.3 Authorization; Validity of Agreement; Company Action. The
Company has all necessary corporate power and authority to execute and deliver
this Agreement and, subject to obtaining the approval of its stockholders, to
the extent necessary, to consummate the transactions contemplated hereby. The
execution, delivery and performance by the Company of this Agreement, and the
consummation by it of the transactions contemplated hereby, have been duly
authorized by the Board and, except for obtaining the approval of its
stockholders as contemplated by Section 1.9 hereof, to the extent necessary, no
other corporate action on the part of the Company is necessary to authorize the
execution and delivery by the Company of this Agreement and the consummation by
it of the transactions contemplated hereby. This Agreement has been duly
executed and delivered by the Company and (assuming due and valid authorization,
execution and delivery hereof by Parent and Purchaser) is a valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms, except that (i) such enforcement may be subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws, now or hereafter
in effect, affecting creditors' rights generally, and (ii) equitable remedies
from specific performance and injunctive and other forms of equitable relief may
be subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought.
Section 3.4 State Takeover Statutes. In addition to the Company's
representations and warranties contained in Section 1.2(a), the action taken by
the Board constitutes approval of the Merger and the other transactions
contemplated hereby or entered into in connection herewith by the Board under
the provisions of Section 203 of the DGCL such that Section 203 of the DGCL does
not apply to this Agreement or the other transactions contemplated hereby
(together with any similar approval made by the Board pursuant to the Section
203 of the DGCL with respect to any affiliate or subsidiary of Parent or
Purchaser, collectively the "Section 203 Approval"). No other state takeover
statute is applicable to the Merger or the other transactions contemplated
hereby.
Section 3.5 Vote Required. In the event that Section 253 of the DGCL is
inapplicable and unavailable to effectuate the Merger, the affirmative vote of
the holders of at least a majority of the outstanding shares of Company Common
Stock (voting as one class, with each share of Company Common Stock having one
(1) vote) entitled to be cast is the only vote of the holders of any class or
series of the Company's capital stock necessary to approve the Merger.
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Section 3.6 Consents and Approvals; No Violations. Except for the filings,
permits, authorizations, consents and approvals as may be required under, and
other applicable requirements of, the Exchange Act, the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), state securities
or blue sky laws and DGCL, matters specifically described in this Agreement and
matters described in the Disclosure Schedule, neither the execution, delivery or
performance of this Agreement by the Company nor the consummation by the Company
of the transactions contemplated hereby will (i) violate any provision of the
Restated Certificate of Incorporation or Amended and Restated By-Laws of the
Company or equivalent organizational documents of any of its subsidiaries, (ii)
result in a violation or breach of, or constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of termination,
cancellation or acceleration) under, any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, lease, license, contract, agreement or
other instrument or obligation to which the Company or any of its subsidiaries
is a party or by which any of them or any of their properties or assets may be
bound and which has been filed as an exhibit to the SEC Documents (the "Material
Agreements"), (iii) violate any order, writ, judgment, injunction, decree, law,
statute, rule or regulation applicable to the Company, any of its subsidiaries
or any of their properties or assets, or (iv) require on the part of the Company
any filing or registration with, notification to, or authorization, consent or
approval of, any court, legislative, executive or regulatory authority or agency
(a "Governmental Entity"); except in the case of clauses (ii), (iii) or (iv) for
such violations, breaches or defaults which, or filings, registrations,
notifications, authorizations, consents or approvals the failure of which to
obtain, would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole, and would not materially adversely affect the
ability of the Company to consummate the transactions contemplated by this
Agreement.
Section 3.7 SEC Reports and Financial Statements. The Company has filed
all reports required to be filed by it with the SEC pursuant to the Exchange Act
and the Securities Act of 1933, as amended (the "Securities Act"), since January
1, 1999 (as such documents have been amended since the date of their filing,
collectively, the "SEC Documents"). The SEC Documents, as of their respective
filing dates, or if amended, as of the date of the last such amendment, (a) did
not contain any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading, and (b) complied in all material respects with the applicable
requirements of the Exchange Act and the Securities Act, as the case may be, and
the applicable rules and regulations of the SEC thereunder. Each of the
consolidated balance sheets (including the related notes) included in the SEC
Documents presents in all material respects the financial position of the
Company and its consolidated subsidiaries as of the respective dates thereof,
and the other related statements (including the related notes) included in the
SEC Documents present in all material respects the results of operations and
cash flows of the Company and its consolidated subsidiaries for the respective
periods or as of the respective dates set forth therein. Each of the
consolidated balance sheets and statements of operations and cash flows
(including the related notes) included in the SEC Documents has been prepared in
all material respects in accordance with United States generally accepted
accounting principles ("GAAP") applied on a consistent basis during the periods
involved, except as otherwise noted therein and subject, in the case of
unaudited interim financial statements, to normal year-end adjustments.
Section 3.8 No Undisclosed Liabilities. Except (a) as disclosed in the
Company's consolidated financial statements included in the SEC Documents and
(b) for liabilities and obligations incurred in the ordinary course of business
and consistent with past practice since March 31, 2000, neither the Company nor
any of its subsidiaries has any liabilities or obligations of any nature,
whether or not accrued, contingent or otherwise, that have, or would be
reasonably likely to have, a material adverse effect on the Company and its
subsidiaries, taken as a whole.
Section 3.9 Absence of Certain Changes. Except as contemplated by this
Agreement, since March 31, 2000, the business of the Company and each of its
subsidiaries has been conducted in the ordinary and usual course consistent with
past practice and the Company has not (i) suffered any change having or
reasonably likely to have a material adverse effect on the Company and its
subsidiaries, taken as
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a whole; (ii) amended its Restated Certificate of Incorporation or Amended and
Restated By-laws; (iii) taken any action which would have been prohibited under
Section 5.1 if such section applied to the period between March 31, 2000 and the
date of execution of this Agreement; (iv) declared or set aside or paid any
dividend or other distribution with respect to the Company Common Stock; or (v)
materially changed the Company's accounting methods.
Section 3.10 Litigation. There is no action, suit, inquiry, proceeding or
investigation by or before any court or governmental or other regulatory or
administrative agency or commission pending or, to the Company's knowledge,
threatened against or involving the Company or any of its subsidiaries or which
questions or challenges the validity of this Agreement, other than those (i)
disclosed in the SEC Documents or (ii) the outcome of which would not (A) have,
or reasonably be expected to have, a material adverse effect on the Company and
its subsidiaries, taken as a whole, or (B) reasonably be expected to materially
impair or delay the ability of the Company to perform its obligations under this
Agreement.
Section 3.11 Employee Benefit Plans; ERISA. (a) The Disclosure Schedule
sets forth a true and complete list of each deferred compensation and each
incentive compensation, stock purchase, stock option and other equity
compensation plan, program, agreement or arrangement; each severance or
termination pay, medical, surgical, hospitalization, life insurance and other
"welfare" plan, fund or program (within the meaning of Section 3(1) of Employee
Retirement Income Security Act of 1974, as amended ("ERISA")); each
profit-sharing, stock bonus or other "pension" plan, fund or program (within the
meaning of Section 3(2) of ERISA); each employment, termination or severance
agreement; and each other employee benefit plan, fund, program, agreement or
arrangement (such a plan, program, agreement, arrangement or program, a "Plan";
collectively "Plans"), in each case, that is sponsored, maintained or
contributed to or required to be contributed to by the Company or by any trade
or business, whether or not incorporated, that together with the Company would
be deemed a "single employer" within the meaning of Section 4001(b) of ERISA
("ERISA Affiliate"), or to which the Company or an ERISA Affiliate is party,
whether written or oral, for the benefit of any employee or former employee of
the Company or any of its subsidiaries. Neither the Company, any of its
subsidiaries nor any ERISA Affiliate has any commitment or formal plan, whether
legally binding or not, to create any additional employee benefit plan or modify
or change any existing plan that would affect any employee or former employee of
the Company or any of its subsidiaries.
(b) The Company has heretofore delivered or made available to Parent true
and complete copies of each Plan and any amendments thereto (or if a Plan is not
a written Plan, a description thereof), any related trust or other funding
vehicle, any summaries required under ERISA or the Internal Revenue Code of
1986, as amended, and the rules and regulations promulgated thereunder (the
"Code"), the most recent annual reports filed, and the most recent determination
letter received from the United States Internal Revenue Service (the "IRS") with
respect to each Plan intended to qualify under Section 401 of the Code.
(c) No Plan is subject to Title IV or Section 302 of ERISA.
(d) To the Company's knowledge, neither the Company or any of its
subsidiaries, any Plan, any trust created thereunder, nor any trustee or
administrator thereof has engaged in a transaction in connection with which the
Company or any of its subsidiaries, any Plan, any such trust, or any trustee or
administrator thereof, or any party dealing with any Plan or any such trust
could reasonably be subject to either a civil penalty assessed pursuant to
Section 409 or 502(i) of ERISA or a tax imposed pursuant to Section 4975 or 4976
of the Code.
(e) Each Plan has been operated and administered in all material respects
in accordance with its terms and applicable law, including but not limited to
ERISA and the Code.
(f) Each Plan intended to be "qualified" within the meaning of Section
401(a) of the Code is so qualified, and the trusts maintained thereunder are
exempt from taxation under Section 501(a) of the
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Code. Each Plan intended to satisfy the requirements of Section 501(c)(9) has
satisfied such requirements.
(g) No Plan provides medical, surgical, hospitalization, death or similar
benefits (whether or not insured) for employees or former employees of the
Company or any of its subsidiaries for periods extending beyond their retirement
or other termination of service, other than (i) coverage mandated by applicable
law, (ii) death benefits under any "pension plan," or (iii) benefits the full
cost of which is borne by the current or former employee (or his beneficiary).
(h) No amounts payable under the Plans will fail to be deductible for
federal income tax purposes by virtue of Section 280G of the Code.
(i) The consummation of the transactions contemplated hereby will not,
either alone or in combination with another event, (i) entitle any current or
former employee or officer of the Company or any of its subsidiaries to
severance pay, unemployment compensation or any other payment, except as
expressly provided in this Agreement, or (ii) accelerate the time of payment or
vesting, or increase the amount of, compensation due any such employee or
officer.
(j) There are no pending or, to the Company's knowledge, threatened or
anticipated claims by or on behalf of any Plan, by any employee or beneficiary
covered under any such Plan, or otherwise involving any such Plan (other than
routine claims for benefits).
Section 3.12 No Default; Compliance with Applicable Laws. The business of
the Company and each of its subsidiaries is not in default (with or without due
notice or the passage of time or both) or violation of, any term, condition or
provision of (i) their respective certificates of incorporation or by-laws or
similar organizational documents, (ii) any Material Agreement or (iii) any
statute, law, rule, regulation, judgment, decree, order, arbitration award,
concession, grant, franchise, permit or license or other governmental
authorization or approval applicable to the Company or any of its subsidiaries,
excluding from the foregoing clauses (i), (ii) and (iii), defaults or violations
which would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
Section 3.13 Taxes. (a) The Company and each of its subsidiaries have duly
filed all Tax Returns (as defined in Section 3.13 (i) below) that are required
to be filed excluding only such Tax Returns as to which any failure to file does
not have a material adverse effect on the Company and its subsidiaries, taken as
a whole, and have duly paid or caused to be duly paid in full or made provision
in accordance with GAAP (or there has been paid or provision has been made on
their behalf) for the payment of all material Taxes (also as defined in Section
3.13 (i) below) for all periods or portions thereof ending through the date
hereof. All such Tax Returns are correct and complete in all material respects
and accurately reflect all liability for material Taxes for the periods covered
thereby. All material Taxes owed and due by the Company and all of its
subsidiaries relating to operations on or prior to March 31, 2000 (whether or
not shown on any Tax Return) have been paid or have been adequately reflected on
the Company's consolidated financial statements included in the SEC Documents.
Since March 31, 2000, the Company has not incurred liability for any material
Taxes other than in the ordinary course of business. Neither the Company nor any
of its subsidiaries has received written notice of any claim made by an
authority in a jurisdiction where neither the Company nor any of its
subsidiaries file Tax Returns, that the Company is or may be subject to taxation
by that jurisdiction.
(b) Neither the Company nor any of its subsidiaries has waived any statute
of limitations in any jurisdiction in respect of material Taxes or material Tax
Returns or agreed to any extension of time with respect to a material Tax
assessment or deficiency.
(c) No federal, state, local or foreign audits, examinations or other
administrative proceedings have been commenced or, to the Company's knowledge,
are pending with regard to any material Taxes or material Tax Returns of the
Company or of any of its subsidiaries. No written notification has been received
by the Company or by any of its subsidiaries that such an audit, examination or
other proceeding is pending or threatened with respect to any material Taxes due
from or with respect to or attributable to the Company or any of its
subsidiaries or any material Tax Return filed by or with respect to the
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Company or any of its subsidiaries. To the Company's knowledge, there is no
dispute or claim concerning any material Tax liability of the Company or any of
its subsidiaries either claimed or raised by any taxing authority in writing.
(d) Neither the Company nor any of its subsidiaries is a party to any
agreement, plan, contract or arrangement that could result, separately or in the
aggregate, in a payment of any "excess parachute payments" within the meaning of
Section 280G of the Code.
(e) Neither the Company nor any of its subsidiaries has filed a consent
pursuant to Section 341(f) of the Code (or any predecessor provision) concerning
collapsible corporations, or agreed to have Section 341(f)(2) of the Code apply
to any disposition of a "subsection (f) asset" (as such term is defined in
Section 341(f)(4) of the Code) owned by the Company or any of its subsidiaries.
(f) No taxing authority has asserted in writing a claim against the Company
or any of its subsidiaries under or as a result of Section 482 of the Code or
any similar provision of state, local or foreign law.
(g) None of the Company or any of its subsidiaries has been a member of any
affiliated group within the meaning of Section 1504(a) of the Code, or any
similar affiliated or consolidated group for tax purposes under state, local or
foreign law (other than a group the common parent of which is the Company), or
has any liability for Taxes of any person (other than the Company and its
subsidiaries) under Treasury Regulation Section 1.1502-6 or any similar
provision of state, local or foreign law as a transferee or successor, by
contract or otherwise. Neither the Company nor any of its subsidiaries is a
party to any material tax sharing, tax indemnity or other agreement or
arrangement with any entity not included in the Company's consolidated financial
statements included in the SEC Documents.
(h) There are no material liens for Taxes upon the assets of the Company or
any of its subsidiaries which are not provided for in the Company's consolidated
financial statements included in the SEC Documents, except liens for Taxes not
yet due and payable.
(i) For purposes of this Agreement, "Taxes" shall mean any and all taxes,
charges, fees, levies or other assessments, including, without limitation,
income, gross receipts, excise, real or personal property, sales, withholding,
social security, occupation, use, service, service use, value added, license,
net worth, payroll, franchise, transfer and recording taxes, fees and charges,
imposed by the IRS or any taxing authority (whether domestic or foreign
including, without limitation, any state, local or foreign government or any
subdivision or taxing agency thereof (including a United States possession)),
whether computed on a separate, consolidated, unitary, combined or any other
basis; and such term shall include any interest, penalties or additional amounts
attributable to, or imposed upon, or with respect to, any such taxes, charges,
fees, levies or other assessments. For purposes of this Agreement, "Tax Return"
shall mean any report, return, document, declaration or other information or
filing required to be supplied to any taxing authority or jurisdiction (foreign
or domestic) with respect to Taxes.
Section 3.14 Title to Properties; Encumbrances. Each of the Company and
its subsidiaries has fee simple title to all of the real properties which it
purports to own. All such real properties are not subject to any mortgages,
title defects or objections, liens, claims, charges, security interests or other
encumbrances ("Encumbrances"), which would cause a material adverse effect on
the Company and its subsidiaries, taken as a whole, and are not subject to any
rights of way, building use restrictions, exceptions, variances, reservations or
limitations ("Property Restrictions"), which would cause a material adverse
effect on the Company and its subsidiaries, taken as a whole, except (i)
Property Restrictions imposed or promulgated by law or any governmental body or
authority with respect to real property, including zoning regulations, which
would not have a material adverse effect on the Company and its subsidiaries,
taken as a whole, (ii) Encumbrances and Property Restrictions disclosed on
existing title reports, existing title policies or existing surveys (in any case
copies of which title reports, title policies and surveys have been delivered or
made available to Parent) and (iii) mechanics', carriers', workmen's,
repairmen's liens and other Encumbrances, Property Restrictions and other
limitations of any kind, if any, which are not substantial in amount, do not
materially detract from the value of or materially interfere with the current
use of any of
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the properties subject thereto or affected thereby, and would not otherwise have
a material adverse effect on the Company and its subsidiaries, taken as a whole.
Section 3.15 No Condemnation or Expropriation. Neither the Company nor any
of its subsidiaries has received written notice to the effect that the whole or
any material portion of the real properties owned or leased by the Company or
any of its subsidiaries is subject to any governmental decree or order to be
sold or is being condemned, expropriated or otherwise taken by any public
authority with or without payment of compensation therefor, or that any such
condemnation, expropriation or taking has been proposed, which would have a
material adverse effect on the Company and its subsidiaries, taken as a whole.
Section 3.16 Leases. All leases pursuant to which the Company or any of
its subsidiaries leases real property are valid and binding and are in full
force and effect as against the Company or its subsidiaries and, to the
Company's knowledge, as against the other party thereto, except to the extent
the failure to be valid and binding and in full force and effect would not
reasonably be expected to have a material adverse effect on the Company and its
subsidiaries, taken as a whole. The Company has not received written notice
under any of such leases of any default, and, to the Company's knowledge, no
event has occurred which, with notice or lapse of time or both, would constitute
such a default by the Company or its subsidiaries, except as would not be
reasonably expected to result in a material adverse effect on the Company and
its subsidiaries, taken as a whole.
Section 3.17 Environmental Laws. (a)(i) The Company and each of its
subsidiaries are in compliance in all material respects with all Environmental
Laws (as defined in Section 3.17(b) below), including, but not limited to,
compliance with any permits or other governmental authorizations or the terms
and conditions thereof; (ii) neither the Company nor any of its subsidiaries has
received any written communication or notice, whether from a governmental
authority or otherwise, alleging any violation of or noncompliance with any
Environmental Laws by the Company or any of its subsidiaries or for which any of
them is responsible which has not been resolved, and there is no pending or, to
the Company's knowledge, threatened Environmental Claim (also as defined in
Section 3.17(b) below), except where such Environmental Claim would not have a
material adverse effect on the Company and its subsidiaries, taken as a whole;
and (c) to the Company's knowledge, there are no past or present facts or
circumstances that could form the basis of any Environmental Claim against the
Company or any of its subsidiaries or against any person or entity whose
liability for any Environmental Claim the Company or any of its subsidiaries has
retained or assumed either contractually or by operation of law, except where
such Environmental Claim, if made, would not have a material adverse effect on
the Company and its subsidiaries, taken as a whole. All permits and other
governmental authorizations currently held or required to be held by the Company
and its subsidiaries pursuant to any Environmental Laws, other than nominal
permits (e.g., sewer permits) and authorizations held by the Company (or any
subsidiary of the Company) in the ordinary course of developing, owning and
operating its properties, are identified in the Disclosure Schedule. The Company
has provided or made available to Parent all assessments, reports and
investigations or audits in the possession of the Company regarding
environmental matters pertaining to, or the environmental condition of, the
business of the Company and its subsidiaries, or the compliance (or
noncompliance) by the Company or any of its subsidiaries with any Environmental
Laws. Notwithstanding the other representations and warranties made by the
Company in this Agreement, the representations and warranties made by the
Company in this Section 3.17 shall be deemed to be the only representations and
warranties made by the Company with respect to Environmental Laws or
Environmental Claims or regarding any other environmental matters pertaining to,
or the environmental condition of, the business of the Company and its
subsidiaries.
(b) For purposes of this Agreement, "Environmental Law" shall mean each
applicable federal, state, local and foreign law and regulation relating to
pollution, protection or preservation of human health or the environment
including, without limitation, ambient air, surface water, ground water, land
surface or subsurface strata, and natural resources, and including, without
limitation, each law and regulation relating to emissions, spills, leaking,
leaching, migration, discharges, releases or threatened releases of pollutants,
contaminants, toxic or hazardous substances, materials and wastes, petroleum and
petroleum products,
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asbestos and asbestos-containing materials, polychlorinated biphenyls, radon and
lead or lead-based paints and materials ("Materials of Environmental Concern"),
or otherwise relating to the generation, storage, containment (whether above
ground or underground), disposal, transport or handling of Materials of
Environmental Concern, or the preservation of the environment or mitigation of
adverse effects thereon and each law and regulation with regard to record
keeping, notification, disclosure and reporting requirements respecting
Materials of Environmental Concern. For purposes of this Agreement,
"Environmental Claim" shall mean any claim, action, investigation or notice by
any person or entity alleging potential liability for investigatory, cleanup or
governmental response costs, or natural resources or property damages, or
personal injuries, attorney's fees or penalties relating to (i) the release into
the environment of any Materials of Environmental Concern at any location owned
or operated by the Company or any of its subsidiaries by the Company or any of
its subsidiaries during the period of the Company's or any of its subsidiaries'
ownership or operation or (ii) any violation, or alleged violation, of any
Environmental Law by the Company or any of its subsidiaries during the period of
the Company's or any of its subsidiaries' ownership or operation.
Section 3.18 Intellectual Property. Except for such claims, which would
not have a material adverse effect on the Company, and its subsidiaries, taken
as a whole, there are no pending or threatened claims of which the Company or
its subsidiaries have been given written notice, by any person against their use
of any trademarks, trade names, service marks, service names, mark
registrations, logos, assumed names and registered and unregistered copyrights,
patents and all applications and registrations therefor which are owned by the
Company or its subsidiaries and used in their respective operations as currently
conducted (collectively, the "Intellectual Property"). Neither the Company nor
any of its subsidiaries has made any claim of a violation or infringement by
others of its rights to or in connection with the Intellectual Property which is
still pending.
Section 3.19 Information Supplied. The Proxy Statement, if any, will not,
at the date mailed to the Company's stockholders and at the time of the Special
Meeting, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements made therein, in the light of the circumstances under which they are
made, not misleading, except that no representation or warranty is made by the
Company with respect to statements made therein based on information furnished
by Parent or Purchaser for inclusion or incorporation by reference in the Proxy
Statement. The Proxy Statement will comply in all material respects with the
provisions of the Exchange Act and the rules and regulations thereunder.
Section 3.20 Opinion of Financial Advisor. The Company has received the
opinion of Merrill Lynch & Co. dated the date hereof, to the effect that, as of
such date, the Offer Price to be received in the Offer and the Merger by the
holders of the Shares is fair to such holders (other than Purchaser and its
affiliates) from a financial point of view, and a complete and correct copy of
such opinion has been furnished to Purchaser.
Section 3.21 Insurance. The Company and its subsidiaries maintain
insurance coverage for the Company and its subsidiaries and their respective
properties and assets of a type and in amounts typical of companies engaged in
the business in which the Company and its subsidiaries are engaged. All such
policies (i) are in full force and effect, and with respect to all such policies
neither the Company (nor to the Company's knowledge, any of its subsidiaries) is
delinquent in the payment of any premiums thereon, and no notice of cancellation
or termination has been received by the Company (or, to the Company's knowledge,
any of its subsidiaries) with respect to any such policy, and (ii) are
sufficient for compliance with all requirements of law and of all agreements to
which the Company or any of its subsidiaries is a party; are valid, outstanding
and enforceable policies, subject to any exception in the case of either clause
(i) or (ii), as would not reasonably be expected to have a material adverse
effect on the Company and its subsidiaries, taken as a whole, or prevent or
materially delay the ability of the Company to consummate the transactions
contemplated by this Agreement.
Section 3.22 Employment Matters. To the Company's knowledge, no key
employee or group of employees has any plans to terminate their employment with
the Company or any of its subsidiaries.
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Neither the Company nor any of its subsidiaries has experienced any strikes,
collective labor grievances, other collective bargaining disputes or claims of
unfair labor practices in the last three years. To the Company's knowledge,
there is no organizational effort presently being made or threatened by or on
behalf of any labor union with respect to employees of the Company and its
subsidiaries.
Section 3.23 Brokers or Finders. The Company represents, as to itself, its
subsidiaries and its affiliates, that no agent, broker, investment banker,
financial advisor or other firm or person is or will be entitled to any brokers'
or finder's fee or any other commission or similar fee in connection with any of
the transactions contemplated by this Agreement, except Merrill Lynch & Co.,
whose fees and expenses will be paid by the Company in accordance with the
Company's agreement with such firm, a complete and correct copy of which has
heretofore been furnished to Parent or Purchaser.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT,
PURCHASER AND ACQUISITION SUB
Parent, Purchaser and Acquisition Sub jointly and severally represent and
warrant to the Company as follows:
Section 4.1 Organization. Parent is a business trust duly formed, validly
existing and in good standing under the laws of the State of Delaware, Purchaser
is a limited liability company duly formed and in good standing under the laws
of the State of Delaware and Acquisition Sub is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Delaware,
and each of Parent, Purchaser and Acquisition Sub has all requisite power and
authority to own, lease and operate its properties and to carry on its business
as now being conducted, except, as to Parent, where the failure to be so
organized, existing and in good standing or to have such power and authority
would not have a material adverse effect on it. Parent is duly qualified or
licensed to do business and is in good standing in each other jurisdiction in
which the nature of the business conducted by it makes such qualification or
licensing necessary, except where the failure to be so duly qualified, licensed
and in good standing would not have any material adverse effect upon its
business and properties. Parent has heretofore delivered to the Company complete
and correct copies of the constitutive or organizational documents of each of
Parent, Purchaser, and Acquisition Sub, as currently in effect.
Section 4.2 Authorization; Validity of Agreement; Necessary Action. Each
of Parent, Purchaser and Acquisition Sub has full power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby. The execution, delivery and performance by Parent, Purchaser and
Acquisition Sub of this Agreement, and the consummation of the transactions
contemplated hereby, have been duly authorized by their respective managements
and Board of Directors and no other action on the part of Parent, Purchaser and
Acquisition Sub is necessary to authorize the execution and delivery by Parent,
Purchaser and Acquisition Sub of this Agreement and the consummation by them of
the transactions contemplated hereby. This Agreement has been duly executed and
delivered by Parent, Purchaser and Acquisition Sub, as the case may be, and
(assuming due and valid authorization, execution and delivery hereof by the
Company) is a valid and binding obligation of each of Parent, Purchaser and
Acquisition Sub, as the case may be, enforceable against them in accordance with
its respective terms, except that (i) such enforcement may be subject to
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws, now or hereafter in effect, affecting creditors' rights generally, and
(ii) the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought.
Section 4.3 Consents and Approvals; No Violations. Except for the filings,
permits, authorizations, consents and approvals as may be required under, and
other applicable requirements of, the Exchange Act, the HSR Act, state
securities or blue sky laws and the DGCL, as the case may be, neither the
execution, delivery or performance of this Agreement by Parent, Purchaser and
Acquisition Sub nor the
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consummation by Parent, Purchaser and Acquisition Sub of the transactions
contemplated hereby will (i) violate any provision of the constitutive or
organizational documents of Parent, Purchaser or Acquisition Sub, (ii) result in
a violation or breach of, or constitute (with or without due notice or lapse of
time or both) a default (or give rise to any right of termination, cancellation
or acceleration) under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, lease, license, contract, agreement or other
instrument or obligation to which Parent, Purchaser or Acquisition Sub is a
party or by which Parent, Purchaser or Acquisition Sub or any of their
properties or assets may be bound, (iii) violate any order, writ, judgment,
injunction, decree, law, statute, rule or regulation applicable to Parent,
Purchaser or Acquisition Sub, or any of their properties or assets, or (iv)
require on the part of Parent, Purchaser or Acquisition Sub any filing or
registration with, notification to, or authorization, consent or approval of,
Governmental Entities; except in the case of clauses (ii), (iii) or (iv) for
such violations, breaches or defaults which, or filings, registrations,
notifications, authorizations, consents or approvals the failure of which to
obtain, (A) would not have a material adverse effect on Parent and would not
materially adversely affect the ability of Parent, Purchaser and Acquisition Sub
to consummate the transactions contemplated by this Agreement, or (B) become
applicable as a result of the business or activities in which the Company is or
proposes to be engaged or as a result of any acts or omissions by, or the status
of any facts pertaining to, the Company.
Section 4.4 Information Supplied. None of the information supplied or to
be supplied by Parent, Purchaser or Acquisition Sub specifically for inclusion
or incorporation by reference in the Proxy Statement, will, at the date it is
filed with the SEC, at any time that it is amended or supplemented, at the time
it is first mailed to the Company's stockholders and at the time of the Special
Meeting, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading.
Section 4.5 Sufficient Funds. Purchaser has sufficient funds available
(through Parent) to complete, and pay all fees and expenses related to, the
transactions contemplated by this Agreement.
Section 4.6 Share Ownership. None of Parent, Purchaser, Acquisition Sub or
any of their respective "affiliates" or "associates" (as those terms are defined
in Rule 12b-2 under the Exchange Act) beneficially owns (as defined in Rule
13d-3 under the Exchange Act) any Shares, other than the 4,004,350 shares of
Company Common Stock beneficially owned by Purchaser and the 5,479,452 shares of
Company Common Stock issuable upon conversion of the Convertible Note.
Section 4.7 Purchaser's and Acquisition Sub's Operations. Each of
Purchaser and Acquisition Sub was formed solely for the purpose of engaging in
the transactions contemplated hereby and has not engaged in any business
activities or conducted any operations other than in connection with the
transactions contemplated hereby.
Section 4.8 Brokers or Finders. Each of Parent, Purchaser and Acquisition
Sub represents, as to itself, its subsidiaries and its affiliates, that no
agent, broker, investment banker, financial advisor or other firm or person is
or will be entitled to any broker's or finder's fee or any other commission or
similar fee in connection with any of the transactions contemplated by this
Agreement.
ARTICLE V
COVENANTS
Section 5.1 Interim Operations of the Company. The Company covenants and
agrees that, except (i) as contemplated by this Agreement, (ii) as disclosed in
the Disclosure Schedule or (iii) as agreed in writing by Parent, during the
period from and after the date hereof until the earlier of the Effective Time or
the time the directors designated by Purchaser have been elected to the Board
pursuant to Section 1.3:
(a) the business of the Company and its subsidiaries shall be
conducted only in the ordinary, regular and usual course of business and,
to the extent consistent therewith, each of the Company and
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its subsidiaries shall use its reasonable best efforts to preserve in all
material respects its business organization intact and maintain its
existing relations with residents, suppliers, creditors, employees,
business associates and others having business dealings with it;
(b) neither the Company nor any of its subsidiaries shall: (i) amend
its Restated Certificate of Incorporation or Amended and Restated By-laws
or similar organizational documents; (ii) split, combine or reclassify any
shares of any class or series of its capital stock; (iii) declare, set
aside or pay any dividend or other distribution payable in cash, stock or
property with respect to its capital stock (other than dividends from any
of its subsidiaries of the Company to the Company or any other subsidiary
of the Company); (iv) issue or sell any additional shares of, or securities
convertible into or exchangeable for, or options, warrants, calls,
commitments or rights of any kind to acquire, any shares of capital stock
of any class of the Company or its subsidiaries, except for issuances of
Common Stock upon the exercise of Options under the Option Plans or upon
the exercise of Warrants; or (v) redeem, purchase or otherwise acquire
directly or indirectly any of its capital stock, except pursuant to the
provisions of Section 2.4;
(c) neither the Company nor any of its subsidiaries shall: (i)
acquire, sell, lease or dispose of any material assets, other than in the
ordinary and usual course of business and consistent with past practice;
(ii) incur or modify any material indebtedness or other liability, other
than in the ordinary and usual course of business and consistent with past
practice; (iii) modify or amend in any material respect or terminate any of
its material contracts or waive, release or assign any material rights or
claims, except in the ordinary course of business and consistent with past
practice; (iv) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the material
obligations of any other person (other than subsidiaries of the Company),
except in the ordinary and usual course of business and consistent with
past practice; (v) make any material loans, advances or capital
contributions to, or investments in, any other person (other than to the
wholly owned subsidiaries of the Company); or (vi) enter into any material
commitment or transaction (including, but not limited to, any capital
expenditure or purchase, sale or lease of assets or real estate);
(d) neither the Company nor any of its subsidiaries shall, except as
may be required or contemplated by this Agreement or in the ordinary and
usual course of business, terminate or materially amend any of its Plans;
(e) except as otherwise specifically provided in this Agreement or in
the Schedule 14D-9, the Company shall not make any change in the
compensation payable or to become payable to any of its officers,
directors, employees, agents or consultants (other than normal recurring
increases in wages to employees who are not officers or directors or
affiliates in the ordinary course of business consistent with past
practice) or to persons providing management services, or enter into or
amend any employment, severance, consulting, termination or other agreement
(other than in the ordinary course of business consistent with past
practice) or employee benefit plan or make any loans to any of its
officers, directors, employees, affiliates, agents or consultants or make
any change in its existing borrowing or lending arrangements for or on
behalf of any of such persons pursuant to an employee benefit plan or
otherwise;
(f) neither the Company nor any of its subsidiaries shall pay,
repurchase, discharge or satisfy any of its material claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the
ordinary course of business and consistent with past practice or pursuant
to contractual requirements existing on the date hereof, of claims,
liabilities or obligations reflected or reserved against in, or
contemplated by, the consolidated financial statements (or the notes
thereto) of the Company and its consolidated subsidiaries;
(g) neither the Company nor any of its subsidiaries will adopt a plan
of complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization of the Company or
any of its subsidiaries (other than the Merger);
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(h) neither the Company nor any of its subsidiaries shall change any
of the accounting methods used by it unless required by the SEC, GAAP or
applicable law;
(i) except as otherwise permitted by this Agreement, neither the
Company nor any of its subsidiaries will take, or agree to commit to take,
any action that would or is reasonably likely to result in any of the
conditions to the Offer set forth in Annex A or any of the conditions to
the Merger set forth in Article VI not being satisfied, or would make any
representation or warranty of the Company contained herein qualified as to
materiality inaccurate in any respect or any representation or warranty of
the Company contained herein not so qualified as to materiality inaccurate
in any material respect at, or as of any time prior to, the Effective Time,
or that would materially impair the ability of the Company, Parent,
Purchaser or the holders of Shares to consummate the Offer or the Merger in
accordance with the terms hereof or materially delay such consummation; and
(j) neither the Company nor any of its subsidiaries will authorize or
enter into an agreement to do any action described in clauses (a) through
(i) of this Section 5.1.
Section 5.2 Access to Information. Upon reasonable notice, the Company
shall (and shall cause each of its subsidiaries to) afford to the officers,
employees, accountants, counsel, and other representatives of Parent, reasonable
access, during normal business hours during the period prior to the Effective
Time, to all its properties, books, contracts, commitments and records and,
during such period, the Company shall (and shall cause each of its subsidiaries
to) furnish promptly to Parent all other information concerning its business,
properties and personnel as Parent may reasonably request. Access shall include
the right to conduct such environmental studies as Parent, in its reasonable
discretion, shall deem appropriate.
Section 5.3 Employee Benefits. Parent, Purchaser and Acquisition Sub agree
to honor, and cause the Surviving Corporation to honor, without modification,
(i) all Plans (other than the Option Plans), as amended through the date hereof,
with respect to employees and former employees of the Company, and (ii) the New
Severance Arrangements (as defined below). Parent, Purchaser and the Company
agree that, prior to the Effective Time, the Company shall use its reasonable
best efforts to adopt severance and incentive plans and/or enter into severance
and incentive agreements as may be mutually agreed upon by Purchaser and various
key employees (the "New Severance Arrangements").
Section 5.4 Competing Acquisition Proposals. (a) The Company shall
promptly (but in any event within 24 hours) advise Purchaser in writing (each
such writing, a "Company Notice") of any negotiations, or any proposals or
requests for non-public information received on or after the date of this
Agreement, in each case relating to any Acquisition Proposal (as defined in
Section 5.4(c) hereof), the material terms and conditions thereof and the
identity of the person submitting the Acquisition Proposal (the "Potential
Acquiror"). The Company shall promptly advise Purchaser of any development
relating to any inquiries, discussions, negotiations, proposals or requests for
information relating to an Acquisition Proposal, on or after the date of this
Agreement. The Company shall keep Purchaser reasonably informed of the status of
any such negotiations, request or Acquisition Proposal and will further update,
to the extent of any developments, the information required to be provided in
each Company Notice upon the request of Purchaser. The Company agrees that any
non-public information furnished to any such Potential Acquiror will be pursuant
to a customary confidentiality agreement and a standstill agreement provided,
however, that such standstill agreement shall have terms that are no less
restrictive than those set forth in the Standstill Agreement between the Company
and Parent, dated as of April 20, 2000.
(b) Except as expressly permitted by this Section 5.4, the Independent
Committee shall not (i) withdraw or modify or propose publicly to withdraw or
modify, in any manner adverse to Parent, the approval or recommendation of such
Independent Committee of this Agreement, the Offer or the Merger, (ii) approve
or recommend, or propose publicly to approve or recommend, any Acquisition
Proposal or (iii) cause the Company to enter into any letter of intent or
agreement (each, a "Company Acquisition Agreement") related to any Acquisition
Proposal. Notwithstanding the foregoing, in the event that (A) the Independent
Committee determines in good faith, after receiving advice from its financial
advisor,
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that any such Acquisition Proposal is a Superior Proposal (as defined in Section
5.4(d) below) and (B) the Independent Committee determines in good faith, based
upon advice of its outside legal counsel, that such action is necessary for the
Independent Committee to comply with its fiduciary duties to the Company's
stockholders under applicable law, the Independent Committee may (x) withdraw or
adversely modify its approval or recommendation of this Agreement, the Offer and
the Merger or the matters to be considered at the Special Meeting, (y) approve
or recommend such Superior Proposal and/or (z) terminate this Agreement in
accordance with Section 7.1(c)(i) and prior to or substantially
contemporaneously with such termination, cause the Company to enter into a
Company Acquisition Agreement with respect to such Superior Proposal.
(c) For purposes of this Agreement, "Acquisition Proposal" shall mean any
bona fide proposal in writing made by a third party to acquire "beneficial
ownership" (as defined under Rule 13(d) of the Exchange Act) of all of the
assets of, or equity interest in, the Company or its subsidiaries pursuant to a
merger, consolidation or other business combination, sale of shares of capital
stock, sale of assets, tender offer or exchange offer or similar transaction
involving the Company or its material subsidiaries including, without
limitation, any single or multi-step transaction or series of related
transactions which is structured to permit such third party to acquire
beneficial ownership of all or substantially all of the assets of, or a majority
or more of the equity interest in, the Company or its material subsidiaries
(other than the transactions contemplated by this Agreement).
(d) For purposes of this Agreement, "Superior Proposal" means any bona fide
proposal to acquire, directly or indirectly, for consideration consisting of
cash and/or securities, more than a majority of the Shares then outstanding or
all or substantially all the assets of the Company, and otherwise on terms which
the Independent Committee determines in good faith to be more favorable to the
Company's stockholders, from a financial point of view, than the Offer and the
Merger (based on advice of the Independent Committee's financial advisor that
the value of the consideration provided for in such proposal is superior to the
value of the consideration provided for in the Offer and the Merger), for which
financing, to the extent required, is then committed.
Section 5.5 Publicity. The initial press release with respect to the
execution of this Agreement shall be a joint press release acceptable to Parent
and the Company; provided, that the parties hereto agree that such press release
shall include, among other things, the following statement:
Fortress Brookdale Acquisition LLC will be paid an expense reimbursement
payment of $750,000 in the event that the Independent Committee of the
Company's Board of Directors receives a higher offer from a third party and
accepts that offer pursuant to the exercise of its fiduciary duties. Other
than the expense reimbursement payment, no other "break-up" or "commitment"
fee would be payable in such event.
Thereafter, so long as this Agreement is in effect, neither the Company, Parent
nor any of their respective affiliates shall issue or cause the publication of
any press release with respect to the Merger, this Agreement or the other
transactions contemplated hereby without the prior consultation of the other
party, except as may be required by law or by the applicable rules of the NASDAQ
National Market System.
Section 5.6 Notification of Certain Matters. The Company shall give prompt
notice to Parent, and Purchaser shall give prompt notice to the Company, of (i)
the occurrence or non-occurrence of any event the occurrence or non-occurrence
of which would cause any representation or warranty contained in this Agreement
to be untrue or inaccurate in any material respect at or prior to the Effective
Time and (ii) any material failure of the Company, or Parent, Purchaser, or
Acquisition Sub, as the case may be, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder;
provided, however, that the delivery of any notice pursuant to this Section 5.6
shall not limit or otherwise affect the remedies available hereunder to the
party receiving such notice.
Section 5.7 Directors' and Officers' Insurance and Indemnification. (a)
From and after the Effective Time, Purchaser and the Surviving Corporation (or
any successor to the Surviving Corporation) shall jointly and severally
indemnify, defend and hold harmless any person who is now, or has been at any
time
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prior to the date hereof, or who becomes prior to the Effective Time, an
officer, director, employee and agent (the "Indemnified Party") of the Company
and its subsidiaries against all losses, claims, damages, liabilities, costs,
fees and expenses (including attorneys' fees and expenses), judgments, fines,
losses, and amounts incurred in connection with any actual or threatened action,
suit, claim, proceeding or investigation (each a "Claim") to the extent that any
such Claim is based on, or arises out of, (i) the fact that such person is or
was a director, officer, employee or agent of the Company or any of its
subsidiaries or is or was serving at the request of the Company or any of its
subsidiaries as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, or (ii) this Agreement,
or any of the transactions contemplated hereby, in each case to the extent that
any such Claim pertains to any matter or fact arising, existing, or occurring
prior to or at the Effective Time, to the fullest extent permitted under
Delaware law, the Company's Restated Certificate of Incorporation or Amended and
Restated By-laws or any applicable indemnification agreements in effect at the
date hereof.
(b) Purchaser or the Surviving Corporation shall maintain the Company's
existing officers' and directors' liability insurance policy for a period of not
less than six years after the Effective Date; provided, that Parent may
substitute therefor policies of substantially similar coverage and amounts
containing terms no less advantageous to such directors or officers.
(c) If the Surviving Corporation or any of its successors or assigns (i)
shall consolidate with or merge into any other corporation or entity and shall
not be the continuing or surviving corporation or entity of such consolidation
or merger or (ii) shall transfer all or substantially all of its properties and
assets to any individual, corporation or other entity, then, and in each such
case, proper provisions shall be made so that the successors and assigns of the
Surviving Corporation shall assume all of the obligations set forth in this
Section 5.7. The provisions of this Section 5.7 are intended to be for the
benefit of, and shall be enforceable by, each of the Indemnified Parties, their
heirs and their representatives.
Section 5.8 State Takeover Laws. Notwithstanding any other provision in
this Agreement, in no event shall the Section 203 Approval be withdrawn, revoked
or modified by the Board. If any state takeover statute other than Section 203
of the DGCL becomes or is deemed to become applicable to the Agreement, the
Offer, the acquisition of Shares pursuant to the Offer or the Merger or any
other transaction provided for or contemplated by this Agreement, the Company
shall take all such action as may be necessary or advisable to obtain such
approvals and take such actions as are necessary or advisable so that the
transactions contemplated hereby may be consummated as promptly as practicable
on the terms contemplated hereby and otherwise act to minimize the effects of
any such statute on the transactions contemplated hereby.
Section 5.9 Approvals and Consents; Cooperation. (a) The parties hereto
shall use their respective reasonable best efforts, and cooperate with each
other, to obtain as promptly as practicable all governmental and third party
authorizations, approvals, consents or waivers required in order to consummate
the transactions contemplated by this Agreement.
(b) The Company, Parent, Purchaser and Acquisition Sub shall take all
actions necessary to file as soon as practicable all notifications, filings and
other documents required to obtain all governmental authorizations, approvals,
consents or waivers, and to respond as promptly as practicable to any inquiries
received from any Governmental Entity for additional information or
documentation and to respond as promptly as practicable to all inquiries and
requests received from any State Attorney General or other Governmental Entity
in connection therewith.
Section 5.10 Taxes. With respect to any Taxes, the Company shall not (i)
make any material tax election or (ii) settle or compromise any material income
tax liability (whether with respect to amount or timing), in each case without
the prior written consent of Parent which consent shall not be unreasonably
withheld or delayed.
Section 5.11 SHN Purchase. The Company will use its reasonable best
efforts to arrange financing and take all other steps necessary or desirable to
consummate the purchase of the four properties leased by Senior Housing
Properties Trust and its affiliates ("SHN") to the Company on the terms
contemplated by
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the purchase and sale agreement dated as of July 26, 2000, between SHN and the
Company. In that regard, it is understood that Purchaser shall have the right to
designate the source of financing for such purchase and to approve the terms of
such financing.
ARTICLE VI
CONDITIONS PRECEDENT
Section 6.1 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligation of each party to effect the Merger shall be
subject to the satisfaction or waiver (subject to applicable law) at or prior to
the Effective Time of the following conditions:
(a) Stockholder Approval. This Agreement shall have been approved and
adopted by the requisite vote of the holders of the Company Common Stock,
if required by applicable law and the Company's Restated Certificate of
Incorporation and Amended and Restated By-laws;
(b) Regulatory Approvals. All regulatory approvals and consents of
third parties, if any, shall have been obtained, except where the failure
to have obtained any such approvals and third party consents would not have
a material adverse effect on the Company and its subsidiaries, taken as a
whole (it being understood that if Purchaser has purchased Shares pursuant
to the Offer, the failure to obtain any consent required under the Master
Lease (as defined in the Disclosure Schedule) shall not be deemed to have a
material adverse effect on the Company and its subsidiaries, taken as a
whole);
(c) Statutes; Court Orders. No statute, rule, regulation, order,
decree or injunction shall have been enacted, promulgated or issued by any
Governmental Entity or court which prohibits the consummation of the
Merger; and
(d) Purchase of Shares in Offer. Parent, Purchaser or their
affiliates shall have accepted for payment and paid for all of the Shares
validly tendered and not withdrawn pursuant to the Offer, except that this
condition shall not apply if Parent, Purchaser or their affiliates shall
have failed to purchase Shares pursuant to the Offer in breach of their
obligation under this Agreement.
ARTICLE VII
TERMINATION
Section 7.1 Termination. This Agreement may be terminated and the Merger
contemplated herein may be abandoned at any time prior to the Effective Time,
whether before or after any necessary stockholder approval thereof:
(a) By the mutual written consent of Purchaser and the Company (acting
through the Independent Committee); or
(b) By the Company (acting through the Independent Committee) or
Purchaser:
(i) if the Offer shall have expired in accordance with the terms of
this Agreement or Purchaser shall have terminated the Offer, in each
case without any Shares being purchased pursuant thereto; provided,
however, that the right to terminate this Agreement under this Section
7.1(b)(i) shall not be available to any party whose failure to fulfill
any obligation under this Agreement has been the cause of, or resulted
in, the failure of Purchaser to purchase the Shares pursuant to the
Offer on or promptly after the applicable expiration date; or
(ii) if any Governmental Entity shall have issued an order, decree
or ruling or taken any other action (which order, decree, ruling or
other action the parties hereto shall use their respective best efforts
to lift), which permanently restrains, enjoins or otherwise prohibits
(x) the acceptance for payment of, or payment for, Shares pursuant to
the Offer or (y) the Merger and such order, decree, ruling or other
action shall have become final and non-appealable.
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(c) By the Company (acting through the Independent Committee):
(i) if, prior to the purchase of Shares pursuant to the Offer, a
third party shall have made an Acquisition Proposal that the Independent
Committee determines in good faith, after consultation with its
financial advisor, is a Superior Proposal and, subject to the Company's
compliance with Section 5.4(b), a Company Acquisition Agreement shall
have been, or substantially contemporaneously with such termination
shall be, executed pursuant to such Superior Proposal; or
(ii) if Purchaser shall have failed to commence the Offer on or
prior to fifteen business days following the date of the initial public
announcement of the Offer; provided, that the Company may not terminate
this Agreement pursuant to this Section 7.1(c)(ii) if the cause of such
failure was the Company's material breach of its obligations under this
Agreement; or
(iii) if, prior to the purchase of Shares pursuant to the Offer,
Parent, Purchaser or Acquisition Sub shall have breached or failed to
perform in any material respect any of their respective representations,
warranties, covenants or other obligations contained in this Agreement
or if any representation or warranty of Parent, Purchaser or Acquisition
Sub shall have become untrue, which breach or failure to perform cannot
be or has not been cured within ten (10) days after the giving of
written notice to Purchaser, as applicable, except, in any case, for
such breaches, untruths or failures to perform which are not, in the
Company's opinion, reasonably likely to adversely affect Purchaser's
ability to complete the Offer or the Merger; provided, however, that the
Company may not terminate this Agreement pursuant to this Section
7.1(c)(iii) if the Company is then in material breach of its
representations, warranties, covenants or other obligations under this
Agreement.
(d) By Purchaser:
(i) if, prior to the purchase of Shares pursuant to the Offer, the
Independent Committee shall have withdrawn, modified or changed in a
manner adverse to Parent or Purchaser its approval or recommendation of
the Offer, this Agreement or the Merger or shall have recommended an
Acquisition Proposal or the Company (acting through the Independent
Committee) shall have executed an agreement in principle or definitive
agreement relating to an Acquisition Proposal with a person or entity
other than Parent, Purchaser or their affiliates (or the Independent
Committee resolves to do any of the foregoing); or
(ii) if, due to an occurrence not involving a breach by Parent,
Purchaser or Acquisition Sub of their respective obligations hereunder,
which makes it impossible to satisfy any of the conditions set forth in
Annex A hereto, Purchaser shall have failed to commence the Offer in
accordance with this Agreement; or
(iii) if, prior to the purchase of Shares pursuant to the Offer,
the Company shall have breached or failed to perform any of its
representations, warranties, covenants or other obligations contained in
this Agreement or if any representation or warranty of the Company shall
have become untrue (except where the breach or untruth of such
representations or warranties results from changes specifically
permitted by this Agreement or from any transaction expressly consented
to in writing by Parent) which (A) would give rise to the failure of a
condition set forth in paragraph (f) or (g) of Annex A hereto and (B)
cannot be or has not been cured within ten (10) days after the giving of
written notice to the Company; provided, however, that Purchaser may not
terminate this Agreement pursuant to this Section 7.1(d)(iii) if Parent
or Purchaser is then in material breach of its representations,
warranties, covenants or other obligations under this Agreement; or
(e) By either the Company (acting through the Independent Committee)
or Purchaser if the Merger has not been consummated on or before December
15, 2000, which date may be extended by the mutual written consent of the
Company and Purchaser.
23
<PAGE> 25
Section 7.2 Effect of Termination. (a) In the event of the termination of
this Agreement as provided in Section 7.1, written notice thereof shall
forthwith be given to the other party specifying the provision hereof pursuant
to which such termination is made, and this Agreement shall forthwith become
null and void, and there shall be no liability on the part of Parent, Purchaser,
Acquisition Sub or the Company or their respective directors, officers,
employees, stockholders, representatives, agents or advisors other than, with
respect to Parent, Purchaser, Acquisition Sub and the Company, the obligations
pursuant to this Section 7.2 and Article VIII. Nothing contained in this Section
7.2 shall relieve Parent, Purchaser, Acquisition Sub or the Company from
liability for willful breach of this Agreement.
(b) In the event that this Agreement is terminated by the Company pursuant
to Section 7.1(c)(i) hereof or by Purchaser pursuant to Section 7.1(d)(i)
hereof, the Company shall promptly (but in any event within five (5) business
days following such termination) pay to Purchaser by wire transfer to an account
designated by Purchaser promptly following receipt of a request therefor, an
amount equal to $750,000 for all fees and expenses incurred by Parent and
Purchaser in connection with the Offer, the Merger, this Agreement and the
consummation of the transactions contemplated hereby, including, but not limited
to, the fees and expenses payable to Parent's counsel, and all banks, investment
banking firms, other financial institutions and their respective agents and
counsel incurred in connection with acting as Parent's or Purchaser's financial
advisor with respect to, or arranging or committing to provide or providing any
financing for the transactions contemplated hereby ("Transaction Expenses");
provided, that in no event shall such Transaction Expenses be payable more than
once. In addition, and only in the event that the Transaction Expenses were not
paid or payable pursuant to the immediately preceding sentence, the Company
shall pay Purchaser the Transaction Expenses if this Agreement is terminated for
any reason (other than as a result of a breach by Parent or Purchaser that
resulted in the termination of this Agreement, or a willful breach by Parent or
Purchaser of their obligations hereunder) at any time after an Acquisition
Proposal has been made by a third party (a "Third Party Acquiror") that the
Company has not rejected prior to such termination of this Agreement and, within
six (6) months after such a termination, the Company completes a merger,
consolidation or other business combination with any such Third Party Acquiror.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Amendment and Modification. Subject to applicable law, this
Agreement may be amended, modified and supplemented in any and all respects,
whether before or after any vote of the stockholders of the Company contemplated
hereby, by written agreement of the parties hereto, by action taken by their
respective managements (which in the case of the Company shall include approvals
as contemplated in Section 1.3(b)), at any time prior to the Closing Date with
respect to any of the terms contained herein; provided, however, that after the
approval of this Agreement by the stockholders of the Company, no such
amendment, modification or supplement shall reduce or change the Merger
Consideration or adversely affect the rights of the Company's stockholders
(other than Purchaser or its affiliates) hereunder without the approval of such
stockholders (other than Purchaser or its affiliates).
Section 8.2 Nonsurvival of Representations and Warranties. None of the
representations and warranties in this Agreement or in any schedule, instrument
or other document delivered pursuant to this Agreement shall survive the
Effective Time or the termination of this Agreement. This Section 8.2 shall not
limit any covenant or agreement contained in this Agreement which by its terms
contemplates performance after the Effective Time.
Section 8.3 Notices. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered personally, telecopied
(which is confirmed) or sent by an overnight courier
24
<PAGE> 26
service, such as Federal Express, to the parties at the following addresses (or
at such other address for a party as shall be specified by like notice):
If to Parent/Purchaser/Acquisition Sub:
c/o Fortress Investment Group LLC
1301 Avenue of the Americas
42nd Floor
New York, New York 10019
Attention: Randal A. Nardone
Facsimile No.: (212) 798-6133
Copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, New York 10036-6522
Attention: J. Gregory Milmoe, Esq.
Facsimile No.: (212) 735-2000
If to the Company:
Brookdale Living Communities, Inc.
330 North Wabash, Suite 1400
Chicago, Illinois 60611
Attention: Independent Committee
Facsimile No.: (312) 977-3769
Copy to:
Brookdale Living Communities, Inc.
330 North Wabash, Suite 1400
Chicago, Illinois 60611
Attention: Robert J. Rudnik, Esq.
Facsimile No.: (312) 977-3769
Copy to:
Gardner, Carton & Douglas
Quaker Tower
321 North Clark Street
Chicago, Illinois 60610
Attention: George C. McKann
Facsimile No.: (312) 644-3381
Copy to:
Winston & Strawn
35 West Wacker Drive
Chicago, Illinois 60601
Attention: Brian T. Black, Esq.
Facsimile No.: (312) 558-5700
Section 8.4 Interpretation. The words "hereof", "herein" and "herewith"
and words of similar import shall, unless otherwise stated, be construed to
refer to this Agreement as a whole and not to any particular provision of this
Agreement, and article, section, paragraph, exhibit, annexes and schedule
references are to the articles, sections, paragraphs, exhibits, annexes and
schedules of this Agreement unless otherwise specified. Whenever the words
"include", "includes" or "including" are used in this Agreement they shall be
deemed to be followed by the words "without limitation". The words describing
25
<PAGE> 27
the singular number shall include the plural and vice versa, and words denoting
any gender shall include all genders and words denoting natural persons shall
include corporations and partnerships and vice versa. The phrase "to the best
knowledge of" or any similar phrase shall mean such facts and other information
which as of the date of determination are actually known to any executive vice
president, chief financial officer, general counsel, chief compliance officer
and any officer superior to any of the foregoing, of the referenced party after
the conduct of a reasonable investigation under the circumstances by such
officer. The phrase "made available" in this Agreement shall mean that the
information referred to has been made available if requested by the party to
whom such information is to be made available. The phrases "the date of this
Agreement", "the date hereof" and terms of similar import, unless the context
otherwise requires, shall be deemed to refer to the date on the first page of
this Agreement. As used in this Agreement, the word "subsidiary" or
"subsidiaries" means, with respect to any party, any corporation, partnership or
other entity or organization, whether incorporated or unincorporated, of which
(i) such party or any other subsidiary of such party is a general partner
(excluding such partnerships where such party or any subsidiary of such party do
not have a majority of the voting interest in such partnership) or (ii) at least
a majority of the securities or other interests having by their terms ordinary
voting power to elect a majority of the board of directors or others performing
similar functions with respect to such corporation or other organization is
directly or indirectly owned or controlled by such party or by any one or more
of its subsidiaries, or by such party and one or more of its subsidiaries. As
used in this Agreement, the term "affiliate" or "affiliates"shall have the
meaning set forth in Rule l2b-2 of the Exchange Act. The parties have
participated jointly in the negotiation and drafting of this Agreement. In the
event an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the parties and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provisions of this Agreement.
Section 8.5 Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
Section 8.6 Entire Agreement; Third Party Beneficiaries. This Agreement,
Annex A hereto and the Disclosure Schedule (a) constitute the entire agreement
and supersede all prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter hereof, and (b) except as
provided in Article II and Sections 5.4 and 5.7, is not intended to confer upon
any person other than the parties hereto any rights or remedies hereunder.
Section 8.7 Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void, unenforceable or against its regulatory policy,
the remainder of the terms, provisions, covenants and conditions of this
Agreement shall remain in full force and effect and shall in no way be affected,
impaired or invalidated.
Section 8.8 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without giving
effect to the principles of conflicts of law thereof.
Section 8.9 Enforcement. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States
located in the State of Delaware or in Delaware state court, this being in
addition to any other remedy to which they are entitled at law or in equity. In
addition, each of the parties hereto (a) consents to submit itself to the
personal jurisdiction of any federal court located in the State of Delaware or
any Delaware state court in the event any dispute arises out of this Agreement
or any of the transactions contemplated by this Agreement, (b) agrees that it
will not attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any such court and (c) agrees that it will not bring any
action relating to this Agreement or any of the transactions
26
<PAGE> 28
contemplated by this Agreement in any court other than a federal or state court
sitting in the State of Delaware.
Section 8.10 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties, provided, however, that Purchaser may assign its
rights in connection with the Offer to Acquisition Sub without such consent.
Subject to the preceding sentence, this Agreement will be binding upon, inure to
the benefit of and be enforceable by the parties and their respective permitted
successors and assigns.
Section 8.11 Expenses. Except as set forth in Section 7.2 hereof, all
costs and expenses incurred in connection with the Offer, the Merger, this
Agreement and the consummation of the transactions contemplated hereby shall be
paid by the party incurring such costs and expenses, whether or not the Offer or
the Merger is consummated.
Section 8.12 Headings. Headings of the Articles and Sections of this
Agreement are for convenience of the parties only, and shall be given no
substantive or interpretative effect whatsoever.
Section 8.13 Extension; Waiver. Subject to Section 8.1, at any time prior
to the Effective Time, the parties may (a) extend the time for the performance
of any of the obligations or other acts of the other parties, (b) waive any
inaccuracies in the representations and warranties of the other parties
contained in this Agreement or in any document, instrument, certificate or other
writing delivered pursuant to this Agreement or (c) waive compliance by the
other parties with any of the agreements or conditions contained in this
Agreement. Any agreement on the part of a party to any such extension or waiver
shall be valid only if set forth in an instrument in writing signed on behalf of
such party. The failure of any party to this Agreement to assert any of its
rights under this Agreement or otherwise shall not constitute a waiver of those
rights.
Section 8.14 Schedules. The Disclosure Schedule shall be construed with
and as an integral part of this Agreement to the same extent as if the same had
been set forth verbatim herein. Any matter disclosed pursuant to the Disclosure
Schedule shall be deemed to be disclosed for all purposes under this Agreement,
provided that the context is reasonably clear, but such disclosure shall not be
deemed to be an admission or representation as to the materiality of the item so
disclosed.
[signature page follows]
27
<PAGE> 29
IN WITNESS WHEREOF, Parent, Purchaser and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized as
of the date first written above.
FORTRESS REGISTERED INVESTMENT TRUST
By:
Name:
Title:
FORTRESS BROOKDALE ACQUISITION LLC
By:
Name:
Title:
FBZ ACQUISITION CORP.
By:
Name:
Title:
BROOKDALE LIVING
COMMUNITIES, INC.
By:
Name: Dr. Bruce L. Gewertz
Title: Chairman of the Independent
Committee
28
<PAGE> 30
ANNEX A
CONDITIONS TO THE OFFER
The capitalized terms used in this Annex A shall have the meanings set
forth in the Agreement to which it is annexed, except that the term "Merger
Agreement" shall mean the Agreement to which this Annex A is annexed.
Notwithstanding any other provision of the Offer, subject to the provisions
of the Merger Agreement, Purchaser shall not be required to accept for payment
or, subject to any applicable rules and regulations of the SEC, including Rule
14e-l(c) under the Exchange Act, pay for, and may delay the acceptance for
payment of or, subject to the restriction referred to above, the payment for,
any tendered Shares, and may, subject to the terms of the Merger Agreement,
terminate the Offer and not accept for payment any tendered Shares if at any
time on or after the date of the Merger Agreement, and before the time of
acceptance of Shares for payment pursuant to the Offer, any of the following
events shall occur:
(a) there shall be pending any suit, action or proceeding or there
shall be threatened by any Governmental Entity any suit, action or
proceeding (i) seeking to prohibit or impose any material limitations on
Parent's or Purchaser's ownership or operation (or that of any of their
respective subsidiaries or affiliates) of all or a material portion of the
business or assets of the Company and its subsidiaries, taken as a whole,
or to compel Parent or Purchaser or their respective subsidiaries and
affiliates to dispose of or hold separate any material portion of the
businesses or assets of the Company and its subsidiaries or affiliates,
taken as a whole, (ii) challenging the acquisition by Parent or Purchaser
of any Shares under the Offer, seeking to restrain or prohibit the making
or consummation of the Offer or the Merger or the performance of any of the
other transactions contemplated by the Merger Agreement, or seeking to
obtain from the Company, Parent or Purchaser any damages that are material
in relation to the Company and its subsidiaries taken as a whole, (iii)
seeking to impose material limitations on the ability of Purchaser, or
rendering Purchaser unable, to accept for payment, pay for or purchase some
or all of the Shares pursuant to the Offer and the Merger, (iv) seeking to
impose material limitations on the ability of Purchaser or Parent
effectively to exercise full rights of ownership of the Shares, including,
without limitation, the right to vote the Shares purchased by it on all
matters properly presented to the Company's stockholders, or (v) which
otherwise is reasonably likely to have a material adverse effect on the
Company and its subsidiaries, taken as a whole;
(b) there shall be any statute, rule, regulation, judgment, order or
injunction enacted, entered, enforced or promulgated applicable to the
Offer or the Merger, other than the application to the Offer or the Merger
of applicable waiting periods under the HSR Act, that is reasonably likely
to result, directly or indirectly, in any of the consequences referred to
in clauses (i) through (v) of paragraph (a) above;
(c) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities in the NASDAQ National Market
System, for a period in excess of three hours (excluding suspensions or
limitations resulting solely from physical damage or interference with such
exchanges not related to market conditions), (ii) a declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States, (iii) a commencement of a war, armed hostilities or other
international or national calamity directly or indirectly involving the
United States, (iv) any limitation (whether or not mandatory) by any United
States or foreign governmental authority on the extension of credit by
banks or other financial institutions, (v) a change in general financial
bank or capital market conditions which materially or adversely affects the
ability of financial institutions in the United States to extend credit or
syndicate loans, or (vi) in the case of any of the foregoing existing at
the time of the commencement of the Offer, a material acceleration or
worsening thereof;
A-1
<PAGE> 31
(d) there shall have occurred any material adverse change (or any
development that, insofar as reasonably can be foreseen, is reasonably
likely to result in any material adverse change) in the Company and its
subsidiaries, taken as a whole;
(e) the Board or the Independent Committee (i) shall have withdrawn or
modified in a manner adverse to Parent or Purchaser its approval or
recommendation of the Offer, this Agreement or the Merger, (ii) shall have
recommended the approval or acceptance of an Acquisition Proposal from, or
similar business combination with, a person or entity other than Parent,
Purchaser or any of their affiliates, or (iii) shall have executed any
agreement relating to an Acquisition Proposal from, or similar business
combination with, a person or entity other than Parent, Purchaser or their
affiliates;
(f) any of the representations and warranties of the Company set forth
in the Merger Agreement that are qualified as to materiality shall not be
true and correct and any such representations and warranties that are not
so qualified shall not be true and correct in any material respect, in each
case as of the date of the Merger Agreement and as of the scheduled
expiration of the Offer (except that those representations and warranties
which address matters only as of a particular date shall remain true and
correct as of such date), except where the failure to be so true and
correct would not reasonably be expected to (i) have a material adverse
effect on the Company and its subsidiaries, taken as a whole, (ii) prevent
or materially delay the consummation of the Offer or (iii) materially
increase the cost of the Offer to Purchaser;
(g) the Company shall have failed to perform in any material respect
or to comply in any material respect with any material obligation,
agreement or covenant of the Company to be performed or complied with by it
under the Merger Agreement; or
(h) the Merger Agreement shall have been terminated in accordance with
its terms;
which in the reasonable judgment of Parent or Purchaser, in any such case, and
regardless of the circumstances giving rise to such condition, makes it
inadvisable to proceed with the Offer and/or with such acceptance for payment of
or payment for Shares.
The foregoing conditions are for the sole benefit of Purchaser and Parent
and, subject to the Merger Agreement, may be asserted or may be waived by Parent
or Purchaser, in whole or in part at any time and from time to time in the sole
discretion of Parent or Purchaser. The failure by Parent or Purchaser at any
time to exercise any such rights shall not be deemed a waiver of any right and
each right shall be deemed an ongoing right which may be asserted at any time
and from time to time.
A-2
<PAGE> 32
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE I
THE OFFER AND MERGER
Section 1.1 The Offer................................................... 1
Section 1.2 Company Actions............................................. 2
Section 1.3 Directors................................................... 3
Section 1.4 The Merger.................................................. 4
Section 1.5 Effective Time.............................................. 4
Section 1.6 Closing..................................................... 4
Section 1.7 Directors and Officers of the Surviving Corporation......... 4
Section 1.8 Subsequent Actions.......................................... 5
Section 1.9 Stockholders' Meeting; Short-Form Merger.................... 5
ARTICLE II
CONVERSION OF SECURITIES
Section 2.1 Conversion of Capital Stock................................. 6
Section 2.2 Surrender of Certificates................................... 6
Section 2.3 Dissenting Shares........................................... 7
Section 2.4 Option Plans; Warrants...................................... 8
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 3.1 Organization................................................ 8
Section 3.2 Capitalization.............................................. 8
Section 3.3 Authorization; Validity of Agreement; Company Action........ 9
Section 3.4 State Takeover Statutes..................................... 9
Section 3.5 Vote Required............................................... 9
Section 3.6 Consents and Approvals; No Violations....................... 10
Section 3.7 SEC Reports and Financial Statements........................ 10
Section 3.8 No Undisclosed Liabilities.................................. 10
Section 3.9 Absence of Certain Changes.................................. 10
Section 3.10 Litigation.................................................. 11
Section 3.11 Employee Benefit Plans; ERISA............................... 11
Section 3.12 No Default; Compliance with Applicable Laws................. 12
Section 3.13 Taxes....................................................... 12
Section 3.14 Title to Properties; Encumbrances........................... 13
Section 3.15 No Condemnation or Expropriation............................ 14
Section 3.16 Leases...................................................... 14
Section 3.17 Environmental Laws.......................................... 14
Section 3.18 Intellectual Property....................................... 15
Section 3.19 Information Supplied........................................ 15
Section 3.20 Opinion of Financial Advisor................................ 15
Section 3.21 Insurance................................................... 15
Section 3.22 Employment Matters.......................................... 15
Section 3.23 Brokers or Finders.......................................... 16
</TABLE>
i
<PAGE> 33
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT, PURCHASER AND ACQUISITION SUB
Section 4.1 Organization................................................ 16
Section 4.2 Authorization; Validity of Agreement; Necessary Action...... 16
Section 4.3 Consents and Approvals; No Violations....................... 16
Section 4.4 Information Supplied........................................ 17
Section 4.5 Sufficient Funds............................................ 17
Section 4.6 Share Ownership............................................. 17
Section 4.7 Purchaser's and Acquisition Sub's Operations................ 17
Section 4.8 Brokers or Finders.......................................... 17
ARTICLE V
COVENANTS
Section 5.1 Interim Operations of the Company........................... 17
Section 5.2 Access to Information....................................... 19
Section 5.3 Employee Benefits........................................... 19
Section 5.4 Competing Acquisition Proposals............................. 19
Section 5.5 Publicity................................................... 20
Section 5.6 Notification of Certain Matters............................. 20
Section 5.7 Directors' and Officers' Insurance and Indemnification...... 20
Section 5.8 State Takeover Laws......................................... 21
Section 5.9 Approvals and Consents; Cooperation......................... 21
Section 5.10 Taxes....................................................... 21
Section 5.11 SHN Purchase................................................ 21
ARTICLE VI
CONDITIONS PRECEDENT
Section 6.1 Conditions to Each Party's Obligation to Effect the
Merger...................................................... 22
ARTICLE VII
TERMINATION
Section 7.1 Termination................................................. 22
Section 7.2 Effect of Termination....................................... 24
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Amendment and Modification.................................. 24
Section 8.2 Nonsurvival of Representations and Warranties............... 24
Section 8.3 Notices..................................................... 24
Section 8.4 Interpretation.............................................. 25
Section 8.5 Counterparts................................................ 26
Section 8.6 Entire Agreement; Third Party Beneficiaries................. 26
Section 8.7 Severability................................................ 26
Section 8.8 Governing Law............................................... 26
Section 8.9 Enforcement................................................. 26
Section 8.10 Assignment.................................................. 27
Section 8.11 Expenses.................................................... 27
</TABLE>
ii
<PAGE> 34
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
Section 8.12 Headings.................................................... 27
Section 8.13 Extension; Waiver........................................... 27
Section 8.14 Schedules................................................... 27
ANNEX A CONDITIONS TO THE OFFER.......................................... A-1
</TABLE>
iii
<PAGE> 35
INDEX TO DEFINED TERMS
<TABLE>
<S> <C>
Acquisition Proposal........................................ 5.4(c)
Acquisition Sub............................................. Preamble
Acquisition Sub Common Stock................................ 2.1
Agreement................................................... Preamble
Board....................................................... Preamble
Certificates................................................ 2.2(b)
Certificate of Merger....................................... 1.5
Claim....................................................... 5.7(a)
Closing..................................................... 1.6
Closing Date................................................ 1.6
Code........................................................ 3.11(b)
Company..................................................... Preamble
Company Common Stock........................................ Preamble
Company Designees........................................... 1.3(b)
Company Notice.............................................. 5.4(a)
Convertible Note............................................ 3.2(a)
Company Acquisition Agreement............................... 5.4(b)
DGCL........................................................ Preamble
Disclosure Schedule......................................... Article III Preamble
Dissenting Shares........................................... 2.3(a)
Effective Time.............................................. 1.5
Encumbrances................................................ 3.14
Environmental Claim......................................... 3.17(b)
Environmental Law........................................... 3.17(b)
ERISA....................................................... 3.11(a)
ERISA Affiliate............................................. 3.11(a)
Exchange Act................................................ 1.1(a)
GAAP........................................................ 3.7
Health Partners............................................. Preamble
HSR Act..................................................... Section 3.6
Governmental Entity......................................... 3.6
Indemnified Party........................................... 5.7(a)
Independent Committee....................................... Preamble
Initial Expiration Date..................................... 1.1(a)
Intellectual Property....................................... 3.18
IRS......................................................... 3.11(b)
Material Agreements......................................... 3.6
Materials of Environmental Concern.......................... 3.17(b)
Merger...................................................... Preamble
Merger Consideration........................................ 2.1(c)
New Severance Arrangements.................................. 5.3
</TABLE>
iv
<PAGE> 36
<TABLE>
<S> <C>
Offer....................................................... Preamble
Offer Documents............................................. 1.1(b)
Offer Price................................................. Preamble
Offer to Purchase........................................... 1.1(a)
Option...................................................... 2.4(a)
Option Plans................................................ 2.4(a)
Parent...................................................... Preamble
Paying Agent................................................ 2.2(a)
Plan........................................................ 3.11(a)
Potential Acquiror.......................................... 5.4(a)
Preferred Stock............................................. 3.2(a)
Property Restrictions....................................... 3.14
Proxy Statement............................................. 1.9(a)(ii)
Purchaser................................................... Preamble
Schedule TO................................................. 1.1(b)
Schedule 14D-9.............................................. 1.2(b)
SEC......................................................... 1.1(b)
SEC Documents............................................... 3.7
Section 203 Approval........................................ 3.4
Securities Act.............................................. 3.7
Shares...................................................... Preamble
Special Meeting............................................. 1.9(a)(i)
Superior Proposal........................................... 5.4(d)
Surviving Corporation....................................... 1.4
Taxes....................................................... 3.13(i)
Tax Return.................................................. 3.13(i)
Third Party Acquiror........................................ 7.2(b)
Transaction Expenses........................................ 7.2(b)
Warrants.................................................... 3.2(a)
</TABLE>
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