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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-A
GENERAL FORM FOR REGISTRATION OF SECURITIES
Pursuant to Section 12(b) or (g) of
The Securities Exchange Act of 1934
ARV ASSISTED LIVING, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
California 33-0160968
- ---------------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
245 Fischer Avenue, Suite D-1
Costa Mesa, California 92626
- ---------------------------------------- ----------------------
(Address of principal executive offices) (Zip Code)
If this Form relates to the registration of a class of securities pursuant to
Section 12(b) of the Exchange Act and is effective pursuant to General
Instruction A(c), please check the following box. [X]
If this Form relates to the registration of a class of securities pursuant to
Section 12(g) of the Exchange Act and is effective pursuant to General
Instruction A(d), please check the following box. [ ]1
Securities Act registration file number to which this form relates (if
applicable):
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of Each Exchange on Which
to be so registered Each Class is to be Registered
------------------- ------------------------------
Common Stock, no par value American Stock Exchange
Securities to be registered pursuant to Section 12(g) of the Act: None
<PAGE> 2
Item 1. Description of Registrant's Securities to be Registered.
This registration statement relates to the registration with the
Securities and Exchange Commission of shares of Common Stock, no par value
("Common Stock") of ARV Assisted Living, Inc., a California corporation (the
"Registrant"). The description of the Common Stock to be registered hereunder is
set forth under the caption "Capital Stock of the Company" in the prospectus
dated October 17, 1995 included in its Registration Statement on Form S-1 (No.
33-95712) filed with the Securities and Exchange Commission pursuant to the
Securities Act of 1933, as such Registration Statement was amended by Amendment
No. 1 dated September 21, 1995, Amendment No. 2 dated September 28, 1995, and
Amendment No. 3 dated October 13, 1995, incorporated herein by reference.
Item 2. Exhibits
1. Specimen of Certificate representing Registrant's Common
Stock
2. Restated Articles of Incorporation of Registrant
(incorporated by reference to Exhibit 3.3 of Registrant's
Registration Statement on Form S-1 dated August 11, 1995,
as amended, File No. 33-95712 ("Form S-1")).
3. Bylaws of Registrant (incorporated by reference to Exhibit
3.4 of Registrant's Form S-1).
4. Stockholders' Voting Agreement by and among Lazard Freres
Real Estate Investors L.L.C. ("Lazard Freres") and
Prometheus Assisted Living LLC ("Prometheus") and the
Stockholders listed herein, dated as of October 29, 1997.
5. Amended and Restated Stockholders Agreement by and among
Lazard Freres and Prometheus and Registrant, dated as of
October 29, 1997.
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SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Act of
1934, the Registrant has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized.
Date: October 31, 1997 ARV ASSISTED LIVING, INC.
By: /s/ BERNARD WHEELER-MEDLEY
-----------------------------
Bernard Wheeler-Medley
Assistant Secretary
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description Page No.
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<S> <C> <C>
3.1 Restated Articles of Incorporation of Registrant (incorporated
by reference to Exhibit 3.3 of Registrant's Registration Statement
on Form S-1 dated August 11, 1995, as amended, File No. 33-95712
("Form S-1")).
3.2 Bylaws of Registrant (incorporated by reference to Exhibit 3.4 of
Registrant's Form S-1).
4.1 Specimen of Certificate representing Registrant's Common Stock
9.1 Stockholders' Voting Agreement by and among Lazard Freres Real Estate
Investors L.L.C. ("Lazard Freres") and Prometheus Assisted Living LLC
("Prometheus") and the Stockholders listed herein, dated as of October
29, 1997.
10.1 Amended and Restated Stockholders Agreement by and among Lazard Freres
and Prometheus and Registrant, dated as of October 29, 1997.
</TABLE>
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EXHIBIT 4.1
[ARV ASSISTED LIVING LOGO]
THIS CERTIFICATE IS TRANSFERABLE IN RIDGEFIELD PARK, N.J. OR NEW YORK, N.Y.
NUMBER SHARES
SD 3000
------------ ------------
COMMON STOCK COMMON STOCK
SEE REVERSE FOR STATEMENTS
INCORPORATED UNDER THE LAWS RELATING TO RIGHTS, PREFERENCES,
OF THE STATE OF CALIFORNIA PRIVILEGES AND RESTRICTIONS, IF ANY
CUSIP 00204C 10 7
This Certifies that
is the record holder of
FULLY PAID AND NONASSESSABLE SHARES OF COMMON STOCK, NO PAR VALUE, OF
- ------------------------ARV ASSISTED LIVING, INC.-----------------------------
transferable on the books of the Corporation in person or by duly authorized
attorney on surrender of this certificate properly endorsed. This certificate
shall not be valid until countersigned and registered by the Transfer Agent and
Registrar.
WITNESS the facsimile seal of the Corporation and the signatures of its duly
authorized officers.
Dated: /s/ GARY DAVIDSON
---------------------
Chairman
ARV ASSISTED LIVING
[SEAL]
/s/ ILLEGIBLE SIGNATURE /s/ ILLEGIBLE SIGNATURE
- ------------------------ -----------------------
Secretary President
<PAGE> 1
EXHIBIT 9.1
- --------------------------------------------------------------------------------
STOCKHOLDERS' VOTING AGREEMENT
by and among
LAZARD FRERES REAL ESTATE INVESTORS L.L.C.
and
PROMETHEUS ASSISTED LIVING LLC
and
the STOCKHOLDERS listed herein
dated as of
October 29, 1997
- --------------------------------------------------------------------------------
<PAGE> 2
STOCKHOLDERS' VOTING AGREEMENT made this 29th day of October, 1997,
between certain holders of the shares of outstanding voting Common Stock, no par
value per share ("Common Stock"), of the Company (as defined below) set forth on
the signature page hereof (each, a "Stockholder" and, collectively, the
"Stockholders"), and Lazard Freres Real Estate Investors L.L.C., a New York
limited liability company ("LFREI"), and Prometheus Assisted Living LLC, a
Delaware limited liability company (the "Investor"). Capitalized terms not
otherwise defined herein have the meaning ascribed to them in the Stock Purchase
Agreement (as defined below).
R E C I T A L S
A. Concurrently with the execution of this Agreement, pursuant to an
Amended and Restated Stock and Note Purchase Agreement (the "Stock Purchase
Agreement") dated as of October 29, 1997, among ARV Assisted Living, Inc., a
California corporation (the "Company"), LFREI and the Investor, the parties
thereto agreed to a series of transactions, including the sale to the Investor
of certain shares of the Company's Common Stock and the Company Notes (all such
transactions between the Company, LFREI and the Investor are hereinafter
collectively referred to as the "Transactions").
B. As a condition to the Stock Purchase Agreement, the Company, the
Investor and LFREI entered into an Amended and Restated Stockholders Agreement
dated as of October 29, 1997, providing for certain rights and restrictions with
respect to the investment in the Company by LFREI and the Investor.
C. As an additional inducement to LFREI and the Investor to enter into
the Transactions, each of the Stockholders have agreed to vote in favor of
certain matters relating to the Transactions (and constituting an integral part
thereof) on the terms set forth below.
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A G R E E M E N T
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
1. Voting of Shares. During the term of this Agreement for so long as
such Stockholder shall be the owner of any Shares (as hereinafter defined), each
of the Stockholders covenants and agrees with each other Stockholder, LFREI and
the Investor, to vote (which term shall include taking action without a meeting
by written consent) such number of Shares that may be voted by such Stockholder
in favor of the election of Directors of the Company (a) nominated by the
nominating committee, if any, or the Board and (b) the Investor Nominees, each
as provided in Section 2.1 of the Stockholders Agreement.
2. Shares. The term "Shares" as used herein shall mean any and all
shares of capital stock of the Company (including Common Stock) which carry
voting rights (including any voting rights which arise by reason of default) now
owned or subsequently acquired by a Stockholder through purchase, gift, stock
splits, stock dividends and exercise of stock options.
3. Termination. This Agreement shall terminate concurrently with the
termination of the Stockholders Agreement. Each Stockholder hereby agrees not to
sell, transfer or otherwise dispose of any of its Shares until the earlier of
(A) the date of the stockholder meeting at which the vote contemplated by
Section 1 shall have occurred and or (B) April 12, 1998; provided, a sale,
transfer or other disposition pursuant to a margin loan shall not be deemed to
violate the foregoing so long as, in the case of margin loans made after July
14, 1997, the principal amount of any such loan and all other outstanding margin
loans secured by Shares shall not exceed 40% of the aggregate value of the
Shares pledged to secure such loans (with all such Shares valued at $11 per
Share).
4. No Revocation. The voting agreements contained herein are coupled
with an interest and may not be revoked prior to termination in accordance with
Section 3, except by written consent of the Investor, the Company and the
Stockholders owning a majority of the Shares.
5. General.
(a) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of California, without regard to any
principles of conflicts of law.
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(b) Notices. All notices, requests, demands and other communications
under this Agreement shall be in writing and shall be deemed given if delivered
personally or by facsimile transmission (with subsequent letter confirmation by
mail) or three days after being mailed by certified or registered mail, postage
prepaid, return receipt requested, to the parties, their successors in interest
or their assigns at the following addresses, or at such other addresses as the
parties may designate by written notice in the manner aforesaid:
If to the Stockholders: ATTN: [Stockholder Name]
c/o ARV Assisted Living, Inc.
245 Fischer Avenue
Costa Mesa, CA 92626
Attention: President and General Counsel
Telecopy: (714) 759-9283
with a copy to: Latham & Watkins
650 Town Center Drive
20th Floor
Costa Mesa, CA 92626
Attention: William J. Cernius
Telecopy: (714) 755-8290
If to the Investors: Prometheus Assisted Living LLC
c/o Lazard Freres Real Estate Investors L.L.C.
60 Rockefeller Plaza, 63rd Floor
New York, NY 10020
Attention: Robert Freeman, Murry Gunty
and Klaus Kretschmann
Telecopy: (212) 332-5980
with a copy to: Cravath, Swaine & Moore
825 Eighth Avenue
New York, New York 10019
Attention: Kevin Grehan, Esq.
(c) Entire Agreement. This Agreement contains the entire
understanding among the parties hereto and supersedes any prior understandings
and agreements, either oral or written, between or among the parties hereto
relating to the subject matter hereof.
(d) Equitable Remedies. In addition to legal remedies, in
recognition of the fact that remedies at law may not be sufficient, the parties
(and their permitted successors and assigns) shall be entitled to equitable
remedies for breaches or defaults hereunder, including, without limitation,
specific performance and injunction.
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(e) Amendment. No amendment, modification or termination of any
provision of this Agreement shall be valid unless in writing and signed by the
Investor, the Company and Stockholders owning a majority of the Shares.
(f) Binding Agreement; Successors and Assigns. This Agreement shall
be binding upon the parties hereto and their respective successors and legal
representatives; provided, however, that the rights and obligations of the
Investor under this Agreement shall not be assigned to any party other than: (i)
to an affiliate of the Investor or to any entity with which the Investor merges
or combines; or (ii) with the consent of the Stockholders owning a majority of
the Shares.
(g) Counterparts. This Agreement may be executed in several
counterparts, and as so executed shall constitute one agreement, binding on all
of the parties hereto, notwithstanding that all the parties are not a signatory
to the original or the same counterparts.
(h) No Waiver; Cumulative Remedies. No failure or delay on the part
of any party in exercising any right, power or remedy hereunder shall, except to
the extent expressly provided herein, operate as a waiver hereof; nor shall any
single or partial exercise of any right, power or remedy preclude any other
future exercise thereof or the exercise of any other right, power or remedy
hereunder. The remedies provided herein are cumulative and not exclusive of any
remedies provided by law.
(i) Severability. The provisions of this Agreement are severable,
and if any clause or provision of this Agreement shall be held invalid or
unenforceable in whole or in part in any jurisdiction, then such clause or
provision shall, as to such jurisdiction, be ineffective to the extent of such
invalidity or unenforceability without in any manner affecting the validity or
enforceability of such clause or provision in any other jurisdiction or the
remaining provisions hereof in any jurisdiction.
(j) By its execution and delivery of this Agreement, each
Stockholder represents and warrants to the Investors that it owns 100% of the
Shares set forth opposite its name on the signature page hereof.
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IN WITNESS WHEREOF, this Agreement has been executed by the parties
hereto as of the day and year first above written.
750 /s/ JOHN A. BOOTY
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John A. Booty
107,773 BOOTY-JONES FAMILY PARTNERSHIP
-------
By: /s/ JOHN A. BOOTY
--------------------------------
Name: John A. Booty
Title: Managing Partner
418,028 BOOTY FAMILY TRUST
-------
By: /s/ JOHN A. BOOTY
--------------------------------
Name: John A. Booty
Title: Trustee
By:
--------------------------------
Name:
Title:
69,500 KAREN A. BOOTY CHARITABLE
------- REMAINDER TRUST
By: /s/ JOHN A. BOOTY
--------------------------------
Name: John A. Booty
Title: Trustee
69,500 JOHN A. BOOTY CHARITABLE REMAINDER
------- UNITRUST
By: /s/ JOHN A. BOOTY
--------------------------------
Name: John A. Booty
Title: Trustee
/s/ DAVID P. COLLINS
------------------------------------
David P. Collins
6
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98,678 D&V COLLINS FAMILY LIMITED
------- PARTNERSHIP
By: /s/ DAVID P. COLLINS
--------------------------------
Name: David P. Collins
Title: Settlor-Trustee
By: /s/ VICTORIA F. COLLINS
-------------------------------
Name: Victoria F. Collins
Title: Settlor-Trustee
408,591 COLLINS FAMILY COMMUNITY PROPERTY
------- TRUST
By: /s/ DAVID P. COLLINS
-------------------------------
Name: David P. Collins
Title: Settlor-Trustee
By: /s/ VICTORIA F. COLLINS
-------------------------------
Name: Victoria F. Collins
Title: Settlor-Trustee
11,978 DAVID P. COLLINS ANNUITY TRUST
-------
By: /s/ DAVID P. COLLINS
-------------------------------
Name: David P. Collins
Title: Trustee
252,552 /s/ GRAHAM P. ESPLEY-JONES
------- ----------------------------------
Graham P. Espley-Jones
7
<PAGE> 8
LAZARD FRERES REAL ESTATE INVESTORS
L.L.C.
By: /s/ ROBERT P. FREEMAN
-------------------------------
Name: Robert P. Freeman
Title: President
PROMETHEUS ASSISTED LIVING LLC
By: Lazard Freres Real Estate
Investors L.L.C.
By: /s/ ROBERT P. FREEMAN
-------------------------------
Name: Robert P. Freeman
Title: President
8
<PAGE> 1
EXHIBIT 10.1
- --------------------------------------------------------------------------------
AMENDED AND RESTATED
STOCKHOLDERS AGREEMENT
by and among
LAZARD FRERES REAL ESTATE INVESTORS L.L.C.
and
PROMETHEUS ASSISTED LIVING LLC
and
ARV ASSISTED LIVING, INC.
dated as of
October 29, 1997
- ------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C>
ARTICLE 1
DEFINITIONS...................................................... 1
"Adjusted Fully Diluted Basis"................................... 1
"Affiliate" ..................................................... 1
"Agreement"...................................................... 2
"Beneficially Own"............................................... 2
"Board".......................................................... 2
"Buyer".......................................................... 2
"Code"............................................................ 2
"Company"........................................................ 2
"Company Charter"................................................ 2
"Company Common Stock"........................................... 2
"Control"........................................................ 2
"Covered Transaction"............................................ 2
"Director"....................................................... 2
"Early Standstill Termination Event"............................. 2
"Exercise Notice"................................................ 2
"Extraordinary Transaction"...................................... 2
"Fully Diluted Basis"............................................ 2
"Government Authority"........................................... 3
"Group".......................................................... 3
"Investor"....................................................... 3
"Investor Nominees".............................................. 3
"Kapson"......................................................... 3
"Kapson Agreement"............................................... 3
"Key Committees"................................................. 3
"1933 Act"....................................................... 3
"1934 Act"....................................................... 3
"Participation Notice"........................................... 3
"person"......................................................... 3
"Standstill Period".............................................. 3
"Stock Purchase Agreement"....................................... 3
"Termination Event".............................................. 3
"13D Group"...................................................... 3
"Transfer"....................................................... 4
"Voting Securities".............................................. 4
</TABLE>
2
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<TABLE>
<CAPTION>
Page
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<S> <C>
ARTICLE 2
BOARD OF DIRECTORS............................................... 4
Section 2.1 Members of the Board................................ 4
Section 2.2 [Intentionally Omitted]............................. 5
Section 2.3 Vacancies........................................... 5
Section 2.4 Officers............................................ 5
Section 2.5 President/CEO....................................... 5
ARTICLE 3
VOTING AND PARTICIPATION RIGHTS.................................. 5
Section 3.1 Voting Rights....................................... 5
Section 3.2 Participation Rights................................ 6
ARTICLE 4
STANDSTILL PROVISIONS............................................ 8
Section 4.1 Standstill Period................................... 8
Section 4.2 Restrictions During Standstill Period............... 9
Section 4.3 Restrictions on Transfer............................ 10
Section 4.4 Notice to Company................................... 11
Section 4.5 Compliance with Insider Trading Policy.............. 11
Section 4.6 Investment Company Matters.......................... 11
Section 4.7 Waiver of Restrictions and Limits................... 11
ARTICLE 5
ADDITIONAL COVENANTS............................................. 11
Section 5.1 Restrictions on Investments......................... 11
ARTICLE 6
MISCELLANEOUS.................................................... 12
Section 6.1 Counterparts........................................ 12
Section 6.2 Governing Law....................................... 12
Section 6.3 Entire Agreement.................................... 12
Section 6.4 Expenses............................................ 12
Section 6.5 Notices............................................. 12
Section 6.6 Successors and Assigns.............................. 13
Section 6.7 Headings............................................ 13
Section 6.8 Amendments and Waivers.............................. 13
Section 6.9 Interpretation; Absence of Presumption.............. 13
Section 6.10 Severability....................................... 14
Section 6.11 Further Assurances................................. 14
Section 6.12 Specific Performance............................... 14
Section 6.13 Investor Breach.................................... 14
Section 6.14 Confidentiality.................................... 14
Section 6.15 Public Announcements............................... 15
</TABLE>
3
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THIS AMENDED AND RESTATED STOCKHOLDERS AGREEMENT (this "Agreement"),
dated as of October 29, 1997, is made by and between Lazard Freres Real Estate
Investors L.L.C., a New York limited liability company (the "Advancing Party"),
Prometheus Assisted Living LLC, a Delaware limited liability company (the
"Buyer"), and ARV Assisted Living, Inc., a California corporation (the
"Company"). Capitalized terms not otherwise defined herein have the meaning
ascribed to them in the Stock Purchase Agreement (as hereinafter defined).
RECITALS:
WHEREAS, the Company, the Buyer and the Advancing Party have entered
into a Stock Purchase Agreement, dated as of July 14, 1997 (as amended to date,
including the Amended and Restated Stock and Note Purchase Agreement dated as of
the date hereof, the "Stock Purchase Agreement"), that provides for the purchase
by Buyer and sale by the Company to Buyer of shares of Company Common Stock and
Company Notes;
WHEREAS, the parties previously entered into a Stockholders Agreement
dated as of July 14, 1997 (the "Stockholders Agreement"), providing for certain
rights and restrictions with respect to the investment by Investor (as
hereinafter defined) in the Company and the corporate governance of the Company;
and
WHEREAS, the Company, the Advancing Party and Buyer desire to amend and
restate the Stockholders Agreement as contemplated by the Stock Purchase
Agreement;
NOW THEREFORE, in consideration of the premises and the covenants and
agreements contained herein and for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, and intending to be legally
bound hereby, the parties hereto hereby, agree to amend and restate the
Stockholders Agreement as follows:
4
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ARTICLE 1
DEFINITIONS
As used in this Agreement, the following terms shall have the following
respective meanings:
"Adjusted Fully Diluted Basis" shall mean on a Fully Diluted Basis,
except that shares of Common Stock issuable upon conversion of the Convertible
Debt or upon exercise of options granted under management benefit plans shall
not be included.
"Affiliate" shall have the meaning ascribed thereto in Rule 12b-2
promulgated under the 1934 Act, and as in effect on the date hereof.
"Agreement" shall have the meaning set forth in the first paragraph
hereof.
"Beneficially Own" shall mean, with respect to any security, having
direct or indirect (including through any Subsidiary or Affiliate) "beneficial
ownership" of such security, as determined pursuant to Rule 13d-3 under the 1934
Act, including pursuant to any agreement, arrangement or understanding, whether
or not in writing; provided, however, that all of the shares of Company Common
Stock that Investor then has the right to acquire upon conversion of the Company
Notes in accordance with their terms shall be deemed to be Beneficially Owned by
Investor.
"Board" shall mean the board of directors of the Company.
"Buyer" shall have the meaning set forth in the first paragraph hereof.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
any successor thereto, including all of the rules and regulations promulgated
thereunder.
"Company" shall have the meaning set forth in the first paragraph
hereof.
"Company Charter" shall have the meaning set forth in the Stock
Purchase Agreement.
"Company Common Stock" shall have the meaning set forth in the second
paragraph hereof.
"Control" shall mean with respect to any person, the power to direct
the management and policies of such person, directly or indirectly, whether
through ownership of voting securities, by contract or otherwise. "Controlled"
shall have a correlative meaning.
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"Convertible Debt" shall mean the Company's 6-3/4% Convertible
Subordinated Notes due 2006.
"Covered Transaction" shall have the meaning set forth in Section 4.1.
"Director" shall mean a member of the Board.
"Early Standstill Termination Event" shall have the meaning set forth
in Section 4.1.
"Exercise Notice" shall have the meaning set forth in Section 3.2(b).
"Extraordinary Transaction" shall mean (a) any merger, consolidation,
sale of a material portion of the Company's assets, recapitalization, other
business combination, liquidation, or other similar action out of the ordinary
course of business of the Company, or (b) any issuance of securities to any
person or Group requiring stockholder approval in accordance with the guidelines
of the NASDAQ National Market (or any stock exchange on which the Company Common
Stock is then listed) as to such matters, as in effect as of the date of the
Stock Purchase Agreement.
"Fully Diluted Basis" shall mean then outstanding Company Stock plus
any shares of stock or other equity or debt exchangeable for Company Stock and
any shares of stock or other equity or debt the holders of which have the right
to vote with the stockholders of the Company on any matter, and shall include
Company Common Stock issuable under the Company Notes, the Convertible Debt, the
instruments listed in Schedule 3.3(a) of the Stock Purchase Agreement and under
option or other equity-incentive plans listed on Schedule 3.13(b) of the Stock
Purchase Agreement and awards issued pursuant thereto.
"Government Authority" shall mean any government or state (or any
subdivision thereof) of or in the United States, or any agency, authority,
bureau, commission, department or similar body or instrumentality thereof, or
any governmental court or tribunal.
"Group" shall mean a "group" as such term is used in Section 13(d)(3)
of the 1934 Act.
"Investor" shall mean the Buyer, and shall also include any permitted
assignee of the Buyer pursuant to the Stock Purchase Agreement and, for purposes
only of the provisions of the Registration Rights Agreement, any bona fide
financial institution to which any Investor has Transferred (including upon
foreclosure of a pledge) shares of Company Common Stock for the purpose of
securing bona fide indebtedness of any Investor and which has agreed to be bound
by this Agreement.
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"Investor Nominees" shall have the meaning set forth in Section 2.1(a).
"Kapson" shall mean Kapson Senior Quarters, Corp.
"Kapson Agreement" shall mean the letter agreement dated as of
September 30, 1997, as amended and restated as of October 29, 1997, among the
Advancing Party, Buyer and the Company relating to Kapson.
"Key Committees" shall have the meaning set forth in Section 2.2(a).
"1933 Act" shall mean the Securities Act of 1933, as amended.
"1934 Act" shall mean the Securities Exchange Act of 1934, as amended.
"Participation Notice" shall have the meaning set forth in Section
3.2(b).
"person" shall mean any individual, corporation, partnership, limited
liability company, joint venture, trust, unincorporated organization, other form
of business or legal entity or Government Authority.
"Standstill Period" shall have the meaning set forth in Section 4.1.
"Stock Purchase Agreement" shall have the meaning set forth in the
Recitals hereof.
"Termination Event" shall mean the date on which either (i) Investor no
longer Beneficially Owns a number of shares of Company Common Stock equal to at
least 5% of the outstanding Company Common Stock, on a Fully Diluted Basis or
(ii) Investor no longer Beneficially Owns Company Common Stock having an
aggregate market value of at least $25,000,000.
"13D Group" shall mean any group of persons acquiring, holding, voting
or disposing of Voting Securities which would be required under Section 13(d) of
the 1934 Act and the rules and regulations thereunder (as in effect, and based
on legal interpretations thereof existing, on the date hereof) to file a
statement on Schedule 13D with the Securities and Exchange Commission as a
"person" within the meaning of Section 13(d)(3) of the 1934 Act if such group
beneficially owned Voting Securities representing more than 5% of any class of
Voting Securities then outstanding.
"Transfer" shall have the meaning set forth in Section 4.3.
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"Voting Securities" shall mean at any time shares of any class of
capital stock of the Company which are then entitled to vote generally in the
election of Directors.
ARTICLE 2
BOARD OF DIRECTORS
Section 2.1 Members of the Board
(a) As of the Closing Date, the Company and Investor will take all
actions necessary to cause the Board to be structured to consist of nine
members, of which three members will be designees of Investor (at least one in
each class of the Board) (the "Investor Nominees"), and the Company and Investor
will take all actions necessary to cause such nominees to become members of the
Board as of the Closing Date. The initial Investor Nominees shall be Robert P.
Freeman, Murry N. Gunty and Kenneth M. Jacobs. If necessary to effectuate the
placement of Investor Nominees on the Board, the Company shall solicit the
resignations of the appropriate number of Directors to the extent necessary to
permit the Investor Nominees to serve. Thereafter until the occurrence of a
Termination Event, at each annual or special meeting of stockholders of the
Company at, or the taking of action by written consent of stockholders of the
Company with respect to which any class of Directors is to be elected, Investor
shall have the right (but not obligation) pursuant to this Agreement and
pursuant to the By-laws of the Company to designate three nominees to the Board
if the Board is a single class, and one designee per class if the Board is
divided into three classes.
(b) Investor will not name any person as an Investor Nominee if (i)
such person is not reasonably experienced in business, financial or real estate
matters, (ii) such person has been convicted of, or has pled nolo contendere to
a felony, (iii) the election of such person would violate any law, or (iv) any
event required to be disclosed pursuant to Item 401(f) of Regulation S-K of the
1934 Act has occurred with respect to such person. Investor shall use its
reasonable efforts to afford the independent directors of the Company a
reasonable opportunity to meet any individual that Investor is considering
naming as an Investor Nominee.
(c) The Company will support the nomination of and the election of each
Investor Nominee to the Board, and the Company will exercise all authority under
applicable law to cause each Investor Nominee to be elected to the Board.
Without limiting the generality of the foregoing, with respect to each meeting
of stockholders of the Company at which Directors are to be elected, the Company
shall use its reasonable efforts to solicit from the stockholders of the Company
eligible to vote in the election of Directors proxies in favor of each Investor
Nominee.
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(d) During the period that Investor shall have the right to designate
nominees to the Board under this Agreement, the number of Directors on the Board
shall not exceed nine at any time.
(e) If Investor's right to nominate directors to the Board is reduced,
Investor shall cause the applicable number of its Investor Nominees to
immediately resign (regardless of the remaining term, if any) from the Board.
(f) It is hereby agreed that any decision to take or omit to take any
action on the Company's behalf with respect to any transaction or agreement
involving or relating to Investor shall be subject only to the approval of a
majority of non-Investor Nominee Directors.
Section 2.2 [Intentionally Omitted]
Section 2.3 Vacancies. In the event that any Investor Nominee shall
cease to serve as a Director for any reason other than the fact that Investor no
longer has a right to nominate a Director, as provided in Section 2.1(a), the
vacancy resulting thereby shall be filled by an Investor Nominee designated by
Investor; provided, however, that any Investor Nominee so designated shall
satisfy the qualification requirements set forth in Section 2.1(b).
Section 2.4 Officers. The Investor agrees to cooperate with the Company
in connection with the negotiation, execution and delivery of employment
agreements between the Company and certain key employees of the Company.
Section 2.5 President/CEO. The Company covenants and agrees to use
commercially reasonable efforts to identify, select and retain a new
President/CEO of the Company within 90 days after the Closing Date. The
retention of such President/CEO shall require the prior written consent of
Investor, such approval not to be unreasonably withheld. The Investor agrees to
cooperate with the Company in the identification, selection and retention of a
new President/CEO of the Company. The parties acknowledge that the
identification, selection and retention of a new President/CEO of the Company is
a critical element for the ongoing success of the Company and the parties agree
to act in good faith in connection therewith. Upon the retention of a new
President/CEO of the Company in accordance with this Section, the Company shall
use its best efforts to cause a Director who is not an Investor Nominee to
resign from the Board, the Company will cause such new President/CEO to be
nominated as a director at the next succeeding annual meeting of the Company and
the Company and the Investor will use their best efforts to cause such new
President/CEO to be elected to the Board.
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ARTICLE 3
VOTING AND PARTICIPATION RIGHTS
Section 3.1 Voting Rights. Subject to the provisions of this Section
3.1, Investor may vote the shares of Company Common Stock which it owns in its
sole and absolute discretion. During the Standstill Period the Advancing Party,
the Buyer and Investor and any of their Controlled Affiliates will vote all
shares of Company Common Stock owned by any of them that represent aggregate
ownership in excess of 35.8% of the outstanding shares of Company Common Stock,
in one of the following two manners, at their option: (x) in accordance with the
recommendation of the Board, or (y) proportionally in accordance with the votes
of the other holders of Company Common Stock. Notwithstanding anything to the
contrary in the foregoing, during the Standstill Period, the Advancing Party,
the Buyer and Investor and any of their Controlled Affiliates shall vote all
shares of Company Common Stock owned by any of them in favor of the election of
all Directors nominated by the nominating committee, if any, or the Board
provided such nominations are in accordance with Section 2.1(a).
Section 3.2 Participation Rights
(a) Rights to Participate. From and after the date hereof until a
Termination Event, if any, Investor shall be entitled to a participation right
to purchase or subscribe up to that number of additional shares of capital stock
(including as "capital stock" for purposes of this Section 3.2, any security,
option, warrant, call, commitment, subscription, right to purchase or other
agreement of any character that is convertible into or exchangeable or
redeemable for shares of capital stock of the Company or any Subsidiary (and all
references in this Section 3.2 to capital stock shall, as appropriate, be deemed
to be references to any such securities), and also including additional shares
of capital stock to be issued pursuant to the conversion, exchange or redemption
of any security, option, warrant, call, commitment, subscription, right to
purchase or other agreement of a character that is convertible into or
exchangeable or redeemable for shares of capital stock, as if the price at which
such additional shares of capital stock is issued pursuant to any such
conversion, exchange or redemption were the market price on the date of such
issuance) to be issued or sold by the Company which represents the same
proportion (the "shareholder percentage") of the total number of shares of
capital stock to be issued or sold by the Company (including the shares of
capital stock to be issued to Investor upon exercise of its participation rights
hereunder; it being understood and agreed that the Company will accordingly be
required to either increase the number of shares of capital stock to be issued
or sold so that Investor may purchase additional shares to maintain its
proportionate interest, or to reduce the number of shares of capital stock to be
issued or sold to Persons other than Investor) as is represented by the number
of shares of Company Common Stock Beneficially Owned by Investor prior to such
sale or issuance relative to the number of outstanding shares of Company Common
Stock, on an Adjusted Fully Diluted basis, prior
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to such sale or issuance (but in no event more than 35.8% of the total number of
shares of capital stock to be issued or sold by the Company at all subsequent
offerings); provided, however, that the provisions of this Section 3.2 shall not
to apply to (i) the issuance or sale by the Company of any of its capital stock
issued to the Company or any of its Subsidiaries or pursuant to options, rights
or warrants or other commitments or securities in effect or outstanding as of
July 14, 1997 (including without limitation, any options issued or to be issued
pursuant to the Employment Agreements), (ii) the issuance of capital stock
pursuant to the conversion, exchange or redemption of any other capital stock,
but shall, without limitation, apply to the issuance by the Company of any of
its capital stock pursuant to benefit, option, stock purchase, or other similar
plans or arrangements, including pursuant to or upon the exercise of options,
rights, warrants, or other securities or agreements (including those issued
pursuant to the Company's benefit plans) and (iii) the issuance of stock for
consideration other than cash; provided further, however, that in the case of
debt securities of the Company that entitle the Investor to participation rights
hereunder, such participation rights shall apply only to the issuance of such
debt securities, i.e., the Investor shall have participation rights with respect
to such debt securities, and shall have whatever conversion rights to which
holders of such debt securities are entitled, but shall have no other
participation rights with respect thereto and the Investor shall only have the
right to acquire such debt securities themselves. Notwithstanding the foregoing,
any participation rights provided for in this Section which arise as a result of
the exception contained in clause (ii) of the preceding sentence shall be
deferred until such time as participation rights shall otherwise arise under
this Section 3.2. The provisions of this Section 3.2 shall apply to the
Convertible Debt only upon conversion, in which event the Company agrees from
time to time to issue the number of additional shares necessary to permit the
Buyer to maintain its shareholder percentage (as defined above), provided that
the purchase price for such shares shall be the closing price of the Company
Common Stock on the date of each such conversion; provided further that the
Company shall provide the Buyer within 15 days after the end of each calendar
quarter with a schedule of the conversions during such quarter (and the related
closing prices for the Common Stock on the dates of conversion), the number of
additional shares of Common Stock the Buyer is entitled to purchase hereunder
and the purchase price therefor; provided further that Buyer shall have until 15
days after receipt of such schedule to purchase such additional shares. Any
conversion or exercise of securities acquired by Investor pursuant to this
Section 3.2 shall be deferred by Investor if it would result in Investor's share
percentage exceeding 49.9%.
(b) Notice. In the event the Company proposes to issue or sell any
shares of capital stock in a transaction giving rise to the participation rights
provided for in this Section, the Company shall send a written notice (the
"Participation Notice") to Investor setting forth the number of shares of such
capital stock of the Company that the Company proposes to sell or issue, the
price (before any commission or discount) at which such shares are proposed to
be issued (or, in the case of an underwritten or privately placed offering in
which the price is not known at the time the Participating Notice is given, the
method of determining such price and an estimate thereof), and all other
relevant
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information as to such proposed transaction as may be necessary for Investor to
determine whether or not to exercise the rights granted in this Section. At any
time within 20 days after its receipt of the Participation Notice, Investor may
exercise its participation rights to purchase or subscribe for shares of such
shares of capital stock, as provided for in this Section, by so informing the
Company in writing (an "Exercise Notice"). Each Exercise Notice shall state the
percentage of the proposed sale or issuance that the Investor elects to
purchase. Each Exercise Notice shall be irrevocable, subject to the conditions
to the closing of the transaction giving rise to the participation right
provided for in this Section.
(c) Abandonment of Sale or Issuance. The Company shall have the right,
in its sole discretion, at all times prior to consummation of any proposed sale
or issuance giving rise to the participation right granted by this Section, to
abandon, rescind, annul, withdraw or otherwise terminate such sale or issuance,
whereupon all participation rights in respect of such proposed sale or issuance
pursuant to this Section shall become null and void, and the Company shall have
no liability or obligation to Investor or any Affiliate thereof who has acquired
shares of Company Stock pursuant to the Stock Purchase Agreement or from
Investor with respect thereto by virtue of such abandonment, rescission,
annulment, withdrawal or termination.
(d) Terms of Sale. The purchase or subscription by Investor or an
Affiliate thereof, as the case may be, pursuant to this Section shall be on the
same price and other terms and conditions, including the date of sale or
issuance, as are applicable to the purchasers or subscribers of the additional
shares of capital stock of the Company whose purchases or subscriptions give
rise to the participation rights (except that the price to Investor to make such
purchase or subscription shall be net of payment of any underwriting, placement
agent or similar fee associated with such purchase or subscription), which price
and other terms and conditions shall be substantially as stated in the relevant
Participation Notice (which standard shall be satisfied if the price, in the
case of a negotiated transaction, is not greater than 110% of the estimated
price set forth in the relevant Participation Notice or, in the case of an
underwritten or privately placed offering, is not greater than of (i) 110% of
the estimated price set forth in the relevant Participation Notice, and (ii) the
most recent closing price on or prior to the date of the pricing of the
offering); provided, however, that in the event the purchases or subscriptions
giving rise to the participation rights are effected by an offering of
securities registered under the 1933 Act and in which offering it is not legally
permissible for the securities to be purchased by Investor to be included, such
securities to be purchased by Investor will be purchased in a concurrent private
placement.
(e) Timing of Sale. If, with respect to any Participation Notice,
Investor fails to deliver an Exercise Notice within the requisite time period,
the Company shall have 120 days after the expiration of the time in which the
Exercise Notice is required to be delivered in which to sell not more than 110%
of the number of shares of capital stock of the Company described in the
Participation Notice (plus, in the event such shares are to be sold in an
underwritten public offering, an additional number of shares of capital stock of
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the Company, not in excess of 15% of 110% of the number of shares of capital
stock of the Company described in the Participation Notice, in respect of any
underwriters over allotment option) and not less than 90% of the number of
shares of capital stock of the Company described in the Participation Notice at
a price of not less than 90% of the estimated price set forth in the
Participation Notice. If, at the end of 120 days following the expiration of the
time in which the Exercise Notice is required to be delivered, the Company has
not completed the sale or issuance of capital stock of the Company in accordance
with the terms described in the Participation Notice (or at a price which is at
least 90% of the estimated price set forth in the Participation Notice), or in
the event of any contemplated sale or issuance within such 120-day period but
outside such price parameters, the Company shall again be obligated to comply
with the provisions of this Section with respect to, and provide the opportunity
to participate in, any proposed sale or issuance of shares of capital stock of
the Company; provided, however, that notwithstanding the foregoing, if the price
at which such capital stock is to be sold in an underwritten offering (or a
privately placed offering in which the price is not less than 97% of the most
recent closing price at the time of the pricing of the offering) is not at least
90% of the estimated price set forth in the Participation Notice, the Company
may inform Investor of such fact and Investor shall be entitled to elect, by
written notice delivered within two Business Days following such notice from the
Company, to participate in such offering in accordance with the provisions of
this Section 4.2.
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ARTICLE 4
STANDSTILL PROVISIONS
Section 4.1 Standstill Period. The "Standstill Period" shall be the
period commencing on the date of this Agreement and ending on the earlier of (x)
the third anniversary of the Settlement Date or (y) the earliest of:
(i) the occurrence of any event of default on the part of the
Company or any Subsidiary under any debt agreements, instruments or
arrangements (other than those disclosed to the Advancing Party or
Investor prior to the Closing Date) that would reasonably be expected
to result in a Material Adverse Effect, and, in the case of a
non-monetary event of default, which event of default cannot be, or is
not, cured by the Company within the applicable cure period under such
debt agreement, instrument or arrangement and that would reasonably be
expected to result in a Material Adverse Effect;
(ii) the authorization by the Company or the Board or any
committee thereof (with all Investor Nominees abstaining or voting
against) of the solicitation of offers or proposals or indications of
interest with respect to any merger, consolidation, other business
combination, liquidation, sale of the Company or all or substantially
all of the assets of the Company or any other change of control of the
Company or similar extraordinary transaction, but excluding any merger,
consolidation or other business combination in which the Company is the
surviving and acquiring corporation and in which the business or assets
so acquired do not, or would not reasonably be expected to, have a
value greater than 50% of the assets of the Company prior to such
merger, consolidation or other business combination (any of the
foregoing, a "Covered Transaction");
(iii) the written submission by any person or Group other than
Investor or any Affiliate thereof of a proposal to the Company
(including to the Board or any agent, representative or Affiliate of
the Company ) with respect to, or otherwise expressing an interest in
pursuing, a Covered Transaction; provided, however, that the Standstill
Period shall not terminate pursuant to this Section 4.1(a)(iii) if, as
soon as practicable after receipt of any such proposal, the Board
determines that such proposal is not in the best interest of the
Company and its stockholders and for so long as the Board continues to
reject such proposal as a result of such determination;
(iv) in connection with any actual or proposed Covered
Transaction, the removal of any rights plan, provisions of the Company
Charter relating to staggered terms of office for directors, provisions
of the Company Charter or the By-laws of the Company relating to
supermajority voting of the Company's stockholders,
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"excess share" provisions of the Company Charter or the By-laws of the
Company, or any other similar arrangements, agreements, commitments or
provisions in the Company Charter or the By-laws of the Company which
would reasonably be expected to impede the consummation of such actual
or proposed Covered Transaction by action of any Government Authority,
the Board, the stockholders of the Company or otherwise;
(v) 90 days after the occurrence of a Termination Event;
(vi) any breach by the Company of the Stock Purchase Agreement
which is neither cured nor desisted from within 30 days of receipt of
written notice from Investor of such breach and which would reasonably
be expected to materially adversely affect Investor or cause a Material
Adverse Effect; or
(vii) any breach of this Agreement by the Company which is
neither cured nor desisted within 30 days of receipt of written notice
from Investor of such breach and which would reasonably be expected to
materially adversely affect Investor or cause a Material Adverse
Effect.
Any event set forth in clauses (i)-(vii) of this Section 4.1 shall be an "Early
Standstill Termination Event."
Section 4.2 Restrictions During Standstill Period
(a) During the Standstill Period, the Advancing Party, the Buyer, and
Investor will not, and will cause each of their Controlled Affiliates not to,
directly or indirectly:
(i) act in concert with any other person or Group by becoming
a member of a 13D Group, other than any 13D Group comprised exclusively
of Investor and one or more of its Affiliates;
(ii) purchase or otherwise acquire shares of Company Common
Stock (or options, rights or warrants or other commitments to purchase
and securities convertible into (or exchangeable or redeemable for)
shares of Company Common Stock) as a result of which, after giving
effect to such purchase or acquisition, the Advancing Party, the Buyer,
and Investor and their Controlled Affiliates will Beneficially Own in
the aggregate more than 49.9% of the outstanding shares of Company
Common Stock on an Adjusted Fully Diluted basis;
(iii) solicit, encourage or propose to effect or negotiate any
Covered Transaction;
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(iv) solicit, initiate, encourage or participate in any
"solicitation" of "proxies" or become a "participant" in any "election
contest" (as such terms are defined or used in Regulation 14A under the
1934 Act, disregarding clause (iv) of Rule 14a-1(1)(2) and including an
exempt solicitation pursuant to Rule 14a-2(b)(1)); call, or in any way
encourage or participate in a call for, any special meeting of
stockholders of the Company (or take any action with respect to acting
by written consent of the stockholders of the Company); request, or
take action to obtain or retain, any list of holders of any securities
of the Company; or initiate or propose any stockholder proposal or
participate in or encourage the making of, or solicit stockholders of
the Company for the approval of, one or more stockholder proposals;
provided, however, that Investor shall not be prohibited from
communicating with a security holder who is engaged in any
"solicitation" of "proxies" or who is a "participant" in any "election
contest";
(v) seek representation on the Board or a change in the
composition or size of the Board other than as permitted by Article 2;
(vi) enter into or (to the extent such person has the power to
do so) permit Kapson to enter into sale/leaseback or other financing
arrangements of the type contemplated by the Kapson Agreement with any
public or private company (other than the Company) the principal
business of which is the ownership, management, operation and
development of assisted living facilities (which shall not include
health care real estate investment trusts) in the United States unless
such company enters into a written standstill agreement with the
Company containing provisions substantially similar to the provisions
of Section 4.1 and this Section 4.2;
(vii) request the Company or any of its directors, officers,
employees or agents to amend or waive any provisions of this Section
4.2 or seek to challenge the legality or effect thereof; or
(viii) assist, advise, encourage or act in concert with any
person with respect to, or seek to do, any of the foregoing.
Section 4.3 Restrictions on Transfer. During the Standstill Period, the
Advancing Party, the Buyer and Investor will not, and will cause each of their
Controlled Affiliates not to, directly or indirectly, Transfer any shares of
Company Common Stock or Company Notes except for: (a) Transfers made in
compliance with the requirements of Rule 144 of the 1933 Act, (b) Transfers
pursuant to negotiated transactions with third parties provided that any such
Transfer is not made to any public or private company the principal business of
which is, or that derives more than $15 million of annual revenue from (in
either case as of the date of such Transfer), the ownership, management,
operation and development of assisted living facilities in the United States,
unless 75% of the Directors of the Company (other than Investor Nominees) have
consented to such Transfer
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and provided further that the transferee acknowledges that it is subject to the
provisions of Article 5 of this Agreement, (c) Transfers pursuant to or in
accordance with the Registration Rights Agreement in a bona fide public
offering, (d) Transfers to one or more Controlled Affiliates of Investor who
agree to be bound by the terms and conditions of this Agreement, who make the
representations set forth in Sections 4.8, 4.10 and 4.11 of the Stock Purchase
Agreement and who satisfy the ownership criteria in the definition of
"Investor", and (e) Transfers to a bona fide financial institution for the
purpose of securing bona fide indebtedness of any Investor. After the expiration
of the Standstill Period, there shall be no restrictions on the ability of the
Advancing Party, the Buyer, Investor and their Controlled Affiliates to Transfer
any shares of Company Common Stock.
Section 4.4 Notice to Company. During the Standstill Period, if any
party wishes to sell pursuant to Section 4.3(a), (b) or (c) any shares of
Company Common Stock or Company Notes, such party shall give the Company 15
days' prior written notice of such proposed sale, setting forth the number of
shares of Company Common Stock or the principal amount of Company Notes (as the
case may be) that such party proposes to sell, the expected timing of the
proposed sale, and the expected selling price of such sale, in order to enable
the Company to make an offer to purchase such shares or Company Notes. During
the period described in the preceding sentence, such party shall also notify the
Company if such party reaches a formal board-level decision to sell shares of
Company Common Stock, or Company Notes convertible into shares of Company Common
Stock, representing more than 2% of the shares of Company Common Stock on an
Adjusted Fully Diluted Basis.
Section 4.5 Compliance with Insider Trading Policy. For as long as the
Advancing Party, the Buyer or Investor Beneficially Owns any shares of Company
Common Stock, such parties will, and will use their commercially reasonable
efforts to cause their directors, officers, employees, agents, and
representatives to, comply with any written policy of the Company reasonably
designed to prevent violations of insider trading and similar laws.
Section 4.6 Investment Company Matters. From and after the Stockholder
Approval Date, if any, until a Termination Event, if any, Investor shall use its
reasonable best efforts to not be or become an "investment company" or any
entity "controlled" by an "investment company", as such terms are defined in the
Investment Company Act of 1940, as amended.
Section 4.7 Waiver of Restrictions and Limits. The Company shall take
all actions, including by providing any necessary conditional exemptions from or
amendments to any agreement or instrument which governs ownership of shares of
Company Stock by any person, necessary to permit Investor to Beneficially Own up
to and including 35.8% of the outstanding shares of Company Common Stock on an
Adjusted Fully Diluted Basis. If any third party shall be given the right to
Beneficially Own more than 35.8% of the
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outstanding shares of Company Common Stock on an Adjusted Fully Diluted Basis,
the Company shall take all actions (including by providing the foregoing
exemptions and amendments) to waive any and all restrictions or limits on
Investor. Notwithstanding the foregoing but subject to the provisions of Section
5.1, Investor or the Company may at any time acquire Beneficial Ownership of the
securities of such other party or its Affiliates to the extent permitted by
applicable law and the provisions of the organizational documents of such party
or its Affiliates, as applicable, and other agreements from time to time
governing the ownership of such securities.
ARTICLE 5
ADDITIONAL COVENANTS
Section 5.1 Restrictions on Investments. Except as contemplated by the
Kapson Agreement, from the date of this Agreement until the occurrence of a
Termination Event or an Early Standstill Termination Event, the Advancing Party,
the Buyer, Investor and their Controlled Affiliates shall not, directly or
indirectly, own any equity interest (other than a de minimis amount) in any
public or private company the principal business of which is the ownership,
management, operation and development of assisted living facilities in the
United States, unless 75% of the Directors of the Company (other than the
Investor Nominees) have consented to such ownership. Upon the termination of the
Kapson Agreement or any provisions thereof, this Section 5.1 shall terminate and
be of no further effect.
ARTICLE 6
MISCELLANEOUS
Section 6.1 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same instrument, and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party. Copies of executed counterparts
transmitted by telecopy, telefax or other electronic transmission service shall
be considered original executed counterparts for purposes of this Section,
provided receipt of copies of such counterparts is confirmed.
Section 6.2 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA WITHOUT
REFERENCE TO THE CHOICE OF LAW PRINCIPLES THEREOF.
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Section 6.3 Entire Agreement. This Agreement (including agreements
incorporated herein) and the Schedules and Exhibits hereto contain the entire
agreement between the parties with respect to the subject matter hereof and
there are no agreements, understandings, representations or warranties between
the parties and other than those set forth or referred to herein. This Agreement
is not intended to confer upon any person not a party hereto (and their
successors and assigns) any rights or remedies hereunder.
Section 6.4 Expenses. Except as set forth in the Stock Purchase
Agreement, all legal and other costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
Company including, without limitation, those specified in Section 9.3(a) of the
Stock Purchase Agreement.
Section 6.5 Notices. All notices and other communications hereunder
shall be sufficiently given for all purposes hereunder if in writing and
delivered personally, sent by documented overnight delivery service or, to the
extent receipt is confirmed, telecopy, telefax or other electronic transmission
service to the appropriate address or number as set forth below. Notice to the
Company shall be addressed to:
ARV Assisted Living, Inc.
245 Fischer Avenue, D-1
Costa Mesa, CA 92626
Attention: President and General Counsel
Telecopy: (714) 759-9283
with a copy to:
Latham & Watkins
650 Town Center Drive
20th Floor
Costa Mesa, CA 92626
Attention: William J. Cernius
Telecopy: (714) 755-8290
or at such other address and to the attention of such other person as the
Company may designate by written notice to Investor. Notices to the Advancing
Party, the Buyer or Investor shall be addressed to:
Lazard Freres Real Estate Investors L.L.C.
30 Rockefeller Plaza, 63rd Floor
New York, NY 10020
Attention: Robert P. Freeman,
Murry N. Gunty and
Klaus Kretschmann
Telecopy: (212) 838-3239
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with a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019
Attention: Kevin J. Grehan, Esq.
Telecopy: (212) 474-3700
Section 6.6 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors (including, in the case of the Advancing Party, any successor to the
principal business of the Advancing Party). No party shall be permitted to
assign any of its rights hereunder to any third party, except that the Buyer,
the Advancing Party and any Investor shall be permitted to assign its rights
hereunder to the same extent as the Buyer or the Advancing Party is permitted to
assign its rights under the Stock Purchase Agreement, provided that such person
agrees to be bound by this Agreement.
Section 6.7 Headings. The Section, Article and other headings contained
in this Agreement are inserted for convenience of reference only and will not
affect the meaning or interpretation of this Agreement. All references to
Sections or Articles contained herein means Sections or Articles of this
Agreement unless otherwise stated.
Section 6.8 Amendments and Waivers. This Agreement may not be modified
or amended except by an instrument or instruments in writing signed by the party
against whom enforcement of any such modification or amendment is sought. Any
party hereto may, only by an instrument in writing, waive compliance by another
party hereto with any term or provision hereof on the part of such other party
hereto to be performed or complied with. The waiver by any party hereto of a
breach of any term or provision hereof shall not be construed as a waiver of any
subsequent breach.
Section 6.9 Interpretation; Absence of Presumption.
(a) For the purposes hereof, (i) words in the singular shall be held to
include the plural and vice versa and words of one gender shall be held to
include the other gender as the context requires, (ii) the terms "hereof",
"herein", and "herewith" and words of similar import shall, unless otherwise
stated, be construed to refer to this Agreement as a whole (including all of the
Schedules and Exhibits hereto) and not to any particular provision of this
Agreement, and Article, Section, paragraph, Schedule and Exhibit references are
to the Articles, Sections, paragraphs, Schedules and Exhibits to this Agreement
unless otherwise specified, (iii) the word "including" and words of similar
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import when used in this Agreement shall mean "including, without limitation,"
unless the context otherwise requires or unless otherwise specified, (iv) the
word "or" shall not be exclusive, (v) provisions shall apply, when appropriate,
to successive events and transactions and (vi) terms used herein but not
otherwise defined herein shall have the meanings assigned to such terms in the
Stock Purchase Agreement.
(b) This Agreement shall be construed without regard to any presumption
or rule requiring construction or interpretation against the party drafting or
causing any instrument to be drafted.
Section 6.10 Severability. Any provision hereof which is invalid or
unenforceable shall be ineffective to the extent of such invalidity or
unenforceability, without affecting in any way the remaining provisions hereof.
Section 6.11 Further Assurances. The Company and Investor agree that,
from time to time, each of them will, and will cause their respective Affiliates
to, execute and deliver such further instruments and take such other action as
may be necessary to carry out the purposes and interests hereof.
Section 6.12 Specific Performance. The Company and Investor each
acknowledge that, in view of the uniqueness of arrangements contemplated by this
Agreement, the parties hereto would not have an adequate remedy at law for money
damages in the event that this Agreement were not performed in accordance with
its terms, and therefore agree that the parties hereto shall be entitled to
specific enforcement of the terms hereof in addition to any other remedy to
which the parties hereto may be entitled at law or in equity.
Section 6.13 Investor Breach. In the event Investor shall have breached
(i) its obligation to effect a purchase of the Company Notes pursuant to the
Stock Purchase Agreement or (ii) any of its obligations under this Agreement
which breach is neither cured nor desisted from within 30 days of receipt of
written notice of such breach and which would reasonably be expected to
materially adversely affect the Company, the Company shall no longer be required
to perform any of its obligations hereunder.
Section 6.14 Confidentiality. The Advancing Party, the Buyer and
Investor agree that all information provided to any of them or any of their
representatives pursuant to this Agreement shall be kept confidential, and such
parties shall not (x) disclose such information to any persons other than the
directors, officers, employees, financial advisors, legal advisors, accountants,
consultants and affiliates of such parties who reasonably need to have access to
the confidential information and who are advised of the confidential nature of
such information or (y) use such information in a manner
21
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which would be detrimental to the Company; provided, however, the foregoing
obligation of such parties shall not (a) relate to any information that (i) is
or becomes generally available other than as a result of unauthorized disclosure
by such parties or by persons to whom such parties have made such information
available; (ii) is or becomes available to such parties on a non-confidential
basis from a third party that is not, to such parties' knowledge, bound by any
other confidentiality agreement with the Company, or (b) prohibit disclosure of
any information if required by law, rule, regulation, court order or other legal
or governmental process.
Section 6.15 Public Announcements. Subject to each party's disclosure
obligations imposed by law and any stock exchange or similar rules and the
confidentiality provisions contained herein and in Section 5.4(b) of the Stock
Purchase Agreement, all news releases and other public information disclosures
with respect to this Agreement, the Stock Purchase Agreement and the Transaction
Documents and any of the transactions contemplated hereby or thereby will
require the mutual approval of Buyer and the Company before such release or
disclosure is made. If a party is required by law or any stock exchange or
similar rule to issue a news release or other public announcement, it shall
advise the other party in advance thereof and use reasonable best efforts to
cause a mutually agreeable release or announcement to be issued.
IN WITNESS WHEREOF, this Agreement has been signed by or on behalf of
each of the parties hereto as of the day first above written.
LAZARD FRERES REAL ESTATE INVESTORS L.L.C.
By: /s/ ROBERT P. FREEMAN
--------------------------------------
Name: Robert P. Freeman
Title: President
PROMETHEUS ASSISTED LIVING LLC
By: LAZARD FRERES REAL ESTATE
INVESTORS L.L.C.,
By: /s/ ROBERT P. FREEMAN
----------------------------------
Name: Robert P. Freeman
Title: President
ARV ASSISTED LIVING, INC.
By: /s/ SHEILA M. MULDOON
--------------------------------------
Name: Sheila M. Muldoon
Title: Vice President and
Secretary
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ARV ASSISTED LIVING, INC.
By: /s/ SHEILA M. MULDOON
----------------------------------
Name: Sheila M. Muldoon
Title: Vice President and
Secretary
