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Exhibit No. 2.1
AMENDMENT NO. 1 TO
AGREEMENT OF MERGER
THIS AMENDMENT NO. 1 TO AGREEMENT OF MERGER ("Amendment") is
made as of March 4, 1999 among SUNRISE ASSISTED LIVING, INC., a Delaware
corporation (referred to herein as "Acquiror"), BUCKEYE MERGER CORPORATION, an
Ohio corporation and wholly-owned subsidiary of Acquiror (referred to herein as
"Merger Sub"), and KARRINGTON HEALTH, INC., an Ohio corporation (referred to
herein as the "Company").
WHEREAS, Acquiror, Merger Sub and the Company are parties to
an Agreement of Merger dated as of October 18, 1998;
WHEREAS, Acquiror, Merger Sub and the Company wish to amend
certain of the terms and conditions of the Agreement as more fully set forth
below; and
WHEREAS, as a condition to Acquiror's and Merger Sub's
willingness to enter into this Amendment, concurrently herewith certain
shareholders and each of the directors and officers of the Company are entering
into an amendment to the Shareholder Agreement (as defined in the Agreement)
with Acquiror, which amendment is dated as of the date hereof and is intended
to reference and incorporate this Amendment into such Shareholder Agreement;
NOW THEREFORE, in consideration of the foregoing, the parties
hereto agree as follows:
1. Section 2.1(a). Section 2.1(a) of the Agreement is
hereby amended by deleting Section 2.1(a) in its entirety and replacing it with
the following new Section 2.1(a):
"(a) Each issued and outstanding share of Company Common
Stock (other than shares of Company Common Stock to be canceled in
accordance with Section 2.1(d)) shall be automatically converted into
the right to receive (i) 0.3333 of a share of Acquiror Common Stock
(the "Exchange Ratio"), plus (ii) the associated right to purchase
shares of Series C Junior Participating Preferred Stock of Acquiror
pursuant to that certain Rights Agreement dated as of April 25, 1996
between Acquiror and First Union National Bank of North Carolina, as
amended (the "Rights Agreement"). If, between the date of this
Agreement and the Effective Time, Acquiror or the Company should
split, subdivide, reclassify, recapitalize, combine or exchange their
respective Common Stock, or pay a stock dividend or other stock
distribution in their respective Common Stock, or otherwise change
their respective Common Stock into a different number of shares, a
different class or a different type of security, or make any other
dividend or distribution on their respective Common Stock, then the
Exchange Ratio will be appropriately adjusted to reflect such split,
subdivision, reclassification, recapitalization, combination,
exchange, dividend or other distribution or change. The Exchange
Ratio shall be rounded, in each case, to the nearest ten-thousandth of
a share."
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2. Section 4.1. Section 4.1 of the Agreement is hereby
amended by deleting the second sentence of Section 4.1 in its entirety and
replacing it with the following new sentence:
"The term "Material Adverse Effect on the Company" as used in this
Agreement shall mean any change or effect that, individually or when
taken together with all such other changes or effects, is or would
reasonably be expected to be materially adverse to the financial
condition, results of operations, properties or business of the
Company and the Company Subsidiaries taken as a whole; provided,
however, that Material Adverse Effect on the Company shall not be
deemed to include the impact of (i) changes in general economic
conditions or conditions applicable to the assisted living industry
generally, (ii) changes or effects which result from the execution and
delivery of this Agreement or the consummation of any transactions
contemplated hereby other than changes or effects which result from
(A) a change in control or change of control or similar event
applicable to the Company or any Company Subsidiary or (B) the failure
to obtain one or more Third Party Consents (as defined below) which
failure individually or in the aggregate would have a Material Adverse
Effect on the Company, (iii) the matters set forth in Section 4.1 of
the Company Disclosure Schedule, (iv) the inability of the Company to
obtain the consent to this Agreement of Catholic Health Initiatives
("CHI") related to the joint venture agreements between the Company
and CHI to develop, own and/or operate assisted living residences in
Ohio, New Mexico and Colorado, and (v) changes or effects which result
from any action or inaction of Acquiror or any of Acquiror's
affiliates, or any action that the Company or any of the Company's
affiliates takes or is directed not to take at the request of Acquiror
or any affiliate of Acquiror, in connection with the performance of
management, consulting or other services provided to the Company or
any of the Company's affiliates by Acquiror or any of Acquiror's
affiliates pursuant to those certain three Development Agreements each
dated as of December 1, 1998 between Sunrise Development, Inc. and the
Company (relating to Hamilton, Ohio, Farmington Hills, Michigan and
Edina, Minnesota, respectively), that certain Management Consulting
Agreement dated as of December 31, 1998 between Sunrise Assisted
Living Management, Inc. and the Company and that certain Management
Services Agreement dated as of January 1, 1999 between Sunrise
Assisted Living Management, Inc. and the Company (such Development
Agreements, Management Consulting Agreement and Management Services
Agreement are collectively referred to as the "Sunrise Services
Agreements")."
3. Section 4.11. Section 4.11 is hereby amended by
deleting clause (i) of Section 4.11 in its entirety, and by adding to the end
of clause (ii) of Section 4.11 the phrase "and except for debt obligations
incurred pursuant to the loan agreement between Karrington Operating Company,
Inc. and Acquiror entered into in accordance with Section 5.19 of this
Agreement".
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4. Section 5.2(a). Section 5.2(a) of the Agreement is
hereby amended by inserting the following phrase immediately following the
phrase "conduct their respective businesses only in the ordinary course and
consistent in all material respects with past practice,":
"as modified or supplemented by any suggestions, guidance, assistance,
advice and/or recommendations provided by Acquiror or any of
Acquiror's affiliates in connection with the performance of
management, consulting or other services provided to the Company or
any of the Company's affiliates by Acquiror or any of Acquiror's
affiliates pursuant to the Sunrise Services Agreements,"
5. Section 5.3(d). Section 5.3(d) of the Agreement is
hereby amended by deleting clause (1) of Section 5.3(d) in its entirety and
replacing it with the following new clause (1):
"(1) Acquiror agrees to use its best efforts to make adequate
provision in such Acquisition Transaction for shareholders of the
Company to be entitled to receive, in lieu of Acquiror Common Stock as
provided in Article II, the same type of securities or other property
from another Person that the stockholders of Acquiror would so receive
from such other Person, giving effect to the Exchange Ratio and"
6. Section 5.19. Section 5.19 of the Agreement is
hereby amended by adding the following new sentence to the end of Section 5.19:
"Concurrently with the execution and delivery of the Amendment No. 1
to Agreement of Merger dated as of March 4, 1999 among Acquiror,
Merger Sub and the Company ("Amendment No. 1"), and pursuant to
amended loan documentation entered into concurrently therewith,
Acquiror shall make available to the Company an additional fully
secured line of credit in the principal amount of up to $6.5 million,
the proceeds of which are to be used for the working capital needs of
the Company and its subsidiaries prior to the Closing (the "Additional
Loan")."
7. Section 6.1(g). Section 6.1(g) of the Agreement is
hereby amended by inserting the phrase "dated within two (2) business days
before the date on which the Registration Statement shall become effective,"
immediately prior to the phrase "as provided in Section 5.1(e)".
8. Section 6.1(j). Section 6.1(j) of the Agreement is
hereby amended by adding the parenthetical phrase "(as amended to reflect
Amendment No. 1)" immediately prior to the phrase "from each of the Company
Affiliates".
9. Section 6.3. Section 6.3 of the Agreement is hereby
amended by deleting clauses 6.3(c) and 6.3(i) in their entirety.
10. Section 7.1(b). Section 7.1(b) of the Agreement is
hereby amended by deleting clause (i) of Section 7.1(b) in its entirety and
replacing it with the following new
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clause (i): "(i) the Merger shall not have been consummated by June 30, 1999,
(provided, however, that this date may be extended to a date not later than
September 30, 1999 by written notice of either Acquiror or the Company given to
the other if the Merger shall not have been consummated as a result of Acquiror
or the Company having failed by June 30, 1999 to receive all necessary Third
Party Consents with respect to the Merger (as contemplated in Sections 6.2(e)
and 6.3(e)) or as a result of an order, writ, judgment, injunction, consent
decree, stipulation, determination or award entered by or with any Governmental
Entity, as contemplated in Sections 6.1(c) and (f)), or".
11. Other Provisions. All other provisions of the
Agreement shall remain in full force and effect.
12. Defined Terms. Capitalized terms used in this
Amendment and not otherwise defined shall have the meanings set forth in the
Agreement.
13. Counterparts. This Amendment may be executed and
delivered in one or more counterparts, all of which shall be considered one and
the same agreement and each of which shall be deemed an original.
14. Governing Law. The validity and interpretation of
this Amendment shall be governed by, and construed in accordance with, the laws
of the State of Delaware, without reference to the conflict of laws principles
thereof; except that the effectiveness of the Merger shall be governed by, and
construed in accordance with, the laws of the State of Ohio.
15. Meditrust Covenants. By separate agreement, the
measurement period for the covenants of the Meditrust loans and leases will be
extended an additional one quarter and certain covenants which may be in
default will be waived.
16. Section 4.20 of the Company Disclosure Schedule. In
accordance with Section 5.14 of the Agreement, Section 4.20 of the Company
Disclosure Schedule is hereby amended to read in the manner set forth on
Exhibit A to this Amendment.
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IN WITNESS WHEREOF, Acquiror, Merger Sub and the Company have
caused this Amendment to be executed and delivered by their respective officers
thereunto duly authorized, all as of the date first written above.
SUNRISE ASSISTED LIVING, INC. KARRINGTON HEALTH, INC.
By: /s/ Xxxxx X. Xxxxxx By: /s/ Xxxxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx Xxxxxxx X. Xxxxxx
President Chairman and Chief
Executive Officer
BUCKEYE MERGER CORPORATION
By: /s/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx
President
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