EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
AMONG
ASSISTED LIVING CONCEPTS, INC.
CH MERGER, INC.
AND
CARRIAGE HOUSE ASSISTED LIVING, INC.
DATED AS OF OCTOBER 15, 1997
TABLE OF CONTENTS*
PAGE
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ARTICLE I
THE MERGER................ 1
SECTION 1.01 The Merger..................................... 1
SECTION 1.02 Conversion of Shares........................... 1
SECTION 1.03 Surrender and Payment.......................... 2
SECTION 1.04 Adjustments.................................... 3
SECTION 1.05 Fractional Shares.............................. 3
ARTICLE II
THE SURVIVING CORPORATION........ 3
SECTION 2.01 Certificate of Incorporation................... 3
SECTION 2.02 Bylaws......................................... 3
SECTION 2.03 Directors and Officers......................... 3
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF CARRIAGE HOUSE............ 3
SECTION 3.01 Corporate Existence............................ 3
SECTION 3.02 Corporate Authority; Non-Contravention......... 3
SECTION 3.03 Property....................................... 4
SECTION 3.04 Litigation..................................... 4
SECTION 3.05 Subsidiaries................................... 4
SECTION 3.06 Contingent Liabilities......................... 5
SECTION 3.07 Taxes.......................................... 5
SECTION 3.08 Contracts...................................... 5
SECTION 3.09 Books and Records.............................. 5
SECTION 3.10 Construction Claims............................ 5
SECTION 3.11 Documents...................................... 5
SECTION 3.12 No Mis-Statement of Material Facts............. 5
SECTION 3.13 Capitalization................................. 5
SECTION 3.14 Foreign Person................................. 6
SECTION 3.15 Financial Statements........................... 6
SECTION 3.16 Absence of Certain Changes..................... 6
SECTION 3.17 No Existing Violation.......................... 6
SECTION 3.18 Licenses and Permits........................... 6
SECTION 3.19 Employment Matters............................. 6
SECTION 3.20 Insurance...................................... 6
SECTION 3.21 Intellectual Property.......................... 7
SECTION 3.22 Tax Free Merger................................ 7
SECTION 3.23 Finders' Fees.................................. 7
SECTION 3.24 Vote Required.................................. 7
SECTION 3.25 Accredited Investor............................ 7
SECTION 3.26 Medicare and Medicaid.......................... 7
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF ALC.......................... 8
SECTION 4.01 Corporate Existence.................................... 8
SECTION 4.02 Corporate Authority; Non-Contravention................. 8
SECTION 4.03 Litigation............................................. 8
SECTION 4.04 No Mis-Statement or Material Facts..................... 8
SECTION 4.05 Capitalization......................................... 8
SECTION 4.06 SEC Filings............................................ 8
SECTION 4.07 Financial Statements................................... 9
SECTION 4.08 Tax Free Merger........................................ 9
SECTION 4.09 Finder's Fee........................................... 10
SECTION 4.10 Vote Required.......................................... 10
ARTICLE V
COVENANTS OF CARRIAGE HOUSE............... 10
SECTION 5.01 Conduct of Carriage House.............................. 10
SECTION 5.02 Access to Information.................................. 10
SECTION 5.03 Other Offers........................................... 11
SECTION 5.04 Notice of Certain Events............................... 11
SECTION 5.05 Stockholder Consent.................................... 11
ARTICLE VI
COVENANTS OF ALC..................... 11
SECTION 6.01 Conduct of ALC......................................... 11
SECTION 6.02 Obligations of Merger Subsidiary....................... 12
SECTION 6.03 American Stock Exchange Listing........................ 12
SECTION 6.04 Registration Rights.................................... 12
SECTION 6.05 Notice of Certain Events............................... 12
SECTION 6.06 Use of the Name "Carriage House"....................... 12
ARTICLE VII
COVENANTS OF ALC AND CARRIAGE HOUSE............... 12
SECTION 7.01 Reasonable Best Efforts................................ 13
SECTION 7.02 Certain Filings........................................ 13
SECTION 7.03 Public Announcements................................... 13
SECTION 7.04 Further Assurances..................................... 13
ARTICLE VIII
CONDITIONS TO THE MERGER................ 13
SECTION 8.01 Conditions to the Obligations of Each Party............ 13
SECTION 8.02 Conditions to the Obligations of ALC and Merger
Subsidiary............................................. 13
SECTION 8.03 Conditions to the Obligations of Carriage House........ 14
ARTICLE IX
TERMINATION....................... 15
SECTION 9.01 Termination............................................ 15
SECTION 9.02 Effect of Termination.................................. 15
ARTICLE X
MISCELLANEOUS
SECTION 10.01 Notices............................................... 15
SECTION 10.02 Survival of Representations and Warranties; Indemnity;
No Waiver of Fraud.................................... 16
SECTION 10.03 Amendments; No Waivers................................ 16
SECTION 10.04 Fees and Expenses/Attorney Fees....................... 17
SECTION 10.05 Successors and Assigns................................ 17
SECTION 10.06 Governing Law......................................... 17
SECTION 10.07 Counterparts; Effectiveness........................... 17
SECTION 10.08 Entire Agreement...................................... 17
LIST OF EXHIBITS
----------------
EXHIBIT A ACKNOWLEDGMENT AGREEMENT
EXHIBIT B REGISTRATION RIGHTS AGREEMENT
EXHIBIT C NON-COMPETITION AND CONFIDENTIALITY AGREEMENT
EXHIBIT D ABSOLUTE GUARANTY OF PAYMENT AND PERFORMANCE
EXHIBIT E LEASE GUARANTY
EXHIBIT F RELEASE
LIST OF SCHEDULES
-----------------
Schedule 1.02 Conversion Exchange Schedule
Schedule 3.03(a) Owned Real Property
Schedule 3.03(b) Leased Real Property
Schedule 3.03(c) Personal Property
Schedule 3.03(d) Permitted Exceptions
Schedule 3.03(e) Environmental Audits
Schedule 3.08 Material Contracts
Schedule 3.19 Employees
Schedule 3.20 Insurance
Schedule 3.21 Intellectual Property
Schedule 8.02(d) Required Consents of Certain Persons.
Schedule 9.01(b) Approved Expenditures
* The Table of Contents is not a part of this Agreement.
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (THIS "AGREEMENT") dated as of October___, 1997,
among Assisted Living Concepts, Inc., a Nevada corporation ("ALC"), CARRIAGE
HOUSE ASSISTED LIVING, INC., a Delaware corporation ("CARRIAGE HOUSE"), and CH
Merger, Inc., a Delaware corporation and wholly owned subsidiary of ALC ("MERGER
SUBSIDIARY").
WHEREAS, the respective Boards of Directors of ALC, Merger Subsidiary and
Carriage House have approved and declared advisable the merger of Merger
Subsidiary into Carriage House (THE "MERGER"), upon the terms and subject to the
conditions set forth herein;
WHEREAS, for federal income tax purposes, it is intended that the Merger shall
qualify as a reorganization within the meaning of Section 368(a)(1)(A) and
(2)(E) of the Code (as defined below); and
WHEREAS, for accounting purposes, it is intended that the Merger shall be
accounted for as a purchase.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
ARTICLE I
THE MERGER
SECTION 1.01 THE MERGER. (a) Upon the terms and subject to the conditions set
forth herein, and in accordance with the General Corporation Law of the State of
Delaware ("DELAWARE LAW"), Merger Subsidiary shall be merged with and into
Carriage House at the Effective Time (as defined in Section 1.01(b)). Following
the Merger, the separate existence of Merger Subsidiary shall cease, and
Carriage House shall be the surviving corporation (THE "SURVIVING CORPORATION")
and shall succeed to and assume all the rights and obligations of Merger
Subsidiary in accordance with Delaware law.
(b) Not later than three (3) business days after satisfaction or, to the extent
permitted hereunder, waiver of all conditions to the Merger, Carriage House and
Merger Subsidiary will file a certificate of merger with the Secretary of State
of the State of Delaware and make all other filings or recordings required by
Delaware Law in connection with the Merger. The Merger shall become effective
at such time as the certificate of merger is duly filed with the Secretary of
State of the State of Delaware or at such later time as is specified in the
certificate of merger (THE "EFFECTIVE TIME").
SECTION 1.02 CONVERSION OF SHARES. At the Effective Time; by virtue of the
Merger and without any action on the part of any shareholders of ALC, Merger
Subsidiary or Carriage House:
(a) each share of common stock, no par value per share, of Merger Subsidiary
outstanding immediately prior to the Effective Time shall be converted into and
become one share of common stock, no par value per share, of the Surviving
Corporation with the same rights, powers and privileges as the shares so
converted and shall constitute the only outstanding shares of capital stock of
the Surviving Corporation;
(b) each outstanding share of common stock, .01 par value per share, of Carriage
House (THE "CARRIAGE HOUSE SHARES") held by Carriage House as treasury stock or
owned by ALC or any subsidiary of ALC immediately prior to the Effective Time
shall be cancelled, and no payment shall be made with respect thereto;
(c) each Carriage House Share outstanding immediately prior to the Effective
Time shall, except as otherwise provided in Section 1.02(b), be converted into
the right to receive a certain number of shares (THE "CONVERSION NUMBER") of
ALC's common stock, $.01 par value per share (THE "ALC COMMON STOCK"), in
accordance with
the conversion exchange schedule set forth in SCHEDULE 1.02 attached hereto,
except for the right to receive an additional number of shares as indicated in
the Registration Rights Agreement in the event ALC shall have failed to register
the ALC Common Stock within one hundred twenty (120) days of the Effective Time.
SECTION 1.03 SURRENDER AND PAYMENT. (a) Prior to the Effective Time, ALC shall
appoint an agent reasonably acceptable to Carriage House (THE "EXCHANGE AGENT")
for the purpose of exchanging certificates as provided hereunder. As of the
Effective Time, ALC shall deposit with the Exchange Agent for the benefit of the
holders of Carriage House Shares, for exchange in accordance with this Section
1.03, through the Exchange Agent, certificates representing the shares of ALC
Common Stock issuable pursuant to Section 1.02 in exchange for outstanding
Carriage House Shares. Promptly after the Effective Time, ALC will send, or
will cause the Exchange Agent to send, to each holder of Carriage House Shares
at the Effective Time a letter of transmittal for use in such exchange (which
shall specify that the delivery shall be effected, and risk of loss and title
shall pass, only upon proper delivery of the certificates representing Carriage
House Shares and the Acknowledgment Agreement, as defined below, to the Exchange
Agent).
(b) Each holder of Carriage House Shares that have been converted into a right
to receive ALC Common Stock, upon surrender to the Exchange Agent of (i) a
certificate or certificates representing such Carriage House Shares, and (ii) a
completed and fully executed Acknowledgment Agreement in the form set forth in
EXHIBIT A attached hereto ("ACKNOWLEDGMENT AGREEMENT"), together with a properly
completed letter of transmittal covering such shares, will be entitled to
receive in exchange therefor (1) that number of whole shares of ALC Common Stock
which such holder has the right to receive pursuant to Section 1.02, and (2)
cash in lieu of fractional shares of ALC Common Stock which such holder has the
right to receive pursuant to Section 1.05, and the certificate or certificates
for Carriage House Shares so surrendered shall be cancelled. Until so
surrendered, each such certificate shall, after the Effective Time, represent
for all purposes, only the right to receive upon such surrender the certificate
representing shares of ALC Common Stock and cash in lieu of any fractional
shares of ALC Common Stock as contemplated by this Section 1.03 and Section
1.05.
(c) If any shares of ALC Common Stock are to be issued to a Person other than
the registered holder of the Carriage House Shares represented by the
certificate or certificates surrendered in exchange therefor, it shall be a
condition to such issuance that (i) the certificate or certificates so
surrendered shall be properly endorsed or otherwise be in proper form for
transfer, (ii) that the Person requesting such issuance shall pay to the
Exchange Agent any transfer or other taxes required as a result of such issuance
to a Person other than the registered holder of such Carriage House Shares or
establish to the satisfaction of the Exchange Agent that such tax has been paid
or is not payable; and (iii) that the Person requesting such issuance shall
qualify as an "Accredited Investor" under Regulation D promulgated by the United
States Securities and Exchange Commission and shall have completed and executed
an Acknowledgment Agreement. For purposes of this Agreement, "PERSON" means an
individual, a corporation, a partnership, an association, a trust or any other
entity or organization, including a government or political subdivision or any
agency or instrumentality thereof.
(d) After the Effective Time, there shall be no further registration of
transfers of Carriage House Shares. Subject to Section 1.03(e), if, after the
Effective Time, certificates representing Carriage House Shares are presented to
the Surviving Corporation, they shall be cancelled and exchanged as provided
for, and in accordance with the procedures set forth, in this Article I.
(e) Any shares of ALC Common Stock made available to the Exchange Agent pursuant
to Section 1.03(a) that remain unclaimed by the holders of Carriage House Shares
six months after the Effective Time shall be returned to ALC, upon demand, and
any such holder who has not exchanged his Carriage House Shares in accordance
with this Section prior to that time shall thereafter look only to ALC to
exchange such Carriage House Shares. Notwithstanding the foregoing, ALC shall
not be liable to any holder of Carriage House Shares for any amount paid, or any
shares of ALC Common Stock delivered to a public official pursuant to applicable
abandoned property laws. Any shares of ALC Common Stock or other amounts
remaining unclaimed by holders of Carriage House Shares two years after the
Effective Time (or such earlier date immediately prior to such time as such
amounts would otherwise escheat to or become property of any governmental
entity) shall, to the extent permitted by
Page 2
applicable law, become the property of ALC free and clear of any claims or
interest of any Person previously entitled thereto.
(f) No dividends or other distributions on shares of ALC Common Stock shall be
paid to the holder of any unsurrendered certificates representing Carriage House
Shares until such certificates are surrendered and exchanged in accordance with
in this Section. Upon such surrender and exchange, there shall be paid, without
interest, to the person in whose name the certificates representing the shares
of ALC Common Stock into which such shares were converted are registered, all
dividends and other distributions paid in respect of such ALC Common Stock on a
date subsequent to, and in respect of a record date after, the Effective Time.
SECTION 1.04 ADJUSTMENTS. If at any time during the period between the date of
this Agreement and the Effective Time, any change in the outstanding shares of
ALC Common Stock shall occur, including by reason of any reclassification,
recapitalization, stock split or combination, exchange or readjustment of
shares, or any stock dividend thereon with a record date during such period, the
Conversion Number shall be appropriately adjusted.
SECTION 1.05 FRACTIONAL SHARES. No fractional shares of ALC Common Stock shall
be issued in the Merger. All fractional shares of ALC Common Stock that a holder
of Carriage House Shares would otherwise be entitled to receive as a result of
the Merger shall be aggregated and if a fractional share results from such
aggregation, such holder shall be entitled to receive, in lieu thereof, an
amount in cash determined by multiplying the number of fractional shares by the
price of $16.25 per share.
ARTICLE II
THE SURVIVING CORPORATION
SECTION 2.01 CERTIFICATE OF INCORPORATION. The certificate of incorporation of
Carriage House in effect at the Effective Time shall be the certificate of
incorporation of the Surviving Corporation until amended in accordance with
applicable law.
SECTION 2.02 BYLAWS. The bylaws of Carriage House in effect at the Effective
Time shall be the bylaws of the Surviving Corporation until amended in
accordance with applicable law.
SECTION 2.03 DIRECTORS AND OFFICERS. From and after the Effective Time, until
successors are duly elected or appointed and qualified in accordance with
applicable law, (i) the directors of Merger Subsidiary at the Effective Time
shall be the directors of the Surviving Corporation, and (ii) the officers of
Merger Subsidiary at the Effective Time shall be the officers of the Surviving
Corporation.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF CARRIAGE HOUSE
Carriage House represents and warrants to ALC that:
SECTION 3.01 CORPORATE EXISTENCE. Carriage House is a duly formed and validly
existing corporation under the laws of the State of Delaware, and is qualified
to do business and is in good standing in the states of Nebraska and Colorado.
SECTION 3.02 CORPORATE AUTHORITY; NON-CONTRAVENTION. Carriage House has full
power and authority to execute and deliver this Agreement and all related
documents, and to carry out the transactions contemplated herein. This
Agreement is valid, binding and enforceable against Carriage House in accordance
with its terms. The execution of this Agreement and the consummation of the
transactions contemplated herein do not result in a breach of the terms and
conditions of, nor constitute a default under, or violation of, Carriage House's
Certificate of Incorporation
Page 3
or Bylaws, or, to Carriage House's actual knowledge, any law, regulation, court
order, mortgage, note, bond, indenture, agreement, license or other instrument
or obligation to which Carriage House is now a party or by which Carriage House
may be bound or affected.
SECTION 3.03 PROPERTY. SCHEDULE 3.03(A) sets forth a complete and accurate legal
description of each parcel of real property, and a description of all buildings,
improvements and fixtures located thereon, owned by Carriage House (THE "OWNED
REAL PROPERTY"). Carriage House has good and marketable, fee simple title to
the Owned Real Property, subject to those liens, encumbrances and other matters
described in Schedule 3.03(d) attached hereto.
(b) SCHEDULE 3.03(B) sets forth a complete and accurate legal description of
each parcel of real property, and a description of all buildings, improvements
and fixtures located thereon, in which Carriage House has a leasehold interest
(THE "LEASED REAL PROPERTY"). All leases pursuant to which Carriage House
leases the Leased Real Property (THE "LEASES") are valid and enforceable in
accordance with their terms and, to the actual knowledge of Carriage House, no
party is in default or breach, or has threatened to default or breach, under
such Leases.
(c) SCHEDULE 3.03(C) sets forth a complete and accurate description of all
personal property used or held for use in connection with the business and
operations of Carriage House (THE "PERSONAL PROPERTY"), identified by location
of such property. To the actual knowledge of Carriage House, no party is in
default or breach under any leases or other agreements relating to the Personal
Property.
(d) For purposes of the Agreement, the term "Property" means the Owned Real
Property, the Leased Real Property and Leases, and the Personal Property. There
are no easements, rights of way, liens, security interests, leases, options to
purchase, rights of first refusal, or other third-party rights or encumbrances
of any kind or nature whatsoever affecting the Property, other than as indicated
in the title reports, land surveys and lien searches identified in SCHEDULE
3.03(D) attached hereto ("PERMITTED EXCEPTIONS").
(e) To Carriage House's actual knowledge, and except as disclosed in the Phase I
environmental audits identified in SCHEDULE 3.03(E) attached hereto (THE
"ENVIRONMENTAL AUDITS"), (1) there does not exist, in or under the Owned Real
Property or Leased Real Property, any contaminant, pollutant, toxic or hazardous
waste, the release or disposal of which is regulated by any law, regulation,
ordinance or code, with the exception of any such materials used by Carriage
House in the ordinary course of business and in accordance with applicable law,
and (2) neither the Owned Real Property nor the Leased Real Property has ever
been used for purposes which may have been conducive to the use or disposal of
hazardous materials on such Property, such as (by way of example only and not by
means of limitation) a dump, gasoline station, car wash, or industrial or
manufacturing use. Carriage House has not received any notice from any
authority having jurisdiction over the Owned Real Property or the Leased Real
Property that Carriage House or such property, or both, are not in compliance
with any applicable environmental laws, regulations, ordinances or orders
relating to such property.
(f) Carriage House has not received (1) from any state or local authority having
jurisdiction over the Property any written notice of any violation of any law,
regulation, ordinance or code affecting any of the Property or the operation
thereof, or (2) any written notice of any threatened litigation or anticipated
condemnation with respect to any of the Property.
(g) Carriage House possesses no rights or interests in real property other than
its rights and interests in the Owned Real Property and Leased Real Property.
Carriage House does not own or lease property of any kind in any state or
jurisdiction other than the Property located in the State of Nebraska.
SECTION 3.04 LITIGATION. There is no pending or, to Carriage House's actual
knowledge, threatened legal action, litigation, arbitration, mediation or
administrative proceeding (including without limitation condemnation
proceedings) affecting Carriage House or the Property.
SECTION 3.05 SUBSIDIARIES. Carriage House has no subsidiaries, parent companies
or other affiliates other than those entities which may be or become
shareholders of Carriage House.
Page 4
SECTION 3.06 CONTINGENT LIABILITIES. Carriage House has no actual knowledge of
any conditions, claims, executory contracts or threatened, pending or contingent
liabilities which, on and after the Effective Time, might affect ALC's ability
to use or operate any Property, or consummate the transaction contemplated by
this Agreement.
SECTION 3.07 TAXES. All returns, reports and filings of any kind or nature
(including, but not limited to, federal and state tax filings) required to be
filed by Carriage House have been fully filed, and all such returns, reports and
filings are true, accurate and complete and have been timely filed in compliance
with all requirements applicable thereto, and all taxes or other obligations
which are due and payable for all periods prior to the Effective Time with
respect to the Property and the business operations of Carriage House, and with
respect to this transaction, have been, or on or before the Effective Time shall
have been, timely paid.
SECTION 3.08 CONTRACTS. SCHEDULE 3.08 sets forth a list of all material oral or
written contracts, leases or agreements of any kind affecting or in respect of
the Property, the business operations of Carriage House or the employees of
Carriage House (with respect to such oral obligations, Schedule 3.08 shall
include narrative descriptions of such obligations, the name and addresses of
all parties thereto, and the nature of and date of entry into the
transactions)(THE "CONTRACTS"). Carriage House is in full compliance with each
of the terms and conditions of each of the Contracts. To the actual knowledge
of Carriage House, no other party is in default or breach, or has threatened to
default or breach, under any of the Contracts.
SECTION 3.09 BOOKS AND RECORDS. The records and books of account of Carriage
House that will be made available to ALC are true, complete and correct, and
such records and books of account have been kept in accordance with generally
accepted accounting principles consistently applied and fairly represent and
reflect all transactions relating to the Property and the business operations of
Carriage House.
SECTION 3.10 CONSTRUCTION CLAIMS. To Carriage House's actual knowledge, all
contractors, subcontractors, laborers and materialmen who have performed work
upon or furnished labor and/or materials to improve or benefit any Leased Real
Property have been paid in full and, with respect to Owned Real Property, have
been paid current or within the terms of the applicable construction contracts.
SECTION 3.11 DOCUMENTS. Carriage House has provided ALC with each and every
material document by which Carriage House is bound affecting or in respect of
the Property and the business operations of Carriage House; there have been no
written or oral modifications to or of such documents and no oral
representations, obligations or commitments of any kind have been made by or to
Carriage House with respect to the Property or the business operations of
Carriage House.
SECTION 3.12 NO MIS-STATEMENT OF MATERIAL FACTS. No representation, warranty or
covenant of Carriage House in this Agreement, nor any statement or document
furnished or to be furnished to ALC pursuant to this Agreement or in connection
with the transaction contemplated hereby, includes any misstatement of a
material fact. The copies of all instruments, agreements, other documents and
written information (including the Exhibits attached to this Agreement)
delivered to ALC by Carriage House are complete and correct in all material
respects as of the date of this Agreement.
SECTION 3.13 CAPITALIZATION. As of the date hereof, the authorized capital
stock of Carriage House is Twenty Thousand (20,000) shares, .01 par value, of
which Ten Thousand (10,000) shares (including shares held by ALC) are issued and
outstanding. All issued and outstanding Carriage House Shares are validly
issued, fully paid and non-assessable, and not subject to any preemptive or
similar right. There are, and as of the Effective Time there shall be, (i) no
shares of capital stock or other voting securities of Carriage House outstanding
other than the Carriage House Shares, (ii) no securities of Carriage House
convertible into or exchangeable for shares of capital stock or voting
securities of Carriage House, and (iii) no options, warrants or other rights to
acquire from Carriage House, and no obligation of Carriage House to issue, any
capital stock, voting securities or securities convertible into or exchangeable
for capital stock or voting securities of Carriage House.
Page 5
SECTION 3.14 FOREIGN PERSON. Carriage House is not a "foreign person" within
the meaning of Section 1445 of the Internal Revenue Code of 1986, as amended,
and Carriage House agrees to provide a FIRPTA affidavit at Effective Time so
stating.
SECTION 3.15 FINANCIAL STATEMENTS. Carriage House has delivered or made
available to ALC true and complete copies of the consolidated financial
statements (including a balance sheet as of September 30, 1997 and a 1997 year
to date income statement) of Carriage House (THE "FINANCIAL STATEMENTS") as, of
and through September 30, 1997. The Financial Statements fairly present in all
material respects, in conformity with generally accepted accounting principles
applied on a consistent basis, the consolidated financial position of Carriage
House as of the dates thereof and their consolidated results of operations for
the periods then ended.
SECTION 3.16 ABSENCE OF CERTAIN CHANGES. Except as contemplated hereby since
September 30, 1997, Carriage House has conducted its business in all material
respects in the ordinary course consistent with past practices, and (i) Carriage
House has not incurred any material liability or obligation (indirect, direct or
contingent), or entered into any material oral or written agreement or other
transaction, that is not in the ordinary course of business, extent to the
extent disclosed herein; (ii) Carriage House has not sustained any loss or
interference with its business or Properties from fire, flood, windstorm,
accident or other calamity (whether or not covered by insurance); (iii) except
for the closing of additional loans and funding of additional disbursements on
existing loans and/or sale and leaseback transactions or commitments with LTC,
all of which are fully disclosed on its financial statements to the extent
completed prior to the effective date of such financial statements, there has
been no material change in the indebtedness of Carriage House, no change in the
outstanding shares of Carriage House and no dividend or distribution of any kind
declared, paid or made by Carriage House.
SECTION 3.17 NO EXISTING VIOLATION. Carriage House is not in violation of its
charter or other organization documents or by-laws, and, to Carriage House's
actual knowledge, the Property and operations of Carriage House are in
compliance in all material respects with, (i) any and all applicable federal,
state and local laws, statutes, ordinances or administrative or governmental
rules or regulations, permits and licenses, and (ii) any and all orders, decrees
or judgments of any governmental entity having jurisdiction over the Carriage
House, including without limitation all laws, rules, regulations and orders
relating to public and worker health and safety and the protection and clean-up
of the environment and activities or conditions related thereto, including but
not limited to those relating to the generation, handling, disposal,
transportation or release of hazardous materials or substances.
SECTION 3.18 LICENSES AND PERMITS. Carriage House has received such
certificates, permits, licenses, franchises, consents, approvals, orders,
authorizations and clearances from appropriate governmental entities (THE
"COMPANY LICENSES") as are necessary to own or lease and operate its businesses
substantially in the manner as currently owned or leased and conducted, and all
such Company Licenses are valid and in full force and effect. Carriage House is
in compliance in all material respects with its obligations under the Company
Licenses, and no event has occurred that allows, or after notice or lapse of
time, or both, would allow, revocation or termination of any material Company
License.
SECTION 3.19 EMPLOYMENT MATTERS. SCHEDULE 3.19 sets forth the list of all
employees of Carriage House and the location of their employment. Except as
disclosed on SCHEDULE 3.19, all employees of Carriage House are employed on an
at-will basis, and there are no employment contracts, collective bargaining
agreements, pension, bonus, profit sharing, stock option or other agreements or
arrangements providing for employee enumeration or benefits to which Carriage
House is a party. There is no pending or, to the actual knowledge of Carriage
House, threatened labor dispute, strike or work stoppage effecting the
operations of Carriage House.
SECTION 3.20 INSURANCE. SCHEDULE 3.20 sets forth a list of insurance policies
held by Carriage House concerning the operations of its business. Carriage
House has maintained and now maintains (i) adequate insurance on all its assets
of a type customarily insured, covering property damage and loss of income by
fire or other casualty, and (ii) adequate insurance protection against all
liabilities, claims and risks against which it is customary to insure. Carriage
House is not in default with respect to payment of premiums on any such
policies, and to the knowledge of Carriage House, there is no claim pending
under any such policy.
Page 6
SECTION 3.21 INTELLECTUAL PROPERTY. SCHEDULE 3.21 attached hereto is a schedule
of all trade names, trademarks, service marks, copyrights and patents owned by
Carriage House or in which it has any rights or licenses, together with a brief
description of each (THE "INTELLECTUAL PROPERTY"). Carriage House has not
infringed, and is not now infringing, on any trade name, trademark, service
xxxx, copyright or patent belonging to any other Person.
SECTION 3.22 TAX FREE MERGER. (a) At the Effective Time, the Surviving
Corporation will hold at least 90 percent of the fair market value of the net
assets, and at least 70 percent of the fair market value of the gross assets,
held by Carriage House prior to the Merger. For purposes of this representation,
amounts used by Carriage House to pay reorganization expenses and all
redemptions, distributions and payments, in cash or property, made by Carriage
House in connection with the Merger shall be included as assets of Carriage
House prior to the Merger.
(b) In the Merger, Carriage House Shares representing control of Carriage House,
as defined in Section 368(c)(1) of the Internal Revenue Code of 1986, as amended
(THE "CODE"), will be exchanged solely for voting stock of ALC. For purposes of
this representation, Carriage House Shares exchanged for cash or other property
originating with ALC will be treated as outstanding Carriage House Shares on the
date of the Merger.
(c) Since its incorporation there has been no dividend or distribution of any
kind declared, paid or made by Carriage House.
(d) There is no intercorporate indebtedness existing between ALC and Carriage
House or between Merger Subsidiary and Carriage House.
(e) Except as provided in Section 10.04 of this Agreement, Carriage House and/or
the stockholders of Carriage House will pay their respective expenses, if any,
incurred in connection with the Merger.
(f) Carriage House is not an investment company as such term is defined in
Section 368(a)(2)(F)(iii) and (iv) of the Code.
(g) Carriage House is not under the jurisdiction of a court in a Title 11 or
similar case within the meaning of Section 368(a)(3)(A) of the Code.
(h) on the Effective Date, the fair market value of the assets of Carriage House
will exceed the sum of Carriage House's liabilities plus the amount of
liabilities, if any, to which the assets are subject.
(i) Carriage House has not knowingly taken, and will not knowingly take, any
action that would jeopardize the qualification of the Merger as a reorganization
within the meaning of Section 368(a)(1)(A) and (2)(E) of the Code.
SECTION 3.23 FINDERS' FEES. There is no investment banker, broker, finder or
other intermediary which has been retained by or is authorized to act on behalf
of Carriage House who might be entitled to any fee or commission in connection
with the transactions contemplated by this Agreement.
SECTION 3.24 VOTE REQUIRED. Except as contemplated by this Agreement, the
affirmative vote of the holders of a majority of the outstanding Carriage House
Shares, voting together as a single class, are the only votes of the holders of
any class or series of Carriage House's capital stock necessary to approve this
Agreement and the transactions contemplated hereby.
SECTION 3.25 ACCREDITED INVESTOR. Prior to and as of the Effective Time, each
holder of Carriage House Shares that have converted to the right to receive ALC
common stock under Section 1.02 hereof, shall qualify as an "accredited
investor" under Regulation D promulgated by the United States Securities and
Exchange Commission.
SECTION 3.26 MEDICARE AND MEDICAID. Reimbursement by Medicare and/or Medicaid is
not permitted in Nebraska for facilities of the type operated by Carriage House.
As a consequence: (a) Carriage House has not filed any Medicare and/or Medicaid
returns, cost reports or other filings; (b) there is no basis for any claims or
requests for
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reimbursement from any such agency, instrumentality, entity or third-party
payor; and (c) Carriage House is not subject to any audit relating to fraudulent
Medicare or Medicaid procedures or practices.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ALC
ALC represents and warrants to Carriage House that:
SECTION 4.01 CORPORATE EXISTENCE. ALC is a duly formed and validly existing
corporation under the laws of the State of Nevada, and Merger Subsidiary is a
duly formed and validly existing corporation under the laws of the State of
Delaware.
SECTION 4.02 CORPORATE AUTHORITY; NON-CONTRAVENTION. Each of ALC and Merger
Subsidiary has full power and authority to execute and to deliver this Agreement
and all related documents, and to carry out the transactions contemplated
herein. This Agreement is valid, binding and enforceable against ALC and Merger
Subsidiary in accordance with its terms. The execution of this Agreement and
the consummation of the transactions contemplated herein do not result in a
breach of the terms and conditions of, nor constitute a default under or
violation of the Certificate of Incorporation or Bylaws of ALC or Merger
Subsidiary, or, to the best of ALC's knowledge, any law, regulation, court
order, mortgage, note, bond, indenture, agreement, license or other instrument
or obligation to which ALC or Merger Subsidiary is now a party or by which ALC
or Merger Subsidiary or any of their assets may be bound or affected.
SECTION 4.03 LITIGATION. There is no pending or threatened legal action,
litigation, arbitration, mediation or administrative proceeding (including
without limitation condemnation proceedings) affecting ALC or Merger Subsidiary,
or their respective assets or properties (or any of them) which, if determined
adversely to ALC or Merger Subsidiary, would have a material adverse effect on
ALC's or Merger Subsidiary's ability to consummate the Merger as contemplated
herein.
SECTION 4.04 NO MIS-STATEMENT OR MATERIAL FACTS. No representation, warranty or
covenant of ALC or Merger Subsidiary in this Agreement, nor any statement or
document furnished or to be furnished to Carriage House pursuant to this
Agreement or in connection with the transaction contemplated hereby, includes
any misstatement of material fact. The copies of all instruments, agreements,
other documents and written information (including the exhibits attached to this
Agreement) delivered to Carriage House by ALC or Merger Subsidiary are complete
and correct in all respects as of the date of this Agreement.
SECTION 4.05 CAPITALIZATION. As of the date hereof, the authorized capital stock
of ALC consists of 80,000,000 shares of ALC Common Stock, par value $.01 per
share, and 1,000,000 shares of Preferred Stock, par value $.01 per share. As of
July 31, 1997 ALC had 11,043,512 shares of Common Stock issued and outstanding
and no outstanding shares of Preferred Stock. The shares of ALC Common Stock
exchanged for Carriage House Shares in the Merger have been duly authorized, and
when issued and delivered in accordance with the terms of this Agreement, will
have been validly issued and will be fully paid and nonassessable and the
issuance thereof will not be subject to any preemptive or other similar right.
SECTION 4.06 SEC FILINGS. (a) ALC has delivered or made available to Carriage
House (i) its annual report on Form 10-K for the fiscal year ended Xxxxxxxx 00,
0000 (xxx "XXX 00-X"), (xx) its quarterly report on Form 10-Q for its fiscal
quarter ended March 31, 1997; (iii) its quarterly report on Form 10-Q for its
fiscal quarter ended June 30, 1997, (iv) its current reports on Form 8-K dated
July 24, 1997 (v) its proxy statement relating to the annual meeting of
stockholders held on May 22, 1997, and (vi) all of its other reports,
statements, schedules and registration statements filed by ALC with the SEC
since June 30, 1997, and in each case all materials incorporated therein by
reference or filed therewith as exhibits.
Page 8
SECTION 4.07 FINANCIAL STATEMENTS. The audited consolidated financial statements
and unaudited consolidated interim financial statements of ALC and its
subsidiaries included in the ALC 10-K and the quarterly reports on Form 10-Q
referred to in Section 4.06 fairly present in all material respects, in
conformity with generally accepted accounting principles applied on a consistent
basis (except as may be indicated in the notes thereto), the consolidated
financial position of ALC and its subsidiaries as of the dates thereof and their
consolidated results of operations and cash flows for the periods then ended
(subject, in the case of any unaudited interim financial statements, to normal
year-end adjustments).
SECTION 4.08 TAX FREE MERGER. (a) Following the Merger, the Surviving
Corporation will hold at least 90 percent of the fair market value of the net
assets and at least 70 percent of the fair market value of the gross assets,
held by Carriage House prior to the Merger, and at least 90 percent of the fair
market value of the net assets and at least 70 percent of the fair market value
of the gross assets, held by Merger Subsidiary prior to the Merger. For purposes
of this representation, amounts used by Carriage House to pay reorganization
expenses and all redemptions, distributions and payments, in cash or property,
made by Carriage House in connection with the Merger shall be included as assets
of Carriage House prior to the Merger;
(b) prior to the Merger, ALC will be in control of Merger Subsidiary within the
meaning of Section 368(c) of the Code;
(c) ALC has no plan or intention as part of the plan of the Merger to cause the
Surviving Corporation to issue after the Effective Time additional shares of
stock that would result in ALC losing control of the Surviving Corporation
within the meaning of Section 368(c) of the Code or any warrants, options,
convertible securities, or any other type of right pursuant to which any person
could acquire stock in the Surviving Corporation that, if exercised or
converted, would affect ALC's acquisition or retention of control of the
Surviving Corporation, as defined in Section 368(c) of the Code;
(d) ALC has no plan or intention to reacquire any of the ALC Common Stock issued
in the Merger;
(e) ALC has no plan or intention to liquidate the Surviving Corporation, to
merge the Surviving Corporation with or into another corporation or to sell or
otherwise dispose of the Surviving Corporation stock except for transfers of
stock to a corporation controlled by ALC;
(f) following the Merger, the Surviving Corporation will continue Carriage
House's historic business or use a significant portion of its historic business
assets in a business;
(g) Merger Subsidiary will have no liabilities assumed by Carriage House and
will not transfer to Carriage House any assets subject to liabilities, in the
Merger;
(h) there is no intercorporate indebtedness existing between ALC and Carriage
House or between Merger Subsidiary and Carriage House;
(i) except as provided in Section 10.04 of this Agreement, ALC and Merger
Subsidiary will pay their respective expenses incurred in connection with the
Merger;
(j) neither ALC nor Merger Subsidiary is an investment company as such term is
defined in Section 368(a)(2)(F)(iii) and (iv) of the Code;
(k) following the Effective Time, ALC shall use its best efforts, and shall
cause the Surviving Corporation to use its best efforts, to conduct its business
and the Surviving Corporation's business in a manner which would not jeopardize
the characterization of the Merger as a reorganization within the meaning of
Section 368(a)(1)(A) and (2)(E) of the Code.
Page 9
SECTION 4.09 FINDERS' FEES. There is no investment banker, broker, finder or
other intermediary which has been retained by or is authorized to act on behalf
of ALC or any of its Subsidiaries who might be entitled to any fee or commission
in connection with the transactions contemplated by this Agreement.
SECTION 4.10 VOTE REQUIRED. The affirmative vote of the majority of the Board of
Directors of ALC are the only votes necessary to approve this Agreement and the
transactions contemplated hereby on behalf of ALC.
ARTICLE V
COVENANTS OF CARRIAGE HOUSE
Carriage House agrees with ALC that:
SECTION 5.01 CONDUCT OF CARRIAGE HOUSE. Except as expressly contemplated by this
Agreement, from the date hereof until the earlier to occur of the Effective Time
and the termination hereof, Carriage House (i) shall conduct its business in the
ordinary course consistent with past practices and pursuant to its existing
contracts and commitments; (ii) shall use its reasonable best efforts to
preserve intact its business organizations and relationships with third parties
and to keep available the services of its present officers and employees;
preserve and protect the Owned Real Property, the Leased Real Property and the
Personal Property; and (iv) conduct its business in material compliance with all
applicable laws and regulations. Except as otherwise approved in writing by ALC
or as expressly contemplated by this Agreement, and without limiting the
generality of the foregoing, from the date hereof until the Effective Time:
(a) Carriage House will not adopt or propose any change in its certificate of
incorporation or bylaws;
(b) Carriage House will not merge or consolidate with any other Person or
acquire a material amount of stock or assets of any other Person;
(c) Carriage House will not sell, lease, license or otherwise dispose of any of
the Property except (i) pursuant to existing contracts or commitments, (ii) in
the ordinary course consistent with past practice;
(d) Carriage House will not declare or pay any dividends or make any
distributions on any Carriage House Shares;
(e) Carriage House will not (i) issue, deliver or sell, or authorize or propose
the issuance, delivery or sale of, any Carriage House Shares (ii) split, combine
or reclassify any Carriage House Shares, or (iii) repurchase, redeem or
otherwise acquire any Carriage House Shares;
(f) except as otherwise expressly permitted hereby, Carriage House will not make
any commitment or enter into any contract or agreement material to Carriage
House except pursuant to existing written contracts or commitments or in the
ordinary course of business consistent with past practice;
(g) Except pursuant to existing written contracts or commitments, Carriage House
will not take any action that would make any representation and warranty of
Carriage House hereunder inaccurate in any material respect at, or as of any
time prior to, the Effective Time; and
(h) except as otherwise expressly permitted hereby, Carriage House will not
agree or commit to do any of the foregoing.
SECTION 5.02 ACCESS TO INFORMATION. From the date hereof until the earlier to
occur of the Effective Time and the termination hereof, Carriage House will give
ALC, its counsel, financial advisors, auditors and other authorized
representatives full access to the offices, properties, books and records of
Carriage House, will furnish to ALC, its counsel, financial advisors, auditors
and other authorized representatives such financial and operating data and other
information as such Persons may reasonably request and will instruct Carriage
House's employees, counsel
Page 10
and financial advisors to cooperate with ALC in its investigation of the
business of Carriage House; provided that no investigation pursuant to this
Section shall affect any representation or warranty given by Carriage House to
ALC hereunder. ALC shall, and shall cause its counsel, financial advisors,
auditors and other authorized representatives to, retain all information
obtained from Carriage House hereunder on a confidential basis.
SECTION 5.03 OTHER OFFERS. From the date hereof until the earlier to occur of
the Effective Time and the termination hereof, Carriage House and the officers,
directors, employees or other agents of Carriage House will not, directly or
indirectly, (i) take any action to solicit, initiate or encourage any Carriage
House Acquisition Proposal (as defined below) or (ii) unless otherwise required
in accordance with the fiduciary duties of the Board of Directors under
applicable law as advised by counsel to Carriage House, engage in negotiations
with, or disclose any non-public information relating to Carriage House or
afford access to the properties, books or records of Carriage House to, any
Person that may be considering making, or has made, a Carriage House Acquisition
Proposal. Carriage House will promptly notify ALC after receipt of any Carriage
House Acquisition Proposal or any indication that any Person is considering
making a Carriage House Acquisition Proposal or any request for non-public
information relating to Carriage House or for access to the properties, books or
records of Carriage House by any Person that may be considering making, or has
made, Carriage House Acquisition Proposal. For purposes of this Agreement,
"Acquisition Proposal" means any offer or proposal for a merger or other
business combination involving Carriage House or the acquisition of any equity
interest in, or a substantial portion of the assets of, Carriage House, other
than the transactions contemplated by this Agreement.
SECTION 5.04 NOTICES OF CERTAIN EVENTS. Carriage House shall promptly notify ALC
of:
(a) any notice or other communication from any Person alleging that the consent
of such Person (or another Person) is or may be required in connection with the
transactions contemplated by this Agreement;
(b) any notice or other communication from any governmental or regulatory agency
or authority in connection with the transactions contemplated by this Agreement;
or
(c) any actions, suits, claims, investigations or proceedings commenced or, to
its actual knowledge, threatened against, relating to or involving or otherwise
affecting Carriage House, or which relate to the consummation of the
transactions contemplated by this Agreement, or of any event or circumstance
which would cause any of Carriage House's representations and warranties
contained herein to be incorrect in any material respect.
SECTION 5.05 STOCKHOLDER CONSENT. Carriage House shall either cause a meeting of
its stockholders to be duly called and held as soon as reasonably practicable
for the purpose of voting on the approval and adoption of this Agreement and the
Merger, or shall obtain such approval and adoption by unanimous written consent
of its stockholders. The Directors of Carriage House shall, unless otherwise
required in accordance with their fiduciary duties as advised by counsel,
recommend approval and adoption of this Agreement and the Merger by Carriage
House's stockholders. In connection with such meetings or written consents,
Carriage House will, subject to the foregoing, use its reasonable best efforts
to obtain the unanimous approval by its stockholders of this Agreement, the
transactions contemplated hereby and such other matters as are contemplated by
the terms of this Agreement or required by Delaware Law, and will otherwise
comply with all legal requirements applicable to such meetings or written
consents.
ARTICLE VI
COVENANTS OF ALC
ALC agrees with Carriage House that:
SECTION 6.01 CONDUCT OF ALC. Except as expressly contemplated by this Agreement,
from the date hereof until the earlier to occur of the Effective Time and the
termination hereof, unless Carriage House shall have consented in writing
thereto (which consent shall not be unreasonably withheld or delayed), ALC and
its Subsidiaries (i) shall
Page 11
conduct their business in the ordinary course consistent with past practices and
pursuant to existing contracts and commitments, (ii) shall use their respective
best efforts to preserve intact their business organizations and relationships
with third parties and to keep available the services of their present officers
and employees, and (iii) shall not amend any of the material terms or provisions
of any ALC Common Stock, except for any such amendments which affect equally all
shares of ALC Common Stock.
SECTION 6.02 OBLIGATIONS OF MERGER SUBSIDIARY. ALC will take all action
necessary to cause Merger Subsidiary to perform its obligations under this
Agreement and to consummate the Merger on the terms and conditions set forth in
this Agreement.
SECTION 6.03 AMERICAN STOCK EXCHANGE LISTING. ALC shall use its reasonable best
efforts to cause the shares of ALC Common Stock to be issued in the Merger to be
approved for listing on the American Stock Exchange subject to official notice
of issuance, prior to the Effective Time.
SECTION 6.04 REGISTRATION RIGHTS. The ALC Common Stock to be issued to the
Shareholders will not be registered under the Securities Act of 1933 (the "1933
Act") prior to being issued in connection with the Merger. The issuance of the
ALC Common Stock will be made to the Accredited Investor Shareholders under
Regulation D promulgated by the SEC pursuant to the 1933 Act. ALC shall take all
action necessary to enter into the Registration Rights Agreement substantially
in the form attached hereto as EXHIBIT B (THE "REGISTRATION RIGHTS AGREEMENT").
After the Effective Time a shelf registration statement shall be filed by ALC
for the Accredited Investor Shareholders. ALC shall use its reasonable best
efforts to cause such registration statement to become effective within sixty
(60) days after the Effective Time and to remain effective during the two-year
period following the Effective Time; provided that, if ALC shall have failed to
register the ALC Common Stock within one hundred twenty (120) days after the
Effective Time, the total number of shares of common stock of ALC to be
distributed to the Shareholders shall be increased by 33,746 shares, which
additional shares shall be distributed to the Shareholders in the same exchange
ratio as provided on Schedule 1.02 to this Agreement.
SECTION 6.05 NOTICE OF CERTAIN EVENTS. Each of ALC and Merger Subsidiary shall
promptly notify Carriage House of:
(a) any notice or other communication from any Person alleging that the consent
of such Person (or other Person) is or may be required in connection with the
transactions contemplated by this Agreement;
(b) any notice or other communication from any governmental or regulatory agency
or authority in connection with the transactions contemplated by this Agreement;
or
(c) any actions, suits, claims, investigations or proceedings commenced or, to
its knowledge, threatened against, relating to or involving or otherwise
affecting it or any of its Subsidiaries which, if determined adversely to ALC or
Merger Subsidiary, would have a material adverse effect on ALC's or Merger
Subsidiary's ability to consummate the Merger as contemplated herein, or which
relate to the consummation of the transactions contemplated by this Agreement,
or of any event or circumstance which would cause any of ALC's representations
and warranties contained herein to be incorrect in any material respect.
SECTION 6.06 USE OF THE NAME "CARRIAGE HOUSE". ALC shall have the right to the
use of the name "Carriage House" for a period of not to exceed ninety (90) days
after the Effective Date, at which time ALC shall relinquish such right.
ARTICLE VII
COVENANTS OF ALC AND CARRIAGE HOUSE
The parties hereto agree with each other that:
Page 12
SECTION 7.01 REASONABLE BEST EFFORTS. Subject to the terms and conditions of
this Agreement, each party will use its reasonable best efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate the transactions contemplated by this Agreement.
SECTION 7.02 CERTAIN FILINGS. Carriage House and ALC shall cooperate with one
another in determining whether any action by or in respect of, or filing with,
any governmental or regulatory agency is required, or any actions, consents,
approvals or waivers are required to be obtained from parties to any material
contracts, in connection with the consummation of the transactions contemplated
by this Agreement, and in seeking any such actions, consents, approvals or
waivers or making any such filings, furnishing information required in
connection therewith and seeking timely to obtain any such actions, consents,
approvals or waivers.
SECTION 7.03 PUBLIC ANNOUNCEMENTS. From and after the date of this Agreement,
ALC and Carriage House will consult with each other before issuing any press
release or making any public statement with respect to this Agreement and the
transactions contemplated hereby and, except as may be required by applicable
law or any listing agreement with any national securities exchange, will not
issue any such press release or make any such public statement prior to such
consultation.
SECTION 7.04 FURTHER ASSURANCES. After the Effective Time, the officers and
directors of the Surviving Corporation will be authorized to execute and
deliver, in the name and on behalf of Carriage House or Merger Subsidiary, any
deeds, bills of sale, assignments, assurances, instruments or other documents
and to take and do, in the name and on behalf of Carriage House or Merger
Subsidiary, any other actions and things to vest, perfect or confirm of record
or otherwise in the Surviving Corporation any and all right, title and interest
in, to and under any of the rights, properties or assets of Carriage House
acquired or to be acquired by the Surviving Corporation as a result of, or in
connection with, the Merger.
ARTICLE VIII
CONDITIONS TO THE MERGER
SECTION 8.01 CONDITIONS TO THE OBLIGATIONS OF EACH PARTY. The obligations of
Carriage House, ALC and Merger Subsidiary to consummate the Merger are subject
to the satisfaction of the following conditions:
(a) the Board of Directors of Carriage House shall have submitted the Merger for
approval to the stockholders of Carriage House in compliance with the applicable
provisions of Delaware Law, and all of the holders of all of the issued and
outstanding Carriage House shares shall have signed written consents or voted in
favor of the Merger; and
(b) no provision of any applicable domestic law or regulation and no judgment,
injunction, order or decree of a court of competent jurisdiction shall restrain
or prohibit the consummation of the Merger.
SECTION 8.02 CONDITIONS TO THE OBLIGATIONS OF ALC AND MERGER SUBSIDIARY. The
obligations of ALC and Merger Subsidiary to consummate the Merger are subject to
the satisfaction of the following further conditions:
(a) Carriage House shall have performed in all material respects all of its
obligations hereunder required to be performed by it at or prior to the
Effective Time, the representations and warranties of Carriage House contained
in this Agreement shall be true in all material respects at and as of the
Effective Time as if made at and as of such time, and ALC shall have received a
certificate signed by an executive officer of Carriage House to the foregoing
effect;
(b) ALC shall have received a copy of the resolutions of the Board of Directors
of Carriage House authorizing the Merger, which copy shall be certified by an
executive officer of Carriage House;
Page 13
(c) ALC shall have completed a due diligence review of the business and
operations of Carriage House, satisfactory to ALC in its sole discretion;
(d) Carriage House shall have obtained the consent or approval of each Person
whose consent or approval is required in connection with this transaction under
any mortgage, note, bond, indenture, agreement or other instrument to which
Carriage House is now a party, including but not limited to consents from the
Persons listed on Schedule 8.02(d);
(e) ALC shall have obtained the consent or approval, or made filings with, any
governmental entity whose consent or approval, or filing with, is required with
respect to the Company Licenses and Carriage House shall have cooperated with
ALC as reasonably necessary in connection with the same;
(f) Carriage House and LTC, respectively, shall have provided estoppel
certificates, in a form acceptable to ALC, with respect to each of: (i) the
Leases and the Leased Real Property; and (ii) those Contracts relating to the
construction, development and permanent financing of the Owned Real Property;
(g) each holder of Carriage House Shares shall qualify as an "Accredited
Investor" under Regulation D promulgated by the United States Securities and
Exchange Commission and shall have signed an Acknowledgment Agreement
substantially in the form of EXHIBIT A so certifying;
(h) Each of Xxxxxx Xxxxxx, Consulting Management and Education, Inc. ("CME"),
Xxxx Xxxxxxxxx and Xxxx Xxxxxx shall have entered into a Non-Competition and
Confidentiality Agreement substantially in the form attached hereto as EXHIBIT
C; and
(j) the shares of ALC Common Stock to be issued in connection with the Merger
shall have been approved for listing on the American Stock Exchange (THE
"AMEX").
SECTION 8.03 CONDITIONS TO THE OBLIGATIONS OF CARRIAGE HOUSE. The obligations of
Carriage House to consummate the Merger are subject to the satisfaction of the
following further conditions:
(a) ALC and Merger Subsidiary shall have performed in all material respects all
of their respective obligations hereunder required to be performed by them at or
prior to the Effective Time, the representations and warranties of ALC and
Merger Subsidiary contained in this Agreement shall be true in all material
respects at and as of the Effective Time as if made at and as of such time, and
Carriage House shall have received a certificate signed by an executive officer
of each of ALC and Merger Subsidiary to the foregoing effect;
(b) Carriage House shall have received a copy of the resolutions of the Board of
Directors of ALC authorizing the Merger, which copy shall be certified by an
executive officer of ALC;
(c) Carriage House and ALC shall have entered into the Registration Rights
Agreement substantially in the form attached hereto as EXHIBIT B;
(d) The shares of ALC Common Stock to be issued in connection with the Merger
shall have been approved for listing on the AMEX;
(e) ALC shall have entered into the Absolute Guaranty of Payment and Performance
substantially in the form attached hereto as EXHIBIT D;
(f) ALC shall have entered into the Lease Guaranty substantially in the form
attached hereto as EXHIBIT E;
(g) LTC shall have entered into the Release substantially in the form attached
hereto as EXHIBIT F; and
Page 14
(h) The Consulting Agreement between Carriage House and CME shall have been
terminated and ALC shall have paid the termination payment to CME of $267,600.
ARTICLE IX
TERMINATION
SECTION 9.01 TERMINATION. This Agreement may be terminated and the Merger may be
abandoned at any time prior to the Effective Time (notwithstanding any approval
of this Agreement by the stockholders of Carriage House or by the Board of
Directors of ALC):
(a) by Carriage House, if the daily closing price of ALC Common Stock on the
American Stock Exchange shall have been less than $14.00 per share between
September 30, 1997 and the Effective Time;
(b) by ALC if Carriage House makes any expenditures in excess of $10,000, except
for expenditures listed on SCHEDULE 9.01(B), which are approved, without the
prior written approval of Xxxxxxx XxXxxxx on behalf of ALC.
(c) by mutual written consent of Carriage House and ALC;
(d) by either Carriage House or ALC, if the Merger has not been consummated by
October 31, 1997 (provided that the right to terminate this Agreement under this
clause shall not be available to any party whose failure to fulfill any of its
obligations under this Agreement has been the cause of or resulted in the
failure to consummate the Merger by such date);
(e) by either Carriage House or ALC, if there shall be any applicable domestic
law, rule or regulation that makes consummation of the Merger illegal or
otherwise prohibited or if any judgment, injunction, order or decree of a court
of competent jurisdiction shall restrain or prohibit the consummation of the
Merger, and such judgment, injunction, order or decree shall become final and
nonappealable;
(f) by either Carriage House or ALC, if the unanimous stockholder approval
referred to in Section 8.01(a) shall not have been obtained by reason of the
failure to obtain: (i) the requisite vote upon a vote at a duly held meeting of
stockholders or at any adjournment thereof; or (ii) written consents signed by
all of the holders of all of the issued and outstanding shares of stock of
Carriage House;
(g) by either Carriage House or ALC (the "Terminating Party") if (x) there has
been a breach by the other party of any representation or warranty contained in
this Agreement which would have or would be reasonably likely to have a material
adverse effect on the Terminating Party, or (y) there has been a material breach
of any of the covenants or agreements set forth in this Agreement on the part of
the other party, which breach is not curable or, if curable, is not cured within
30 days after written notice of such breach is given by the Terminating Party to
the other party, or (z) Carriage House has entered into an agreement or
agreement in principle with respect to any Company Acquisition Proposal.
SECTION 9.02 EFFECT OF TERMINATION. If this Agreement is terminated pursuant to
Section 9.01, this Agreement shall become void and of no effect with no
liability on the part of any party hereto, except that the parties shall be
liable for any willful breaches hereof.
ARTICLE X
MISCELLANEOUS
SECTION 10.01 NOTICES. All notices, requests and other communications to any
party hereunder shall be in writing (including telecopy or similar writing) and
shall be given,
Page 15
if to ALC or Merger Subsidiary, to:
Assisted Living Concepts, Inc., 0000 XX Xxxxxxxxxx Xxxxxx, Xxxxx 000,
Xxxxxxxx, Xxxxxx, 00000, Telephone (000) 000-0000, Facsimile (000) 000-0000
Attention: Xxxxxxx XxXxxxx, III.
with a copy to:
Bullivant Xxxxxx Xxxxxx Xxxxxxxxxxx & Xxxxxxx, 300 Pioneer Tower, 000 XX
Xxxxx Xxxxxx, Xxxxxxxx, Xxxxxx, 00000, Telephone (000) 000-0000, Facsimile (503)
295-0915 Attention: Xxxxxx Xxxxxxxx, Esq.
if to Carriage House, to:
Carriage House Assisted Living, Inc., 00000 X. Xxxxx Xxxxxxxx Xxxxx,
Xxxxxxxx, Xxxxxxxx, 00000, Telephone (000) 000-0000, Facsimile (000) 000-0000
Attention: Xxxxxx X. Xxxxxx.
with a copy to:
Xxxxxxxxx & Xxxxx, 0000 Xxxxxxx Xxxx Xxxx, Xxxxx 000, Xxx Xxxxxxx,
Xxxxxxxxxx, 00000, Telephone (000) 000-0000, Facsimile (000) 000-0000 Attention:
Xxxxxx Xxxxxxxxx, Esq.
or such other address or telecopy number as such party may hereafter specify for
the purpose by notice to the other parties hereto. Each such notice, request or
other communication shall be effective (i) if given by telecopy during the
normal business hours of the recipient, when such telecopy is transmitted to the
telecopy number specified in this Section and the appropriate answer back is
received or at the beginning of the next business day of the recipient or (ii)
if given by any other means, when delivered at the address specified in this
Section.
SECTION 10.02 SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNITY; NO WAIVER
OF FRAUD. (a) The representations and warranties and agreements contained herein
and in any certificate or other writing delivered pursuant hereto shall not
survive the Effective Time, except with respect to: (i) Article I, Section 7.04
and the agreements referenced in Section 8.02(g) and Section 8.03(c), (e), (f)
and (g); and (ii) any liability that any party may have at law or in equity
based upon that party's fraudulent acts or omissions. No provision of this
Agreement shall be deemed a waiver by any party to this Agreement of any right
or remedy which such party may have at law or in equity based upon any other
party's fraudulent acts or omissions, nor shall any such provision limit or be
deemed to limit (x) the amounts of recovery sought or awarded in any such claim
for fraud, (y) the time period during which a claim for fraud may be brought, or
(z) the recourse which any party may seek against another party with respect to
a claim for fraud; provided further that, with respect to such rights and
remedies at law or in equity, the parties further acknowledge and agree that
none of the provisions of this Section 10.02, nor any reference to this Section
10.02 throughout this Agreement, shall be deemed a waiver of any defenses that
might be available in respect of actions or claims for fraud, including but not
limited to, defenses of statutes of limitations or limitations of damages.
SECTION 10.03 AMENDMENTS; NO WAIVERS. (a) Any provision of this Agreement may be
amended or waived prior to the Effective Time if, and only if, such amendment or
waiver is in writing and signed, in the case of an amendment, by Carriage House,
ALC and Merger Subsidiary or, in the case of a waiver, by the party against whom
the waiver is to be effective; provided that (i) any waiver or amendment shall
be effective against a party only if the Board of Directors of such party
approves such waiver or amendment and only the Board of Directors can take
actions on behalf of that party and (ii) after the adoption of this Agreement by
the stockholders of Carriage House, no such amendment or waiver shall, without
the further approval of such stockholders and each party's Board of Directors
upon recommendation, alter or change (x) the amount or kind of consideration to
be received in exchange for any shares of capital stock of Carriage House, (y)
any term of the certificate of incorporation of the Surviving Corporation or (z)
any of the terms or conditions of this Agreement if such alteration or change
would adversely affect the holders of any shares of capital stock of Carriage
House.
Page 16
(b) No failure or delay by any party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies herein provided
shall be cumulative and not exclusive of any rights or remedies provided by law.
SECTION 10.04 FEES AND EXPENSES/ATTORNEY FEES. All costs and expenses incurred
in connection with this Agreement shall be paid by the party incurring such cost
or expense; provided, however, that should any party hereto retain counsel for
the purpose of enforcing or preventing the breach of any provision of this
Agreement, including but not limited to instituting or defending any action or
proceeding to enforce any provision hereof, then, if said matter is settled by
judicial determination, the prevailing party shall be entitled to be reimbursed
by the losing party for all costs and expenses incurred thereby including but
not limited to reasonable attorneys', paralegals', experts' and accountants'
fees. Notwithstanding the foregoing, ALC shall pay the reasonable attorney fees
and costs incurred in the representation of the interests of Carriage House in
this transaction of: (a) Xxxxxxxxx and Xxxxx not to exceed $25,000; and (b) Xxx
Xxxxxxxx not to exceed $5,000.
SECTION 10.05 SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns, provided that no party may assign, delegate or otherwise
transfer any of its rights or obligations under this Agreement without the
consent of the other parties hereto.
SECTION 10.06 GOVERNING LAW. This Agreement shall be construed in accordance
with and governed by the law of the State of Delaware applicable in the case of
agreements made and to be performed entirely within such State.
SECTION 10.07 COUNTERPARTS; EFFECTIVENESS. This Agreement may be signed in any
number of counterparts, each of which shall be an original, with the same effect
as if the signatures thereto and hereto were upon the same instrument. This
Agreement shall become effective when each party hereto shall have received
counterparts hereof signed by all of the other parties hereto.
SECTION 10.08 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersede all
prior agreements, understandings and negotiations, both written and oral,
between the parties with respect to the subject matter of this Agreement. No
representation, inducement, promise, understanding, condition or warranty not
expressly set forth herein has been made or relied upon by either party hereto.
Neither this Agreement nor any provision hereof is intended to confer upon any
Person other than the parties hereto any rights or remedies hereunder except for
the provisions of Article I, which are intended for the benefit of the
stockholders of Carriage House.
Page 17
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.
ASSISTED LIVING CONCEPTS, INC.
By: /s/ Xxxxx Xxxxx Xxxxxx
----------------------------
Xxxxx Xxxxx Xxxxxx, President
CH MERGER, INC.
By: /s/ Xxxxx Xxxxx Xxxxxx
----------------------------
Xxxxx Xxxxx Xxxxxx, President
CARRIAGE HOUSE ASSISTED LIVING, INC.
By: /s/ Xxxxxx X. Xxxxxx
---------------------------
Xxxxxx X. Xxxxxx, President
Page 18
ATTESTATIONS
I, Xxxxxxx Xxxxxx, Secretary of Assisted Living Concepts, Inc., a Nevada
corporation ("ALC"), certify that the signature of Xxxxx Xxxxx Xxxxxx, President
of ALC, appearing on the foregoing Agreement and Plan of Merger dated as of
October 15, 1997 among ALC, CH Merger, Inc. and Carriage House Assisted Living,
Inc., is a true specimen of her signature.
Dated October 23, 1997
/s/ Xxxxxxx Xxxxxx
---------------------------
Xxxxxxx Xxxxxx, Secretary
I, Xxxxxxx Xxxxx, Secretary of Carriage House Assisted Living, Inc., a Delaware
corporation ("Carriage House"), certify that the signature of Xxxxxx Xxxxxx,
President of Carriage House Assisted Living, Inc., appearing on the foregoing
Agreement and Plan of Merger dated as of __________ ___, 1997 among
_______________________, _________ and _________________, is a true specimen of
his signature.
Dated as of October 23, 1997
/s/ Xxxxxxx Xxxxxxx
---------------------------
Secretary
I, Xxxxxxx Xxxxxx, Secretary of CH Merger, Inc., a Delaware corporation ("Merger
Subsidiary"), certify that the signature of Xxxxx Xxxxx Xxxxxx, President of
Merger Subsidiary appearing on the foregoing Agreement and Plan of Merger dated
as of October 15, 1997 among Carriage House Assisted Living, Inc., Assisted
Living Concepts, Inc. and Merger Subsidiary, is a true specimen of her
signature.
Dated October 23, 1997
/s/ Xxxxxxx Xxxxxx
----------------------------
Xxxxxxx Xxxxxx, Secretary
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