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EXHIBIT 10.9
AMENDED AND RESTATED
CONFIDENTIALITY AGREEMENT
THIS CONFIDENTIALITY AGREEMENT dated as of July 2, 1997, as amended
and restated as of July 30, 1997 (this "Agreement"), by and between Alternative
Living Services, Inc., a Delaware corporation ("ALI") and Sterling House
Corporation, a Kansas corporation ("Sterling House").
WHEREAS, each party (the "Disclosing Party") has agreed to disclose
certain confidential and proprietary information to the other party (the
"Recipient") concerning the desirability and viability of a potential corporate
transaction involving the parties (the "Possible Transaction");
WHEREAS, Recipient desires to review such information to determine its
interest in the Possible Transaction;
WHEREAS, ALI and Sterling House are parties to that certain
Confidentiality Agreement dated as of July 2, 1997 (the "Original Agreement");
WHEREAS, simultaneously with the execution and delivery of this
Agreement, ALI, Tango Merger Corporation, a Kansas corporation and wholly owned
subsidiary of ALI ("Merger Sub") and Sterling House are entering into an
Agreement and Plan of Merger of even date herewith (the "Merger Agreement"),
pursuant to which ALI proposes to combine with Sterling House by means of a
merger (the "Merger") of Merger Sub with and into Sterling House in which (a)
each issued and outstanding share of common stock, no par value, of Sterling
House (the "Sterling House Common Stock"), other than shares of Sterling House
Common Stock that are owned by Sterling House as treasury stock, shall
automatically be converted into the right to receive 1.1 shares (the "Exchange
Ratio") of the common stock, $.01 par value, of ALI; (b) the issued and
outstanding shares of the common stock, $.01 par value, of Merger Sub shall be
converted into one hundred shares of fully paid and nonassessable shares of
common stock, no par value, of the Surviving Corporation; and (c) each option
to purchase Sterling House Common Stock outstanding as of the effective time of
the Merger shall be assumed by ALI as provided in Section 5.7 of the Merger
Agreement; and
WHEREAS, as a condition to the willingness of the parties to enter
into the Merger Agreement and incur expenses and expend time and effort in
connection with the Merger Agreement and transactions contemplated thereby, ALI
has required that Sterling House agree, and Sterling House has required that
ALI agree, to amend and restate the Original Agreement to make certain changes
to the representations, warranties and agreements set forth therein as
hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained
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herein, the adequacy of which is acknowledged by such party, the parties agree
as follows:
1. In connection with the Possible Transaction and the Merger,
the Disclosing Party has agreed to furnish the Recipient with
information the Disclosing Party views as non-public,
confidential or proprietary in nature (the "Information").
Such Information shall consist of any and all tangible and
intangible information, whether oral, in writing or in any
other medium, whether developed by the Disclosing Party or
furnished to the Disclosing Party by other third parties at
the direction of the Disclosing Party. Notwithstanding the
previous sentence, however, the term "Information" shall not
apply to information and data which (i) at the time of
disclosure, is generally available to the public, (ii) after
disclosure by the Disclosing Party, becomes published or
generally available to the public, other than through any act
or omission on the part of the Recipient, (iii) the Recipient
can show was in its possession at the time of disclosure and
was not acquired directly or indirectly from the Disclosing
Party, or (iv) was rightfully acquired by the Recipient from
third parties who themselves rightfully acquired such
information and who did not themselves obtain the Information
under a confidentiality agreement with the Disclosing Party.
2. With regard to the Information, the Recipient agrees:
(a) to disclose the Information only to: (i) those of
its employees and officers whom the Recipient
considers to have a need to know or whom are
necessary to perform analyses and other services;
(ii) its directors; (iii) its affiliates, and each of
their directors, officers and employees (but only as
to those affiliates, directors, officers and
employees who have a need to know); and (iv) its
outside consultants, agents, auditors and attorneys
who are specifically engaged to provide services for
the Possible Transaction, all of whom as defined in
clauses (i) through (iv) (collectively,
"Representatives") shall be informed of the
confidential nature of the Information and agree to
be bound by the terms of this Agreement;
(b) to be liable for any breach of this Agreement by its
Representatives who have not entered into a separate,
identical confidentiality agreement with the
Disclosing Party;
(c) to not use the Information for any other purpose
other than its evaluation of the Possible Transaction
being considered or the Merger;
(d) to make the minimum number of copies of the
Information which the Recipient deems necessary for
its review and analysis;
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(e) that, upon termination of this Agreement (as provided
in paragraph 4 hereinafter), Recipient, at the
request of the Disclosing Party, will either return
or destroy the Information and all copies made and
certify in writing to the Disclosing Party that the
Information and all copies thereof have been returned
or destroyed; provided, however, that in the event
that the Recipient subsequently discovers Information
and/or any copies thereof which were neither returned
nor destroyed, the Recipient agrees to promptly
notify the Disclosing Party of such fact, and, at the
request of the Disclosing Party, will either return
or destroy the same as promptly as possible;
(f) to treat the Information as confidential and in a
manner that is at a minimum consistent with its
internal procedures for handling and protecting its
own confidential information; and
(g) except as otherwise provided in the Merger Agreement,
no representation or warranty, express or implied, is
made by the Disclosing Party as to the accuracy,
completeness or sufficiency of the Information and
neither the Disclosing Party, its subsidiaries or
affiliates, nor any of their respective officers,
directors, employees, stockholders, agents or
Representatives will have any liability to the
Recipient resulting from the Recipient's use of the
Information or any errors therein or omissions
therefrom. It is understood that all representations
and warranties given by the parties hereto are set
forth in the Merger Agreement. Except as otherwise
provided in the Merger Agreement, neither party
hereto shall have any obligation to furnish
Information to the other party hereto.
3. Notwithstanding paragraph 2 above, the Recipient shall be
permitted to disclose the Information in order to comply with
any applicable statute, rule, regulation, court order,
administrative agency directive or rule of The Nasdaq Stock
Market, Inc. or of a nationally or internationally recognized
stock exchange; provided, however, that in the event that the
Recipient or any of its Representatives is compelled to
disclose any part of or all of the Information, the Recipient
or Representative shall promptly notify the Disclosing Party
of such fact and will cooperate with the Disclosing Party to
obtain a protective order or other appropriate remedy to
maintain the confidential nature of the Information; provided
further, however, that if the Recipient or Representative
discloses any part or all of the Information in compliance
with this paragraph, the Recipient or Representative shall
disclose only that portion of the Information which it is
advised by counsel that it is legally required to disclose.
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In addition, without the prior written consent of the
Disclosing Party, the Recipient will not, and will cause its
Representatives not to, disclose to any person or entity (i)
that the Information has been made available to the Recipient
or its Representatives, (ii) that discussions or negotiations
are taking place concerning the Possible Transaction between
the parties, including, without limitation, the existence of
this Agreement, or (iii) any of the terms, conditions or other
facts with respect to the Possible Transaction, including the
status thereof, except as required under federal securities
laws as evidenced by a written opinion of counsel to such
effect. In the event counsel determines that such disclosure
is required under federal securities laws, the Recipient
agrees to furnish a copy of the written opinion of counsel to
the Disclosing Party and to consult with the Disclosing Party
concerning the form and substance of any such disclosure a
reasonable period of time prior to making any such disclosure.
4. This Agreement shall commence as of the date hereof and shall
terminate on the first to occur of (i) the effective date of
the Merger or (ii) two years after termination of the Merger
Agreement.
5. The parties agree that money damages would not be a sufficient
remedy for any breach or anticipated breach of this Agreement
by the Recipient and that the Disclosing Party shall be
entitled to specific performance and/or injunctive or other
equitable relief as a remedy for any such breach. If a court
of competent jurisdiction determines that the Disclosing Party
is entitled to injunctive or equitable relief, the Recipient
agrees to waive any requirement for the securing or posting of
any bond in connection with such remedy. Such remedy shall
not be deemed to be the exclusive remedy for breach of this
Agreement but shall be in addition to all other remedies
available at law or in equity to the Disclosing Party.
6. Each party hereby acknowledges that it is aware that
securities laws of the United States prohibit any person who
has material, non-public information concerning a company or a
possible transaction involving a company from purchasing or
selling securities in reliance upon such information or from
communicating such information to any other person or entity
under circumstances in which it is reasonably foreseeable that
such person or entity is likely to purchase or sell such
securities while in possession of such information.
7. Sterling House and ALI agree that during the period of one
year following the date of this Agreement, except with the
prior approval of the Board of Directors of the other party,
neither Sterling House or ALI nor any of their respective
affiliates, as defined in Rule 12b-2 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), shall,
directly or indirectly, except as otherwise contemplated or
permitted by the Merger Agreement:
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(a) acquire or agree to acquire beneficial ownership (as
defined in Rule 13d-3 under the Exchange Act) of any
outstanding common stock of the other party or any of
its affiliates, or any rights or options to acquire
such ownership, or any bank debt, claims against or
other obligations of the other party or any of its
affiliates, whether now or hereafter outstanding;
provided, however, any affiliate shall not be deemed
to be in violation of this provision solely by reason
of such affiliate acting as an investment advisor or
manager for a fund or entity which holds not greater
than one percent (1%) of the outstanding common stock
of the other party hereto;
(b) seek to have called any meeting of stockholders, or
initiate, propose or solicit the taking of any action
by written consent of stockholders, of the other
party or any of its affiliates in lieu of a meeting,
or solicit or participate in the solicitation of
proxies with respect to any proposal, or seek to
appoint, elect or remove any member of the board of
directors of the other party or any of its
affiliates, or take any action to effect a change of
control of the other party or any of its affiliates;
(c) propose to enter into any merger, restructuring or
business combination involving, or make any tender
offer or exchange offer for securities of, the other
party or any of its affiliates, or to purchase any
material assets of the other party or any of its
affiliates, except in connection with the Possible
Transaction contemplated by this Agreement;
(d) form, join or participate in a partnership, limited
partnership, syndicate or other group, or enter into
any contract, arrangement, understanding or
relationship, or deposit any securities of the other
party in a voting trust or subject any such
securities to any arrangement, understanding or
agreement with respect to the voting, holding or
disposition of such securities, or otherwise act in
concert with any other person for the purpose of
acquiring, holding, voting or disposing of any
outstanding common stock or material assets of the
other party or any of its affiliates, subject to the
one percent (1%) proviso set forth with respect to
affiliates in subparagraph (a) above; or
(e) subject to the provisions of paragraph 3, disclose
any intention, plan or arrangement to take any of the
foregoing actions prohibited by this paragraph 7, or
participate in or induce or encourage any other
person to take any of such actions.
8. Except as otherwise contemplated or required by the Merger
Agreement, neither party shall solicit for employment any of
the current employees, who hold a
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position of responsibility of regional or divisional manager
or higher, of the other party or such other party's affiliates
so long as they are employed by such other party or affiliate
during the period of one year following the date of this
Agreement, without the prior written consent of the other
party; provided, however, that nothing herein shall restrict
or preclude either party's rights to make generalized
searches for employees by use of advertisements in the media
(including without limitation trade media) or by engaging
search firms which are not targeted or focused on the
employees of the other party or such other party's affiliates
and hiring such other party's or affiliate's employees as a
result thereof or by responding to unsolicited inquiries by
the other party's or affiliate's employees.
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9. The parties further agree that:
(a) the rights and obligations of each party shall not be
assignable without the prior written consent of the
non-assigning party;
(b) this Agreement shall be governed and construed in
accordance with the internal laws, and not the laws
pertaining to conflicts of laws, of the State of
Kansas. The parties hereto irrevocably waive trial
by jury;
(c) this Agreement, together with the Merger Agreement,
contains the entire understanding and agreement
between the parties as to the subject matter hereof
and thereof and supersedes all prior or
contemporaneous communications, agreements and
understandings between the parties, whether written
or oral;
(d) any modifications, waivers or amendments to this
Agreement shall only become effective if in writing
and signed by each party;
(e) no failure or delay by either 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 right, power
or privilege hereunder;
(f) in case any provision of this Agreement shall be
invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining
provisions of this Agreement shall not in any way be
affected or impaired thereby;
(g) in the event of litigation relating to this
Agreement, if a court of competent jurisdiction
determines in a final, nonappealable order that a
party has breached this Agreement, then such party
shall be liable and pay to the non-breaching party
the reasonable legal fees such non-breaching party
has incurred in connection with such litigation,
including any appeal therefrom; and
(h) it is the explicit intention of the parties hereto
that the covenants, undertakings and agreements set
forth in this Agreement shall be solely for the
benefit of, and shall be enforceable only by, the
parties hereto and their respective successors.
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IN WITNESS WHEREOF, the parties have caused this Confidentiality
Agreement to be executed and delivered effective as of the date first written
above.
ALTERNATIVE LIVING SERVICES, INC. STERLING HOUSE CORPORATION
By: /s/ XXXXXXX X. XXXXX By: /s/ XXXXXXX X. XXXXXXXX
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President and Chief Xxxxxxx X. Xxxxxxxx
Executive Officer Chairman of the Board and
Chief Executive Officer
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