EXHIBIT 2
ARV Assisted Living, Inc.
000 Xxxxxxx Xxxxxx, X-0
Xxxxx Xxxx, XX 00000
October 7, 2002
Prometheus Assisted Living LLC
00 Xxxxxxxxxxx Xxxxx, 00xx xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: Confidentiality/Non-Disclosure Agreement (Reciprocal)
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Gentlemen:
In connection with the consideration of a possible negotiated
transaction (the "Transaction") between ARV Assisted Living, Inc. and/or
its subsidiaries, controlled affiliates or divisions (collectively, "ARV")
and Prometheus Assisted Living LLC and/or its subsidiaries, controlled
affiliates or divisions (other than ARV) (collectively, "Prometheus"), each
party (as such, the "disclosing party") intends to make available to the
other party (as such the "receiving party") certain information concerning
its business, financial condition, operations, assets and liabilities which
is non-public, confidential or proprietary in nature. As a condition to
such information being exchanged by the parties and their respective
directors, officers, employees, agents or advisors (including, without
limitation, attorneys, accountants, consultants, bankers and financial
advisors) (collectively, "Representatives"), the receiving party must agree
to treat any information concerning the disclosing party (whether prepared
by the disclosing party, its advisors or otherwise and irrespective of the
form of communication) which has been or is furnished pursuant to this
letter agreement to the receiving party or to its Representatives by or on
behalf of the disclosing party (such information herein collectively
referred to as the "Evaluation Material") in accordance with the provisions
of this letter agreement. Lazard Freres Real Estate Investors L.L.C.
("LFREI") and its controlled affiliates shall constitute Representatives of
Prometheus and Prometheus intends to provide to LFREI and/or its controlled
affiliates the information provided to Prometheus pursuant to this letter
agreement.
The term "Evaluation Material" shall also be deemed to include all
notes, analyses, compilations, studies, interpretations or other documents
prepared by the receiving party or its Representatives which contain,
reflect or are based upon, in whole or in part, the information furnished
to the receiving party or its Representatives pursuant hereto. For purposes
of this Agreement, the term "Evaluation Material" does not include
information which (i) becomes generally available to the public other than
as a result of a disclosure by the receiving party or its Representatives,
(ii) was available to the receiving party on a nonconfidential basis prior
to its disclosure by the disclosing party or its Representatives, or (iii)
becomes available to the receiving party from a source other than the
disclosing party or its Representatives, provided that such source is not
known by the receiving party to be bound by a confidentiality agreement
with the disclosing party or its Representatives.
It is understood that the receiving party or its Representatives may
disclose any of the Evaluation Material (1) to those of its other
Representatives who require such material for the purpose of evaluating a
possible Transaction (provided that such Representatives (a) need to know
the Evaluation Material for the purpose of evaluation of the Transaction,
(b) are informed by the receiving party or Representative of the
confidential nature of the Information, and (c) agree to act in accordance
with the terms of this letter agreement) or (2) to potential financing
sources for any possible Transaction (provided that such financing sources
are informed by the receiving party or Representative of the confidential
nature of the Information). The receiving party agrees that the Evaluation
Material will be kept confidential by it and its Representatives and,
except with the specific prior written consent of the disclosing party or
as expressly otherwise permitted by the terms hereof, will not be disclosed
by it or its Representatives. The receiving party further agrees that it
and its Representatives will not use any of the Evaluation Material for any
reason or purpose other than to evaluate a possible Transaction.
Without the prior written consent of the other party, each party
hereto and its Representatives will not disclose to any person (i) the fact
that the Evaluation Material has been made available to a receiving party
or that a receiving party or its Representatives have inspected any portion
of the Evaluation Material, (ii) the fact that any discussions or
negotiations are taking place concerning a possible Transaction, or (iii)
any of the terms, conditions or other facts with respect to any possible
Transaction, including the status thereof, unless and only to the extent
that such disclosure (after making reasonable efforts to avoid such
disclosure and after advising and consulting with the other party about the
intention to make, and the proposed contents of, such disclosure) is
required by applicable law. The term "person" as used in this letter
agreement shall be broadly interpreted to include, without limitation, any
corporation, company, partnership and individual.
In the event that either party or its Representatives is requested or
required (by oral questions, interrogatories, requests for information or
documents, subpoena, civil investigative demand or similar legal process)
to disclose any of the Evaluation Material, it is agreed that such party or
its Representative, as the case may be, will provide the other party with
prompt notice of such request(s) so that such other party may seek an
appropriate protective order or other appropriate remedy and/or waive its
or such Representative's compliance with the provisions of this letter
agreement. In the event that such protective order or other remedy is not
obtained, or that any party grants a waiver hereunder, the other party or
its Representative may furnish that portion (and only that portion) of the
Evaluation Material which such other party is legally required to disclose
and will exercise its best efforts to obtain reliable assurance that
confidential treatment will be accorded any Evaluation Material so
furnished.
Each party agrees that it will not use the Evaluation Material for any
purpose other than determining whether to enter into a Transaction. Each
party agrees that it will not use the Evaluation Material in any way
directly or indirectly detrimental to the other party. In particular, each
party agrees that for a period of one (1) year from the date of the signing
of this letter agreement, it will not knowingly, as a result of knowledge
or information obtained from the Evaluation Material or otherwise in
connection with a possible Transaction, directly solicit for employment any
employee of the other, provided the parties acknowledge that they may
employ any person that responds to a public advertisement for an available
position.
In the event that the receiving party does not proceed with a
Transaction, upon the written request of the disclosing party, the
receiving party shall promptly deliver to the disclosing party or destroy
(with such destruction certified to the disclosing party) all documents or
other matter furnished by it to the receiving party or its Representatives
constituting Evaluation Material, together with all copies thereof in the
possession of the receiving party or its Representatives. Notwithstanding
the return or destruction of Evaluation Material, the receiving party will
continue to be bound by its obligations of confidentiality and other
obligations hereunder.
Although it is understood that the disclosing party will endeavor to
include in the Evaluation Material information believed by it to be
relevant for the purpose of this investigation, the receiving party further
understands that neither the disclosing party nor its Representatives make
any representation or warranty as to the accuracy or completeness of the
Evaluation Material. The receiving party agrees that neither it nor its
Representatives shall have any liability to the receiving party or any of
its Representatives resulting from the use of the Evaluation Material by
the receiving party or such Representatives. Only those representations and
warranties that may be made to the receiving party or its affiliates in a
definitive written agreement for a Transaction, when, as and if executed
and subject to such limitations and restrictions as may be specified
therein, shall have any legal effect, and the receiving party agrees that
if it determines to engage in a Transaction, such determination will be
based solely on the terms of such written agreement and on the receiving
party's own investigation, analysis, and assessment of the business to be
acquired. Moreover, unless and until such a definitive written agreement is
entered into, neither the receiving party nor its Representatives will be
under any legal obligation of any kind whatsoever with respect to such a
Transaction except for the matters specifically agreed to in this letter
agreement. The agreements set forth in this letter agreement may be
modified or waived only by a separate writing signed by both parties
expressly so modifying or waiving such agreements.
Prometheus agrees that, for a period of one (1) year from the date
hereof, unless such shall have been specifically approved in writing by the
Board of Directors of ARV, neither Prometheus, LFREI, nor any controlled
affiliates of Prometheus or LFREI, will in any manner, directly or
indirectly, (a) effect or seek, offer or propose (whether publicly or
otherwise) to effect, or cause or participate in (i) any acquisition of any
securities (or beneficial ownership thereof) or any rights or options to
acquire any securities or assets of ARV or any of its subsidiaries; (ii)
any tender or exchange offer or merger or other business combination
involving ARV or any of its subsidiaries; (iii) any recapitalization,
restructuring, liquidation, dissolution or other extraordinary transaction
with respect to ARV or its subsidiaries; or (iv) any "solicitation" of
"proxies" (as such terms are used in the proxy rules of the Securities and
Exchange Commission) or consents to vote any voting securities of ARV, (b)
form, join or in any way participate in a "group" (as defined under the
Securities Exchange Act of 1934), other than with any of their affiliates,
with respect to ARV or (c) otherwise act, alone or in concert with others
(other than with any of their affiliates), to seek to control or influence
the management, Board of Directors or policies of ARV, other than through
directors designated or nominated by affiliates of LFREI under the
Settlement Agreement, dated as of September 29, 1999, among ARV, LFREI and
certain other parties (the "Settlement Agreement"); provided, however,
that, the foregoing provisions of this paragraph shall not apply to the
granting or exercise of warrants, options or other rights issued by ARV to
affiliates of LFREI or their employees, officers or directors or if (i) a
third party acquires beneficial ownership of more than 15% of the
outstanding common stock of ARV, (ii) ARV or any of its subsidiaries or
affiliates (other than LFREI and its affiliates) enter into a definitive
agreement providing for, or a third party publicly announces an intention
to effect, any transaction which would result in (A) the sale by ARV or one
or more of its subsidiaries of 50% of its assets or assets representing
more than 50% of its consolidated earning power, (B) the common
stockholders of ARV immediately prior to such transaction owning less than
50% of the outstanding common stock of the acquiring entity or, in the case
of a merger transaction, the surviving corporation (or, if the surviving
corporation is a subsidiary of a parent company, the parent company) or (C)
a third party acquiring beneficial ownership of more than 15% of the
outstanding common stock of ARV, or (iii) after a tender or exchange offer
is made by any third party for the common stock of ARV, the Board of
Directors of ARV has not recommended that its stockholders reject the
tender or exchange offer within 10 business days after the public
announcement of such tender or exchange offer. Notwithstanding the
foregoing, neither Prometheus, LFREI nor any of their respective affiliates
shall be prohibited from making, or be required to obtain the consent of
ARV or its Board of Directors to make, one or more proposals to ARV or its
Board of Directors or any special committee thereof with respect to a
possible Transaction and nothing herein shall restrict or otherwise prevent
Prometheus or any of its affiliates from selling or otherwise disposing of
any shares, warrants, options or other rights for such shares, of ARV now
held or hereafter acquired. Nothing contained herein shall supersede, amend
or modify the terms of the Settlement Agreement, including without
limitation Section 3.01 thereof.
It is understood and agreed that money damages would not be a
sufficient remedy for any breach of this letter agreement by either party
or its Representatives and that any such breach would cause the
non-breaching party irreparable harm. Accordingly, it is further agreed
that in the event of any breach or threatened breach of this letter
agreement, the non-breaching party, in addition to any other remedies at
law or in equity it may have, shall be entitled, without the requirement of
posting a bond or other security, to equitable relief, including injunctive
relief and specific performance.
It is understood and agreed that 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.
The invalidity or unenforceability of any provision of this letter
agreement shall not affect the validity or enforceability of any other
provisions of this letter agreement, which shall remain in full force and
effect. This letter agreement shall be governed by and construed in
accordance with the laws of the State of Delaware. This agreement will
terminate on March 31, 2003.
If you are in agreement with the foregoing, please sign, date, and
return one copy of this letter agreement, which will constitute our
agreement with respect to the matters set forth herein.
Very truly yours,
/s/ Xxxxxxx XxXxxx
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Xxxxxxx XxXxxx
Chairman of the Special Committee of
the Board of Directors of ARV Assisted
Living, Inc.
CONFIRMED AND AGREED:
Prometheus Assisted Living LLC
By: /s/ Xxxx X. Xxxxx
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Name: Xxxx X. Xxxxx
Title: Authorized Signatory
