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EXHIBIT 10.2
MERGER AGREEMENT
THIS MERGER AGREEMENT (the "Agreement") entered into as of ____, 1997,
by and among JUST LIKE HOME, INC., a Florida corporation ( "JLH") whose
principal address is 0000 Xxxxxx Xxxx Xxxx, Xxxxxxxxx, Xxxxxxx 00000-0000, JLH
ACQUISITION CORPORATION, a Florida corporation and a wholly-owned Subsidiary of
JLH (the "Acquisition Company") whose principal address is 0000 Xxxxxx Xxxx
Xxxx, Xxxxxxxxx, Xxxxxxx 00000-0000, and COMMUNITY ASSISTED LIVING CENTERS,
INC., a Florida corporation ("CALCI") whose principal address is 0000 Xxxxxxx
Xxxxx Xxxxx, Xxxxxxx, Xxxxxxx 00000. JLH, the Acquisition Company, and CALCI are
referred to collectively herein as the "Parties."
This Agreement contemplates a merger of CALCI with and into the
Acquisition Company in a tax free exchange.
Now, therefore, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties agree as follows.
1. DEFINITIONS.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"JLH" has the meaning set forth in the preface above.
"JLH Stock" has the meaning set forth in Section 2 below.
"Certificate of Merger" has the meaning set forth in Section 2 below.
"Closing" has the meaning set forth in Section 2 below.
"Closing Date" has the meaning set forth in Section 2 below.
"Confidential Information" means any information concerning the
businesses and affairs of CALCI and its Subsidiaries that is not already
generally available to the public.
"Disclosure Schedule" has the meaning set forth in Section 3 below.
"Effective Time" has the meaning set forth in Section 2 below.
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"Florida General Corporation Law" means the General Corporation Law of
the State of Florida, as amended.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
"Knowledge" means actual knowledge without independent investigation.
"Merger" has the meaning set forth in Section 2 below.
"Merger Consideration" has the meaning set forth in Section 2 below.
"Most Recent Fiscal Quarter End" has the meaning set forth in Section 3
below.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"Party" has the meaning set forth in the preface above.
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or political
subdivision thereof).
"Public Report" has the meaning set forth in Section 3 below.
"Registration Statement" has the meaning set forth in Section 5 below.
"Requisite Stockholder Approval" means the affirmative vote of the
holders of a majority of CALCI Shares in favor of this Agreement and the Merger.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Security Interest" means any mortgage, pledge, lien, encumbrance,
charge, or other security interest, including, without limitation, (a)
mechanic's, materialman's, and similar liens, (b) liens for taxes not yet due
and payable or for taxes that the taxpayer is contesting in good faith through
appropriate proceedings, (c) purchase money liens and liens securing rental
payments under capital lease arrangements, and (d) other liens arising in the
Ordinary Course of Business and not incurred in connection with the borrowing of
money.
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"Special Meeting" has the meaning set forth in Section 5 below.
"Subsidiary" means any corporation with respect to which a specified
Person (or a Subsidiary thereof) owns a majority of the common stock or has the
power to vote or direct the voting of sufficient securities to elect a majority
of the directors.
"Surviving Corporation" has the meaning set forth in Section 2 below.
"CALCI" has the meaning set forth in the preface above.
"CALCI Share" means any share of the Common Stock of CALCI.
"CALCI Stockholder" means any Person who or which holds any CALCI
Shares.
"Acquisition Company" has the meaning set forth in the preface above.
2. BASIC TRANSACTION.
(a) The Merger. On and subject to the terms and conditions of this
Agreement, CALCI will merge with and into the Acquisition Company (the "Merger")
at the Effective Time. The Acquisition Company shall be the corporation
surviving the Merger (the "Surviving Corporation").
(b) The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at such location and time as the
Parties shall mutually agree no later than thirty (30) days after the execution
hereof, unless otherwise provided herein (the "Closing Date").
(c) Actions at the Closing. At the Closing:
(i) JLH and the Acquisition Company will deliver to CALCI the
various certificates, instruments, and documents referred to in Section
6 below;
(ii) CALCI and the Acquisition Company will file with the
Secretary of State of the State of Florida a Certificate of Merger in
the form attached hereto as Exhibit 2(c) (the "Certificate of Merger");
and
(iii) JLH will cause the Surviving Corporation to deliver the
JLH Stock in the manner provided below in this Section 2.
(d) CALCI's Acquisition Audit. CALCI's obligation to close hereunder is
expressly contingent upon CALCI's ability to satisfy itself about the status of
JLH's operations as a provider of assisted living services and CALCI's ability
to integrate and oversee the operations of JLH in a fiscally profitable manner.
Toward that end, CALCI shall continue its acquisition audit (the "Acquisition
Audit") of JLH commenced prior to the execution hereof. CALCI's Acquisition
Audit shall include, but not be limited to:
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(i) a review of JLHOs properties, books and records and such
additional financial and operating data and other information as CALCI
may from time to time require in order to determine the present
condition and character of JLHOs business and operations; and
(ii) a thorough background investigation regarding the
officers and directors of JLH.
CALCI's obligation to conclude the transactions contemplated by this
Agreement shall be contingent upon CALCI's satisfaction, in its sole discretion,
with the results of the Acquisition Audit. In the event of CALCI determines that
it is not satisfied with the results of its Acquisition Audit at any time prior
to Closing, CALCI may terminate this Agreement prior to or upon such date by
providing JLH with written notice of such election, and this Agreement shall
immediately terminate and be of no further force and effect, and the parties
shall have no further rights, claims or obligations with respect to each other,
except as otherwise set forth herein. Alternatively, in the event of CALCI
determines that it is satisfied at any time prior to the termination of this
Agreement with the results of its Acquisition Audit, or CALCI's waiver thereof,
CALCI may, upon five (5) daysO written notice of such election, proceed to
Closing.
(e) Effect of Merger.
(i) Effective Time of Merger. The Merger shall become
effective at the time (the "Effective Time") CALCI and the Acquisition
Company file the Certificate of Merger with the Secretary of State of
the State of Florida (the "Effective Time"). The Merger shall have the
effect set forth in the Florida General Corporation Law. The Surviving
Corporation may, at any time after the Effective Time, take any action
(including executing and delivering any document) in the name and on
behalf of either CALCI or the Acquisition Company in order to carry out
and effectuate the transactions contemplated by this Agreement.
(ii) Certificate of Incorporation. As of the Effective Time
the Articles of Incorporation of the Acquisition Company immediately
prior to the Effective Time shall become the Articles of Incorporation
of the Surviving Corporation.
(iii) Bylaws. As of the Effective Time the Bylaws of the
Acquisition Company immediately prior to the Effective Time shall
become the Bylaws of the Surviving Corporation.
(iv) Directors and Officers. The directors and officers of
the Acquisition Company shall become the directors and officers of the
Surviving Corporation at and as of the Effective Time retaining their
respective positions and terms of office.
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(v) Conversion of CALCI Shares. At and as of the Effective
Time each CALCI Share shall be converted into one and one half (1.5)
shares of common stock of JLH (the "JLH Stock") issued by JLH. No CALCI
Share shall be deemed to be outstanding or to have any rights other
than those set forth above in this subsection after the Effective Time.
Stock issuable in exchange for each share of CALCI Stock is referred to
herein as "Merger Consideration".
(f) Exchange Agent / Conversion of CALCI Shares. Prior to the
Effective Time, CALCI and JLH shall appoint American Stock Transfer & Trust
Company, CALCI's transfer agent, or such other mutually acceptable bank or trust
company as agent (the "Exchange Agent") for the purpose of exchanging
certificates representing CALCI Shares outstanding immediately prior to the
Effective Time for the Merger Consideration. Promptly after the Effective Time,
(i) the Exchange Agent shall mail to each record holder
of CALCI Shares, as of the Effective Time, of an outstanding
Certificate or Certificates which immediately prior to the Effective
Time represented by shares of CALCI common stock (the "Certificates") a
form letter of transmittal and instructions advising such holder of the
relevant terms of the exchange effected by the Merger and the procedure
for surrendering to the Exchange Agent such Certificates for exchange.
Upon surrender to the Exchange Agent of a Certificate, together with
such letter of transmittal duly executed, the holder of such
Certificate shall be entitled to receive in exchange therefor a
Certificate or Certificates representing the Merger Consideration
multiplied by the number of shares of CALCI common stock represented by
such Certificate and such surrendered Certificate shall then be
canceled. Until surrendered in accordance with the provisions of this
Section, each Certificate shall represent for all purposes the right to
receive Merger Consideration multiplied by the number of CALCI Shares
represented by such Certificate.
(ii) At and after the Effective Time there shall be no
transfers of CALCI Shares which were outstanding immediately prior to
the Effective Time on the stock transfer books of CALCI. If, after the
Effective Time, Certificates are presented to CALCI or the Exchange
Agent, they shall be canceled and exchanged for the Merger
Consideration multiplied by the number of CALCI Shares represented by
such Certificates as provided herein. At the close of business on the
day prior to the Effective Time the stock ledger of CALCI shall be
closed.
(iii) From and after the Effective Time, holders of
Certificates formerly evidencing CALCI Shares shall cease to have any
rights as stockholders of CALCI, except as provided herein or by law.
(g) Intentionally Left Blank.
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(h) Management of JLH. From the date of execution hereof forward
until the earlier of the termination or the Closing of this Agreement, JLH shall
consult with CALCI regarding all material JLH decisions. Upon the Closing of
this Agreement, the daily management team of JLH and its subsidiaries and
affiliates shall be conducted by and through the following personnel:
Xxxxxxx X. Xxxxxx Co-Chairman
Xxxxxx Xxxxx Co-Chairman
Xxxx X. Xxxxxxxx President & CEO
Xxxxxxxxx X. Xxxxxx President, JLH subsidiary & Just
Like Family, Inc.
Xxxxxxx Xxxxxxx Chief Financial Officer
Xxxxxxxx Xxxxxx Vice President, Operations
Xxxxxxx X. Xxxxxxxx Vice President, Construction
Xxxxxx X. Xxxxxx Vice President, Acquisition &
Development
Xxxxxxxxx XxXxxxx Director of Shareholder Relations
Xxxxx Xxxxx Director of Programs & Training
Sister Xxxxx Xxxxxx Executive Director, Just Like
Family, Inc.
Xxxxx Xxxx Assistant for Construction &
Development
Each of these individuals will hold office in accordance with the
Articles of Incorporation and Bylaws of the Surviving Corporation until their
respective successors are duly elected and qualified.
(i) Shareholder Agreement. Upon the execution hereof, Xxxxxxxxx X.
Xxxxxx and Xxxx Xxxxxxxx will enter into a shareholder agreement in
substantially the same form as that contained in "Exhibit 2(i)" hereto, whereby
Xxxxxxxxx X. Xxxxxx and Xxxx X. Xxxxxxxx will be required to vote their JLH
Stock in accordance with the terms of such agreement. Such shareholder agreement
shall only be effective upon the Closing hereof.
(j) Board of Directors. At the Effective Time, the following
individuals shall become the directors of the Surviving Corporation, each of
such directors to hold office, subject to the applicable provisions of the
Articles of Incorporation and Bylaws of the Surviving Corporation, until the
next annual meeting of shareholders of the Surviving Corporation and until their
successors shall be duly elected and shall duly qualify:
1. Xxxxxxx X. Xxxxxx, M.D.
2. Xxxxx Xxxxxx
3. Xxxxxxx Xxxxxx
4. Xxxx X. Xxxxxxxx
5. Xxxxxx X. Xxxxx
6.
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7.
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The sixth and seventh positions shall be held by two of Xxxxxxx X. Xxxxxxx,
Xxxxxxxx Xxxxxx, and Xxx Xxxxx subject to the agreement of Xxxx X. Xxxxxxxx and
Xxxxxxxxx X.
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Xxxxxx. Rosters of subsequently elected directors shall be agreed upon by Xxxx
X. Xxxxxxxx and Xxxxxxxxx X. Xxxxxx pursuant to the terms of the shareholder
agreement enumerated above.
3. REPRESENTATIONS AND WARRANTIES OF CALCI. CALCI represents and
warrants to JLH and the Acquisition Company that the statements contained in
this section are correct and complete as of the date of this Agreement, and will
be correct and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement
throughout this section), except as set forth in the disclosure schedule
accompanying this Agreement and initialed by the Parties (the ODisclosure
ScheduleO), which Disclosure Schedule shall be amended as of the Closing in
order to accurately reflect the correctness and completeness of such
representations and warranties as of the Closing. The Disclosure Schedule will
be arranged in paragraphs corresponding to the lettered and numbered paragraphs
contained in this section.
(a) Organization, Qualification, and Corporate Power. CALCI is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Florida. CALCI is duly authorized to conduct business and
is in good standing under the laws of each jurisdiction where such qualification
is required, except where the lack of such qualification would not have a
material adverse effect on the financial condition of CALCI taken as a whole or
on the ability of the Parties to consummate the transactions contemplated by
this Agreement. CALCI has full corporate power and authority to carry on the
businesses in which it is engaged and to own and use the properties owned and
used by it.
(b) Capitalization. The entire authorized capital stock of CALCI
consists of 1,097,500 CALCI Shares, of which 1087,500 CALCI Shares are issued
and outstanding and 10,000 CALCI Shares are held in treasury. All of the issued
and outstanding CALCI Shares have been duly authorized and are validly issued,
fully paid, and nonassessable. There are no outstanding or authorized options,
warrants, purchase rights, subscription rights, conversion rights, exchange
rights, or other contracts or commitments that could require CALCI to issue,
sell, or otherwise cause to become outstanding any of its capital stock. There
are no outstanding or authorized stock appreciation, phantom stock, profit
participation, or similar rights with respect to CALCI.
(c) Authorization of Transaction. CALCI has full power and
authority (including full corporate power and authority) to execute and deliver
this Agreement and to perform its obligations hereunder; provided, however, that
CALCI cannot consummate the Merger unless and until it receives the Requisite
Stockholder Approval. This Agreement constitutes the valid and legally binding
obligation of CALCI, enforceable in accordance with its terms and conditions
subject to receipt of shareholder approval.
(d) Noncontravention. To the knowledge of any director or officer
of CALCI, neither the execution and the delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, will:
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(i) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other
restriction of any government, governmental agency, or court to which
CALCI is subject or any provision of the charter or bylaws of CALCI, or
(ii) conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any party the
right to accelerate, terminate, modify, or cancel, or require any
notice under any agreement, contract, lease, license, instrument, or
other arrangement to which CALCI is a party or by which it is bound or
to which any of its assets is subject (or result in the imposition of
any Security Interest upon any of its assets), except where the
violation, conflict, breach, default, acceleration, termination,
modification, cancellation, failure to give notice, or Security
Interest would not have a material adverse effect on the financial
condition of CALCI taken as a whole or on the ability of the Parties to
consummate the transactions contemplated by this Agreement.
To the Knowledge of any director or officer of CALCI, and other than in
connection with the provisions of the Florida General Corporation Law, the
Securities Exchange Act, the Securities Act, and the state securities laws,
CALCI needs not give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or governmental agency in
order for the Parties to consummate the transactions contemplated by this
Agreement except where the failure to give notice, to file, or to obtain any
authorization, consent, or approval would not have a material adverse effect on
the financial condition of CALCI taken as a whole or on the ability of the
Parties to consummate the transactions contemplated by this Agreement.
(e) Intentionally Left Blank.
(f) Brokers' Fees. CALCI has no liability or obligation to pay any
fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement.
(g) Title to Assets. CALCI has good and marketable title to, or a
valid leasehold interest in, the properties and assets used or owned by it,
located on their premises, or acquired after the date thereof, free and clear of
all Security Interests, except for properties and assets disposed of in the
Ordinary Course of Business since the date hereof. Without limiting the
generality of the foregoing, CALCI has good and marketable title to all of these
assets, free and clear of any Security Interest or restriction on transfer.
(h) Events Subsequent to Most Recent Fiscal Year End. Since the
Most Recent Fiscal Year End (as defined below), there has not been any material
adverse change in the business, financial condition, operations, results of
operations, or future prospects of CALCI. Without limiting the generality of the
foregoing, since that date:
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(i) CALCI has not sold, leased, transferred, or assigned
any of its assets, tangible or intangible, other than for a fair
consideration in the Ordinary Course of Business;
(ii) CALCI has not entered into any agreement, contract,
lease, or license (or series of related agreements, contracts, leases,
and licenses) either involving more than $50,000.00 or outside the
Ordinary Course of Business;
(iii) no party has accelerated, terminated, modified, or
canceled any agreement, contract, lease, or license (or series of
related agreements, contracts, leases, and licenses) involving more
than $50,000.00 to which CALCI is a party or by which it is bound;
(iv) intentionally left blank;
(v) CALCI has not made any capital expenditure (or series
of related capital expenditures) either involving more than $100,000.00
or outside the Ordinary Course of Business;
(vi) CALCI has not made any capital investment in, any
loan to, or any acquisition of the securities or assets of, any other
Person (or series of related capital investments, loans, and
acquisitions) either involving more than $1,000,000.00 or outside the
Ordinary Course of Business;
(vii) CALCI has not issued any note, bond, or other debt
security or created, incurred, assumed, or guaranteed any indebtedness
for borrowed money or capitalized lease obligation either involving
more than $1,000,000.00 singly or $2,500,000.00 in the aggregate;
(viii) CALCI has not delayed or postponed the payment of
accounts payable and other Liabilities;
(ix) CALCI has not canceled, compromised, waived, or
released any right or claim (or series of related rights and claims)
either involving more than $50,000.00;
(x) CALCI has not granted any license or sublicense of
any rights under or with respect to any Intellectual Property;
(xi) there has been no change made or authorized in the
charter or bylaws of any of CALCI;
(xii) CALCI has not issued, sold, or otherwise disposed of
any of its capital stock, or granted any options, warrants, or other
rights to purchase or obtain (including upon conversion, exchange, or
exercise) any of its capital stock;
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(xiii) CALCI has not declared, set aside, or paid any
dividend or made any distribution with respect to its capital stock
(whether in cash or in kind) or redeemed, purchased, or otherwise
acquired any of its capital stock;
(xiv) CALCI has not experienced any damage, destruction, or
loss (whether or not covered by insurance) to its property;
(xv) CALCI has not made any loan to, or entered into any
other transaction with, any of its directors, officers, and employees
outside the Ordinary Course of Business;
(xvi) CALCI has not entered into any employment contract or
collective bargaining agreement, written or oral, or modified the terms
of any existing such contract or agreement;
(xvii) CALCI has not granted any increase in the base
compensation of any of its directors, officers, and employees outside
the Ordinary Course of Business;
(xviii) CALCI has not adopted, amended, modified or
terminated any bonus, profit-sharing, incentive, severance, or other
plan, contract, or commitment for the benefit of any of its directors,
officers, and employees (or taken any such action with respect to any
other Employee Benefit plan);
(xix) CALCI has not made any other change in employment
terms for any of its directors, officers, and employees outside the
Ordinary Course of Business;
(xx) CALCI has not has made or pledged to make any
charitable or other capital contribution outside the Ordinary Course of
Business;
(xxi) CALCI has not paid any amount to any third party with
respect to any Liability or obligation (including any costs and
expenses CALCI has incurred or may incur in connection with this
Agreement and the transactions contemplated hereby) which would not
constitute an Assumed Liability if in existence as of the Closing;
(xxii) there has not been any other occurrence, event,
incident, action, failure to act, or transaction outside the Ordinary
Course of Business involving CALCI; and
(xxiii) CALCI has not committed to any of the foregoing.
(i) Undisclosed Liabilities. CALCI has no Liability (and, to the
knowledge of CALCI, its officers and directors, there is no basis for any
present or future action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand against any of
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them giving rise to any Liability), except for those which have arisen after the
Most Recent Fiscal Month End in the Ordinary Course of Business (none of which
results from, arises out of, relates to, is in the nature of, or was caused by
any breach of contract, breach of warranty, tort, infringement, or violation of
law).
(j) Financial Statements. Attached hereto as "Exhibit 3(g)" are
the following financial statements (collectively the "Financial Statements"):
(i) unaudited consolidating balance sheets and statements of
income, changes in stockholders' equity, and cash flow as of and for
the calendar year ended December 31, 1996 (the "Most Recent Fiscal Year
End") for CALCI; and
(ii) unaudited consolidated and consolidating balance sheets
and statements of income, changes in stockholders' equity, and cash
flow (the "Most Recent Financial Statements") as of and for the month
ended January 31, 1997 (the "Most Recent Fiscal Month End") for CALCI.
The Financial Statements (including the Notes thereto) have been prepared in
accordance with GAAP applied on a consistent basis throughout the periods
covered thereby, present fairly the financial condition of CALCI as of such
dates and the results of operations of CALCI for such periods, are correct and
complete, and are consistent with the books and records of CALCI (which books
and records are correct and complete); provided, however, that the Most Recent
Financial Statements are subject to normal year-end adjustments (which will not
be material individually or in the aggregate) and lack footnotes and other
presentation items.
(k) Events Subsequent to Most Recent Fiscal Year End. Since the
Most Recent Fiscal Year End, there has not been any adverse change in the
business, financial condition, operations, results of operations, or future
prospects of any of CALCI.
4. REPRESENTATIONS AND WARRANTIES OF JLH AND THE ACQUISITION
COMPANY. Each of JLH (on its own behalf and, as more fully enumerated below, on
behalf of each of its Subsidiaries) and the Acquisition Company (represents and
warrants to CALCI that the statements contained in this section are correct and
complete as of the date of this Agreement and will be correct and complete as of
the Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this section), except as
set forth in the Disclosure Schedule which Disclosure Schedule shall be amended
as of the Closing in order to accurately reflect the correctness and
completeness of such representations and warranties as of the Closing. The
Disclosure Schedule will be arranged in paragraphs corresponding to the numbered
and lettered paragraphs contained in this section.
(a) Organization and Qualification. Each of JLH and the
Acquisition Company, is a corporation duly organized, validly existing, and in
good standing under the laws of the jurisdiction of its incorporation. Each of
JLH and the Acquisition Company is duly authorized to conduct business and is in
good standing under the laws
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of each jurisdiction where such qualification is required, except where the lack
of such qualification would not have a material adverse effect on the financial
condition of each of JLH and the Acquisition Company taken as a whole or on the
ability of the Parties to consummate the transactions contemplated by this
Agreement.
(b) Authorization of Transaction. Each of JLH and the Acquisition
Company has full power and authority (including full corporate power and
authority) to execute and deliver this Agreement and to perform its obligations
hereunder. This Agreement constitutes the valid and legally binding obligation
of each of JLH and the Acquisition Company, enforceable in accordance with its
terms and conditions.
(c) Noncontravention. Neither the execution and the delivery of
this Agreement, nor the consummation of the transactions contemplated hereby,
will:
(i) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other
restriction of any government, governmental agency, or court to which
either JLH or the Acquisition Company is subject or any provision of
the charter or bylaws of either JLH or the Acquisition Company, or
(ii) conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any party the
right to accelerate, terminate, modify, or cancel, or require any
notice under any agreement, contract, lease, license, instrument or
other arrangement to which either JLH or the Acquisition Company is a
party or by which it is bound or to which any of its assets is subject.
Other than in connection with the provisions of the Florida General Corporation
Law, the Securities Exchange Act, the Securities Act, and the state securities
laws, neither JLH nor the Acquisition Company needs to give any notice to, make
any filing with, or obtain any authorization, consent, or approval of any
government or governmental agency in order for the Parties to consummate the
transactions contemplated by this Agreement. As of the Closing, all such
authorizations, consents and approvals necessary for the parties to consummate
the transactions contemplated by this Agreement shall have been received.
(d) Brokers' Fees. Neither JLH nor the Acquisition Company has any
liability or obligation to pay any fees or commissions to any broker, finder, or
agent with respect to the transactions contemplated by this Agreement for which
any of CALCI and the Acquisition Company could become liable or obligated.
(e) Disclosure. The following representations and warranties apply
to JLHOs reporting to the SEC:
(i) any information provided to the SEC pursuant to the terms
hereof shall comply with the Securities Act in all material respects.
Such information will not contain any untrue statement of a material
fact or omit to state a material fact necessary in order to make the
statements made therein, in the light of the
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circumstances under which they will be made, not misleading; provided,
however, that JLH and the Acquisition Company make no representation or
warranty with respect to any information that CALCI will supply
specifically for use in any documents filed with the SEC. None of the
information that JLH and the Acquisition Company will supply will
contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements made therein,
in the light of the circumstances under which they will be made, not
misleading;
(ii) all information previously provided to the SEC, of any
kind or nature, complies with the Securities Act in all material
respects. Such information will not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to
make the statements made therein, in the light of the circumstances
under which they will be made, not misleading.
(f) Capitalization. The Disclosure Statement contains a schedule
of the entire authorized capital stock of JLH and its Subsidiaries. All of the
issued and outstanding shares of JLH and its Subsidiaries have been duly
authorized and are validly issued, fully paid, and nonassessable. Other than
those enumerated in "Exhibit 4(f)" hereto, there are no outstanding or
authorized options, warrants, purchase rights, subscription rights, conversion
rights, exchange rights, or other contracts or commitments that could require
JLH or its Subsidiaries to issue, sell, or otherwise cause to become outstanding
any of its capital stock. Other than those described in "Exhibit 4(f)" hereto,
there are no outstanding or authorized stock appreciation, phantom stock, profit
participation, or similar rights with respect to JLH or its Subsidiaries.
(g) Title to Assets. JLH, the Acquisition Company and the JLH
Subsidiaries have good and marketable title to, or a valid leasehold interest
in, the properties and assets used by them, located on their premises,
including, but not limited to those shown on the Most Recent Balance Sheet
(defined hereunder) or acquired after the date thereof, free and clear of all
Security Interests since the date of the Most Recent Balance Sheet. Without
limiting the generality of the foregoing, JLH has good and marketable title to
all of the assets, free and clear of any Security Interest or restriction on
transfer.
(h) Subsidiaries. The attached Disclosure Schedule sets forth for
each Subsidiary of JLH (including the Acquisition Company):
(i) its name and jurisdiction of incorporation,
(ii) the number of shares of authorized capital stock of each
class of its capital stock,
(iii) the number of issued and outstanding shares of each
class of its capital stock, the names of the holders thereof, and the
number of shares held by each such holder,
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(iv) the number of shares of its capital stock held in
treasury, and
(v) its directors and officers.
Each Subsidiary of JLH is a corporation duly organized, validly existing, and in
good standing under the laws of the jurisdiction of its incorporation. Each
Subsidiary of JLH is duly authorized to conduct business and is in good standing
under the laws of each jurisdiction where such qualification is required. Each
Subsidiary of JLH has full corporate power and authority and all licenses,
permits, and authorizations necessary to carry on the businesses in which it is
engaged and in which it presently proposes to engage and to own and use the
properties owned and used by it. JLH has delivered to CALCI correct and complete
copies of the charter and bylaws of each Subsidiary of JLH (as amended to date).
All of the issued and outstanding shares of capital stock of each Subsidiary of
JLH have been duly authorized and are validly issued, fully paid, and
nonassessable. JLH holds of record and owns legally or beneficially all of the
outstanding capital stock of each Subsidiary of JLH, free and clear of any
restrictions on transfer (other than restrictions under the Securities Act and
state securities laws), Taxes, Security Interests, options, warrants, purchase
rights, contracts, commitments, equities, claims, and demands. There are no
outstanding or authorized options, warrants, purchase rights, subscription
rights, conversion rights, exchange rights, or other contracts or commitments
that could require any of JLH or the Acquisition Company to sell, transfer, or
otherwise dispose of any capital stock of any of the Subsidiaries of JLH or that
could require any Subsidiary of JLH to issue, sell, or otherwise cause to become
outstanding any of its own capital stock (other than this Agreement). There are
no outstanding stock appreciation, phantom stock, profit participation, or
similar rights with respect to any Subsidiary of JLH. There are no voting
trusts, proxies, or other agreements or understandings with respect to the
voting of any capital stock of any Subsidiary of JLH. The minute books
(containing the records of meetings of the stockholders, the board of directors,
and any committees of the board of directors), the stock certificate books, and
the stock record books of each Subsidiary of JLH are correct and complete. None
of the Subsidiaries of JLH is in default under or in violation of any provision
of its charter or bylaws. None of JLH or the Acquisition Company controls
directly or indirectly or has any direct or indirect equity participation in any
corporation, partnership, trust, or other business association which is not a
Subsidiary of JLH.
(i) Financial Statements. Unless otherwise noted, attached hereto
as Exhibit 4(i) are the following financial statements (collectively the
"Financial Statements"):
(i) audited consolidated balance sheets and statements of
income, changes in stockholders' equity, and cash flow of JLH and all
subsidiaries as of and for the fiscal years ended December 31, 1996
(presently being prepared and to be attached subsequent to the date of
execution hereof, but in any event prior to the Closing), December 31,
1995, December 31, 1994, December 31, 1993, (the "Most Recent Fiscal
Year End") for JLH and its Subsidiaries; and
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(ii) unaudited consolidated and consolidating balance sheets
and statements of income, changes in stockholders' equity, and cash
flow of JLH and all subsidiaries (the "Most Recent Financial
Statements") as of and for the month ended January 31, 1997 (the "Most
Recent Fiscal Month End") for JLH and its Subsidiaries.
The Financial Statements (including the Notes thereto) have been prepared in
accordance with GAAP applied on a consistent basis throughout the periods
covered thereby, present fairly the financial condition of JLH and its
Subsidiaries as of such dates and the results of operations of JLH and its
Subsidiaries for such periods, are correct and complete, and are consistent with
the books and records of JLH and its Subsidiaries (which books and records are
correct and complete); provided, however, that the Most Recent Financial
Statements are subject to normal year-end adjustments (which will not be
material individually or in the aggregate) and lack footnotes and other
presentation items.
(j) Events Subsequent to Most Recent Fiscal Year End. Since the
Most Recent Fiscal Year End, there has not been any adverse change in the
business, financial condition, operations, results of operations, or future
prospects of any of JLH and the Acquisition Company or any Subsidiaries. Without
limiting the generality of the foregoing, since that date:
(i) neither of JLH the Acquisition Company, nor any other
Subsidiary has sold, leased, transferred, or assigned any of its
assets, tangible or intangible, other than for a fair consideration;
(ii) neither of JLH the Acquisition Company, nor any other
Subsidiary has entered into any agreement, contract, lease, or license
(or series of related agreements, contracts, leases, and licenses)
either involving more than $50,000.00 or outside the Ordinary Course of
Business;
(iii) neither JLH, the Acquisition Company, nor any Subsidiary
has accelerated, terminated, modified, or canceled any agreement,
contract, lease, or license (or series of related agreements,
contracts, leases, and licenses) involving more than $50,000.00 or
outside the Ordinary Course of Business;
(iv) no Security Interest upon any of the assets, tangible or
intangible, of JLH, the Acquisition Company, or any other Subsidiary
has been created;
(v) neither of JLH the Acquisition Company, nor any other
Subsidiary has made any capital expenditure (or series of related
capital expenditures) either involving more than $100,000.00 or outside
the Ordinary Course of Business;
(vi) neither of JLH the Acquisition Company, nor any other
Subsidiary has made any capital investment in, any loan to, or any
acquisition of the securities or assets of, any other Person (or series
of related capital investments,
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loans, and acquisitions) either involving more than $1,000,000.00 or
outside the Ordinary Course of Business;
(vii) neither of JLH the Acquisition Company, nor any other
Subsidiary has issued any note, bond, or other debt security or
created, incurred, assumed, or guaranteed any indebtedness for borrowed
money or capitalized lease obligation either involving more than
$1,000,000.00 singly or $2,500,000.00 in the aggregate;
(viii) neither of JLH the Acquisition Company, nor any other
Subsidiary has delayed or postponed the payment of accounts payable and
other Liabilities outside the Ordinary Course of Business;
(ix) neither of JLH the Acquisition Company, nor any other
Subsidiary has canceled, compromised, waived, or released any right or
claim (or series of related rights and claims) either involving more
than $50,000.00;
(x) neither of JLH the Acquisition Company, nor any other
Subsidiary has granted any license or sublicense of any rights under or
with respect to any Intellectual Property;
(xi) there has been no change made or authorized in the
charter or bylaws of JLH, the Acquisition Company, or any other
Subsidiary;
(xii) neither of JLH the Acquisition Company, nor any other
Subsidiary has issued, sold, or otherwise disposed of any of its
capital stock, or granted any options, warrants, or other rights to
purchase or obtain (including upon conversion, exchange, or exercise)
any of its capital stock;
(xiii) neither of JLH the Acquisition Company, nor any other
Subsidiary has declared, set aside, or paid any dividend or made any
distribution with respect to its capital stock (whether in cash or in
kind) or redeemed, purchased, or otherwise acquired any of its capital
stock;
(xiv) neither of JLH the Acquisition Company, nor any other
Subsidiary has experienced any damage, destruction, or loss (whether or
not covered by insurance) to its property;
(xv) neither of JLH the Acquisition Company, nor any other
Subsidiary has made any loan to, or entered into any other transaction
with, any of its directors, officers, and employees outside the
Ordinary Course of Business;
(xvi) neither of JLH the Acquisition Company, nor any other
Subsidiary has entered into any employment contract or collective
bargaining agreement, written or oral, or modified the terms of any
existing such contract or agreement;
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(xvii) neither of JLH the Acquisition Company, nor any other
Subsidiary has granted any increase in the base compensation of any of
its directors, officers, and employees outside the Ordinary Course of
Business;
(xviii) neither of JLH the Acquisition Company, nor any other
Subsidiary has adopted, amended, modified or terminated any bonus,
profit-sharing, incentive, severance, or other plan, contract, or
commitment for the benefit of any of its directors, officers, and
employees (or taken any such action with respect to any other Employee
Benefit plan);
(xix) neither of JLH the Acquisition Company, nor any other
Subsidiary has made any other change in employment terms for any of its
directors, officers, and employees outside the Ordinary Course of
Business;
(xx) neither of JLH the Acquisition Company, nor any other
Subsidiary has made or pledged to make any charitable or other capital
contribution outside the Ordinary Course of Business;
(xxi) neither of JLH the Acquisition Company, nor any other
Subsidiary has paid any amount to any third party with respect to any
Liability or obligation (including any costs and expenses JLH has
incurred or may incur in connection with this Agreement and the
transactions contemplated hereby) which would not constitute an Assumed
Liability if in existence as of the Closing;
(xxii) there has not been any other occurrence, event,
incident, action, failure to act, or transaction outside the Ordinary
Course of Business involving either JLH, the Acquisition Company, or
any Subsidiary; and
(xxiii) neither of JLH the Acquisition Company, nor any other
Subsidiary has committed to any of the foregoing.
(k) Undisclosed Liabilities. Neither of JLH and the Acquisition
Company has any Liability (and there is no basis for any present or future
action, suit, proceeding, hearing, investigation, charge, complaint, claim, or
demand against any of them giving rise to any Liability), except for
(i) Liabilities set forth on the face of the Most Recent
Balance Sheet (rather than in any notes thereto) and
(ii) Liabilities which have arisen after the Most Recent
Fiscal Month End in the Ordinary Course of Business (none of which
results from, arises out of, relates to, is in the nature of, or was
caused by any breach of contract, breach of warranty, tort,
infringement, or violation of law).
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(l) ERISA; Employee Benefit Plans.
(i) The Disclosure Schedule contains a complete list of
all employee benefit plans sponsored or maintained by JLH or its
Subsidiaries or under which JLH or its Subsidiaries may be obligated.
JLH has delivered to CALCI accurate and complete:
(A) Copies of all employee benefit plan documents and all
other material documents relating thereto, including
all summary plan descriptions, summary annual reports
and insurance contracts;
(B) detailed summaries of all unwritten employee benefit
plans;
(C) copies of the most recent financial statements and
actuarial reports with respect to all employee
benefit plans for which financial statements or
actuarial reports are required or have been prepared;
and
(D) copies of all annual reports for all employee benefit
plans (for which annual reports are required)
prepared since JLH's inception.
Each employee benefit plan providing benefits that are funded
through a policy of insurance is indicated by the word "insured" placed
by the listing of the employee benefit plans in the JLH Disclosure
Schedule.
(ii) All employee benefit plans listed in the JLH
Disclosure Schedule conform (and at all times have conformed) in all
material respects to, and are being administered and operated (and have
at all times been administered and operated) in material compliance
with, all applicable requirements of ERISA, the Internal Revenue Code
of 1986, as amended (the "Code"), and all other applicable Laws.
(iii) Any employee benefit plan that is intended to be
qualified under Section 401(a) of the Code and exempt from tax under
Section 501(a) of the Code has been determined by the Internal Revenue
Service ("IRS") to be so qualified, and such determination remains in
effect and has not been revoked. Nothing has occurred since the date of
any such determination that is reasonably likely to affect adversely
such qualification or exemption, or result in the imposition of excise
taxes or income taxes or unrelated business income under the Code or
ERISA with respect to any such employee benefit plan.
(iv) JLH and its Subsidiaries do not have a defined
benefit plan subject to Title IV of ERISA and do not have a current or
contingent obligation to contribute to any multi-employer plan (as
defined in Section 3(37) of ERISA). JLH and its Subsidiaries have no
liability with respect to any employee benefit plan (as defined in
Section 3(3) of ERISA) other than with respect to the employee benefit
plans listed on the JLH Disclosure Schedule.
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(v) There are no pending or, to JLH's knowledge,
threatened proceedings by or on behalf of any employee benefit plan
listed on the Disclosure Schedule, or by or on behalf of any individual
participants or beneficiaries of any such employee benefit plan,
alleging any breach of fiduciary duty on the part of JLH or its
Subsidiaries or any of their officers, directors or employees under
ERISA or any other applicable regulations, or claiming benefit payments
other than those made in the ordinary operation of such plans, nor is
there, to JLH's knowledge, any basis for any such Proceeding. To JLH's
knowledge, the Employee Benefit plans listed on the Disclosure Schedule
are not the subject to any investigation, audit or action by the
Internal Revenue Service, the Department of Labor or the Pension
Benefit Guaranty Corporation ("PBGC").
(vi) No former or present employee of JLH or its
Subsidiaries has any claim against JLH or its Subsidiaries (whether
under federal or state law, any employment agreement or otherwise) on
account of or for:
(A) Overtime pay;
(B) wages or salary for any period;
(C) vacation, time off or pay in lieu of vacation or time
off; or
(D) any violation of any statute, ordinance or regulation
relating to minimum wages or maximum hours of work.
No person or party (including, but not limited to,
governmental agencies of any kind) has any claim or basis for any
Proceeding against JLH or its Subsidiaries arising out of any statute,
ordinance or regulation relating to discrimination in employment or to
employment practices, sexual harassment or occupational safety and
health standards.
(m) Status of SEC Reporting. JLH has been a reporting company (as
such is designated by the SEC) for at least one continuous year, has filed all
required report in a timely manner according to SEC rules and regulations during
that year. JLH has complied in all material respects with all rules and
regulations of the SEC. All information provided to the SEC is true and correct
and does not contain any untrue or misleading statements of material facts.
(n) Control Share Acquisition. Section 607.0902, Florida Statutes,
relative to control share acquisitions does not apply to the transactions
contemplated by this Agreement.
(o) Accounts Receivable. The accounts receivable of JLH and its
Subsidiaries are bona fide accounts receivable created in the ordinary course of
business and JLH is aware of no reason why accounts receivable are not good and
collectable within periods of time normally prevailing in the assisted living
industry at the recorded amounts
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thereof, subject to the allowance for doubtful accounts receivable that is
included in the JLH balance sheet. To the best of JLH's knowledge, no account
receivable is subject to any claim for reduction, counterclaim, set off,
recoupment or other claim for credit by the obligor thereof.
(p) Board Recommendation. By a vote of the directors present at a
meeting of JLHOs Board of Directors on February 3, 1997 (which meeting was duly
called and held and at which a quorum was present at all time), the Board of
Directors of JLH:
(i) approved and adopted this Agreement, including the
Merger and the other transactions contemplated herein, and determined
that the Merger is fair to the shareholders of JLH.
(ii) intentionally left blank.
(q) Liquidity. Neither JLH, nor any of its Subsidiaries, including
the Acquisition Company shall take any action, or omit to take any action, which
would have the effect of materially decreasing the liquidity or availability of
JLHOs or any of its SubsidiariesO current assets as of the date of this
Agreement, or invest any funds not used by JLH or any of its Subsidiaries for
working capital purposes between the date of this Agreement and Effective Time
in any investment other than direct obligations of or instruments guaranteed by
the United States of America having a maturity of not more than one year;
provided, however, that JLH and its Subsidiaries shall not dispose of any
marketable equity securities.
(r) Default. Neither JLH nor any of JLHOs Subsidiaries is in
default, nor do any circumstances exist which, with notice or the passage of
time, or both, would give rise to a default under any of the documents, recorded
or unrecorded, relating to any properties owned by JLH or its Subsidiaries or
with respect to any contractual obligations that would have a material adverse
effect on such properties.
(s) Insurance. JLH and its Subsidiaries are, and will be through
the Closing Date, adequately insured with responsible insurers in respect of
their properties, assets and business against risks normally insured against by
companies in similar lines of business under similar circumstances. The
Disclosure Schedule correctly describes (by type, carrier, policy number,
limits, premium and expiration date) the insurance coverage carried by JLH and
its Subsidiaries with respect to the business of JLH and its Subsidiaries, which
insurance will remain in full force and effect with respect to all events
occurring prior to the Closing. JLH and its Subsidiaries:
(i) have not failed to give any notice or present any
claim under any such policy or binder in due and timely fashion;
(ii) have not received notice of cancellation or
non-renewal of any such policy or binder;
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(iii) are not aware of any threatened or proposed
cancellation or non-renewal of any such policy or binder; and
(iv) have not received notice of and are not otherwise
aware of any insurance premiums which will be materially increased in
the future.
There are no outstanding claims under any such policy which have gone
unpaid for more than forty-five (45) days, or as to which the insurer has
disclaimed liability.
5. COVENANTS. The Parties agree as follows with respect to the
period from and after the execution of this Agreement.
(a) General. Each of the Parties will use its best efforts to take
all action and to do all things necessary, proper, or advisable in order to
consummate and make effective the transactions contemplated by this Agreement
(including satisfaction, but not waiver, of the closing conditions set forth
below). Additionally, the Parties shall use their best efforts:
(i) If any events should occur, either within or without
the knowledge or control of any party, which would prevent fulfillment
of the conditions to the obligations of any party hereto to consummate
the transactions contemplated by this Agreement, to cure the same as
expeditiously as possible;
(ii) To cooperate fully with each other in preparing,
filing, prosecuting, and taking any other actions which are or may be
reasonable and necessary to obtain the consent of any governmental
instrumentality or any third party to accomplish the transactions
contemplated by this Agreement;
(iii) To deliver such other instruments of title,
certificates, consents, endorsements, assignments, assumptions and
other documents or instruments, in form reasonably acceptable to the
Party requesting the same and its counsel, as may be reasonably
necessary to carry out and/or to comply with the terms of this
Agreement and the transactions contemplated herein; and
(iv) To confer on a regular basis with the other, report
on material operational matters and promptly advise the other orally
and in writing of any change or event resulting in, or which, insofar
as can reasonably be foreseen could result in, a material adverse
change on such Party or which would cause or constitute a material
breach of any of the representations, warranties or covenants of such
Party contained herein.
(b) Regulatory Matters and Approvals. Each of the Parties will
give any notices to, make any filings with, and use its best efforts to obtain
any authorizations, consents, and approvals of governments and governmental
agencies required of them individually in connection with the matters referred
to in Section 3 and Section 4 above.
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(c) Operation of Business. Each Party hereby agrees that, except with
the prior written consent of the other Party, it will not engage in any
practice, take any action, or enter into any transaction outside the Ordinary
Course of Business. Without limiting the generality of the foregoing, each Party
agrees that it will not:
(i) authorize or effect any change in its charter or
bylaws;
(ii) grant any options, warrants, or other rights to
purchase or obtain any of its capital stock or issue, sell, or
otherwise dispose of any of its capital stock (except upon the
conversion or exercise of options, warrants, and other rights currently
outstanding);
(iii) None of the Parties will declare, set aside, or pay
any dividend or distribution with respect to its capital stock (whether
in cash or in kind), or redeem, repurchase, or otherwise acquire any of
its capital stock, in either case outside the Ordinary Course of
Business;
(iv) None of the Parties will issue any note, bond, or
other debt security or create, incur, assume, or guarantee any
indebtedness for borrowed money or capitalized lease obligation outside
the Ordinary Course of Business;
(v) None of the Parties will impose any Security Interest
upon any of its assets outside the Ordinary Course of Business;
(vi) None of the Parties will make any capital investment
in, make any loan to, or acquire the securities or assets of any other
Person outside the Ordinary Course of Business;
(vii) None of the Parties will make any change in
employment terms for any of its directors, officers, and employees
outside the Ordinary Course of Business; and
(viii) None of the Parties will commit to any of the
foregoing.
(d) Full Access. The Parties will permit representatives of each
to have full access at all reasonable times, and in a manner so as not to
interfere with their normal business operations, to all premises, properties,
personnel, books, records (including tax records), contracts, and documents of
or pertaining to each of the Parties. Each of the Parties will treat and hold as
such any Confidential Information any one receives from any other in the course
of the reviews contemplated by this subsection, will not use any of the
Confidential Information except in connection with this Agreement, and, if this
Agreement is terminated for any reason whatsoever, agree to return as soon as
possible to source of such Confidential Information all tangible embodiments
(and all copies) thereof which are in the Party's possession.
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(e) Notice of Developments. Each Party will give prompt written
notice to the others of any material adverse development causing a breach of any
of its own representations and warranties in Section 3 and Section 4 above. No
disclosure by any Party pursuant to this subsection, however, shall be deemed to
amend or supplement the Disclosure Schedule or to prevent or cure any
misrepresentation, breach of warranty, or breach of covenant. Additionally, the
Parties shall promptly notify each other of:
(i) any notice or other communication from any person
alleging that the consent of such person is or may be required in
connection with the transactions contemplated by this Agreement;
(ii) any notice or other communication from any foreign or
domestic governmental or regulatory agency or authority in connection
with the transactions contemplated by this Agreement;
(iii) any actions, suits, claims, investigations or
proceedings commenced or, to the respective Party's knowledge,
threatened against, relating to or involving or otherwise affecting the
Party or any of its Subsidiaries which, if pending on the date of this
Agreement, would have been required to have been disclosed pursuant
hereto or which relate to the consummation of the transactions
contemplated by this Agreement; and
(iv) the occurrence of any event relating to the Parties or
their Subsidiaries or the transactions contemplated hereby to which the
Parties shall become aware that would require any amendment or
supplement any SEC registration statement then in effect.
(f) Exclusivity. JLH will not, directly or indirectly, through any
officer, director, agent, shareholder or otherwise:
(i) Solicit or initiate, directly or indirectly, or
encourage submission of inquiries, proposals, or offers from any person
or entity other than CALCI relating to the disposition or merger of the
assets (whether tangible or intangible) or securities of JLH, its
affiliates, subsidiaries, or any divisions thereof; or
(ii) subject to fiduciary obligations under applicable law as
advised in writing by counsel, participate in any discussions or
negotiations regarding, or furnish to any person or entity any
information with respect to, the disposition of the assets (whether
tangible or intangible) or any securities of JLH, its affiliates,
subsidiaries, or any divisions thereof.
Furthermore, JLH shall not offer the assets (tangible or intangible) which
comprise JLH, its affiliates, subsidiaries, or any divisions thereof, for sale
or combination to any person or entity other than CALCI nor will JLH, or any of
its stockholders, enter into negotiation with any other party for the
disposition or combination of the business or stock of XXX,
00
00
its affiliates, subsidiaries, or any divisions thereof, during the pendency of
negotiations between Community and JLH pursuant to this Agreement.
(g) Insurance and Indemnification.
(i) JLH will not take any action to alter or impair any
exculpatory or indemnification provisions now existing in the
certificate of incorporation or bylaws of CALCI for the benefit of any
individual who served as a director or officer of CALCI at any time
prior to the Effective Time.
(ii) JLH will hold harmless, indemnify and defend CALCI at
any time prior to the Effective Time or, at any time should CALCI not
close this transaction, from and against any and all actions, suits,
proceedings, hearings, investigations, charges, complaints, claims,
demands, injunctions, judgments, orders, decrees, rulings, damages,
dues, penalties, fines, costs, amounts paid in settlement, liabilities,
obligations, taxes, liens, losses, expenses, and fees, including court
costs and attorneys' fees and expenses, resulting from, arising out of,
relating to, in the nature of, or caused by this Agreement or any of
the transactions contemplated herein.
(h) Solicitation of Employees. In the event of the termination of
this Agreement prior to Closing, the Parties shall not, for a period of two (2)
years from the date of such termination, call on, solicit, take away or attempt
to call on, solicit, or take away any of the employees of the other who was
employed by one of the Parties at any time during the period of this Agreement,
either for the benefit of the soliciting Party or any other person, firm or
corporation. This provision shall specifically survive the termination or
Closing hereof.
(i) Indemnification by Parties.
(i) JLH (on its own behalf and on behalf of its
Subsidiaries) and the Acquisition Company shall hold harmless,
indemnify and defend CALCI against and with respect to any and all
damage, loss, liability, deficiency, cost and expense, including
without limitation reasonable attorney's fees, resulting from any
misrepresentation, breach of warranty, failure to fulfill any agreement
or covenant on JLH's part under this Agreement.
(ii) CALCI shall hold harmless, indemnify and defend JLH
and the Acquisition Company against and with respect to any and all
damage, loss, liability, deficiency, cost and expense, including
without limitation reasonable attorney's fees, resulting from any
misrepresentation, breach of warranty, failure to fulfill any agreement
or covenant on CALCI's part under this Agreement.
6. CONDITIONS TO OBLIGATION TO CLOSE.
(a) Conditions to Obligation of JLH and the Acquisition Company.
The obligation of each of JLH and the Acquisition Company to consummate the
transactions
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to be performed by it in connection with the Closing is subject to satisfaction
of the following conditions:
(i) the representations and warranties set forth in
Section 3 above shall be true and correct in all material respects at
and as of the Closing Date;
(ii) CALCI shall have performed and complied with all of
its covenants hereunder in all material respects through the Closing;
(iii) CALCI shall have delivered to JLH and the Acquisition
Company a certificate to the effect that each of the conditions
specified above in Section 6(a)(i)-(iii) is satisfied in all respects;
(iv) any information required to be filed under the
Securities Act shall have been accepted and become effective under the
Securities Act;
(v) JLH and the Acquisition Company shall have received
from counsel to CALCI an opinion in form and substance as set forth in
Exhibit E attached hereto, addressed to JLH and the Acquisition
Company, and dated as of the Closing Date;
(vi) all actions to be taken by CALCI in connection with
consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to
effect the transactions contemplated hereby will be reasonably
satisfactory in form and substance to JLH and the Acquisition Company.
JLH and the Acquisition Company may waive any condition specified in this
Section 6(a) if they execute a writing so stating at or prior to the Closing.
b. The obligation of CALCI to consummate the transactions to be
performed by it in connection with the Closing is subject to satisfaction of the
following conditions:
(i) CALCI is fully satisfied, in its sole and absolute
discretion, with the results of its Acquisition Audit as described in
Section 2 above;
(ii) the representations and warranties set forth in
Section 4 above shall be true and correct in all material respects at
and as of the Closing Date, without regard to any amendment to the JLH
Disclosure made subsequent to the date hereof;
(iii) this Agreement and the Merger shall have received the
Requisite Stockholder Approval;
(iv) the transaction herein contemplated shall be deemed a
tax free reorganization;
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(v) Xxxxxxxxx X. Xxxxxx and Xxxx X. Xxxxxxxx have entered
into a Shareholder Agreement as set forth in Paragraph 2(i).
(vi) each of JLH and the Acquisition Company shall have
performed and complied with all of its covenants hereunder in all
material respects through the Closing;
(vii) No action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative agency
of any federal, state, local, or foreign jurisdiction or before any
arbitrator wherein an unfavorable injunction, judgment, order, decree,
ruling, or charge would:
(A) prevent consummation of any of the transactions
contemplated by this Agreement,
(B) cause any of the transactions contemplated by this
Agreement to be rescinded following consummation,
(C) affect adversely the right of the shareholders of
CALCI to own the capital stock of the Surviving
Corporation and share in the control the Surviving
Corporation and its Subsidiaries, or
(D) affect adversely the right of any of the Surviving
Corporation and its Subsidiaries to own its assets
and to operate its businesses (and no such
injunction, judgment, order, decree, ruling, or
charge shall be in effect);
(viii) each of JLH and the Acquisition Company shall have
delivered to CALCI a signed certificate to the effect that each of the
conditions specified above in Section 6(b)(i)-(vi) is satisfied in all
respects;
(ix) the Parties shall have received all other
authorizations, consents, and approvals of governments and governmental
agencies referred to in Section 3 and Section 4 above;
(x) all actions to be taken by JLH and the Acquisition
Company in connection with consummation of the transactions
contemplated hereby and all certificates, opinions, instruments, and
other documents required to effect the transactions contemplated hereby
will be satisfactory in form and substance to CALCI;
(xi) CALCI shall have received an opinion of an attorney
licensed to practice in the State of Florida retained by JLH, dated as
of the Effective Time, in the form and substance reasonably
satisfactory to CALCI.
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CALCI may waive any condition specified in this Section 6(b) if it executes a
writing so stating at or prior to the Closing.
7. TERMINATION.
(a) Termination of Agreement. Any of the Parties may terminate
this Agreement with the prior authorization of its board of directors (whether
before or after stockholder approval) as provided below:
(i) the Parties may terminate this Agreement by mutual
written consent at any time prior to the Effective Time;
(ii) JLH and the Acquisition Company may terminate this
Agreement by giving written notice to CALCI if the Closing shall not
have occurred upon the expiration of thirty (30) days from the date
hereof, by reason of the failure of any condition precedent hereunder
(unless the failure results primarily from JLH or the Acquisition
Company breaching any representation, warranty, or covenant contained
in this Agreement);
(iii) CALCI may terminate this Agreement by giving written
notice to JLH and the Acquisition Company at any time prior to the
Effective Time:
(A) in the event JLH or the Acquisition Company has
breached any material representation, warranty, or
covenant contained in this Agreement in any material
respect, CALCI has notified JLH and the Acquisition
Company of the breach, and the breach has continued
without cure for a period of 30 days after the notice
of breach, or
(B) if the Closing shall not have occurred on or before
the expiration of thirty (30) days from the date
hereof, by reason of the failure of any condition
precedent hereunder (unless the failure results
primarily from CALCI breaching any representation,
warranty, or covenant contained in this Agreement);
(iv) CALCI may, without any liability, terminate this
Agreement by giving written notice to JLH and the Acquisition Company
at any time prior to the Effective Time in the event CALCI's board of
directors concludes that termination would be in the best interests of
CALCI and its stockholders.
(b) Effect of Termination. If any Party terminates this Agreement
pursuant to Section 7(a) above, all rights and obligations of the Parties
hereunder shall terminate without any liability of any Party to any other Party
(except for any liability of any Party then in breach); provided, however, that
the confidentiality provisions contained in Section 5 above shall survive any
such termination.
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8. REGISTRATION RIGHTS.
A. Demand Registrations.
(i) Requests for Registration. Subject to paragraph
1(b) below, at any time and from time to time after the first
anniversary of the Effective Date, the holders of at least 51%
of the shares held by the former shareholders of CALCI
(ORegistrable SecuritiesO) may request registration, whether
underwritten or otherwise, of all or part of their Registrable
Securities on Form S-1 or any similar long-form registration
("Long-Form Registrations"), or on Form S-2 or S-3 or any
similar short-form registration ("Short-Form Registrations")
if available. Within ten days after receipt of any such
request, the Company will give written notice of such
requested registration to all other holders of Registrable
Securities and will include in such registration all
Registrable Securities with respect to which the Company has
received written requests for inclusion therein within 15 days
after the receipt of the Company's notice. All registrations
requested pursuant to this paragraph 1(a) are referred to
herein as "Demand Registrations".
(ii) Restrictions on Demand Registrations. The
Company will not be obligated to effect any Demand Long-Form
Registration during the period starting with the date thirty
(30) days prior to the Company's good faith estimate of the
date of filing of, and ending on a date one hundred twenty
(120) days after the effective date of, a Company-initiated
registration; provided that the Company is actively employing
in good faith all reasonable efforts to cause such
registration statement to become effective. The Company may
postpone for up to one hundred twenty (120) days the filing or
the effectiveness of a registration statement for a Demand
Registration if the Company determines in good faith, that
such Demand Registration would reasonably be expected to have
a material adverse effect on the Company.
B. Piggyback Registrations.
(i) Right to Piggyback. Whenever the Company
proposes to register any of its securities under the
Securities Act (other than pursuant to (i) a Demand
Registration, (ii) a registration in connection with shares
issued by the Company in connection with a merger,
consolidation, exchange offer or the acquisition of all or
substantially all of the assets of any company or companies or
(iii) a registration solely of shares that have been issued
pursuant to the Company's employee benefit plans) and the
registration form to be used may be used for the registration
of Registrable Securities (a "Piggyback Registration"), the
Company will give prompt written notice to all holders of
Registrable Securities of its intention to effect such a
registration and will include in such registration all
Registrable Securities with respect to which the Company has
received written requests for inclusion therein within fifteen
(15) days after the receipt of the Company's notice.
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(ii) Piggyback Expenses. The Registration
Expenses of the holders of Registrable Securities will be paid
by the Company in all Piggyback Registrations.
(iii) Priority on Primary Registrations. If a
Piggyback Registration is an underwritten primary registration
on behalf of the Company, the Company will include in such
registration all Registrable Securities requested to be
included in such registration; provided, that if the managing
underwriters advise the Company in writing that in their
opinion the number of securities requested to be included in
such registration exceeds the number which can be sold in such
offering without adversely affecting the marketability of the
offering, the Company will include in such registration (i)
first, the securities the Company proposes to sell, (ii)
second, the Registrable Securities (and other securities with
pari passu registration rights) requested to be included in
such registration, pro rata among the holders of such
Registrable Securities (and other securities with pari passu
registration rights) on the basis of the number of shares of
Registrable Securities (and other securities with pari passu
registration rights) owned by each holder of securities to be
registered in such offering and (iii) third, other securities,
if any, requested to be included in such registration;
provided that in any event the holders of Registrable
Securities shall be entitled to register at least 20% of the
securities to be included in any such registration, other than
the Company's initial underwritten primary registration,
unless waived by the holders of at least 51% of the
Registrable Securities to be included in such registration.
(iv) Priority on Secondary Registrations. If a
Piggyback Registration is an underwritten secondary
registration on behalf of holders of the Company's securities,
and the managing underwriters advise the Company in writing
that in their opinion the number of securities requested to be
included in such registration exceeds the number which can be
sold in such offering without adversely affecting the
marketability of the offering, the Company will include in
such registration (i) first, the securities requested to be
included in such registration by the holders requesting such
registration, (ii) second, the Registrable Securities (and
other securities with pari passu registration rights)
requested to be included in such registration, pro rata among
the holders of such Registrable Securities (and other
securities with pari passu registration rights) on the basis
of the number of Registrable Securities (and other securities
with pari passu registration rights) owned by each holder of
securities to be registered in such offering, and (iii) third,
other securities requested to be included in such registration
not covered by clause (i) above.
(v) Other Registrations. If the Company has
previously filed a registration statement with respect to
Registrable Securities pursuant to paragraph 1 or pursuant to
this paragraph 2, and if such previous registration has not
been withdrawn or abandoned, the Company will not file or
cause to be effected any other registration of any of its
equity securities or securities convertible or exchangeable
into or exercisable for its equity securities under the
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Securities Act (except on Forms S-4 or S-8 or any successor
forms thereto), whether on its own behalf or at the request of
any holder or holders of such securities, until a period of at
least six (6) months has elapsed from the effective date of
such previous registration.
9. MISCELLANEOUS.
(a) Survival. None of the representations, warranties, and
covenants of the Parties (other than the provisions in Section 2 above
concerning payment of the Merger Consideration and the provisions in Section 5
above concerning insurance and indemnification) will survive the Effective Time.
(b) Press Releases and Public Announcements. No Party shall issue
any press release or make any public announcement relating to the subject matter
of this Agreement without the prior written approval of the other Parties;
provided, however, that any Party may make any public disclosure which is
required by applicable law or any listing or trading agreement concerning its
publicly-traded securities (in which case the disclosing Party will use its best
efforts to advise the other Party in writing at least ten (10) days prior to
making the disclosure.
(c) No Third Party Beneficiaries. This Agreement shall not confer
any rights or remedies upon any Person other than the Parties and their
respective successors and permitted assigns; provided, however, that the
provisions in Section 2 above concerning payment of the Merger Consideration are
intended for the benefit of CALCI Stockholders.
(d) Entire Agreement. This Agreement (including the documents
referred to herein) constitutes the entire agreement among the Parties and
supersedes any prior understandings, agreements, or representations by or among
the Parties, written or oral, to the extent they related in any way to the
subject matter hereof.
(e) Succession and Assignment. This Agreement shall be binding
upon and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of its rights, interests, or obligations hereunder without the prior written
approval of the other Parties.
(f) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(g) Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(h) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication
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hereunder shall be deemed duly given if (and then two business days after) it is
sent by registered or certified mail, return receipt requested, postage prepaid,
and addressed to the intended recipient as set forth below:
If to CALCI: Community Assisted Living Centers, Inc.
ATTN: Xxxx X. Xxxxxxxx, President & CEO
0000 Xxxxxxx Xxxxx Xxxxx
Xxxxxxx, Xxxxxxx 00000
tel.: (000) 000-0000
fax: (000) 000-0000
Copy to: Xxxxx Xxxxxx, Esq.
Xxxxx, McClosky, Smith, Xxxxxxxx & Xxxxxxx, P.A.
000 Xxxx Xxxxxxx Xxxxxxxxx
Xx. Xxxxxxxxxx, Xxxxxxx 00000
tel.: (000) 000-0000
fax: (000) 000-0000
If to JLH: Just Like Home, Inc.
ATTN: Xxxxxxx X. Xxxxxx, M.D., Chairman
0000 Xxxxxx Xxxx Xxxx
Xxxxxxxxx, Xxxxxxx 00000-0000
tel.: 000.000.0000
fax: 000.000.0000
Copy to: Xxxxxxx X. Xxxxxxxx, Esq.
Schifino & Xxxxxxxxx, P.A.
000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxx, Xxxxxxx 00000
tel.: 000.000.0000
fax: 000.000.0000
If to the Acquisition Company:
Just Like Home Acquisition Company
0000 Xxxxxx Xxxx Xxxx
Xxxxxxxxx, Xxxxxxx 00000-0000
tel.: 000.000.0000
fax: 000.000.0000
Copy to: Xxxxxxx X. Xxxxxxxx, Esq.
Schifino & Xxxxxxxxx, P.A.
000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxx, Xxxxxxx 00000
tel.: 000.000.0000
fax: 000.000.0000
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Any Party may send any notice, request, demand, claim, or other
communication hereunder to the intended recipient at the address set forth above
using any other means (including personal delivery, expedited courier, messenger
service, telecopy, telex, ordinary mail, or electronic mail), but no such
notice, request, demand, claim, or other communication shall be deemed to have
been duly given unless and until it actually is received by the intended
recipient. Any Party may change the address to which notices, requests, demands,
claims, and other communications hereunder are to be delivered by giving the
other Parties notice in the manner herein set forth.
(i) Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Florida without giving effect
to any choice or conflict of law provision or rule (whether of the State of
Florida or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of Florida.
(j) Amendments and Waivers. The Parties may mutually amend any
provision of this Agreement at any time prior to the Effective Time with the
prior authorization of their respective boards of directors; provided, however,
that any amendment effected subsequent to stockholder approval will be subject
to the restrictions contained in the Florida General Corporation Law. No
amendment of any provision of this Agreement shall be valid unless the same
shall be in writing and signed by all of the Parties. No waiver by any Party of
any default, misrepresentation, or breach of warranty or covenant hereunder,
whether intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
(k) Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(l) Expenses. Each of the Parties will bear its own costs and expenses
(including legal fees and expenses) incurred in connection with this Agreement
and the transactions contemplated hereby.
(m) Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context otherwise requires. The
word "including" shall mean including without limitation.
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(n) Incorporation of Exhibits and Schedules. The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof.
(o) Costs. Unless otherwise stated herein, the Parties will each be
solely responsible for and bear all of their own respective expenses, including,
without limitation, expenses of legal counsel, accountants, and other advisors,
incurred at any time in connection with pursuing or consummating this Agreement,
and the transactions contemplated thereby. In the event any party takes legal
action to enforce any of the terms of this Agreement, the prevailing party to
such action shall not be entitled to reimbursement for such party's expenses,
including reasonable attorney's fees, incurred in such action.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on
the date first above written.
JUST LIKE HOME, INC.
By: /s/ Xxxxxxx X. Xxxxxx, M.D.
---------------------------------- ------------------------------
Corporate Secretary
Print: Its:
---------------------------- ------------------------------
----------------------------------
[Seal]
JLH ACQUISITION
CORPORATION
By:
---------------------------------- ------------------------------
Corporate Secretary
Print: Its:
---------------------------------- ------------------------------
----------------------------------
COMMUNITY ASSISTED
LIVING CENTERS, INC.
By:
---------------------------------- -----------------------------
Xxxxxx X. Xxxxxx, Secretary Xxxx X. Xxxxxxxx, President & CEO
[Seal]
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