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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: July 30, 1997
(Date of earliest event reported)
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ALTERNATIVE LIVING SERVICES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 1-11999 39-1771281
(State or other jurisdiction of (Commission file number) (I.R.S. Employer Identification No.)
incorporation or organization)
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450 N. SUNNYSLOPE ROAD, SUITE 300
BROOKFIELD, WISCONSIN 53005
(Address of principal executive offices)
(414) 789-9565
(Registrant's telephone number, including area code)
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Item 5. Other Events
On July 31, 1997, Alternate Living Services, Inc. (the
"Company") announced that it had entered into an Agreement and Plan of Merger,
dated as of July 30, 1997 (the "Merger Agreement), with Sterling House
Corporation, a Kansas corporation ("Sterling"), and Tango Merger Corporation, a
Kansas corporation and a wholly-owned subsidiary of the Company ("Merger Sub"),
which provides for the merger (the "Merger") of Merger Sub with and into
Sterling with Sterling continuing as the surviving corporation. Pursuant to
the Merger Agreement, at the effective time of the Merger (the "Effective
Time"), each share of Common Stock, no par value per share, of Sterling
("Sterling Common Stock"), outstanding immediately prior to the Effective Time
will be converted into the right to receive 1.1 shares of common stock, par
value $.01 per share, of the Company (the "Company Common Stock").
The merger is subject to certain conditions, including
required regulatory and shareholder approvals.
Concurrently with the execution of the Merger Agreement, the
Company and Sterling entered into a Cross Option Agreement (the "Cross Option
Agreement") whereby (i) the Company granted to Sterling an option to purchase
2,586,303 shares of the Company Common Stock at $21.625 per share, exercisable
only if the Merger Agreement becomes terminable or is terminated under
circumstances which could entitle Sterling to termination fees under the Merger
Agreement, and (ii) Sterling granted to the Company an option to purchase
1,003,344 shares of Sterling Common Stock at $18.25 per share, exercisable only
if the Merger Agreement becomes terminable or is terminated under circumstances
which would entitle the Company to termination fees under the Merger Agreement.
In connection with the execution and delivery of the Merger
Agreement, (i) Mr. Timothy J. Buchanan, Chairman of the Board and Chief
Executive Officer of Sterling, entered into an employment agreement with the
Company pursuant to which Mr. Buchanan will become the President of the Company
at the Effective Time of the Merger, (ii) Mr. Steven L. Vick, President of
Sterling, entered into an employment agreement with the Company and Sterling
pursuant to which Mr. Vick will remain as President of Sterling following the
Merger and will thereafter become the Chief Operating Officer of the Company.
Both employment agreements become effective only upon consummation of the
Merger.
On July 30, 1997, certain affiliates of Sterling (each, a
"Sterling Shareholder"), who collectively own approximately 45% of the
outstanding shares of Sterling Common Stock also entered into Stockholder
Voting Agreements (each, a "Voting Agreement") with the Company pursuant to
which each Sterling Shareholder appointed the Company such Company
Shareholder's lawful proxy and attorney-in-fact to vote such Sterling
Shareholder's Sterling Common Stock in favor of the approval of the Merger
Agreement and the Merger and against any "Third Party Transaction" (as such
term is defined in the Merger Agreement), and Sterling entered into Voting
Agreements with certain affiliates of the Company (each a "Company
Stockholder"), who collectively own approximately 26% of the outstanding
shares of the Company Common Stock, pursuant to
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which each Company Stockholder appointed Sterling such Company Stockholder's
lawful proxy and attorney-in-fact to vote such Company Stockholder's Company
Common Stock in favor of the approval of the Merger Agreement and the Merger
and against any Third Party Transaction.
Copies of the Merger Agreement, the Employment Agreements of
Messrs. Buchanan and Vick, the forms of the Stockholder Voting Agreements and
the Cross Option Agreement are filed as exhibits hereto. The foregoing
descriptions are qualified in their entirety by reference to such exhibits.
A copy of the press release issued by the Company on July 31,
1997, with respect to the Merger is attached hereto as Exhibit 99.1 and is
incorporated herein by reference.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
(a) None.
(b) None.
(c) Exhibits.
2.1 Agreement and Plan of Merger, dated
as of July 30, 1997, among the
Company, Merger Sub and Sterling.
99.1 Press release dated July 31, 1997,
announcing the Merger.
99.2 Form of Stockholder Voting Agreement
with Sterling affiliates.
99.3 Form of Stockholder Voting Agreement
with Company affiliates.
99.4 Employment Agreement with Timothy J.
Buchanan.
99.5 Employment Agreement with Steven L.
Vick.
99.6 Cross Option Agreement, dated July
30, 1997, between the Company and
Sterling.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, Registrant
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
Dated: August 14, 1997
ALTERNATIVE LIVING SERVICES, INC.
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(Registrant)
By: /s/ Thomas E. Komula
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Thomas E. Komula, Senior Vice President,
Treasurer and Chief Financial Officer
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