EXHIBIT 99.2
SHAREHOLDER AGREEMENT
SHAREHOLDER AGREEMENT, dated as of October 18, 1998 (this
"Agreement"), by the undersigned shareholder (the "Shareholder") of Karrington
Health, Inc., an Ohio corporation (the "Company"), for the benefit of Sunrise
Assisted Living, Inc., a Delaware corporation ("Acquiror").
RECITALS
WHEREAS, concurrently with the execution and delivery of this
Agreement, Acquiror, Buckeye Merger Corporation, an Ohio corporation ("Merger
Sub"), and the Company are entering into an Agreement of Merger of even date
herewith (the "Merger Agreement"; capitalized terms used but not defined herein
shall have the same meaning assigned to such terms in the Merger Agreement),
pursuant to which Merger Sub will be merged with and into the Company (the
"Merger"), the separate corporate existence of Merger Sub shall cease and the
Company shall continue as the surviving corporation in the Merger; and
WHEREAS, the Shareholder owns of record and/or holds stock options to
acquire (whether or not vested) that number of shares of Company Common Stock
appearing on the signature page hereof (such shares of Company Common Stock,
together with any other shares of capital stock of the Company acquired by such
Shareholder after the date hereof and during the term of this Agreement, being
collectively referred to herein as the "Subject Shares"); and
WHEREAS, the Shareholder will receive a significant economic benefit
as a result of the Merger; and
WHEREAS, as a condition to its willingness to enter into the Merger
Agreement, Acquiror has required that the Shareholder agree, and in order to
induce Acquiror to enter into the Merger Agreement the Shareholder has agreed,
to enter into this Agreement.
NOW, THEREFORE, in consideration of the promises and the mutual
covenants and agreements set forth herein, the Shareholder agrees as follows:
1. Proxy.
(a) With respect to the Merger, the Merger Agreement and any
Third Party Transaction for which approval of the shareholders of the
Company is sought, and any transactions contemplated thereby,
Shareholder hereby irrevocably makes, constitutes and appoints
Acquiror to act as Shareholder's true and lawful proxy and
attorney-in-fact in the name and on behalf of Shareholder, with full
power to appoint a substitute or substitutes. Shareholder further
directs Acquiror, and Acquiror hereby agrees, to vote all of the
Subject Shares which are entitled to vote at any meeting of the
shareholders of the Company (whether annual or special and
whether or not an adjourned meeting), or by written consent in the
place and stead of Shareholder in favor of the Merger as set forth in
the Merger Agreement and against any Third Party Transaction. By
giving this proxy Shareholder hereby revokes any other proxy granted
by Shareholder at any time with respect to the Subject Shares and no
subsequent proxies will be given with respect thereto by Shareholder.
(b) All power and authority hereby conferred is coupled with an
interest and is irrevocable, shall not be terminated by any act of
Shareholder or by operation of law, by lack of appropriate power of
authority, or by the occurrence of any other event or events and shall
be binding upon all beneficiaries, heirs at law, legatees,
distributees, successors, assigns and legal representatives of
Shareholder. If after the execution of this Agreement, Shareholder
shall cease to have appropriate power or authority, or if any other
such event or events shall occur, Acquiror is nevertheless authorized
and directed to vote the Subject Shares in accordance with the terms
of this Agreement as if such lack of appropriate power or authority or
other event or events had not occurred and regardless of notice
thereof.
(c) The proxy granted herein shall expire on the date of
termination of this Agreement.
2. Covenants of the Shareholder. Until the termination of this
Agreement in accordance with Section 5, the Shareholder irrevocably agrees as
follows:
(a) At any meeting of shareholders of the Company or at any
adjournment thereof or in any other circumstances upon which the
Shareholder's vote, consent or other approval is sought, the
Shareholder shall vote (or cause to be voted) the Subject Shares
against any amendment of the Company's Amended and Restated
Certificate of Incorporation and Restated By-Laws or other action,
which amendment or other action would in any manner impede, delay,
frustrate, prevent or nullify the Merger, the Merger Agreement, the
Option Agreement or any of the other transactions contemplated by the
Merger Agreement or change in any manner the voting rights of any
class of capital stock of the Company. The Shareholder further agrees
not to commit or agree to take any action inconsistent with the
foregoing.
(b) The Shareholder agrees not to (i) sell, transfer, pledge,
assign or otherwise dispose of (including by gift) (collectively,
"Transfer"), or enter into any contract, option or other arrangement
(including any profit-sharing arrangement) with respect to the
Transfer of the Subject Shares to any person or (ii) enter into any
voting arrangement, whether by proxy, voting agreement or otherwise,
in relation to the Subject Shares, and agrees not to commit or agree
to take any of the foregoing actions.
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(c) The Shareholder shall not, nor shall the Shareholder permit
any affiliate, director, officer, employee, investment banker,
attorney or other advisor or representative of the Shareholder to, (i)
directly or indirectly solicit, initiate or knowingly encourage the
submission of, any Third Party Transaction or (ii) directly or
indirectly participate in any discussions or negotiations regarding,
or furnish to any person any information with respect to, or take any
other action to facilitate any inquiries or the making of any proposal
that constitutes or may reasonably be expected to lead to, any Third
Party Transaction, except in the Shareholder's capacity as a director
or officer of the Company to the extent permitted under the Merger
Agreement.
(d) The Shareholder shall use the Shareholder's reasonable best
efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, and to assist and cooperate with Acquiror in doing,
all things necessary, proper or advisable to support and to consummate
and make effective, in the most expeditious manner practicable, the
Merger and the other transactions contemplated by the Merger Agreement.
3. Representations and Warranties. The Shareholder represents and
warrants to Acquiror as follows:
(a) The Shareholder is the record and beneficial owner of, and has
Good and marketable title to, the Subject Shares. The Shareholder does
not own, of record or beneficially, any shares of capital stock of the
Company other than the Subject Shares. The Shareholder has the sole
right to vote, and the sole power of disposition with respect to, the
Subject Shares, and none of the Subject Shares is subject to any voting
trust, proxy or other agreement, arrangement or restriction with respect
to the voting or disposition of such Subject Shares, except as
contemplated by this Agreement.
(b) This Agreement has been duly executed and delivered by the
Shareholder. Assuming the due authorization, execution and delivery of
this Agreement by Acquiror, this Agreement constitutes the valid and
binding agreement of the Shareholder enforceable against the Shareholder
in accordance with its terms, except as may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium and other similar
laws of general application which may affect the enforcement of
creditors' rights generally and by general equitable principles. Neither
the execution or delivery of this Agreement nor the consummation by
Shareholder of the transactions contemplated hereby will (i) require any
consent or approval of or filing with any person or entity (other than
filings, if any, required under the Securities Exchange Act, as amended)
or (ii) constitute a violation of, conflict with or constitute a default
under, any contract, commitment, agreement, understanding, arrangement
or other restriction of any kind to which Shareholder is a party or by
which Shareholder is bound.
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4. Understanding of this Agreement. The Shareholder has carefully
read this Agreement and has discussed its requirements, to the extent such
Shareholder believes necessary, with counsel (which may be counsel to the
Company). The undersigned further understands that the parties to the Merger
Agreement will be proceeding in reliance upon this Agreement.
5. Termination. The obligations of the Shareholder hereunder shall
terminate upon the earlier of (i) the Effective Time or (ii) at 5:00 p.m.
(Eastern Standard Time) on the 90th day following the date of the termination or
expiration of the Merger Agreement pursuant to Article VII thereof.
6. Further Assurances. The Shareholder will, from time to time,
execute and deliver, or cause to be executed and delivered, such additional or
further consents, documents and other instruments as Acquiror may reasonably
request for the purpose of effectively carrying out the transactions
contemplated by this Agreement.
7. Successors, Assigns and Transferees Bound. Any successor, assignee
or transferee (including a successor, assignee or transferee as a result of the
death of the Shareholder, such as an executor or heir) shall be bound by the
terms hereof, and the Shareholder shall take any and all actions necessary to
obtain the written confirmation from such successor, assignee or transferee that
it is bound by the terms hereof.
8. Remedies. The Shareholder acknowledges that money damages would be
both incalculable and an insufficient remedy for any breach of this Agreement by
it, and that any such breach would cause Acquiror irreparable harm. Accordingly,
the Shareholder agrees that in the event of any breach or threatened breach of
this Agreement, Acquiror, 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.
9. Severability. The invalidity or unenforceability of any provision
of this Agreement in any jurisdiction shall not affect the validity or
enforceability of any other provision of this Agreement in such jurisdiction, or
the validity or enforceability of any provision of this Agreement in any other
jurisdiction.
10. Amendment. This Agreement may be amended only by means of a
written instrument executed and delivered by both the Shareholder and Acquiror.
11. Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Ohio, regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws thereof.
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12. Headings. The headings of the Sections of this Agreement are
inserted for convenience of reference only and do not form a part or affect the
meanings hereof.
13. Counterparts. For the convenience of the parties, this Agreement
may be executed in counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument.
14. Entire Agreement. This Agreement constitutes the entire agreement
and suspends all prior agreements and understandings, both written and oral,
among the parties hereto with respect to the subject matter hereof.
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IN WITNESS WHEREOF, Acquiror and the Shareholder have caused this
Agreement to be executed as of the date first written above.
SUNRISE ASSISTED LIVING, INC.
By:
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Name: David W. Faeder
Title: President
SHAREHOLDER
Name:
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Address of Shareholder
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Telephone:
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Telecopier:
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Number of shares of Company Common Stock
beneficially owned on the date hereof:
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Number of shares of Company Common Stock subject
to option on the date hereof:
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