Exhibit 2.1
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
VENTAS, INC.
VENTAS SUB, LLC
AND
ELDERTRUST
DATED AS OF NOVEMBER 19, 2003
TABLE OF CONTENTS
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ARTICLE I. THE MERGER 2
Section 1.1. The Merger.....................................................................................2
Section 1.2. Closing........................................................................................2
Section 1.3. Effective Time.................................................................................2
Section 1.4. Constituent Documents..........................................................................3
Section 1.5. Directors and Officers.........................................................................3
ARTICLE II. MERGER CONSIDERATION; CONVERSION OF SHARES..........................................................3
Section 2.1. Effect of Merger on Equity.....................................................................3
Section 2.2. Exchange of Certificates.......................................................................4
Section 2.3. Stock Plans....................................................................................7
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.......................................................8
Section 3.1. Organization, Standing and Power of the Company................................................8
Section 3.2. The Company Subsidiaries.......................................................................9
Section 3.3. Capital Structure.............................................................................10
Section 3.4. Other Interests...............................................................................11
Section 3.5. Authority; Board Action.......................................................................11
Section 3.6. No Conflict or Violation; Consents............................................................12
Section 3.7. SEC Documents; Financial Statements; Undisclosed Liabilities..................................14
Section 3.8. Absence of Certain Changes or Events..........................................................15
Section 3.9. Litigation....................................................................................15
Section 3.10. Properties...................................................................................16
Section 3.11. Tenant Matters...............................................................................19
Section 3.12. Environmental Matters........................................................................20
Section 3.13. Related Party Transactions...................................................................21
Section 3.14. Employee Benefits............................................................................22
Section 3.15. Employee Matters.............................................................................24
Section 3.16. Taxes........................................................................................25
Section 3.17. Condition and Compliance of Property.........................................................28
Section 3.18. Compliance with Legal Requirements...........................................................28
Section 3.19. Contracts....................................................................................28
Section 3.20. Investment Company Act of 1940...............................................................31
Section 3.21. Trademarks, Patents and Copyrights...........................................................31
Section 3.22. Insurance....................................................................................32
Section 3.23. Books and Records of the Company.............................................................32
Section 3.24. Certain Payments.............................................................................33
Section 3.25. Genesis Contracts............................................................................33
Section 3.26. Brokers; Schedule of Fees and Expenses.......................................................33
Section 3.27. Opinion of Financial Advisor.................................................................33
Section 3.28. Information Supplied.........................................................................33
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF PARENT............................................................34
Section 4.1. Organization, Standing and Power of Parent....................................................34
Section 4.2. Organization, Standing and Power of Sub.......................................................34
TABLE OF CONTENTS
(Continued)
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Section 4.3. Authority.....................................................................................34
Section 4.4. No Conflict or Violation; Consents............................................................35
Section 4.5. Funds.........................................................................................36
Section 4.6. Brokers.......................................................................................36
Section 4.7. Sub Operations................................................................................36
Section 4.8. Information Supplied..........................................................................36
ARTICLE V. COVENANTS 36
Section 5.1. Conduct of the Company's Business Pending Merger..............................................36
Section 5.2. Conduct of Business of Parent.................................................................36
Section 5.3. Access to Information: Confidentiality........................................................36
Section 5.4. Notices of Certain Events.....................................................................36
Section 5.5. Tenant Information............................................................................36
Section 5.6. Certain Space Leases..........................................................................36
Section 5.7. Estoppel Certificates.........................................................................36
ARTICLE VI. ADDITIONAL COVENANTS................................................................................36
Section 6.1. Proxy Statement; the Company Shareholders Meeting.............................................36
Section 6.2. Anti-Takeover Provisions......................................................................36
Section 6.3. Commercially Reasonable Efforts; Consents and Approvals.......................................36
Section 6.4. The Company Partnership.......................................................................36
Section 6.5. Resignations..................................................................................36
Section 6.6. No Solicitation...............................................................................36
Section 6.7. Taxes.........................................................................................36
Section 6.8. Coordination of Dividends.....................................................................36
Section 6.9. New York Stock Exchange Listing...............................................................36
Section 6.10. Amendment of Company Disclosure Letter.......................................................36
Section 6.11. Parent Indenture.............................................................................36
ARTICLE VII. CONDITIONS.........................................................................................36
Section 7.1. Conditions to Each Party's Obligation to Effect the Merger....................................36
Section 7.2. Additional Conditions to Obligations of Parent and Sub........................................36
Section 7.3. Additional Conditions to Obligations of the Company...........................................36
ARTICLE VIII. EMPLOYEE BENEFITS AND POST-CLOSING COVENANTS......................................................36
Section 8.1. Employee Plans and Other Employee Arrangements................................................36
Section 8.2. Indemnification of Company Officers and Trustees..............................................36
Section 8.3. Further Assurances............................................................................36
ARTICLE IX. TERMINATION AND FEES................................................................................36
Section 9.1. Termination...................................................................................36
Section 9.2. Effect of Termination.........................................................................36
Section 9.3. Fees and Expenses.............................................................................36
ARTICLE X. GENERAL PROVISIONS...................................................................................36
Section 10.1. Nonsurvival of Representations and Warranties................................................36
Section 10.2. Amendment....................................................................................36
(ii)
TABLE OF CONTENTS
(Continued)
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Section 10.3. Notices......................................................................................36
Section 10.4. Assignment and Parties in Interest...........................................................36
Section 10.5. Announcements................................................................................36
Section 10.6. Entire Agreement.............................................................................36
Section 10.7. Descriptive Headings.........................................................................36
Section 10.8. Counterparts.................................................................................36
Section 10.9. Governing Law; Venue.........................................................................36
Section 10.10. Construction................................................................................36
Section 10.11. Severability................................................................................36
Section 10.12. Specific Performance........................................................................36
Section 10.13. Tax Treatment...............................................................................36
EXHIBITS
Exhibit A - Delaware Certificate of Merger
Exhibit B - Maryland Articles of Merger
Exhibit C - Voting Agreement
Exhibit D - Unitholder Agreement
Exhibit E - Class C Amendment Agreement
Exhibit F - REIT Opinion
(iii)
INDEX OF DEFINED TERMS
Defined Term Section
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Acquisition Proposal............................................................................................6.6
Adjusted Terms..................................................................................................6.6
Affiliate......................................................................................................3.13
Agreement..................................................................................................Preamble
Board...........................................................................................................3.5
Break-Up Fee....................................................................................................9.3
Break-Up Fee Tax Opinion........................................................................................9.3
Business Day....................................................................................................1.2
Certificate.....................................................................................................2.1
Certificate of Merger......................................................................................Recitals
Class C Amendment Agreement................................................................................Recitals
Class C Units..............................................................................................Recitals
Closing.........................................................................................................1.2
Closing Date....................................................................................................1.2
Code............................................................................................................2.2
Commitment......................................................................................................5.1
Company....................................................................................................Preamble
Company 7.2 Liabilities.........................................................................................7.2
Company Audited Financials......................................................................................3.7
Company Common Stock.......................................................................................Recitals
Company Disclosure Letter.......................................................................................3.1
Company Environmental Reports..................................................................................3.12
Company Intellectual Property..................................................................................3.21
Company Leased Properties......................................................................................3.10
Company Material Adverse Effect.................................................................................3.1
Company Option..................................................................................................2.3
Company Organizational Documents................................................................................3.1
Company Owned Properties.......................................................................................3.10
Company Partnership........................................................................................Recitals
Company Partnership Merger......................................................................................6.4
Company Permit..................................................................................................3.6
Company Preferred Stock.........................................................................................3.3
Company Prohibited Effect.......................................................................................3.6
Company Properties.............................................................................................3.10
Company Restricted Shares.......................................................................................2.3
Company SEC Documents...........................................................................................3.7
Company Shareholder Approval....................................................................................3.5
Company Shareholders Meeting...................................................................................3.28
Company Subsidiaries............................................................................................3.2
Company Tenant ................................................................................................3.10
Company Title Insurance Policy.................................................................................3.10
Company Transaction Expenses....................................................................................7.2
Competing Agreement.............................................................................................6.6
INDEX OF DEFINED TERMS
(Continued)
Defined Term Section
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Confidentiality Agreement.......................................................................................5.3
Constituent Entities............................................................................................1.1
Contract.......................................................................................................3.19
Corporate Law...................................................................................................1.1
Declaration.....................................................................................................3.1
Declaration Amendment...........................................................................................6.3
Defensive Measures..............................................................................................3.5
Delaware Certificate of Merger.............................................................................Recitals
Distribution Equivalent Right...................................................................................2.3
DLLCA...........................................................................................................1.1
Effective Time..................................................................................................1.3
Employee Plan..................................................................................................3.14
Environmental Laws.............................................................................................3.12
ERISA..........................................................................................................3.14
ERISA Affiliate................................................................................................3.14
Estimate........................................................................................................3.7
Excess Distributions............................................................................................2.1
Exchange Act....................................................................................................3.7
Exchange Fund...................................................................................................2.2
Financial Statement Date........................................................................................3.7
GAAP............................................................................................................3.7
Genesis.........................................................................................................3.1
Genesis Contract...............................................................................................3.25
Genesis Master Agreement .......................................................................................5.6
Genesis Ruling Request ........................................................................................3.16
Genesis Spin-off................................................................................................7.2
GHC.............................................................................................................3.1
Governmental Agency.............................................................................................3.6
Group Member...................................................................................................3.14
Hazardous Substances...........................................................................................3.12
Healthcare Lease...............................................................................................3.11
Indebtedness...................................................................................................3.19
Indemnified Parties.............................................................................................8.2
Insurance Policies.............................................................................................3.22
Intellectual Property..........................................................................................3.21
IRS............................................................................................................3.14
Knowledge.....................................................................................................10.10
Lease..........................................................................................................3.19
Legal Requirement...............................................................................................3.6
Liabilities.....................................................................................................3.7
Liens...........................................................................................................3.2
Maryland Articles of Merger................................................................................Recitals
(ii)
INDEX OF DEFINED TERMS
(Continued)
Defined Term Section
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Material Contract..............................................................................................3.19
Maximum Break-Up Fee............................................................................................9.3
Medicaid.......................................................................................................3.11
Medicare.......................................................................................................3.11
Merger.....................................................................................................Recitals
Merger Consideration............................................................................................2.1
MHFA Properties ...............................................................................................3.10
Multiemployer Plan.............................................................................................3.14
Order...........................................................................................................3.9
Ordinary Course of Business.....................................................................................3.8
Parent.....................................................................................................Preamble
Parent Expense Reimbursement....................................................................................9.3
Parent Material Adverse Effect..................................................................................4.1
Parent Permit...................................................................................................4.4
Paying Agent....................................................................................................2.2
PBGC...........................................................................................................3.14
Pension Plan...................................................................................................3.14
Permitted Liens................................................................................................3.10
Person..........................................................................................................3.2
Property Restrictions..........................................................................................3.10
Provider Agreements............................................................................................3.11
Proxy Statement.................................................................................................3.6
Qualifying Income...............................................................................................9.3
Regulation S-K ................................................................................................3.13
Regulation S-X..................................................................................................3.2
REIT...........................................................................................................3.16
REIT Dividend...................................................................................................6.8
REIT Requirements...............................................................................................9.3
Rent Roll......................................................................................................3.10
Representatives.................................................................................................5.3
Restricted Share Grants.........................................................................................3.3
Rights..........................................................................................................3.5
Rights Agreement................................................................................................3.5
SEC.............................................................................................................3.6
Securities Act..................................................................................................3.2
Space Lease....................................................................................................3.10
Stock Plan......................................................................................................2.3
Sub........................................................................................................Preamble
Subsidiary......................................................................................................3.2
Superior Acquisition Proposal...................................................................................6.6
Surviving Entity................................................................................................1.1
Tax Asset.......................................................................................................5.1
(iii)
INDEX OF DEFINED TERMS
(Continued)
Defined Term Section
------------ -------
Tax Protection Agreement.......................................................................................3.19
Taxes..........................................................................................................3.16
Tenant Deliveries..............................................................................................3.11
Tenant Permits.................................................................................................3.11
Title 8.........................................................................................................1.1
Title IV Plan..................................................................................................3.14
Transfer........................................................................................................6.6
Transfer and Gains Taxes........................................................................................6.7
Unitholder Agreements......................................................................................Recitals
Voting Agreements..........................................................................................Recitals
Welfare Plan...................................................................................................3.14
338 Dividend....................................................................................................6.8
(iv)
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of
November 19, 2003, by and among VENTAS, INC., a Delaware corporation ("Parent"),
VENTAS SUB, LLC, a Delaware limited liability company and wholly-owned
subsidiary of Parent ("Sub"), and ELDERTRUST, a Maryland real estate investment
trust (the "Company").
R E C I T A L S:
WHEREAS, the board of directors of Parent and the board of trustees of
the Company deem it advisable and in the best interests of their respective
equityholders for Parent and the Company to combine their businesses by the
merger of Sub with and into the Company on the terms and subject to the
conditions set forth in this Agreement (the "Merger");
WHEREAS, immediately prior to the Merger, Sub and the Company shall
execute a Certificate of Merger in substantially the form attached hereto as
Exhibit A (the "Delaware Certificate of Merger") and shall file such certificate
in accordance with Delaware law to effectuate the Merger;
WHEREAS, immediately prior to the Merger, Sub and the Company shall
execute Articles of Merger in substantially the form attached hereto as Exhibit
B (the "Maryland Articles of Merger" and together with the Delaware Certificate
of Merger, the "Certificate of Merger") and shall file such articles in
accordance with Maryland law to effectuate the Merger;
WHEREAS, the Company has received a fairness opinion relating to the
Merger, as more fully described herein;
WHEREAS, as a condition and inducement to the willingness of Parent to
enter into this Agreement, certain principal holders of common shares of
beneficial interest in the Company, $.01 par value per share (the "Company
Common Stock"), have entered into an agreement with Parent in the form attached
hereto as Exhibit C (each, a "Voting Agreement"), pursuant to which such holders
have (a) agreed, among other things, to vote their Company Common Stock in favor
of the Merger and (b) granted to Parent an irrevocable proxy to vote their
Company Common Stock upon the terms and conditions set forth therein;
WHEREAS, as a condition and inducement to the willingness of Parent to
enter into this Agreement, certain partners (excluding the Company) of
ElderTrust Operating Limited Partnership, a Delaware limited partnership (the
"Company Partnership") have entered into an agreement with Parent in the form
attached hereto as Exhibit D (each, a "Unitholder Agreement"), pursuant to which
such partners have agreed, among other things, to sell their partnership
interest in the Company Partnership to Parent or Parent's designee for a
consideration equal to the cash amount such holder would have received pursuant
to this Agreement had he, she or it exchanged his, her or its partnership
interest for Company Common Stock immediately prior to the Effective Time (as
defined herein);
WHEREAS, as a condition and inducement to the willingness of Parent to
enter into this Agreement, the sole holder of Class C (LIHTC) Units ("Class C
Units") in the Company Partnership has entered into an agreement with Parent in
the form attached hereto as Exhibit E (the "Class C Amendment Agreement"),
pursuant to which such holder has agreed, among other things, to amend the
Second Amended and Restated Agreement of Limited Partnership of the Company
Partnership, as amended, in accordance with the terms set forth therein, and
take such other action to effect the changes to the rights afforded to the
holder of the Class C Units as contemplated by the Class C Amendment Agreement;
and
WHEREAS, Parent, Sub and the Company desire to make certain
representations, warranties and agreements in connection with the Merger.
NOW, THEREFORE, in consideration of the premises, the mutual covenants
and agreements contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound, agree as follows:
ARTICLE I.
THE MERGER
Section 1.1. The Merger. Upon the terms and subject to the conditions
set forth in this Agreement, and in accordance with the Delaware Limited
Liability Company Act (the "DLLCA") and Title 8 of the Corporations and
Associations Article of the Annotated Code of Maryland ("Title 8" and, together
with the DLLCA, "Corporate Law"), at the Effective Time (as defined below), Sub
shall be merged with and into the Company, with the Company as the surviving
entity (the "Surviving Entity") and a wholly-owned subsidiary of Parent. Sub and
the Company are collectively referred to as the "Constituent Entities."
Section 1.2. Closing. The closing of the Merger ("Closing") shall take
place at 10:00 a.m. on the first Business Day after satisfaction of the latest
to occur of the conditions set forth in Article VII (other than those conditions
that by their terms are to be satisfied at the Closing), unless another date is
agreed to in writing by the parties hereto (the "Closing Date"); provided,
however, that even if all of such conditions have been satisfied, Parent shall
have the right to delay the Closing Date for such period of time as will allow
the Company to set a record date with regard to a 338 Dividend or REIT Dividend
and make payment thereof immediately prior to the Effective Time, as
contemplated by Section 6.8 hereof, in compliance with requirements of Law,
rules of the New York Stock Exchange and the Company's Declaration. The Closing
shall take place at the offices of ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, unless another place is agreed to in writing
by the parties hereto. "Business Day" shall mean any day, other than a Saturday,
Sunday or legal holiday on which banks are permitted to close in the City and
State of New York.
Section 1.3. Effective Time. As soon as practicable following the
satisfaction or waiver of the conditions set forth in Article VII, Sub and the
Company shall file the Certificate of Merger in accordance with Corporate Law,
and shall make all other filings and recordings required under Corporate Law.
The Merger shall become effective (the "Effective Time") on the date and at such
time as shall be specified in the Certificate of Merger (or on the date the
Certificate of Merger is accepted for record in accordance with Corporate Law if
not set forth therein). The Merger shall have the effects specified in this
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Agreement, the Certificate of Merger and the applicable provisions of Corporate
Law. Unless otherwise agreed, the parties shall cause the Effective Time to
occur on the Closing Date. Without limiting the generality of the foregoing and
subject to the terms of this Agreement, at the Effective Time, all of the
property, rights, privileges, powers and franchises of the Company and Sub shall
vest in the Surviving Entity, and all debts, liabilities and duties of the
Company and Sub shall become the debts, liabilities and duties of the Surviving
Entity.
Section 1.4. Constituent Documents. The constituent documents of the
Company in effect at the Effective Time shall be the constituent documents of
the Surviving Entity.
Section 1.5. Directors and Officers.
(a) The officers of Sub at the Effective Time shall become the initial
officers of the Surviving Entity as of the Effective Time, to hold office
in accordance with the constituent documents of the Surviving Entity until
their successors are duly appointed and qualified or until their earlier
death, resignation or removal.
(b) The Company and Parent shall cause T. ▇▇▇▇▇▇▇ ▇▇▇▇▇ (or some other
person designated by Parent) to be the initial trustee of the Surviving
Entity as of the Effective Time, to hold office in accordance with the
constituent documents of the Surviving Entity until his or her successor is
duly elected and qualified or until his or her earlier death, resignation
or removal.
(c) Resignations will be tendered for all current trustees and officers
of the Company effective upon the Effective Time.
ARTICLE II.
MERGER CONSIDERATION;
CONVERSION OF SHARES
Section 2.1. Effect of Merger on Equity. At the Effective Time by
virtue of the Merger and without any action on the part of the Constituent
Entities or the holders of any shares of capital stock or beneficial interests
of the Constituent Entities:
(a) Membership Interests of Sub. The membership interests of Sub issued
and outstanding immediately prior to the Effective Time of the Merger, by
virtue of the Merger and without any action on the part of the holder
thereof, automatically shall be converted into one hundred fully paid and
non-assessable common shares of beneficial interest of the Surviving
Entity, which shall constitute all of the issued and outstanding equity
interests of the Surviving Entity immediately after the Effective Time of
the Merger.
(b) Treatment of Certain Company Common Stock. Each share of Company
Common Stock that is owned by any Subsidiary of the Company or by Parent,
Sub or any other controlled Affiliate of Parent shall be cancelled and
retired and shall cease to exist and no consideration shall be delivered or
deliverable in exchange therefor.
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(c) Conversion of Company Common Stock.
(i) Each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time (other than shares to be
canceled in accordance with Section 2.1(b)) shall, by virtue of the
Merger and without any further action on the part of the Constituent
Entities or the holders of any membership interest of Sub or the
holders of beneficial interest of the Company, be converted into the
right to receive $12.50 in cash following the Merger, subject to
adjustment as provided below (as adjusted, the "Merger Consideration").
If (x) from and after the date hereof, the Company declares or pays a
dividend or distribution to its shareholders (including any 338
Dividend or REIT Dividend), but excluding those dividends and
distributions permitted by clause (ii) of Section 6.8 (all such
dividends or distributions, "Excess Distributions"), the Merger
Consideration per share of Company Common Stock shall be reduced by the
amount equal to the quotient obtained by dividing the aggregate amount
of Excess Distributions by the number of shares of Company Common Stock
outstanding immediately prior to the Effective Time; and (y) the
Closing shall not have occurred by May 31, 2004, the Merger
Consideration per share of Company Common Stock shall be increased by
an amount equal to the product of (a) $.72 divided by 365, multiplied
by (b) the number of days that have elapsed from and including June 1,
2004 through but not including the Closing Date.
(ii) As of the Effective Time all such shares of Company
Common Stock shall no longer be outstanding and shall automatically be
canceled and retired and shall cease to exist, and each holder of a
certificate that immediately prior to the Effective Time evidenced any
such shares of Company Common Stock (a "Certificate") shall cease to
have any rights with respect thereto, except the right to receive the
Merger Consideration upon surrender of such Certificate in accordance
with Section 2.2. The right of any holder of any share of Company
Common Stock to receive the Merger Consideration shall be subject to
and reduced by the amount of any withholding that is required under
applicable tax law.
(d) Rights. Unless the context indicates otherwise, all references
herein to shares of Company Common Stock shall be deemed to include any
accompanying Rights (as defined herein).
Section 2.2. Exchange of Certificates.
(a) Paying Agent. Prior to the Effective Time, Parent shall select a
bank or trust company reasonably acceptable to the Company to act as paying
agent (the "Paying Agent") for the payment of Merger Consideration upon
surrender of certificates evidencing Company Common Stock. At the Effective
Time, Parent shall deposit, or cause the Surviving Entity to deposit, with
the Paying Agent amounts in immediately available funds sufficient in the
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aggregate to provide cash necessary to pay for the shares of Company Common
Stock converted into the right to receive the Merger Consideration pursuant
to Section 2.1(c) (such cash being hereinafter referred to as the "Exchange
Fund"), upon surrender of Certificates, it being understood that any and
all interest earned on funds made available to the Paying Agent pursuant to
this Agreement shall be paid to Parent.
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, the Paying Agent shall mail to each holder of record of a
Certificate or Certificates that immediately prior to the Effective Time
evidenced outstanding shares of Company Common Stock whose shares were
converted into the right to receive Merger Consideration pursuant to
Section 2.1, (i) a letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall
pass, only upon delivery of the Certificates to the Paying Agent and shall
be in such form and have such other provisions as Parent and the Company
may reasonably specify) and (ii) instructions for use in effecting the
surrender of the Certificates in exchange for Merger Consideration. Upon
surrender of a Certificate for cancellation to the Paying Agent or to such
other agent or agents as may be appointed by Parent, together with such
letter of transmittal, duly executed, and such other documents as may
reasonably be required by the Paying Agent, the holder of such Certificate
shall be entitled to receive in exchange therefor (by mail or made
available for collection by hand if so elected by the surrendering
shareholder) the amount of cash payable in respect of the shares of Company
Common Stock theretofore evidenced by such Certificate pursuant to the
provisions of this Article II, and the Certificate so surrendered shall
forthwith be canceled. In the event of a transfer of ownership of Company
Common Stock that is not registered in the transfer records of the Company,
payment may be made to a person other than the person in whose name the
Certificate so surrendered is registered, if such Certificate shall be
properly endorsed or otherwise be in proper form for transfer and the
person requesting such payment shall pay any transfer or other taxes
required by reason of the payment to a person other than the registered
holder of such Certificate or establish to the satisfaction of Parent that
such tax has been paid or is not applicable. Until surrendered as
contemplated by this Section 2.2, each Certificate shall be deemed at any
time after the Effective Time to evidence only the right to receive upon
such surrender Merger Consideration as contemplated by this Section 2.2. No
interest shall be paid or accrue on any cash payable upon surrender of any
Certificate.
(c) Lost Certificates. If any Certificate shall have been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed, the Paying Agent
shall issue in exchange for such lost, stolen or destroyed Certificate the
Merger Consideration deliverable in respect thereof determined in
accordance with this Article II; provided, however, that Parent or the
Paying Agent may require the delivery of a reasonable indemnity or bond
against any claim that may be made against the Surviving Entity with
respect to such Certificate or ownership thereof.
(d) No Further Ownership Rights in Company Common Stock. The Merger
Consideration paid in accordance with the terms of this Article II upon
conversion of any shares of Company Common Stock shall be deemed to have
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been paid in full satisfaction of all rights pertaining to such shares of
Company Common Stock, subject, however, to the Surviving Entity's
obligation to pay any dividends or make any other distributions with a
record date prior to the Effective Time that may have been declared by the
Company on such shares of Company Common Stock in accordance with the terms
of this Agreement or prior to the date hereof and which remain unpaid at
the Effective Time, and after the Effective Time there shall be no further
registration of transfers on the transfer books of the Surviving Entity of
shares of Company Common Stock that were outstanding immediately prior to
the Effective Time. If, after the Effective Time, any certificates formerly
evidencing shares of Company Common Stock are presented to the Surviving
Entity or the Paying Agent for any reason, they shall be canceled and
exchanged as provided in this Article II.
(e) Termination of Exchange Fund. Any portion of the Exchange Fund that
remains undistributed to the holders of Company Common Stock for nine
months after the Effective Time shall be delivered to Parent, upon demand,
and any holder of Company Common Stock who has not theretofore complied
with this Article II shall thereafter look only to Parent for payment of
its claim for Merger Consideration; provided, however, that Parent may
cause the Surviving Entity to pay such claim for Merger Consideration.
(f) No Liability. None of Parent, Sub, the Company or the Paying Agent
shall be liable to any person in respect of any cash delivered to a public
official pursuant to any applicable abandoned property, escheat or similar
Law. If any Certificate has not been surrendered prior to five years after
the Effective Time (or immediately prior to such earlier date on which
Merger Consideration would otherwise escheat to or become the property of
any Governmental Agency), any such cash in respect of such Certificate
shall, to the extent permitted by applicable law, become the property of
the Surviving Entity, free and clear of all claims or interest of any
person previously entitled thereto.
(g) Investment of Exchange Fund. The Paying Agent shall invest any cash
included in the Exchange Fund, as directed by Parent, on a daily basis. Any
interest and other income resulting from such investments shall be paid to
Parent.
(h) Withholding Rights. Parent, the Surviving Entity or the Paying
Agent shall be entitled to deduct and withhold from the consideration
otherwise payable to any holder of Company Common Stock pursuant to this
Agreement such amounts as Parent, the Surviving Entity or the Paying Agent
may be required to deduct and withhold with respect to the making of such
payment under the Internal Revenue Code of 1986, as amended (the "Code"),
or under any provision of state, local or foreign tax law. To the extent
that amounts are so withheld and paid over to the appropriate taxing
authority by Parent, the Surviving Entity or the Paying Agent, such
withheld amounts shall be treated for all purposes of this Agreement as
having been paid to the holder of the shares of Company Common Stock in
respect of which such deduction and withholding was made by Parent, the
Surviving Entity or the Paying Agent.
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Section 2.3. Stock Plans.
(a) The Company shall take all actions necessary to provide that, at
the Effective Time, (i) each then outstanding option to purchase shares of
Company Common Stock (a "Company Option"), whether granted under any of the
Company's stock option plans referred to in Section 3.14, each as amended
(collectively, the "Stock Plans"), or otherwise, and whether or not then
exercisable or vested, shall be canceled and (ii) the Surviving Entity
shall pay to such holders of Company Options an amount in cash with respect
to each such Company Option equal to the product obtained by multiplying
(A) the amount, if any, by which the Merger Consideration exceeds the
exercise price relating to such Company Option, by (B) the number of shares
of Company Common Stock subject thereto (such payment to be net of
applicable withholding taxes). The aggregate amount to be paid pursuant to
clause (ii) with respect to all Company Options (assuming that the Merger
Consideration is $12.50) is $1,132,774. Prior to the Effective Time and
contingent upon the consummation of the Merger, the Company shall notify
each holder of a Company Option that (i) all outstanding Company Options
that have not become fully vested prior to the Effective Time shall become
fully vested immediately prior to the Effective Time and (ii) each such
holder may exercise his or her Company Options prior to the Effective Time
or such Company Options shall be canceled and cashed out in the manner set
forth in clause (ii) above.
(b) The Company shall take all actions necessary to provide that, at
the Effective Time, (i) each then outstanding right that entitles the
recipient to receive credits based on a cash distribution that would have
been paid on Company Common Stock specified in such right, or other award
to which it relates (a "Distribution Equivalent Right"), whether granted
under any of the Company's Stock Plans or otherwise, shall be canceled and
(ii) the Surviving Entity shall pay to the holders of Distribution
Equivalent Rights an amount in cash equal to their accrued and unpaid
distribution equivalents as of the Effective Time (such payment to be net
of applicable withholding taxes). The Company represents and warrants that
the total amount of shares of Company Common Stock specified in the
Distribution Equivalent Rights is 74,000 and, as of November 30, 2003, the
total unpaid and unreinvested distribution equivalents credited to the
holders of Distribution Equivalent Rights shall be $22,147.
(c) Prior to the Effective Time, the Company shall cause any
restrictions imposed pursuant to any stock plan on any outstanding shares
of Company Common Stock (such shares, "Company Restricted Shares") to lapse
and each Company Restricted Share shall be subject to the same terms and
conditions of this Agreement as other shares of Company Common Stock,
including, but not limited to, Section 2.1(c) herein.
(d) Except as otherwise agreed to by the parties, (i) the Company shall
cause the Stock Plans to terminate as of the Effective Time and the
provisions in any other plan, program or arrangement, providing for the
issuance or grant by the Company of any interest in respect of the shares
of beneficial interest of the Company shall be terminated and have no
further force or effect as of the Effective Time and (ii) the Company shall
ensure that following the Effective Time no holder of Company Options or
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any participant in the Stock Plans or anyone otherwise shall have any right
to acquire any equity securities or other interest in respect of the
capital stock of the Company, the Surviving Entity or any Company
Subsidiary (as defined herein).
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Sub as follows:
Section 3.1. Organization, Standing and Power of the Company.
(a) The Company is a real estate investment trust duly organized,
validly existing and in good standing under the laws of the State of
Maryland and has the requisite power and authority to carry on its business
as it is now being conducted or currently proposed to be conducted.
(b) Section 3.1(b) of the disclosure letter delivered by the Company to
Parent prior to the execution of this Agreement (the "Company Disclosure
Letter") lists the jurisdictions in which the Company is qualified to do
business as a foreign trust, which constitute all of the jurisdictions
where the character of the properties owned or held under lease or the
nature of its activities make such qualification necessary, except for
those jurisdictions where the failure to be so qualified would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect (as defined below).
As used in this Agreement, a "Company Material Adverse Effect" shall
mean any event, circumstance or development (i) that has or is reasonably likely
to have a material adverse effect on the business, properties, assets, condition
(financial or otherwise), results of operations, cash flow, liabilities,
prospects or operations of the Company and its Subsidiaries (as defined herein)
taken as a whole (including, without limitation, (A) a material adverse effect
on the ability of Genesis Healthcare Ventures, Inc. ("Genesis"; which term for
purposes of this definition shall mean Genesis Healthcare Corporation ("GHC")
after such time as the Genesis Spin-off (as defined herein) is consummated) or
its Subsidiaries to perform their respective obligations under the Space Leases
(as defined herein) to which they are a party or the guarantees thereof,
provided, however, that the Genesis Spin-off, in and of itself, shall not be
deemed to have such effect, and (B) to the extent otherwise having any of the
foregoing material adverse effects on the Company and its Subsidiaries, any
other materially adverse effect, event, circumstance or development with respect
to the business, properties, assets, condition (financial or otherwise), results
of operation, cash flow, liabilities, prospects or operations of Genesis and its
Subsidiaries, taken as a whole), or (ii) that materially adversely affects the
ability of the Company or Parent, as the case may be, to perform its obligations
hereunder or consummate the Merger; excluding, however, in the case of clause
(i), any adverse effect arising from conditions in the United States economy or
capital or financial markets generally or the effects of the public announcement
of the pendency of the transactions contemplated hereby.
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(c) The Company has delivered to Parent complete and correct copies of its
Articles of Amendment and Restatement of Declaration of Trust including
all amendments and supplements thereto (collectively, the
"Declaration") and its Amended and Restated Bylaws as in effect as of
the date of this Agreement (together with the Declaration, the "Company
Organizational Documents").
Section 3.2. The Company Subsidiaries.
(a) Section 3.2 of the Company Disclosure Letter sets forth (i) each
Subsidiary of the Company (the "Company Subsidiaries"), (ii) the legal form
of each Company Subsidiary, including the state or country of formation,
(iii) the ownership interest therein of the Company, if not wholly-owned,
directly or indirectly, by the Company, and if not wholly-owned, the
identity and the class and number of ownership interest of other owners of
such Company Subsidiary, (iv) the real estate properties owned or under
contract to be purchased by each Company Subsidiary, all real estate
properties leased as lessee by each Company Subsidiary and separately
setting forth each real estate property currently under development, (v)
each jurisdiction in which each Company Subsidiary is required to be
qualified or licensed to do business and (vi) each assumed name under which
each Company Subsidiary conducts business in any jurisdiction. As used in
this Agreement, "Subsidiary" of any Person means (x) any corporation,
partnership, limited liability company, joint venture or other legal entity
of which such Person (either directly or through or together with another
Subsidiary of such Person), either (A) owns capital stock or other equity
interests having ordinary voting power to elect a majority of the board of
directors (or equivalent) of such Person, (B) controls the management of
which, directly or indirectly through one or more intermediaries, or (C)
directly or indirectly through Subsidiaries owns more than 50% of the
equity interests, and (y) any "subsidiary" as such term is defined in
Section 1-02(x) of Regulation S-X ("Regulation S-X") promulgated under the
Securities Act of 1933, as amended (the "Securities Act") and "Person"
means an individual, corporation, partnership, limited liability company,
joint venture, association, trust, unincorporated organization or any other
legal entity or Governmental Agency (as defined herein).
(b) Except as set forth on Section 3.2 of the Company Disclosure
Letter, (i) all the outstanding shares of capital stock of each Company
Subsidiary that is a corporation have been validly issued and are (A) fully
paid and nonassessable, (B) owned by the Company or by another Company
Subsidiary, and (C) owned free and clear of any charge, claim, community
property interest, condition, equitable interest, lien, option, pledge,
security interest, mortgage, deed of trust, deed to secure debt, right of
first refusal, encumbrance or restriction of any kind, including any
restriction on use, voting, transfer, receipt of income, or exercise of any
other attribute of ownership (collectively, "Liens"), and (ii) all equity
interests in each Company Subsidiary that is a partnership, joint venture,
limited liability company or trust which are owned by the Company, by
another Company Subsidiary or by the Company and another Company Subsidiary
are owned free and clear of all Liens. Each Company Subsidiary that is a
corporation is duly incorporated and validly existing under the laws of its
jurisdiction of incorporation and has the requisite corporate power and
authority to carry on its business as now being conducted, and each Company
Subsidiary that is a partnership, limited liability company or trust is
-9-
duly organized and validly existing under the laws of its jurisdiction of
organization and has the requisite power and authority to carry on its
business as now being conducted. Each Company Subsidiary is duly qualified
or licensed to do business and is in good standing in each jurisdiction in
which the nature of its business or the ownership or leasing of its
properties makes such qualification or licensing necessary, other than in
such jurisdictions where the failure to be so qualified or licensed,
individually or in the aggregate, would not reasonably be expected to have
a Company Material Adverse Effect. True and correct copies of the Articles
of Incorporation, By-Laws, partnership agreements, joint venture and
operating agreements or similar organizational documents of each Company
Subsidiary, as amended to the date hereof, have been previously delivered
to Parent.
(c) With respect to each less than wholly-owned Subsidiary, except as
set forth on Section 3.2 of the Company Disclosure Letter: (i) the Company
or the relevant Company Subsidiary is a partner, member or stockholder in
good standing in such less than wholly-owned Subsidiary; and (ii) neither
the Company nor any of the Company Subsidiaries is in breach in any
material respect of any provision of any agreement, document or contract
governing its rights in any such less than wholly-owned Subsidiary or to
the interests owned or held by it, all of which agreements, documents and
contracts are (x) set forth on Section 3.2 of the Company Disclosure Letter
and (y) in full force and effect. To the Knowledge (as defined herein) of
the Company, the other parties to such agreements, documents or contracts
are not in any material breach of any of their respective obligations under
such agreements, documents or contracts, nor has the Company received any
notice of any such material breach.
Section 3.3. Capital Structure.
(a) As of November 19, 2003, the authorized shares of beneficial
interest of the Company consist of 100 million shares of Company Common
Stock, of which 7,784,446 were issued and outstanding, and 20 million
preferred shares of beneficial interest, par value $.01 per share (the
"Company Preferred Stock"), of which none were issued and outstanding. On
the date hereof, except as set forth in this Section 3.3 or Section 3.3 of
the Company Disclosure Letter, no shares of Company Common Stock or other
voting or equity securities of the Company were issued, reserved for
issuance or outstanding.
(b) Set forth on Section 3.3(b) of the Company Disclosure Letter is a
true and complete list of each grant of Company Common Stock to employees
which as of the date hereof are subject to any risk of forfeiture
("Restricted Share Grants") under the Stock Plans and a total thereof. The
Restricted Share Grants are included in the number of outstanding shares of
Company Common Stock set forth in Section 3.3(a). For each Restricted Share
Grant, Section 3.3(b) of the Company Disclosure Letter sets forth the name
of the grantee, the date of the grant and the number of shares of Company
Common Stock granted.
(c) All outstanding shares of Company Common Stock are duly authorized,
validly issued, fully paid and nonassessable and not subject to preemptive
rights. There are no bonds, debentures, notes or other indebtedness of the
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Company, or assets of any other entities exchangeable into Company Common
Stock having the right to vote (or convertible into, or exchangeable for,
securities having the right to vote) on any matters on which the Company
shareholders may vote.
(d) Except for Company Options to acquire 461,500 shares of Company
Common Stock issued under the Stock Plans, the grantee, exercise price,
number of shares, vesting schedule and term of which are listed on Section
3.3(d) of the Company Disclosure Letter and the Distribution Equivalent
Rights referenced in Section 2.3(b), there are no outstanding securities,
options, warrants, calls, rights, commitments, agreements, arrangements or
undertakings of any kind (including, without limitation, distribution
equivalent rights or phantom or other share awards) to which the Company or
any Company Subsidiary is a party or by which such entity is bound,
obligating the Company or any Company Subsidiary to issue, deliver or sell,
or cause to be issued, delivered or sold, additional shares of beneficial
interest, capital stock, voting securities or other ownership interests or
award in respect of the Company or any Company Subsidiary or obligating the
Company or any Company Subsidiary to issue, grant, extend or enter into any
such security, option, warrant, call, right, commitment, agreement,
arrangement or undertaking.
(e) All dividends or distributions on the Company Common Stock which
have been authorized or declared prior to the date hereof have been paid in
full.
Section 3.4. Other Interests. Except as set forth on Section 3.4 of the
Company Disclosure Letter, neither the Company nor any Company Subsidiary owns
directly or indirectly any interest or investment (whether equity or debt) in
any Person (other than investments in short-term investment securities and
Subsidiaries). With respect to such interests, except as set forth on Section
3.4 of the Company Disclosure Letter, the Company and each such Company
Subsidiary is a partner, member or stockholder in good standing, and owns such
interests free and clear of all Liens.
Section 3.5. Authority; Board Action.
(a) The Company has the requisite power and authority to enter into
this Agreement and, subject to the affirmative vote of at least two-thirds
(2/3) of the outstanding Company Common Stock entitled to vote thereon to
approve the Merger (the "Company Shareholder Approval"), to consummate the
transactions contemplated by this Agreement (including the Declaration
Amendment (as defined below)). The execution and delivery of this Agreement
by the Company and consummation by the Company of the transactions
contemplated by this Agreement (including the Declaration Amendment) have
been duly authorized by all necessary action on the part of the Company,
subject to Company Shareholder Approval. This Agreement has been duly
executed and delivered by the Company and constitutes a valid and binding
obligation of the Company, enforceable against the Company in accordance
with its terms, except as enforcement may be limited by bankruptcy,
insolvency or other similar laws affecting the enforcement of creditors'
rights generally and except that the availability of equitable remedies,
including specific performance, is subject to the discretion of the court
before which any proceeding therefor may be brought.
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(b) The Board of Trustees (the "Board") of the Company (at a meeting
duly called and held) has by the unanimous vote of all trustees present:
(i) determined that the Merger is advisable and fair and in the best
interests of the Company and the Company shareholders, (ii) approved the
Merger in accordance with the provisions of Section 8-501.1(d) of Title 8
and the Declaration Amendment, (iii) recommended the approval of this
Agreement, the Merger and the Declaration Amendment by the holders of
Company Common Stock, (iv) provided that this Agreement has not been
terminated pursuant to Section 9.1 hereof, directed that the Merger be
submitted for consideration by the Company shareholders at the Company
Shareholders Meeting even if the Board later withdraws its recommendation,
as authorized by Section 8-501.1(f) of Title 8, (v) taken all necessary
steps to render the following (the "Defensive Measures") inapplicable to
the Merger, the Voting Agreements, the Unitholder Agreements, the Class C
Amendment Agreement and the transactions contemplated by this Agreement
(including the Declaration Amendment), the Voting Agreements, the
Unitholder Agreements and the Class C Amendment Agreement: (A) Article 7 of
the Declaration, (B) the rights (the "Rights") issued pursuant to the terms
of that certain Rights Agreement, dated as of October 13, 1999, between the
Company and First Union National Bank, as rights agent (the "Rights
Agreement"), (C) Subtitle 6 (the Maryland Business Combination Act),
Subtitle 7 (the Maryland Control Share Acquisition Act), and Subtitle 8 of
Title 3 of the Maryland General Corporation Law, and (D) any other "fair
price," "moratorium," "control share acquisition" or any other
anti-takeover statute or similar statute enacted under the state or federal
laws of the United States or similar statute or regulation that may purport
to be applicable to the Merger, the Voting Agreements, the Unitholder
Agreements, the Class C Amendment Agreement and the transactions
contemplated by this Agreement (including the Declaration Amendment), the
Voting Agreements, the Unitholder Agreements and the Class C Amendment
Agreement.
(c) No Defensive Measure is applicable to the Merger, the Declaration
Amendment, the Voting Agreements, the Unitholder Agreements, the Class C
Amendment Agreement and the transactions contemplated by this Agreement,
the Voting Agreements, the Unitholder Agreements and the Class C Amendment
Agreement.
Section 3.6. No Conflict or Violation; Consents. Except (i) as
disclosed on the appropriate subsection of Section 3.6 of the Company Disclosure
Letter and (ii) in the case of paragraphs (b), (c), (d) and (g): for (A) the
filing with the Securities and Exchange Commission (the "SEC") of the proxy
statement to be filed with the SEC in connection with the Merger (the "Proxy
Statement"), (B) the filing and acceptance for record of the Certificate of
Merger as required by applicable Corporate Law, (C) such filings as may be
required in connection with the payment of any transfer and gains taxes and (D)
filings required to be made by the Company with the SEC under the Exchange Act
(as defined herein) with respect to the public announcement of the pendency of
the transactions contemplated hereby, neither the execution and delivery of this
Agreement, the Voting Agreements, the Unitholder Agreements and the Class C
Amendment Agreement nor the consummation or performance of any of the
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transactions contemplated hereby or thereby (including the Declaration
Amendment) will, directly or indirectly (with or without notice or lapse of
time):
(a) contravene, conflict with, or result in a violation of (i) any
provision of the Company Organizational Documents, or (ii) any resolution
adopted by the Board or the Company shareholders;
(b) contravene, conflict with, result in a violation of, or give (i)
any international, foreign, federal, state, county, local or municipal
government or administrative agency or political subdivision thereof, (ii)
any governmental agency, authority, board, bureau, commission, department
or instrumentality, (iii) any court or administrative tribunal, (iv) any
non-governmental agency, tribunal or entity that is vested by a
governmental agency with applicable jurisdiction, or (v) any arbitration
tribunal or other non-governmental authority with applicable jurisdiction
("Governmental Agency") or other Person the right to challenge any of the
transactions contemplated hereby and thereby or to exercise any remedy or
obtain any relief under, any constitution, law, rule, ordinance, permit,
principle of common law, regulation, statute, treaty, judgment, decree or
order ("Legal Requirement") to which the Company, the Company Subsidiaries,
or any of the assets owned or used by the Company or the Company
Subsidiaries, may be subject;
(c) contravene, conflict with, or result in a violation of any of the
terms or requirements of, or give any Governmental Agency the right to
revoke, withdraw, suspend, cancel, terminate, or modify, any permit,
approval, consent, authorization, license, variance, or permission required
by a Governmental Agency under any Legal Requirement with respect to the
Company, the Company Subsidiaries or any of their respective operations or
assets, including, without limitation, certificates of occupancy and
certificates of need for the Company Properties (as defined herein)
("Company Permit"), except as would not reasonably be expected to have a
Company Material Adverse Effect or prevent or delay in any material respect
the consummation of the Merger (a "Company Prohibited Effect");
(d) to the Knowledge of the Company, cause the Company, Parent or Sub
to become subject to, or to become liable for the payment of, any Tax (as
defined below), other than Transfer and Gains Taxes;
(e) with respect to any Material Contract (as defined below),
contravene, conflict with, or result in a violation or breach of any
provision of, or give any Person the right to declare a default or exercise
any remedy under, or to accelerate the maturity or performance of, or to
cancel, terminate, or modify such Material Contract;
(f) result in the imposition or creation of any Lien (other than
Permitted Liens) upon or with respect to any of the assets owned or used by
the Company; or
(g) require the consent, approval, or authorization of, or registration
or filing with, or notice to, any Governmental Agency or any other Person.
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Section 3.7. SEC Documents; Financial Statements; Undisclosed
Liabilities.
(a) The Company has filed all reports, schedules, forms, statements and
other documents (the "Company SEC Documents") required to be filed with the
SEC since January 1, 2000 through the date hereof under the Securities Act
and the Securities Exchange Act of 1934, as amended (the "Exchange Act").
None of the Company Subsidiaries is required to file any reports or other
documents with the SEC.
(b) As of their respective filing dates, the Company SEC Documents and
any forms, reports and other documents filed by the Company with the SEC
after the date hereof: (i) complied or will comply in all material respects
with the requirements of the Securities Act or the Exchange Act, as the
case may be, and the rules and regulations of the SEC thereunder applicable
thereto, and (ii) did not at the time they were filed (or if amended or
superseded by a filing prior to the date hereof then on the date of such
filing) or will not at the time they are filed contain any untrue statement
of a material fact or omit to state a material fact necessary in order to
make the statements made, in light of the circumstances under which they
were made, not misleading; provided, however, that no representation is
made with respect to information included in the Company SEC Documents that
was provided in writing by Parent or Sub.
(c) The Company's real estate investment trust taxable income (as
defined in Section 857(b)(2) of the Code) for the year ended December 31,
2002 was zero dollars and the Company's estimated real estate investment
trust taxable income (as defined in Section 857(b)(2) of the Code) for the
year ended December 31, 2003 (the "Estimate") is as set forth in Section
3.7 of the Company Disclosure Letter. Section 3.7 of the Company Disclosure
Letter provides, in reasonable detail, the Company's calculation of the
Estimate for the year ended December 31, 2003. The Estimate represents the
Company's reasonable good faith estimate as of the date of this Agreement
of the estimated real estate investment trust taxable income of the Company
for the year ended December 31, 2003 and has been prepared on the basis of
the assumptions set forth in Section 3.7 of the Company Disclosure Letter,
which the Company believes are fair and reasonable in light of the
historical financial information relevant to the Estimate and current and
reasonably foreseeable factors.
(d) The consolidated financial statements of the Company included in
the Company SEC Documents complied as to form in all material respects with
applicable accounting requirements and the published rules and regulations
of the SEC with respect thereto, have been prepared in accordance with
generally accepted accounting principles ("GAAP") (except, in the case of
unaudited statements, as permitted by the applicable rules and regulations
of the SEC) applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto) and fairly presented, in
accordance with the applicable requirements of GAAP and the applicable
rules and regulations of the SEC, the consolidated financial position of
the Company and its consolidated subsidiaries, as of the dates thereof and
the consolidated results of operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal year-end
audit adjustments).
-14-
(e) The Company has no Company Subsidiaries that are not consolidated
for accounting purposes.
(f) Neither the Company nor any of the Company Subsidiaries has any
liabilities or obligations of any nature (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated and whether due or to become
due) (collectively, "Liabilities") that are material, other than
Liabilities to the extent (i) reserved for on the audited balance sheet
included in the audited financial statements of the Company as of December
31, 2002 (the "Financial Statement Date") contained in the Company SEC
Documents (the "Company Audited Financials"), (ii) incurred in the Ordinary
Course of Business (as defined herein) after the Financial Statement Date,
and which individually or in the aggregate are not reasonably expected to
have a Company Material Adverse Effect, (iii) relating to performance
obligations, under Leases and Contracts (as defined below) in accordance
with the terms and conditions thereof which are not required by GAAP to be
reflected on a regularly prepared balance sheet, or (iv) as set forth on
Section 3.7(f) of the Company Disclosure Letter.
Section 3.8. Absence of Certain Changes or Events. Except as disclosed
on Section 3.8 of the Company Disclosure Letter or the Company SEC Documents,
since the Financial Statement Date, the Company and the Company Subsidiaries:
(a) have conducted their business only in the "Ordinary Course of Business,"
meaning consistent with the past practices of the Company and taken in the
ordinary course of the normal day-to-day operations of the Company; and (b)
there has not been (i) any Company Material Adverse Effect, (ii) any occurrence
or circumstance that with the passage of time would reasonably be expected to
result in a Company Material Adverse Effect or (iii) any action which would have
constituted a breach of Section 5.1 if such Section 5.1 had applied since the
Financial Statement Date.
Section 3.9. Litigation. Except as disclosed on Section 3.9 of the
Company Disclosure Letter, as of the date hereof there is no suit, action or
proceeding pending or, to the Knowledge of the Company, threatened against or
affecting the Company or any Company Subsidiary (including, but not limited to
suits, actions or proceedings with respect to which the Company or any Company
Subsidiary may be indemnified by a Company Tenant) involving, affecting or
relating to any assets, properties or operations of the Company or any Company
Subsidiary or the transactions contemplated by this Agreement that could
reasonably be expected to have a Company Material Adverse Effect. Section 3.9 of
the Company Disclosure Letter includes in each case a brief summary of any such
claim or threatened claim and, to the Knowledge of the Company, any suit, action
or proceeding pending or threatened against any Company Tenant under a
Healthcare Lease (as defined below). Except as disclosed on Section 3.9 of the
Company Disclosure Letter, there is no judgment, decree, injunction, rule or
order (an "Order") of any Governmental Agency or arbitrator outstanding against
the Company or any Company Subsidiary or, to the Knowledge of the Company, any
Company Tenant. Except as disclosed on Section 3.9 of the Company Disclosure
Letter, no claim is pending or has been made within the last five (5) years
under any trustees' or officers' liability insurance policy maintained at any
time by the Company or any of the Company Subsidiaries.
-15-
Section 3.10. Properties.
(a) Section 3.10(a) of the Company Disclosure Letter identifies all
real property owned by the Company or the Company Subsidiaries (the
"Company Owned Properties"). Section 3.10(a) of the Company Disclosure
Letter identifies all real property leased by the Company or the Company
Subsidiaries as lessee or sublessee (the "Company Leased Properties"
together with the Company Owned Properties, the "Company Properties").
Section 3.10(a) of the Company Disclosure Letter lists every real property
for which the Company or the Company Subsidiaries has a Contract to buy or
lease any real property at some future date. Except as provided on Section
3.10(a) of the Company Disclosure Letter, the Company or the Company
Subsidiary set forth on Section 3.10(a) of the Company Disclosure Letter
owns fee simple title to each of the Company Owned Properties and has a
valid leasehold interest in each of the Company Leased Properties free and
clear of any rights of way, easements, encumbrances written agreements or
reservations of an interest in title (collectively, "Property
Restrictions") and other Liens, except for the following (collectively, the
"Permitted Liens"): (i) Property Restrictions imposed or promulgated by
Legal Requirements with respect to real property and improvements,
including zoning regulations, provided they do not materially adversely
affect the current use of any Company Property, (ii) Liens and Property
Restrictions disclosed on existing title reports or existing surveys (in
either case copies of which title reports and surveys have been delivered
or made available to Parent), except for those Liens set forth on Section
3.10(a)(ii) of the Disclosure Letter (which Liens no longer encumber the
Company Properties), (iii) mechanics', carriers', workmen's, repairmen's
and similar Liens, incurred in the Ordinary Course of Business and which
(x) are not yet due and payable, (y) are duly budgeted to be paid and (z)
do not materially detract from the value of or materially interfere with
the present use of any of the Company Properties subject thereto or
affected thereby, (iv) Liens for Taxes that are not yet due and payable,
(v) any current Liens for indebtedness related to the Company Properties
set forth on Section 3.10(a) of the Company Disclosure Letter, and (vi) the
Space Leases (as defined herein); provided further that no Lien not in
existence on the date hereof or Property Restriction (except for those
described in clauses (i), (iii), (iv), (v) and (vi) above) shall be a
Permitted Lien if it will materially impair business operations conducted
by the Company and the Company Subsidiaries. To the Knowledge of the
Company or the Company Subsidiaries, each Company Permit or other
agreement, easement or other right (such agreement shall be included as a
Material Contract (as defined herein)) which is necessary to permit the
lawful use and operation of the buildings and improvements on any of the
Company Properties or which is necessary to permit the lawful use and
operation of all driveways, roads and other means of egress and ingress to
and from any of the Company Properties has been obtained and is in full
force and effect.
(b) Section 3.10(b) of the Company Disclosure Letter lists each of the
Company Properties which are under development as of the date hereof and
describes the status of such development as of the date hereof.
(c) Section 3.10(c) of the Company Disclosure Letter lists each policy
of title insurance for the Company Properties (each a "Company Title
Insurance Policy"), including the insurer and policy number of such Company
-16-
Title Insurance Policy. Except as provided on Section 3.10(c) of the
Company Disclosure Letter, each Company Title Insurance Policy has been
issued insuring the Company's or the applicable Company Subsidiary's fee
simple title to the applicable Company Owned Properties or leasehold
interests in the applicable Company Leased Properties in amounts at least
equal to the purchase price thereof paid by the Company or the Company
Subsidiary therefor (or the value of the leasehold interest at the time of
entering into the applicable Lease), subject only to Permitted Liens, and
such policies are, at the date hereof, valid, in full force and effect and
no claim has been made against any such policy. A true and correct copy of
each Company Title Insurance Policy and back-up document referred to in
each Company Title Insurance Policy has been previously delivered to
Parent. Section 3.10(c) of the Company Disclosure Letter lists each survey
for the Company Properties and a true and correct copy of each such survey
has been previously delivered to Parent.
(d) Except as provided on Section 3.10(d) of the Company Disclosure
Letter, the Company has no Knowledge (i) of any material structural defects
relating to any Company Property which costs more than $100,000 to repair;
(ii) of any Company Property whose building systems are not in working
order in any material respect and costs more than $100,000 to repair; (iii)
of any physical damage to any Company Property in excess of $100,000 for
which there is no insurance in effect covering the cost of the restoration;
(iv) of any current renovation or uninsured restoration to any Company
Property the cost of which exceeds $250,000; or (v) of items referred to in
Section 3.10(d) (without giving effect to the dollar thresholds set forth
therein) which aggregate for the Company and the Company Subsidiaries more
than $300,000.
(e) Except as set forth on Section 3.10(e) of the Company Disclosure
Letter, neither the Company nor any of the Company Subsidiaries has
received any written notice nor has Knowledge to the effect that (i) any
condemnation or rezoning proceedings are pending or threatened with respect
to any of the Company Properties or (ii) any zoning, building or similar
Legal Requirement is or will be violated in any material respect for any
property by the continued maintenance, operation or use of any buildings or
other improvements on any of the Company Properties or by the continued
maintenance, operation or use of the parking areas.
(f) Except as set forth on Section 3.10(f) of the Company Disclosure
Letter, none of the Company Properties are managed by the Company or a
wholly-owned Company Subsidiary.
(g) The rent roll of the Company Properties as of the date hereof that
is set forth on Section 3.10(g) of the Company Disclosure Letter (the "Rent
Roll") lists each Lease under which the Company or a Company Subsidiary is
the lessor or the sublessor (a "Space Lease"). No Person occupies any
portion of the Company Properties except pursuant to a Space Lease and no
Space Lease has been assigned or sublet except as set forth on the Rent
Roll. All information set forth in the Rent Roll is true, correct and
complete as of the date hereof. The Company has delivered to Parent true,
correct and complete copies of all Space Leases, including all amendments,
modifications, supplements, renewals, extensions and guarantees related
thereto, as of the date hereof. Except as set forth in a delinquency report
-17-
made available to Parent, none of the Company or any Company Subsidiary, on
the one hand, nor, to the Knowledge of the Company, any other party, on the
other hand, is in material default under any Space Lease or but for the
passage of time or giving of notice (or both) would be in material default
and neither Company nor any Company Subsidiary has received or issued any
written notice of any default under any Space Lease. No tenant under any
Space Lease (a "Company Tenant") has been promised or given a loan by the
Company or any Company Subsidiary. None of the Company and the Company
Subsidiaries has received any advance payment of rent (other than for the
current month) on account of any of the Space Leases except as shown on
Section 3.10(g) of the Company Disclosure Letter. The Rent Roll discloses
all security and other deposits made by each Company Tenant which have not
duly been applied as of the date hereof. Except as set forth on Section
3.10(g) of the Company Disclosure Letter, no Company Tenant is currently
contesting or has successfully contested amounts due under any Space Lease
as additional rent or otherwise.
(h) Except as set forth on Section 3.10(h) of the Company Disclosure
Letter, all material work required to be performed, payments required to be
made and actions required to be taken prior to the date hereof pursuant to
any agreement entered into with a Governmental Agency in connection with a
site approval, zoning reclassification or other similar action relating to
any of the Company Properties (e.g., local improvement district, road
improvement district, environmental mitigation) have been performed, paid
or taken, as the case may be, and the Company has no Knowledge of any
material work, payments or actions that are required after the date hereof
pursuant to such agreements. Except as set forth on Section 3.10(h) of the
Company Disclosure Letter, all material work required to be performed,
payments required to be made and actions required to be taken prior to the
date hereof pursuant to any Space Lease have been performed, paid or taken,
as the case may be, and the Company has no Knowledge of any material work,
payments or actions that are required after the date hereof pursuant to
such Space Leases.
(i) There are no Tax abatements or exemptions specifically affecting
the Company Properties, and the Company and the Company Subsidiaries have
not received any written notice of (and the Company and the Company
Subsidiaries do not have any Knowledge of) any proposed increase in the
assessed valuation of any of the Company Properties or of any proposed
public improvement assessments.
(j) The Company or a Company Subsidiary has good title to all material
personal property, free and clear of all Liens, except for Liens that are
immaterial or relate to debt and encumbrances which do not materially
detract from the value of such property.
(k) The Company has delivered to Parent true, correct and complete
copies of all of the outstanding notes and amended and restated notes
evidencing indebtedness of the Company and the Company Subsidiaries in
relation to, or arising out of, any bond financing provided by the
Massachusetts Housing Finance Authority with respect to any or all of those
certain properties identified in Section 3.2(a) of the Company Disclosure
Letter as owned by ET Sub-Cleveland Circle, LLC, ET Sub-▇▇▇▇▇▇ Court, LLC,
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and ET Sub-Cabot Park, LLC (collectively, the "MHFA Properties"), and there
exists no bond financing indebtedness relative to such properties other
than the indebtedness evidenced by such notes.
Section 3.11. Tenant Matters.
(a) To the Company's Knowledge, each Company Tenant under any lease of
any Company Property that is operated by the tenant under the applicable
Space Lease as a healthcare or healthcare-related facility, including,
without limitation, skilled nursing facilities and assisted living
facilities (each such lease, a "Healthcare Lease"), is operating the
applicable Company Property pursuant to and in compliance with all material
Legal Requirements, permits, licenses, regulatory approvals, certificates
of public need, accreditations and comparable authorizations from all
applicable Governmental Agencies necessary or advisable for the use,
operation and maintenance of the applicable Company Property (collectively,
"Tenant Permits"). To the Company's Knowledge, no Company Tenant under a
Healthcare Lease is the subject of any investigation, proceeding or
examination by any Government Agency concerning an actual or alleged
violation of any Legal Requirement or Tenant Permit or any provider
agreement held by or issued to any Company Tenant or any Company Property
under which such Company Tenant is eligible to receive payment under Title
XVIII of the Social Security Act ("Medicare"), Title XIX of the Social
Security Act ("Medicaid") or any other third party payor programs of any
Governmental Agency or any private or quasi-private healthcare
reimbursement or private payor programs (including so-called "HMO" and
"PPO" programs) or any other agreement, arrangement, program or
understanding with any Governmental Agency or private organization pursuant
to which such Company Tenant or such Company Property qualifies for payment
or reimbursement for medical or therapeutic care or other goods or services
rendered or supplied to any resident (collectively, "Provider Agreements").
(b) The Company has delivered or made available to Parent true and
complete copies of (i) all reports, financial statements, correspondence,
evidence of insurance, and all other deliveries made, to the Knowledge of
the Company, by a Company Tenant to the Company or its Subsidiaries within
the 18 months prior to this Agreement pursuant to a requirement under a
Space Lease and, in any event, all such deliveries made within the 12
months prior to this Agreement, and (ii) all other material reports,
financial statements, correspondence, evidence of insurance, and all other
deliveries made, to the Knowledge of the Company, by a Company Tenant to
the Company or its Subsidiaries within the 18 months prior to this
Agreement, whether or not the same were required to be delivered pursuant
to the applicable Space Lease and, in any event, all such deliveries made
within the 12 months prior to this Agreement, including, without
limitation, monthly financial statements and other reports, materials and
information concerning each such Company Tenant's business operations and
compliance with Legal Requirements, Tenant Permits and Provider Agreements,
including, but not limited to, Medicare and Medicaid cost reports, and all
correspondence relating thereto or to the applicable Company Property (the
items referred to in clauses (i) and (ii) are referred to collectively as
"Tenant Deliveries"); provided further that any and all financial,
regulatory or legal items shall be deemed for purposes of this sentence to
be material. To the Company's Knowledge, no Tenant Delivery, including,
-19-
without limitation, financial information, delivered to the Company prior
to the date hereof contained any untrue statement of a material fact or
omitted to state a material fact necessary in order to make the statements
made, in light of the circumstances under which they were made, not
misleading.
Section 3.12. Environmental Matters. The Company has delivered or made
available to Parent true and complete copies of the most recent environmental
documents with respect to the subject matter contained therein listed on Section
3.12 of the Company Disclosure Letter (the "Company Environmental Reports"). To
the Company's Knowledge, the Company Environmental Reports constitute all
material environmental documents (including, without limitation, all most recent
versions of environmental investigations and testing or analysis made by or on
behalf of the Company or any of the Company Subsidiaries) with respect to the
Company and the Company Subsidiaries, their past and present operations, and the
Company Properties in the possession or control of the Company or any Company
Subsidiary. With respect to each Company Property (which for purposes of this
Section 3.12 shall include all real property formerly owned, operated or leased
by the Company or a Company Subsidiary during the period of such ownership,
operation or lease; provided, however, that with respect to such real property
formerly owned, operated or leased by the Company or a Company Subsidiary, the
Company's representations and warranties contained in this Section 3.12, shall
speak only as to the Company's Knowledge), (i) no Hazardous Substances (as
defined below) have been used, stored, manufactured, treated or processed on or
about any Company Property by the Company, any Company Subsidiary or, to the
Knowledge of the Company, any other Person except in compliance with
Environmental Law and in the Ordinary Course of Business; (ii) there has been
(A) no circumstance constituting a threatened release that is reasonably likely
to result in liability under Environmental Laws and (B) no release, in each
case, of any Hazardous Substance on, in, under, or from any Company Property
which requires any disclosure, investigation, remediation, monitoring,
maintenance, abatement or deed or use restriction, or which will give rise to
any other Liability or diminution in value under any Environmental Laws; (iii)
the Company has not arranged for the disposal of any Hazardous Substance at, or
transported any Hazardous Substance to any site for which the Company is or may
be liable under Environmental Laws; (iv) the Company Property and the business
conducted thereon are not in violation of Environmental Laws by the Company, any
Company Subsidiary or, to the Knowledge of the Company, any other Person; (v)
the Company has not received any notice of violation or potential liability
under any Environmental Laws from any Person or any Governmental Agency inquiry,
request for information, or demand letter under any Environmental Law relating
to operations or Company Properties, nor is the Company subject to any orders,
agreements, settlements or other such obligations arising under Environmental
Laws, nor are there any administrative, civil or criminal actions, suits,
proceedings or investigations pending or, to the Company's Knowledge, threatened
against the Company under any Environmental Law; (vi) no Lien has been or, to
the Company's Knowledge, is reasonably expected to be recorded on any Company
Property by any Governmental Agency under any Environmental Law; (vii) none of
the Company Properties contain any wetlands, underground storage tanks (active,
inactive or abandoned) or friable asbestos or friable asbestos-containing
materials; and (viii) the transactions contemplated by this Agreement are not
subject to and will not trigger any requirement under Environmental Law to
provide notice to a Governmental Agency of the transaction or conduct any
environmental investigation and/or remediation of the Company Properties.
-20-
(a) "Environmental Laws" shall mean any Legal Requirement relating to:
(i) emissions, discharges, spills, releases or threatened releases of
Hazardous Substances into the ambient environment; (ii) the treatment,
storage, disposal, manufacture, transportation or shipment of Hazardous
Substances; (iii) the regulation of storage tanks; or (iv) otherwise
relating to pollution or the protection of human health, the environment
and natural resources.
(b) "Hazardous Substances" shall mean all substances, wastes,
pollutants, contaminants and materials potentially harmful to human health,
the environment or natural resources or otherwise regulated or defined or
designated as hazardous, extremely hazardous or toxic pursuant to any
Environmental Law, including, without limitation:
(i) all substances, wastes, pollutants, contaminants and
materials regulated, or defined or designated as hazardous, extremely
or imminently hazardous, dangerous or toxic, under the following
federal statutes and their state counterparts, as well as their
statutes' implementing regulations: the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. Section 9601 et
seq., the Resource Conservation and Recovery Act, 42 U.S.C. Section
6901 et seq., the Toxic Substances Control Act, 15 U.S.C. Section 2601
et seq., the Clean Water Act, 33 U.S.C. Section 1251 et seq., the Clean
Air Act, 42 U.S.C. Section 7401 et seq., the Emergency Planning and
Community Right to Know Act, 42 U.S.C. Section 11011 et seq., the Safe
Drinking Water Act, 33 U.S.C. Section 300f et seq., the Federal
Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. Section 136 et
seq., the Atomic Energy Act, 42 U.S.C. Section 22011 et seq., and the
Hazardous Materials Transportation Act, 42 U.S.C. Section 1801 et seq.;
(ii) petroleum and petroleum products including crude oil and
any fractions thereof;
(iii) natural gas, synthetic gas, and any mixtures thereof;
and
(iv) radon, radioactive substances, asbestos, urea
formaldehyde, polychlorinated biphenyls, asbestos-containing materials
and toxic mold.
Section 3.13. Related Party Transactions. Set forth on Section 3.13 of
the Company Disclosure Letter is a list of all Contracts entered into by the
Company or any Company Subsidiary under which continuing obligations exist with
(i) any consultant or any investment banker or financial advisor, in each case,
relating to any material obligation to make, or which could result in the making
of, any payment (except pursuant to indemnification obligations), (ii) any
Person who is an officer, trustee (or person occupying a similar position in any
other entity) or Affiliate (as defined below) of the Company or any of the
Company Subsidiaries, any member of the "immediate family" (as such term is
defined in Item 404 of Regulation S-K promulgated under the Securities Act
("Regulation S-K") of any of the foregoing or any entity of which any of the
foregoing is an Affiliate or (iii) any Person who acquired Company Common Stock
in a private placement within the preceding three years. Such documents, true
and correct copies of all of which have previously been delivered to Parent, are
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listed on Section 3.13 of the Company Disclosure Letter. As used in this
Agreement, the term "Affiliate" shall have the meaning ascribed to such term in
Rule 405 promulgated under the Securities Act.
Section 3.14. Employee Benefits. As used herein, the term "Employee
Plan" includes any pension, retirement, savings, disability, medical, dental,
health, life, death benefit, group insurance, profit sharing, deferred
compensation, stock option, stock loan, bonus, incentive, vacation pay, tuition
reimbursement, severance pay, or other employee benefit plan, trust, agreement,
contract, arrangement, policy or commitment (including, without limitation, any
pension plan ("Pension Plan"), as defined in Section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended and the rules and regulations
promulgated thereunder ("ERISA"), and any welfare plan ("Welfare Plan") as
defined in Section 3(1) of ERISA), whether any of the foregoing is funded,
insured or self-funded, written or oral, (i) sponsored or maintained by the
Company or the Company Subsidiaries (each a "Group Member") and covering any
Group Member's active or former employees (or their beneficiaries), (ii) to
which any Group Member is a party or by which any Group Member (or any of the
rights, properties or assets thereof) is bound or (iii) with respect to which
any current Group Member may otherwise have any material Liability (whether or
not such Group Member still maintains such Employee Plan). Each Employee Plan is
listed on Section 3.14(a) of the Company Disclosure Letter.
(a) Except as disclosed on Section 3.14 of the Company Disclosure
Letter, no Group Member has any continuing liability under any Welfare Plan
which provides for continuing benefits or coverage for any participant or
any beneficiary of a participant after such participant's termination of
employment, except as may be required by Section 4980B of the Code or
Section 601 (et seq.) of ERISA, or under any applicable state law, and at
the expense of the participant or the beneficiary of the participant.
(b) Each Employee Plan complies in all material respects with the
applicable requirements of ERISA and any other applicable Legal Requirement
governing such Employee Plan, and each Employee Plan has at all times been
properly administered in all material respects in accordance with all such
Legal Requirements, and in accordance with its terms and the terms of any
applicable collective bargaining agreement to the extent consistent with
all such Legal Requirements. Each Pension Plan which is intended to be
qualified is qualified under Section 401(a) of the Code, has received a
favorable determination letter from the Internal Revenue Service ("IRS")
stating that such Pension Plan meets the applicable requirements of Section
401(a) of the Code and that the trust associated with such Pension Plan is
tax exempt under Section 501(a) of the Code and no event has occurred which
would jeopardize the qualified status of any such plan or the tax exempt
status of any such trust under Sections 401(a) and Section 501(a) of the
Code, respectively. No lawsuits, claims (other than routine claims for
benefits) or complaints to, or by, any Person or Governmental Agency with
respect to any Employee Plan have been filed or are pending, the Company
has received no notice of such a lawsuit, claim or complaint and, to the
Knowledge of the Company, there is no fact or contemplated event which
would be expected to give rise to any such lawsuit, claim (other than
routine claims for benefits) or complaint with respect to any Employee
Plan. Without limiting the foregoing, the following are true with respect
to each Employee Plan:
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(i) all Group Members have filed or caused to be filed every
material return, report, statement, notice, declaration and other
document required by any Legal Requirement or Governmental Agency
(including, without limitation, the IRS and the Department of Labor)
with respect to each such Employee Plan, each of such filings has been
complete and accurate in all material respects and no Group Member has
incurred any material Liability in connection with such filings;
(ii) all Group Members have delivered or caused to be
delivered to every participant, beneficiary and other party entitled to
such material, all material plan descriptions, returns, reports,
schedules, notices, statements and similar materials, including,
without limitation, summary plan descriptions and summary annual
reports, as are required under Title I of ERISA, the Code, or both, and
no Group Member has incurred any material Liability in connection with
such deliveries;
(iii) all contributions and payments with respect to Employee
Plans that are required to be made by a Group Member with respect to
periods ending on or before the Closing Date (including periods from
the first day of the current plan or policy year to the Closing Date)
have been, or will be, made or accrued before the Closing Date in
accordance with the appropriate plan document, actuarial report,
collective bargaining agreements or insurance contracts or arrangements
or as otherwise required by ERISA or the Code; and
(iv) with respect to each such Employee Plan, to the extent
applicable, the Company has previously delivered or made available to
Parent true and complete copies of (A) plan documents, or any and all
other material documents that establish the existence of the plan,
trust, arrangement, contract, policy or commitment and all amendments
thereto, (B) the most recent determination letter, if any, received
from the IRS, (C) the three most recent Form 5500 Annual Reports (and
all schedules and reports relating thereto) and actuarial reports and
(D) all related trust agreements, insurance contracts or other funding
agreements that implement each such Employee Plan.
(c) With respect to each Employee Plan, there has not occurred, and no
Person or entity is contractually bound to enter into, any "prohibited
transaction" within the meaning of Section 4975(c) of the Code or Section
406 of ERISA, which transaction is not exempt under Section 4975(d) of the
Code or Section 408 of ERISA.
(d) None of the Employee Plans is a multiemployer plan, as defined in
Section 3(37) of ERISA ("Multiemployer Plan"). None of the Group Members or
any trade or business (whether or not incorporated) which is or has ever
been treated as a single employer with any Group Member under Section
414(b), (c), (m) or (o) of the Code ("ERISA Affiliate") has incurred any
liability due to a complete or partial withdrawal from a Multiemployer Plan
or due to the termination or reorganization of a Multiemployer Plan, except
for any such liability which has been satisfied in full, and no events have
occurred and no circumstances exist that would be expected to result in any
such Liability to any Group Member or ERISA Affiliate.
-23-
(e) Except as disclosed on Section 3.14(e) of the Company Disclosure
Letter, (i) none of the Employee Plans is a single-employer plan, as
defined in Section 4001(a)(15) of ERISA, that is subject to Title IV of
ERISA ("Title IV Plan"), (ii) the assets and liabilities in respect of the
accrued benefits of any Title IV Plan disclosed on Section 3.14(e) of the
Company Disclosure Letter, as set forth in the most recent actuarial
valuation report prepared by such plan's actuary, fairly present the funded
status of such plan in all material respects, and (iii) since the date of
such valuation report there has been no material adverse change in the
funded status of any such Title IV Plan. With respect to each Title IV Plan
sponsored by, or to which contributions are required of, any Group Member
or ERISA Affiliate, there does not exist any accumulated funding deficiency
within the meaning of Section 412 of the Code or Section 302 of ERISA,
whether or not waived. None of the Group Members or any ERISA Affiliate has
any outstanding liability under Section 4062 of ERISA to the Pension
Benefit Guaranty Corporation ("PBGC") or to a trustee appointed under
Section 4042 of ERISA, and no events have occurred and no circumstances
exist that would be expected to result in any such Liability to any Group
Member or ERISA Affiliate. There has been no "reportable event" within the
meaning of Section 4043 of ERISA with respect to any Title IV Plan that
would require the giving of notice to the PBGC or any other event requiring
disclosure under Section 4041(c)(3)(C) or 4063(a) of ERISA. None of the
Group Members or any ERISA Affiliate has engaged in any transaction
described in Section 4069 of ERISA that would be expected to result in
Liability to any Group Member with respect to any Title IV Plan. All
premiums due the PBGC with respect to any Title IV Plan have been paid when
due.
(f) With respect to each Pension Plan maintained or sponsored by any
Controlled Group Member, such plans provide the plan sponsor the authority
to amend or terminate the plan at any time, subject to applicable
requirements of ERISA and the Code.
(g) Except as disclosed on Section 3.14(e) of the Company Disclosure
Letter, none of the Company or any of its Subsidiaries is a party to any
agreement or arrangement that could reasonably be expected to result,
separately or in the aggregate, in the actual or deemed payment (including
any payment made pursuant to Section 2.3(a) herein) by the Company or any
of its Subsidiaries of any "excess parachute payments" within the meaning
of Section 280G of the Code or that would be nondeductible under Section
162(m) of the Code.
Section 3.15. Employee Matters.
(a) Section 3.15(a) of the Company Disclosure Letter lists the employee
handbooks of the Company and each of the Company Subsidiaries currently in
effect. A copy of each such employee handbook has previously been delivered
to Parent. Such handbooks fairly and accurately summarize all material
employee policies, vacation policies and payroll practices of the Company
and the Company Subsidiaries. Neither the Company nor any of the Company
-24-
Subsidiaries is a party to, or bound by, any collective bargaining
agreement, contract or other agreement or understanding with a labor union
or other labor organization, nor has the Company or any of the Company
Subsidiaries agreed that any unit of their employees is appropriate for
collective bargaining. No union or other labor organization has been
certified as bargaining representative for any of the Company's or the
Company Subsidiaries' employees. To the Knowledge of the Company there are
no organizational efforts with respect to the formation of a collective
bargaining unit presently being made or threatened involving employees of
the Company or any of the Company Subsidiaries.
(b) Set forth on Section 3.15(b) of the Company Disclosure Letter is a
true and complete list of all cash and non-cash payments, rights to
property or other contract rights which will become payable, accelerated or
vested to or in each employee, officer or trustee (or person occupying a
similar position in any other entity) of the Company or any Company
Subsidiary as a result of the Merger (other than the Merger Consideration
payable to such persons solely as a result of such person's ownership of
Company Common Stock or payments made to such persons pursuant to the terms
of this Agreement solely as a result of such person's ownership of Company
Options or Distribution Equivalent Rights). Except as described on Section
3.15(b) of the Company Disclosure Letter, there is no employment or
severance contract, or other agreement requiring payments, cancellation of
indebtedness or other obligation to be made on a change of control or
otherwise as a result of the consummation of any of the transactions
contemplated by this Agreement, either alone or upon the occurrence of
subsequent events, with respect to any employee, officer or trustee (or
person occupying a similar position in any other entity) of the Company or
any Company Subsidiary.
Section 3.16. Taxes.
(a) Each of the Company and the Company Subsidiaries has filed all Tax
returns and reports required to be filed by it (after giving effect to any
filing extension properly granted by a Governmental Agency having authority
to do so) and has paid (or the Company has paid on its behalf) all Taxes
required to be paid by it except (i) as set forth on Section 3.16 of the
Company Disclosure Letter, or (ii) as regards Taxes that are being
contested in good faith by appropriate proceedings and for which the
Company or the applicable the Company Subsidiary has set aside on its books
adequate reserves. Such Tax returns and reports are true, correct and
complete. The Company Audited Financials reflect an adequate reserve for
all Taxes payable or accrued by the Company and the Company Subsidiaries
for all taxable periods and portions thereof through the Financial
Statement Date. Since the Financial Statement Date, the Company has
incurred no liability for Taxes under Sections 857(b), 860(c) or 4981 of
the Code, including, without limitation, any tax arising from a prohibited
transaction described in Section 857(b)(6) of the Code, and neither the
Company nor any Company Subsidiary has incurred any liability for Taxes
other than in the Ordinary Course of Business. The Company has established
in its books and records reserves or accrued liabilities or expenses that
are adequate for payment of all Taxes for which the Company or any Company
Subsidiary is liable but are not yet due and payable. No event has
occurred, and no condition or circumstance exists, which presents a
material risk that any material Tax described in the preceding sentence
-25-
will be imposed upon the Company. No deficiency for any Taxes has been
proposed, asserted or assessed pursuant to a "30-day letter" or notice of
deficiency sent by the IRS or any state, local or foreign taxing authority,
or, to the Knowledge of the Company, threatened. No waiver of the time to
assess any such Taxes has been executed by the Company or any the Company
Subsidiary and, to the Knowledge of the Company, no requests for such
waivers are pending.
(b) All Taxes which the Company or Company Subsidiaries are required by
Law to withhold or collect, including Taxes required to have been withheld
in connection with amounts paid or owing to an employee, independent
contractor, creditor, stockholder or other third party and sales, gross
receipts and use taxes, have been duly withheld or collected and, to the
extent required, have been paid over to the proper Governmental Agency or
are held in separate bank accounts for such purpose. There are no
encumbrances for Taxes upon the assets of the Company or the Company
Subsidiaries except for statutory encumbrances for Taxes not yet due. For
purposes of this Agreement, "Taxes" shall mean any federal, state, local,
foreign or other tax, assessment, ▇▇▇▇, ▇▇▇▇ or charge, including, without
limitation, any income, gross receipts, excise, employment, sales, use,
transfer, license, payroll, franchise, severance, stamp, withholding,
Social Security, unemployment, real property, personal property, property
gains, registration, capital stock, value added, single business,
occupation, workers' compensation, alternative or add-on minimum,
estimated, or other tax, including, without limitation any interest,
penalties or additions thereto and water or sewer charges or rents.
(c) None of the Company or any Company Subsidiary has any liability for
the Taxes of any Person other than the Company or Company Subsidiaries and
the Company and Company Subsidiaries do not have any Liability for the
Taxes of any Person other than the Company or Company Subsidiaries either
(i) under Treasury Regulation Section 1.1502-6 (or any similar provision of
state, local or foreign Legal Requirements) or (ii) to the Knowledge of the
Company as a transferee or successor.
(d) None of the Company or any Company Subsidiary has any Liability for
the Taxes of any Person other than the Company or Company Subsidiaries and
the Company and Company Subsidiaries do not have any Liability for the
Taxes of any Person other than the Company or Company Subsidiaries under
any tax sharing or tax indemnity agreements.
(e) The Company and each Company Subsidiary that is a U.S. corporation
has disclosed to the IRS all positions taken on their federal income Tax
returns which could give rise to a substantial understatement of Tax under
Section 6662 of the Code.
(f) The Company (i) has since its tax year ended December 31, 1998
qualified as a real estate investment trust (a "REIT") within the meaning
of Section 856 of the Code, (ii) has operated since the Financial Statement
Date in such a manner as to qualify as a REIT for the taxable year ending
on the earlier of December 31, 2003, or the Closing Date and, if later, for
the taxable year of the Company ending on the Closing Date, and (iii) has
not taken or omitted to take any action which would reasonably be expected
to (A) result in any rents or other amounts paid by tenants of the
Properties to be excluded from the definition of "rents from real property"
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or (B) result in a challenge to its status as a REIT and, to the Company's
Knowledge, no such challenge is pending or threatened. Each Company
Subsidiary which is a partnership, joint venture, limited liability company
or other entity other than a corporation (i) has been since its formation
and continues to be treated for federal income tax purposes as a
partnership or as an entity that is disregarded for federal income tax
purposes and not as a corporation or an association taxable as a
corporation and (ii) has not since the later of its formation or the
acquisition by the Company of a direct or indirect interest therein, owned
any assets (including, without limitation, securities) that would cause the
Company to violate Section 856(c)(4) of the Code. Each Company Subsidiary
which is a corporation or treated as an association taxable as a
corporation and any Person in which the Company owns 10% or more, by vote
or by value, of such Person's securities, is and has been since its
formation or acquisition by the Company a qualified REIT subsidiary under
Section 856(i) of the Code, or is and has been a "taxable REIT subsidiary"
under Section 856(l) of the Code. Neither the Company nor any Company
Subsidiary holds any asset the disposition of which would be subject to
rules similar to Section 1374 of the Code as a result of Treas. ▇▇▇.▇▇.
1.337(d)-5, Treas. ▇▇▇.▇▇. 1.337(d)-6 or Treas. ▇▇▇.▇▇. 1.337(d)-7.
(g) To the Company's Knowledge, as of the date hereof, the Company is a
"domestically-controlled" REIT within the meaning of Section 897(h) of the
Code.
(h) Except as set forth on Section 3.16 of the Company Disclosure
Letter (such request set forth on Section 3.16 of the Company Disclosure
Letter being referred to in this Agreement as the "Genesis Ruling
Request"), neither the Company nor any Company Subsidiary has pending any
request for a tax ruling with a taxing authority. The Company has delivered
to Parent true and correct copies of the Genesis Ruling Request, together
with all related correspondence and supplemental submissions related
thereto. To the Knowledge of the Company, except as has been delivered or
made available to Parent, (i) neither the Company nor any Company
Subsidiary has received any correspondence or other communication from, or
sent any correspondence or other communication to, the IRS relating to tax
credits for MHFA Properties; and (ii) neither the Company nor any Company
Subsidiary is aware or in possession of any correspondence or other
communications between the IRS and any other party relating to any Company
Property relating to tax credits for MHFA Properties.
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Section 3.17. Condition and Compliance of Property. The assets of the
Company and its Subsidiaries: (i) in the aggregate are adequate to conduct the
operations of the Company and its Subsidiaries in substantially the manner
currently conducted and (ii) have been maintained in accordance with the
Company's and its Subsidiaries' historical practices since December 31, 2002 in
all material respects. Except as set forth on Section 3.10(d) of the Company
Disclosure Letter, each building and other improvement on a Company Property is
in good operating condition, ordinary wear and tear excepted, and is suitable
and sufficient for the operation of the business currently conducted thereon.
Section 3.18. Compliance with Legal Requirements.
(a) Except as set forth on Section 3.18(a) of the Company Disclosure
Letter or in the Company SEC Documents, the Company and the Company
Subsidiaries have complied with all applicable Legal Requirements, except
as would not have a Company Material Adverse Effect, and have not received
any notice of violation of any such Legal Requirement.
(b) The Company and its Subsidiaries possess each Company Permit,
including the certificate of occupancy for each Company Property, that is
necessary or appropriate for the operations of the Company and the Company
Subsidiaries as currently or currently proposed to be conducted. All
Company Permits are in full force and effect and no proceeding is pending
or, to the Knowledge of the Company, threatened, to revoke or limit any
Company Permit. Except as set forth on Section 3.18(b) of the Company
Disclosure Letter:
(i) the Company is, and at all times since the Financial
Statement Date has been, in compliance in all material respects with
all of the terms and requirements of each Company Permit; and
(ii) since the Financial Statement Date, neither the Company
nor any Company Subsidiary has received any notice or other
communication (whether oral or written) from any Governmental Agency or
any other Person regarding (A) any actual, alleged, possible, or
potential violation of or failure to comply with any term or
requirement of any material Company Permit, or (B) any actual,
proposed, possible, or potential revocation, withdrawal, suspension,
cancellation, termination of, or modification to any Company Permit.
Section 3.19. Contracts.
(a) Except as specifically listed on the appropriate subsection of
Section 3.19(a) of the Company Disclosure Letter, neither the Company nor
any Company Subsidiary is a party to or bound by any (each of the
following, collectively with all contracts, agreements, commitments,
instruments and guaranties to which the Company or any Company Subsidiary
is a party ("Contract"), including leases and subleases, together with any
amendments thereto and any guaranties, or subordination, nondisturbance and
attornment agreements, with respect to all real property leased by the
Company or its Subsidiaries as lessor or lessee ("Lease") and the other
agreements or instruments listed on Section 3.13 of the Company Disclosure
Letter, being a "Material Contract"):
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(i) Space Lease;
(ii) Lease other than a Space Lease;
(iii) mortgage, indenture, note, or installment obligation, or
other instrument or Contract for or relating to Indebtedness or which
restricts any of them from prepaying any of their Indebtedness without
penalty or premium at any time or which requires any of them to
maintain any amount of Indebtedness with respect to any of the Company
Properties; for purposes of this Agreement, "Indebtedness" means: (A)
indebtedness for borrowed money, whether secured or unsecured, (B)
obligations under conditional sale or other title retention agreements
relating to property purchased by such Person, (C) capitalized lease
obligations, (D) obligations under interest rate cap, swap, collar or
similar transaction or currency hedging transactions, (E) obligations
secured by Liens on assets of the Company or any Company Subsidiary
whether or not the Company or any Company Subsidiary is an obligor with
respect to the underlying obligations, (F) guarantees of any such
indebtedness of any other Person and (G) any other obligation required
by GAAP to be treated as indebtedness;
(iv) Contract relating to the service, supply, development,
construction, maintenance or management of any of the Company
Properties;
(v) Contract relating to management of real property other
than Company Properties;
(vi) Contract relating to the development or construction of,
or additions or expansions to, any Company Properties under which the
Company or any of the Company Subsidiaries currently has, or expects to
incur, an obligation in excess of $100,000;
(vii) Contract providing for the sale of, or option to sell,
any Company Properties or the purchase of, or option to purchase, any
Company Property or Company Properties or other real estate;
(viii) Contract pursuant to which it is or may be obligated to
make payments, contingent or otherwise, on account of or arising out of
prior acquisitions or sales of real estate or other assets;
(ix) Contract (A) that both (I) has as one of its purposes to
permit a person or entity to take the position that such person or
entity could defer federal taxable income that otherwise might have
been recognized upon a transfer of property to any Company Subsidiary
that is treated as a partnership for federal income tax purposes, and
(II) (x) prohibits or restricts in any manner the disposition of any
assets of the Company or any Company Subsidiary, (including, without
limitation, requiring the Company or any Company Subsidiary to
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indemnify any person for any Tax Liabilities resulting from any such
disposition), (y) requires that the Company or any Company Subsidiary
maintain, or put in place, or replace, Indebtedness, whether or not
secured by one or more of the Company Properties, or (z) requires that
the Company or any Company Subsidiary offer to any person or entity at
any time the opportunity to guarantee or otherwise assume, directly or
indirectly, the risk of loss for federal income tax purposes for
Indebtedness or other Liabilities of the Company or any Company
Subsidiary, (B) that specifies or relates to a method of taking into
account book-tax disparities under Section 704(c) of the Code with
respect to one or more assets of the Company or a Company Subsidiary,
or (C) that requires a particular method for allocating one or more
liabilities of the Company or any Company Subsidiary under Section 752
of the Code (collectively, "Tax Protection Agreements");
(x) Contract requiring the Company or any Company Subsidiary
to provide any funds to, or make any investment (in the form of a loan,
capital contribution or otherwise) in, any Company Subsidiary or any
other Person;
(xi) Contract for the sale or lease of any of its assets other
than in the Ordinary Course of Business;
(xii) Contract imposing non-competition or exclusive dealing
obligations on it or limiting the names or the geographic location in
which the Company or any Company Subsidiary may conduct its business;
(xiii) Contract or agreement for the employment of any
stockholder, trustee (or person occupying a similar position in any
other entity), officer, consultant or key employee not terminable
without penalty or Liability arising from such termination or any
severance or change-in-control contract or arrangement;
(xiv) Contract relating to an interest in a Person other than
a Subsidiary;
(xv) Contract relating to cleanup, abatement or other actions
in connection with environmental liabilities; or
(xvi) Contract which (A) involves future payment by or to the
Company or any Company Subsidiary in excess of $50,000 or (B) is
otherwise material to the extent relating to the conduct of the
business of the Company.
(b) Each Material Contract is (i) valid, binding and enforceable
against the Company or the Company Subsidiary party thereto, and to the
Company's Knowledge the other parties thereto, in accordance with its
terms, and (ii) in full force and effect. The Company or the Company
Subsidiary party thereto has performed all material obligations required to
be performed by it under each of the Material Contracts. Except as set
forth on Section 3.19(b) of the Company Disclosure Letter, neither the
Company, any Company Subsidiary, nor, to the Company's Knowledge, any other
party thereto is in material breach of or default under any Material
Contract (and, to the Company's Knowledge, no event has occurred which,
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with due notice or lapse of time or both, would constitute such a default).
Neither the Company, any Company Subsidiary, nor, to the Company's
Knowledge, any other party thereto is in material breach of or default
under any Healthcare Lease (and no event has occurred which, with due
notice or lapse of time or both, would constitute such a default). Neither
the Company nor any Company Subsidiary has received a written notice of
breach or termination of any Material Contract. The Company has delivered
or made available to Parent a copy of each Contract listed or required to
be listed on Section 3.19(a) of the Company Disclosure Letter and each of
the same has not been modified or amended except as set forth on Section
3.19(a) of the Company Disclosure Letter.
Section 3.20. Investment Company Act of 1940. Neither the Company nor
any of the Company Subsidiaries is, or at the Effective Time will be, required
to be registered under the Investment Company Act of 1940, as amended.
Section 3.21. Trademarks, Patents and Copyrights.
(a) Except as set forth on Section 3.21(a) of the Company Disclosure
Letter, or to the extent the inaccuracy of any of the following,
individually or in the aggregate, would not have a Company Material Adverse
Effect, (i) the Company and the Company Subsidiaries own all right, title
and interest in and to, or have a valid and enforceable license to use, all
trademarks, service marks, logos, trade dress, product configurations,
corporate names, trade names and other indications of origin, and the
goodwill of the business connected therewith and symbolized thereby,
patents, registered designs, copyrights, computer software and databases,
domain names, Internet Web sites (and all intellectual property and
proprietary rights used in connection therewith or incorporated therein),
inventions, trade secrets, know-how, business methods and all other
proprietary and intellectual property rights and information, including all
grants, registrations and applications relating to all of the foregoing
(collectively, the "Intellectual Property") used or held for use in
connection with their respective business as currently conducted or as
contemplated to be conducted (such Intellectual Property owned by or
licensed to the Company and the Company Subsidiaries, collectively, the
"Company Intellectual Property"); (ii) neither the Company nor any Company
Subsidiary has received a demand, claim, notice or inquiry from any Person
that challenges or threatens to challenge the validity of, or the rights of
the Company or such Company Subsidiary in, any Company Intellectual
Property, and the Company knows of no basis for any such challenge; (iii)
the Company and the Company Subsidiaries are not violating or infringing,
and have not violated or infringed, any Intellectual Property of any other
Person in such a way that would have a Company Material Adverse Effect;
(iv) to the Knowledge of the Company, no Person is infringing any Company
Intellectual Property; (v) the Company and the Company Subsidiaries are not
under any obligation to pay royalties or other payments in connection with
any agreement granting the Company or any Company Subsidiary the right to
use the software or any other Intellectual Property of any third party, nor
does any such agreement prohibit the Company or Company Subsidiary from
assigning its rights thereunder (including by operation of law) or contain
any "change of control" restriction, nor will the Company or any Company
Subsidiary be, as a result of the transactions contemplated in this
Agreement, in breach of any agreement relating to the Company Intellectual
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Property; and (vi) no present or former employee, officer, trustee or
director of the Company or any Company Subsidiary, or any agent or outside
contractor of the Company or any Company Subsidiary, holds any right, title
or interest, directly or indirectly, in whole or in part, in or to any
Company Intellectual Property.
(b) Section 3.21(b) of the Company Disclosure Letter contains a
complete and current list of: (i) patents and patent applications; (ii)
copyright applications and registrations, (iii) trademark and service ▇▇▇▇
applications and registrations and material unregistered marks and trade
names; (iv) domain names; and (v) license and other agreements pertaining
to the Company Intellectual Property.
Section 3.22. Insurance.
(a) Section 3.22 of the Company Disclosure Letter sets forth a list of
all insurance policies and all material fidelity bonds or other insurance
service contracts (the "Insurance Policies") providing coverage for the
properties or operations of the Company and the Company Subsidiaries. There
is no claim by the Company pending under any of the Insurance Policies. All
premiums payable under all Insurance Policies have been paid, and the
Company has otherwise complied in all material respects with the terms and
conditions of all the Insurance Policies. The Insurance Policies are valid
and enforceable in accordance with their terms and insure against risks and
liabilities that the Company believes are customary in the industry and as
required by Legal Requirements and the Contracts. Neither the Company nor
any Company Subsidiary has received notice from any insurance carrier: (i)
threatening a suspension, revocation, modification or cancellation of any
Insurance Policy or a material increase in any premium in connection
therewith, or (ii) informing the Company or any Company Subsidiary that any
coverage listed on Section 3.22 of the Company Disclosure Letter will or
may not be available in the future on substantially the same terms as now
in effect.
(b) To the knowledge of the Company, Section 3.22 of the Company
Disclosure Letter sets forth a list of all Insurance Policies and insurance
certificates maintained by Company Tenants providing coverage with respect
to Company Properties or the operation thereof.
Section 3.23. Books and Records of the Company. The books of account,
minute books, stock record books, and other records of the Company, all of which
have been made available to Parent, are complete and correct, accurately reflect
in reasonable detail the transactions to which the Company or any Company
Subsidiary is a party or by which its properties are bound in accordance with
GAAP consistently applied and have been maintained in accordance with sound
business practices and the requirements of Section 13(b)(2) of the Exchange Act,
including the maintenance of an adequate system of internal controls. The minute
books of the Company contain accurate and complete records of all meetings held
of, and action taken by, the Company shareholders, the Board, and committees of
the Board of the Company, and no meeting of any such shareholders, Board, or
committee has been held for which minutes have not been prepared and are not
contained in such minute books. At the Closing, all of those books and records
will be delivered to Parent.
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Section 3.24. Certain Payments. Since January 1, 2000, neither the
Company nor any Company Subsidiary, nor, to the Company's Knowledge, any of
their respective trustees, directors, officers, agents or employees has directly
or indirectly (a) made any contribution, gift, bribe, rebate, payoff, influence
payment, kickback, or other payment to any Person, private or public, regardless
of form, whether in money, property, or services (i) to obtain favorable
treatment in securing business, (ii) to pay for favorable treatment for business
secured, (iii) to obtain special concessions or for special concessions already
obtained, for or in respect of the Company or any Company Subsidiary, or (iv) in
violation of any Legal Requirement, or (b) established or maintained any fund or
asset that has not been recorded in the books and records of the Company.
Section 3.25. Genesis Contracts. Except as specifically listed on
Section 3.25 of the Company Disclosure Letter, neither the Company nor any
Company Subsidiary is a party to or bound by any Contract to which Genesis or
any Affiliate of Genesis is a party or by which Genesis or any Affiliate of
Genesis is bound (each, a "Genesis Contract"). The Company has delivered to
Parent complete and correct copies of each Genesis Contract, including any
amendment, supplement or modification thereof or waiver or consent related
thereto.
Section 3.26. Brokers; Schedule of Fees and Expenses. Except as
disclosed on Section 3.26 of the Company Disclosure Letter, no broker,
investment banker, financial advisor or other person, other than Wachovia
Capital Markets, LLC, the fees and expenses of which have previously been
disclosed to Parent, is entitled to any broker's, finder's, financial advisor's
or other similar fee or commission in connection with the transactions
contemplated hereby based upon arrangements made by or on behalf of the Company
or any Company Subsidiary.
Section 3.27. Opinion of Financial Advisor. The Board of Trustees of
the Company has received the opinion of Wachovia Capital Markets, LLC, to the
effect that, as of the date hereof, the Merger Consideration is fair from a
financial point of view to the holders of Company Common Stock, a copy of which
opinion in the form in which it has been or will be delivered to the Company has
been delivered to Parent.
Section 3.28. Information Supplied. None of the information to be
supplied by the Company or, to the Knowledge of the Company, its officers,
trustees, representatives, agents or employees specifically for inclusion or
incorporation by reference in the Proxy Statement will, on the date it is first
mailed to the holders of the Company Common Stock or at the time of the meeting
of the Company's shareholders to consider the Merger (the "Company Shareholders
Meeting"), contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading. If at any time prior to the date of the Company Shareholders
Meeting, any event with respect to the Company or any Company Subsidiaries, or
with respect to information supplied by the Company specifically for inclusion
in the Proxy Statement, shall occur which is required to be described in an
amendment of, or supplement to, the Proxy Statement, such event shall be so
described by the Company. All documents that the Company is responsible for
filing with the SEC in connection with the transactions contemplated herein, to
the extent relating to the Company or any of its Subsidiaries or other
information supplied by the Company for inclusion therein, will comply as to
form, in all material respects, with the provisions of the Exchange Act, and
each such document required to be filed with any Governmental Agency other than
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the SEC will comply in all material respects with the provisions of applicable
law as to the information required to be contained therein. Notwithstanding the
foregoing, the Company makes no representation or warranty with respect to the
information supplied or to be supplied by Parent or its affiliates for inclusion
or incorporation by reference in the Proxy Statement.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent and Sub jointly and severally represent and warrant to the
Company as follows:
Section 4.1. Organization, Standing and Power of Parent.
(a) Parent is a corporation duly organized and validly existing under
the laws of the State of Delaware and has the requisite corporate power and
authority to carry on its business as now being conducted or currently
proposed to be conducted.
(b) Parent is duly qualified to do business as a foreign corporation
and is in good standing in each jurisdiction where the character of the
properties owned or held under lease or the nature of its activities make
such qualification necessary, except for those jurisdictions where the
failure to be so qualified would not, individually or in the aggregate,
reasonably be expected to prevent or delay in any material respect the
consummation of the Merger (a "Parent Material Adverse Effect").
(c) Parent has previously delivered to the Company complete and correct
copies of its Amended and Restated Articles of Incorporation and By-Laws
and of Sub's Certificate of Formation and Limited Liability Company
Agreement.
Section 4.2. Organization, Standing and Power of Sub.
(a) Sub is a limited liability company duly organized and validly
existing under the laws of the State of Delaware and has the requisite
power and authority to carry on its business as now being conducted or
currently proposed to be conducted.
(b) Sub is duly qualified to do business as a foreign limited liability
company and is in good standing in each jurisdiction where the character of
the properties owned or held under lease or the nature of its activities
make such qualification necessary, except for those jurisdictions where the
failure to be so qualified would not, individually or in the aggregate,
reasonably be expected to have a Parent Material Adverse Effect.
Section 4.3. Authority. Each of Parent and Sub has the requisite
corporate or limited liability company power and authority to enter into this
Agreement and to consummate the transactions contemplated by this Agreement. The
execution and delivery of this Agreement by Parent and Sub and consummation by
each of Parent and Sub of the transactions contemplated by this Agreement have
been duly authorized by all necessary action on the part of Parent and Sub. This
Agreement has been duly executed and delivered by Parent and Sub and constitutes
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a valid and binding obligation of each of Parent and Sub, enforceable against
each of Parent and Sub in accordance with its terms, except as enforcement may
be limited by bankruptcy, insolvency or other similar laws affecting the
enforcement of creditors' rights generally and except that the availability of
equitable remedies, including specific performance, is subject to the discretion
of the court before which any proceeding therefor may be brought.
Section 4.4. No Conflict or Violation; Consents. Except (i) as
disclosed on Section 3.6 of the Company Disclosure Letter and subject to receipt
of the consents and consummation of the transactions set forth on Section 7.2(d)
of the Company Disclosure Letter, and (ii) in the case of paragraphs (b) through
(e) below: for (A) the filing with the SEC of the Proxy Statement and such
reports under Section 13(a) of the Exchange Act as may be required in connection
with the Voting Agreements, the Unitholder Agreements, the Class C Amendment
Agreement and the transactions contemplated by the Voting Agreements, the
Unitholder Agreements and the Class C Amendment Agreement, (B) the filing of the
Certificate of Merger as required by applicable Corporate Law, and (C) such
filings as may be required in connection with the payment of any transfer and
gains taxes, neither the execution and delivery of this Agreement, the Voting
Agreements, the Unitholder Agreements and the Class C Amendment Agreement nor
the consummation or performance of any of the transactions contemplated hereby
or thereby will, directly or indirectly (with or without notice or lapse of
time):
(a) contravene, conflict with, or result in a violation of (i) any
provision of the Certificate of Incorporation or By-Laws of Parent or the
Certificate of Formation or Limited Liability Company Agreement of Sub, or
(ii) any resolution adopted by the board of directors or the stockholders
of Parent and Sub;
(b) contravene, conflict with, or result in a violation of, or give any
Governmental Agency or other Person the right to challenge any of the
transactions contemplated hereby and thereby or to exercise any remedy or
obtain any relief under, any Legal Requirement to which Parent or Sub may
be subject;
(c) contravene, conflict with, or result in a violation of any of the
terms or requirements of, or give any Governmental Agency the right to
revoke, withdraw, suspend, cancel, terminate, or modify, any permit,
approval, consent, authorization, license, variance, or permission required
by a Governmental Agency under any Legal Requirement (a "Parent Permit")
with respect to Parent, any Subsidiary of Parent, or any of their
respective operations or assets, except as would not reasonably be expected
to have a Parent Material Adverse Effect;
(d) contravene, conflict with, or result in a violation or breach of
any provision of, or give any Person the right to declare a default or
exercise any remedy under, or to accelerate the maturity or performance of,
or to cancel, terminate, or modify, any contracts, agreements, commitments,
instruments and guaranties to which Parent or any Parent Subsidiary is a
party or any Parent Permit; or
(e) require with respect to Parent or any Parent Subsidiary, the
consent, approval, or authorization of, or registration or filing with, or
notice to, any Governmental Agency or any other Person.
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Section 4.5. Funds. On the Closing Date, Parent will have available all
funds necessary to pay the Merger Consideration and to satisfy all of their
other respective obligations hereunder.
Section 4.6. Brokers. No broker, investment banker or other person is
entitled to any broker's, finder's or other similar fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of Parent, for which fee or commission the
Company or any Company Subsidiary may be liable.
Section 4.7. Sub Operations. Sub was formed solely for the purpose of
engaging in the transactions contemplated by this Agreement and has not engaged
in any business activities or conducted any operations other than in connection
with the transactions contemplated herein. As of the Effective Time, all of the
outstanding membership interests of Sub will be owned directly or indirectly by
Parent.
Section 4.8. Information Supplied. None of the information to be
supplied by Parent or its officers, directors, representatives, agents or
employees specifically for inclusion or incorporation by reference in the Proxy
Statement to be filed with the SEC in connection with the Merger will, on the
date it is first mailed to the holders of Company Common Stock or at the time of
the Company Shareholders Meeting, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading. If at any time prior to the date of
the Company Shareholders Meeting, any event with respect to Parent, or with
respect to information supplied by Parent specifically for inclusion in the
Proxy Statement, shall occur which is required to be described in an amendment
of, or supplement to, the Proxy Statement, such event shall be so described by
Parent and provided to the Company. All documents that Parent is responsible for
filing with the SEC in connection with the transactions contemplated herein will
comply as to form, in all material respects, with the provisions of the Exchange
Act, and each such document required to be filed with any Governmental Agency
other than the SEC will comply in all material respects with the provisions of
applicable law as to the information required to be contained therein.
Notwithstanding the foregoing, Parent makes no representation or warranty with
respect to the information supplied or to be supplied by the Company or any
affiliate thereof for inclusion or incorporation by reference in the Proxy
Statement.
ARTICLE V.
COVENANTS
Section 5.1. Conduct of the Company's Business Pending Merger. Prior to
the Effective Time, except as (x) set forth on Section 5.1 of the Company
Disclosure Letter, (y) consented to in writing by Parent or (z) as contemplated
herein, the Company shall, and shall cause each of the Company Subsidiaries to:
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(a) Affirmative Business Covenants.
(i) conduct its business: (x) only in the Ordinary Course of
Business, (y) in compliance with all Legal Requirements and Contracts
and (z) in substantially the same manner as heretofore conducted;
(ii) use its commercially reasonable efforts to preserve
intact its business organizations and goodwill and keep available the
services of its officers and employees;
(iii) maintain its books and records in accordance with GAAP
consistently applied and not change any of its methods, principles or
practices of accounting in effect at the Financial Statement Date,
except as may be required by GAAP;
(iv) maintain insurance in such amounts and against such risks
and losses as in effect on the date hereof, except any changes in the
Ordinary Course of Business;
(v) perform in all material respects all obligations under all
Leases and other Material Contracts and Company Permits, and enforce
its material rights under all Material Contracts and Leases unless, in
the good faith judgment of the Company, after consultation with Parent,
the Company determines that enforcement of such rights is inadvisable;
(vi) continue to maintain, in all material respects, their
properties in accordance with present practices in a condition, taken
as a whole, reasonably suitable for their current use;
(vii) including the distributions contemplated by Section 6.8,
make distributions at times and in amounts sufficient to maintain in
effect the Company's status as a REIT under the Code;
(viii) maintain the Company's qualification as a REIT under
the Code; and
(ix) file all Tax returns and reports when due and timely pay
all Taxes, except for such Taxes that are being contested in good faith
by appropriate proceedings and for which the Company or the applicable
Company Subsidiary has set aside on its books adequate reserves.
(b) Negative Business Covenants. not
(i) incur, become subject to or assume or agree to incur,
become subject to or assume (X) any Liabilities other than in the
Ordinary Course of Business or (Y) any Indebtedness;
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(ii) make any loans, advances or capital contributions to, or
investments in, any other Person (other than to (x) wholly owned
Company Subsidiaries or (y) as permitted by Section 5.1(f)(v));
(iii) exercise an option to acquire additional real property;
(iv) sell, lease, mortgage, subject to Lien or Property
Restrictions, or otherwise dispose of, any Company Property or other
assets, excluding any such Lien or Property Restriction as is not
material individually or in the aggregate to the applicable asset and
excluding sales of personal property that do not exceed $50,000 in the
aggregate;
(v) pay, discharge or satisfy any material Liabilities, other
than the payment, discharge or satisfaction, in the Ordinary Course of
Business consistent with past practice, or in accordance with their
terms, of Liabilities reflected or reserved against in the Company
Audited Financials, or incurred since the Financial Statement Date in
the Ordinary Course of Business consistent with past practice;
(vi) subject to Section 5.6, modify, amend or terminate in any
material respect, or suffer or allow to terminate (except in accordance
with its terms as of the date hereof), any Material Contract or any
Contract pursuant to which the Persons identified in Section 3.26 of
the Company Disclosure Letter are entitled to receive the fees
specified in such Section or otherwise increase the fees payable to the
Persons identified in Section 3.26 or waive, release or assign any
material rights or claims thereunder, or enter into any new Material
Contracts;
(vii) subject to Section 5.6, modify, amend or terminate, or
suffer or allow to terminate (except in accordance with its terms as of
the date hereof), any Genesis Contract; waive, release or assign any
rights or claims thereunder; perform its obligations under any Genesis
Contract in any manner materially inconsistent with the express terms
of such Genesis Contract as of the date hereof; enter into any Contract
to which Genesis or any Subsidiary of Genesis would be a party or by
which Genesis or any Subsidiary of Genesis would be bound; or transact
any business or make any payment to Genesis or any Subsidiary of
Genesis other than pursuant to the express terms of such Genesis
Contract as of the date hereof;
(viii) subject to Section 5.6, modify, amend or terminate, or
suffer or allow to terminate (except in accordance with its terms as of
the date hereof), any lease of any Company Property which is operated
by the Company Tenant under a Healthcare Lease; waive, release or
assign any rights or claims thereunder; or perform its obligations
under any Healthcare Lease in any manner materially inconsistent with
the express terms of such Healthcare Lease as of the date hereof;
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(ix) make or agree to make any capital expenditure other than
in the Ordinary Course of Business or capital expenditures in excess of
$100,000 in the aggregate;
(x) (A) acquire, enter into any option to acquire, or exercise
an option or other right or election or enter into any other commitment
or contractual obligation (each, a "Commitment") for the acquisition of
any real property or other transaction involving nonrefundable deposits
in excess of $50,000 and, in any event, not in excess of $100,000 in
the aggregate, (B) commence construction of, or enter into any
Commitment to develop or construct, other real estate projects
involving in excess of $50,000, or (C) enter into any lease (i) that
will be operated by the tenant thereunder as a healthcare or
healthcare-related facility, including, without limitation, skilled
nursing facilities and assisted living facilities or (ii) in excess of
2,500 square feet or incur or commit to incur any tenant allowances or
landlord funded construction expenditures related thereto;
(xi) merge or consolidate with, acquire all or substantially
all of the assets of, or acquire the beneficial ownership of a majority
of the outstanding capital stock or other equity interest in any Person
or division thereof, or acquire any assets, including real estate,
except purchases in the ordinary course of business consistent with
past practice in an amount not involving more than $100,000, in the
aggregate;
(c) Organizational Documents. not amend the Company Organizational
Documents or the articles of incorporation, by-laws, partnership agreement,
joint venture agreement or comparable charter or organization document of
the Company or any Company Subsidiary;
(d) Capital Stock. not (i) declare, set aside or pay any dividend or
other distribution payable in cash, shares, stock or property with respect
to the Company's shares of beneficial interest or that of the Company
Subsidiaries, other than pursuant to Section 6.8 hereof and other than
dividends and distributions by a direct or indirect wholly owned Company
Subsidiary to its parent, (ii) redeem, purchase or otherwise acquire
directly or indirectly any of the Company's shares of beneficial interest
(or options, warrants, calls, commitments or rights of any kind to acquire
any shares of beneficial interest of the Company) or capital stock of any
Company Subsidiaries, except (A) for deemed transfers of Company excess
shares required under Article 7 of the Declaration in order to preserve the
status of the Company as a REIT under the Code, and (B) in connection with
the use of Company Common Stock to pay the exercise price or tax
withholding in connection with equity-based employee benefit plans by the
participants therein, (iii) issue, sell, pledge, dispose of or encumber any
additional shares of, or securities convertible into or exchangeable for,
or options, warrants, calls, commitments or rights of any kind to acquire,
any shares of beneficial interest or capital stock of any class of the
Company or the Company Subsidiaries, other than Company Common Stock issued
upon the exercise of Company Options listed on Section 3.3(d) of the
Company Disclosure Letter; (iv) accept a promissory note in payment of the
exercise price of any Company Option, except as otherwise required pursuant
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to the terms of a Company Option in effect as of the date hereof; (v)
split, combine or reclassify the outstanding shares of beneficial interest
or capital stock or other equity of the Company or of its Subsidiaries;
(vi) make any loan or advance to, or payment (including with respect to
outstanding Indebtedness) for the benefit of, any direct or indirect
beneficial owner of any Company Common Stock or Company Options, other than
payment of salary and benefits to employees, in the Ordinary Course of
Business, consistent with past practice, and advances permitted under
Section 5.1(f)(v).
(e) Defensive Measures. ensure that the Defensive Measures are not
applicable to the Merger, the Declaration Amendment, the Voting Agreements,
the Unitholder Agreements, the Class C Amendment Agreement and the
transactions contemplated by this Agreement, the Voting Agreements, the
Unitholder Agreements and the Class C Amendment Agreement.
(f) Employees and Affiliates. not:
(i) increase in any manner the compensation or fringe benefits
of any trustee (or person occupying a similar position in any other
entity) or officer of the Company or any Company Subsidiary or pay any
benefit not required by any plan and arrangement as in effect as of the
date hereof;
(ii) increase the compensation or benefits payable or to
become payable to the Company's employees or employees of any of the
Company's Subsidiaries, other than the payment of 2003 annual bonuses;
provided, that the aggregate amount of the 2003 annual bonuses shall
not exceed the amount set forth in Section 5.1(f)(ii) of the Company
Disclosure Letter, as such amount shall be reduced by the accrued, but
unpaid bonus amounts payable to individuals who cease to be employees
of the Company and its Subsidiaries prior to the payment of the 2003
annual bonuses; provided, further that no bonuses shall be awarded for
employment or services rendered in 2004;
(iii) (A) adopt any new, (B) grant any award under, or (C)
amend or otherwise increase, or accelerate the payment or vesting of
the amounts payable or to become payable under, any existing Employee
Plan;
(iv) enter into or modify or amend any employment or severance
agreement with or grant any severance or termination rights to any
officer, trustee (or person occupying a similar position in any other
entity) or employee;
(v) make any loan to any trustee (or person occupying a
similar position in any other entity), executive officer or employee
(other than travel advances in the Ordinary Course of Business to
employees who are not executive officers); or
(vi) engage in a transaction with (except pursuant to
Contracts listed on Section 3.13 of the Company Disclosure Letter), or
enter into, amend, modify, terminate, waive or take any similar action
with respect to any Contract with, an Affiliate, or a person described
in clauses (i), (ii), or (iii) of Section 3.13.
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(g) Litigation. not settle or otherwise compromise any shareholder
derivative or class action claims arising out of or in connection with any
of the transactions contemplated by this Agreement, the Voting Agreements,
the Unitholder Agreements or the Class C Amendment Agreement or any
material litigation, arbitration or other judicial or administrative
dispute or proceeding relating to the Company, any of the Company
Subsidiaries or any of their respective assets;
(h) Taxes. not (i) make or rescind any express or deemed election
relative to Taxes or alter any method of Tax accounting, (ii) enter into
any Tax sharing, Tax indemnity or Tax Protection Agreement; (iii) settle,
compromise, enter into, or agree to enter into a closing agreement or
settle any material federal, state, local or foreign Tax liability, but,
subject to compliance with Section 6.7(d), receipt of a ruling in response
to the Genesis Ruling Request shall not be subject to this clause (iii),
(iv) engage in any action that could reasonably be expected to cause the
Company to fail to continue to qualify as a REIT; or (v) take any action,
omit to take any action or enter into any transaction that results in any
increased Tax liability or reduction of any Tax Asset of the Company, but
no breach of this clause (v) shall be deemed to arise from the Company's
operation of its business in the Ordinary Course of Business; provided that
the operating of the Company's business in the Ordinary Course of Business
shall not include the sale or monetization of tax losses. "Tax Asset" means
any net operating loss, net capital loss, foreign tax credit, charitable
deduction or any other credit or tax attribute which could reduce Taxes
(including, without limitation, deductions and credits related to
alternative minimum Taxes);
(i) Consent Fees. not make any payments or incur any Liability or
obligation for the purpose of obtaining any consent from any Person to the
Merger (excluding, for the avoidance of doubt, any Company Transaction
Expenses incurred in connection with obtaining any such consent), other
than (i) filing fees paid to Governmental Agencies in connection with the
Merger and (ii) payments not in excess of $50,000 in the aggregate;
(j) Competing Transactions. not waive the benefits of, or agree to
modify in any material manner, any confidentiality, standstill or similar
agreement relating to the Company or the Company Subsidiaries;
(k) Satisfaction of Closing Conditions. not take any action that would
reasonably be expected to result in any of the conditions to the Merger set
forth in Article VII not being satisfied;
(l) No Authorization of Prohibited Matters. not authorize, recommend,
propose or announce an intention to do any of the foregoing prohibited
actions, or enter into any Contract to do any of the foregoing prohibited
actions; and
(m) Fees and Expenses. not pay in excess of $100,000 of Company
Transaction Expenses (as defined below) in the aggregate in any calendar
month, except for regulatory filing fees and other similar expenses the
payment of which may not be deferred until the Closing Date, and shall not
pay or incur any Company Transaction Expenses to any Affiliate of the
Company.
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Section 5.2. Conduct of Business of Parent. During the period from the
date hereof and continuing until the Effective Time or until the termination of
this Agreement pursuant to Article IX, Parent shall not, without the prior
written consent of the Company, take any action that would reasonably be
expected to result in any of the conditions to the Merger set forth in Article
VII not being satisfied or authorize, recommend, propose or announce an
intention to do any of the foregoing prohibited actions.
Section 5.3. Access to Information: Confidentiality.
(a) Each of the Company and Parent shall, and shall cause each of its
Subsidiaries to, afford to the other party and to the officers, employees,
accountants, counsel, financial advisors, brokers, consultants and other
representatives of such other party (collectively, "Representatives"),
reasonable access during normal business hours with reasonable advance
notice to all their respective properties (including for the purpose of
performing any environmental investigation that Parent shall, in its sole
discretion, deem necessary or advisable), books, contracts, commitments,
personnel and records and, during such period, each of the Company and
Parent shall, and shall cause each of its Subsidiaries to, furnish
reasonably promptly to the other party (i) a copy of each report, schedule,
registration statement and other document filed by it during such period
pursuant to the requirements of federal or state securities laws and (ii)
all other information concerning its business, properties and personnel as
such other party may reasonably request, including, without limitation, a
list of all significant personal property owned by the Company and its
Subsidiaries.
(b) The Company, and any Company Subsidiary, shall reasonably promptly
provide any consent required in order for Parent to have reasonable access
to, and to consult and communicate with, the officers of Company Tenants
during normal business hours upon reasonable advance notice prior to the
Effective Time and shall use its commercially reasonable efforts to cause
such Company Tenants to permit such access, consultation and communication.
(c) Each of the Company and Parent shall, and shall cause its
Subsidiaries to, use commercially reasonable efforts to cause its
Representatives to, hold any nonpublic information in confidence to the
extent required by, and in accordance with, and will comply with the
provisions of, the confidentiality agreement between Parent and the Company
dated October 20, 2003 (the "Confidentiality Agreement").
(d) Notwithstanding anything else in this Agreement or the
Confidentiality Agreement, any information relating to "tax structure" or
"tax treatment" (in each case, within the meaning of Treasury Regulation
Section 1.6011-4) of the transactions contemplated hereby shall not be
confidential and may be disclosed by any party hereto without limitation of
any kind. This provision is intended to cause the transactions contemplated
hereby not to be offered under "conditions of confidentiality" for purposes
of Treasury Regulation Section 1.6011-4(b)(3) and shall be construed
consistently with such purpose.
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Section 5.4. Notices of Certain Events. From and after the date hereof
until the termination of this Agreement or the Effective Time, each of the
Company and Parent shall promptly notify the other:
(a) of any notice or other communication from any Person (i) alleging
that the consent of such Person is or may be required in connection with
the transactions contemplated by this Agreement or (ii) making allegations
which, if true, would cause any representation or warranty made by it
contained in this Agreement that is qualified as to Company Material
Adverse Effect or Parent Material Adverse Effect to be untrue or inaccurate
in any respect or any such representation or warranty that is not so
qualified to be untrue or inaccurate in any material respect;
(b) of any notice or other communication from any Governmental Agency
in connection with the transactions contemplated by this Agreement;
(c) of any actions, suits, claims, investigations or proceedings
commenced or, to their Knowledge, threatened that relate to the
consummation of the transactions contemplated by this Agreement;
(d) (i) if any representation or warranty made by it contained in this
Agreement that is qualified as to Company Material Adverse Effect or Parent
Material Adverse Effect becomes untrue or inaccurate in any respect or any
such representation or warranty that is not so qualified becomes untrue or
inaccurate in any material respect; (ii) of any failure to materially
comply with or satisfy any covenant, condition or agreement to be complied
with or satisfied by it hereunder; and (iii) of the occurrence of any event
that, individually or in the aggregate, is reasonably likely to cause a
Company Prohibited Effect or a Parent Material Adverse Effect; and
(e) of any notice of default under any Material Contract by or to any
Person.
Section 5.5. Tenant Information. The Company will deliver to Parent
promptly, and in no event later than five (5) Business Days after receipt by the
Company or its Subsidiary, true and complete copies of all Tenant Deliveries and
will advise Parent promptly if it comes within the Company's Knowledge that any
Tenant Deliveries, whether delivered prior to or after the date hereof, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading.
Section 5.6. Certain Space Leases. Prior to the Effective Time, the
Company shall enter into the amended Space Leases contemplated by that certain
Master Agreement, dated as of September 11, 2003, between Genesis Healthcare
Ventures, Inc. and the Company Partnership (the "Genesis Master Agreement") in
accordance with terms of the forms of amended lease annexed thereto with such
changes as are set forth on Section 5.6 of the Company Disclosure Letter.
Section 5.7. Estoppel Certificates. Prior to the Effective Time, the
Company shall use commercially reasonable efforts to procure the estoppel
certificates from each Company Tenant and lessor to the Company or any Company
Subsidiary listed on Section 7.2(k) of the Company Disclosure Letter.
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ARTICLE VI.
ADDITIONAL COVENANTS
Section 6.1. Proxy Statement; the Company Shareholders Meeting.
(a) As promptly as reasonably practicable after the date hereof, the
Company shall prepare and file the preliminary Proxy Statement with the
SEC. Parent shall have the right to review drafts of the preliminary Proxy
Statement and consult with the Company on the preparation thereof. The
Company shall use its commercially reasonable efforts to (i) obtain and
furnish the information required to be included by the SEC in the Proxy
Statement and, after consultation with and review by Parent, to respond
promptly to any comments made by the SEC with respect to the preliminary
Proxy Statement; and (ii) as promptly as practicable upon the earlier of
(y) receiving notification that the SEC is not reviewing the preliminary
Proxy Statement and (z) the conclusion of any SEC review of the preliminary
Proxy Statement, cause a definitive Proxy Statement to be filed with the
SEC and mailed to the Company's shareholders and, if necessary, after the
definitive Proxy Statement shall have been so filed and mailed, promptly
circulate amended or supplemental proxy materials and, if required in
connection therewith, resolicit proxies; provided, however, that no such
amended or supplemental proxy materials will be filed or mailed by the
Company without consultation with and review by Parent. The Company will
promptly notify Parent of the receipt of comments of the SEC and of any
request from the SEC for amendments or supplements to the preliminary Proxy
Statement or definitive Proxy Statement or for additional information, and
will promptly supply Parent with copies of all written correspondence
between the Company or its Representatives, on the one hand, and the SEC or
members of its staff, on the other hand, with respect to the preliminary
Proxy Statement, the definitive Proxy Statement, the Merger or any of the
other transactions contemplated by this Agreement. Parent will cooperate
with the Company in connection with the preparation of the Proxy Statement,
including, but not limited to, furnishing to the Company any and all
information regarding Parent and its affiliates as may be required to be
disclosed therein. Subject to the provisions of Section 6.6, the Proxy
Statement shall include the recommendation of the Board to the shareholders
of the Company in favor of approval and adoption of the Merger.
(b) Subject to Section 6.6, the Company shall, as promptly as
reasonably practicable after the Proxy Statement is "cleared" by the SEC,
duly call, give notice of, convene and hold the Company Shareholders
Meeting, for the purpose of obtaining the Company Shareholder Approval. The
Company will, through its Board, recommend to its shareholders approval of
this Agreement, the Merger and the transactions contemplated by this
Agreement; provided, that prior to the Company Shareholders Meeting, such
recommendation may be withdrawn, modified or amended as provided in Section
6.6. Subject to Section 6.6, the Company shall use commercially reasonable
efforts to solicit and obtain from shareholders of the Company proxies in
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favor of the Merger and shall take all other action necessary or, in the
reasonable opinion of Parent, advisable to secure any vote or consent of
shareholders required by Corporate Law and the Company Organizational
Documents to effect the Merger.
(c) Provided that this Agreement has not been terminated pursuant to
Section 9.1, the Company shall call and hold the Company Shareholders
Meeting whether or not the Board at any time subsequent to the date hereof
determines that this Agreement or the Merger is no longer advisable,
recommends the rejection thereof by the Company shareholders, or otherwise
makes an adverse recommendation with respect to the Merger.
Section 6.2. Anti-Takeover Provisions. The Board of the Company shall
redeem the Rights prior to the Effective Time or otherwise render the Rights
Agreement inapplicable to the Merger and the other transactions contemplated
hereby (including the Declaration Amendment) and by the Voting Agreements, the
Unitholder Agreements and the Class C Amendment Agreement. Each party shall take
all actions required, if any, necessary to exempt or otherwise render the
Defensive Measures inapplicable (or continue the exemption or inapplicability
of) to the Merger and the other transactions contemplated hereby (including the
Declaration Amendment) and by the Voting Agreements, the Unitholder Agreements
and the Class C Amendment Agreement.
Section 6.3. Commercially Reasonable Efforts; Consents and Approvals.
Subject to the terms and conditions herein provided, each of the parties hereto
agrees to use its commercially reasonable efforts to take promptly, or cause to
be taken promptly, all actions and to do, or cause to be done, all things
necessary, proper or advisable under or in compliance with applicable Legal
Requirements to consummate and make effective the transactions contemplated by,
and comply with their applicable covenants set forth in, this Agreement, the
Voting Agreements, the Unitholder Agreements and the Class C Amendment
Agreement, including to obtain all necessary waivers, consents and approvals
from any Person, including, without limitation, the Company obtaining those set
forth on Section 3.6 of the Company Disclosure Letter, to effect all necessary
registrations and filings, to lift any injunction or other legal bar to the
Merger (and, in such case, to proceed with the Merger as expeditiously as
possible), the Voting Agreements, the Unitholder Agreements or the Class C
Amendment Agreement and to cause the transactions set forth in Section 7.2(f) to
be consummated. Notwithstanding the foregoing, the Company shall not obtain any
consent that will affect Parent or the Company to either of their economic
detriment, including any modification of any Contract or Company Permit, and the
Company shall not pay consideration of more than $50,000, in the aggregate, in
connection with obtaining any such waivers, consents and approvals. The Company
has not incurred and will not incur (whether previously paid, paid after the
date hereof or accrued and unpaid as of the Closing Date) liabilities,
obligations or expenses in excess of the amounts set forth on Section 6.3 of the
Company Disclosure Letter in connection with the transactions contemplated by
the Genesis Master Agreement, whether such transactions have been consummated on
or prior to the date hereof or shall be consummated at a future date. The
parties hereto shall execute and deliver any reasonably requested documents (in
form and substance) at the closing to facilitate the transactions contemplated
hereby and any other reasonably related purpose (such as obtaining title
insurance). The Company agrees to amend its constituent documents as requested
by Parent, which amendments shall be effective at the Effective Time (the
"Declaration Amendment"), subject to compliance with applicable law.
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Section 6.4. The Company Partnership.
(a) The Company shall provide all reasonable cooperation in connection
with the consummation of the purchase of partnership interests in the
Company Partnership (other than the Class C Units) prior to the Effective
Time in accordance with the terms of the Unitholder Agreements. The Company
shall, in consultation with Parent, cause the Company Partnership to be, at
all times up to and including the Effective Time, a validly existing
limited partnership under Title 6, Chapter 17 of the Delaware Code
Annotated.
(b) Parent shall have the right, in its sole discretion, to require
that the Company Partnership merge with or into any affiliate of Parent (a
"Company Partnership Merger"), which Company Partnership Merger shall take
place concurrent with or immediately prior or subsequent to the Merger.
Upon Parent's request, the Company and Parent shall take all actions
reasonably required to effectuate the Company Partnership Merger.
Section 6.5. Resignations. Upon the written request of Parent, (i) the
Company shall cause any or all of the trustees (or persons occupying similar
positions in any other entity) and/or officers of each direct or indirect wholly
owned Subsidiary and the Company Partnership to resign or be removed or, as to
officers, to resign or be terminated, effective as of the Effective Time, and
(ii) if the Company or any of its affiliated entities has the right to appoint
any trustee (or person occupying a similar position in any other entity) or to
cause the resignation or termination of any officer of any other entity in which
the Company (directly or indirectly) owns an equity interest, the Company shall
cause, effective as of the Effective Time, such trustee to resign or to be
removed and/or such officer to resign or be terminated.
Section 6.6. No Solicitation.
(a) On and after the date hereof and prior to the Effective Time, the
Company agrees that:
(i) neither the Company nor any Company Subsidiary shall
invite, initiate, solicit or encourage, directly or indirectly, any
inquiries, proposals, discussions or negotiations or the making or
implementation of any proposal or offer (including, without limitation,
any proposal or offer to the Company shareholders) with respect to any
direct or indirect (A) merger, consolidation, business combination,
reorganization, recapitalization, liquidation, dissolution or similar
transaction, (B) sale, acquisition, tender offer, exchange offer (or
the filing of a registration statement under the Securities Act in
connection with such an exchange offer), share exchange or other
transaction or series of related transactions that, if consummated,
would result in the issuance of securities representing, or the sale,
exchange or transfer of, 20% or more of the outstanding voting equity
securities of the Company or equity interests in any Company Subsidiary
(including, without limitation, partnership interests and units), or
(C) sale, lease, exchange, mortgage, pledge, transfer or other
disposition ("Transfer") of any assets of the Company or any Company
Subsidiary in one or a series of related transactions that, if
consummated, would result in the Transfer of more than 20% of the
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consolidated assets of the Company (any such proposal or offer being
hereinafter referred to as an "Acquisition Proposal"), or engage in any
discussions or negotiations with or provide any confidential or
non-public information or data to, or afford access to properties,
books or records to, any Person relating to, or that may reasonably be
expected to lead to, an Acquisition Proposal, or enter into any letter
of intent, agreement in principle or agreement relating to an
Acquisition Proposal, or propose publicly to agree to do any of the
foregoing, or otherwise facilitate any effort or attempt to make or
implement an Acquisition Proposal (including, without limitation, by
amending or granting any waiver under, the Rights Agreement);
(ii) neither the Company nor any Company Subsidiary shall
permit any of their respective Representatives to engage in any of the
activities described in Section 6.6(a)(i);
(iii) the Company and the Company Subsidiaries shall
immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any Persons conducted heretofore with
respect to any of the foregoing (including, without limitation, any
Acquisition Proposal) and shall take commercially reasonable actions to
inform each Company Representative, of the obligations undertaken in
this Section 6.6 and to cause each such Company Representative to
comply with such obligations; and
(iv) the Company shall (A) notify Parent promptly (but in any
event within 48 hours after receipt thereof), orally and in writing, if
the Company, any Company Subsidiary or any Company Representative
receives (1) an Acquisition Proposal or any material amendment or
change in any previously received Acquisition Proposal, (2) any request
for confidential or nonpublic information or data relating to, or for
access to the properties, books or records of, the Company or any
Company Subsidiary by any Person that has made, or to such party's
knowledge may be considering making, an Acquisition Proposal, or (3)
any oral or written expression that any such activities, discussions or
negotiations are sought to be initiated or continued with the Company,
and, as applicable, include in such notice the identity of the Person
making such Acquisition Proposal, indication or request, the material
terms of such Acquisition Proposal, indication or request and, if in
writing, shall promptly deliver to Parent copies of any proposals,
indications of interest, indication or request along with all other
related documentation and correspondence; and (B) keep Parent informed
of the status and material terms of (including all material changes to
the status or material terms of) any such Acquisition Proposal,
indication or request.
(b) Notwithstanding Section 6.6(a), the Board shall not be prohibited
from furnishing information to or entering into discussions or negotiations
with, any Person that makes a bona fide written Acquisition Proposal to the
Board after the date hereof which was not invited, solicited or encouraged,
directly or indirectly, by the Company, any Company Subsidiary or any
Company Representative on or after the date hereof if, and only to the
extent that, (i) the Board concludes in good faith, after consultation with
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its outside legal counsel, that failure to take such action would be
inconsistent with its duties to the Company's shareholders under Maryland
law, (ii) the Board determines in good faith, after consultation with its
financial advisors of nationally recognized reputation and outside legal
counsel, that such Acquisition Proposal is reasonably likely to result in a
Superior Acquisition Proposal (as defined herein), (iii) the Company
complies with all of its obligations under this Agreement, (iv) prior to
furnishing such information to, or entering into discussions or
negotiations with, such Person, the Company provides written notice to
Parent to the effect that it is furnishing information to, or entering into
discussions with such Person and (v) the Company enters into a
confidentiality agreement with such Person the material terms of which are
(without regard to the terms of such Acquisition Proposal) in all material
respects no less favorable to the Company, and no less restrictive to the
Person making such Acquisition Proposal, than those contained in the
Confidentiality Agreement.
(c) If the Board or any committee thereof intends: (i) to approve or
recommend, or propose to approve or recommend, any Superior Acquisition
Proposal, or (ii) to cause the Company to enter into any agreement with
respect to any Superior Acquisition Proposal (other than any
confidentiality agreement as contemplated by Section 6.6(b)) (a "Competing
Agreement"), then at least three (3) Business Days prior to taking such
action: (A) the Company shall provide Parent with written notice advising
Parent that the Board has received a Superior Acquisition Proposal that it
intends to accept, specifying the material terms and conditions of such
Superior Acquisition Proposal and identifying the Person or Persons making
such Superior Acquisition Proposal, and (B) the Company shall, and shall
cause its financial and legal advisors to, negotiate in good faith with
Parent to make such adjustments in the terms and conditions of this
Agreement as would cause such Superior Acquisition Proposal to no longer
constitute a Superior Acquisition Proposal (the "Adjusted Terms"). If
following the completion of such three (3) Business Day period the Company
and Parent have been unable to agree upon Adjusted Terms that cause such
Superior Acquisition Proposal to no longer constitute a Superior
Acquisition Proposal (taking into account all financial and strategic
considerations and other relevant factors, including relevant legal,
financial, regulatory and other aspects of such proposals, and the
conditions, prospects and time required for completion of such proposal),
then the Board or any committee thereof may: (i) approve, advise or
recommend, or propose to approve, advise or recommend, such Superior
Acquisition Proposal; (ii) make an Adverse Recommendation or (iii) cause
the Company to enter into a Competing Agreement with respect to such
Superior Acquisition Proposal.
(d) For all purposes of this Agreement, "Superior Acquisition Proposal"
means a bona fide written proposal made by a third party to acquire,
directly or indirectly, the Company and/or the Company Subsidiaries
pursuant to a tender or exchange offer, merger, share exchange,
consolidation or sale of all or substantially all of the assets of the
Company and the Company Subsidiaries or otherwise (i) on terms which the
Board determines in good faith, after consultation with the Company's
financial advisors of nationally recognized reputation, would be more
favorable to the holders of the Company Common Stock than those provided
for in the Merger, (ii) for which financing, to the extent required, in the
reasonable judgment of the Board is capable of being obtained and (iii)
which the Board determines in good faith is reasonably capable of being
consummated.
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(e) Any "stop, look and listen" disclosure that the Board may be
compelled to make with respect to the receipt of an Acquisition Proposal in
order to comply with its duties imposed by Rule 14d-9 or 14e-2 of the
Exchange Act shall not constitute a violation of this Section 6.6.
(f) Nothing in this Section 6.6 shall (i) permit the Company to
terminate this Agreement (except as expressly provided in Article IX) or
(ii) except as expressly provided herein, affect any other obligations of
the Company under this Agreement.
Section 6.7. Taxes.
(a) Parent and the Company shall cooperate in the preparation,
execution and filing of all returns, questionnaires, applications or other
documents regarding any real property transfer or gains, sales, use,
transfer, value added, stock transfer or stamp Taxes, any transfer,
recording, registration and other fees and any similar Taxes that become
payable in connection with the transactions contemplated by this Agreement
(including with any related interest, penalties or additions to tax,
"Transfer and Gains Taxes"). From and after the Effective Time, Parent
shall pay or cause to be paid, without deduction or withholding from any
consideration or amounts payable to shareholders of the Company, all
Transfer and Gains Taxes.
(b) The Company will consult with and provide Parent the opportunity to
review and comment upon all returns, reports, questionnaires, applications
or other documents to be filed after the date hereof by the Company with
respect to Taxes including, without limitation, the Company's federal,
state and local income and franchise Tax returns and reports for its
taxable years ended December 31, 2002 and 2003, and shall not file any such
returns, reports or other documents without the prior review and comment of
Parent, which shall not be unreasonably delayed.
(c) The Company will cause each of the Company Subsidiaries to consult
with and provide Parent the opportunity to review and comment upon all
returns, reports, questionnaires, applications or other documents to be
filed after the date hereof by each respective subsidiary of the Company
with respect to Taxes including, without limitation, each of the Company
Subsidiaries' federal, state and local income and franchise Tax returns and
reports for its taxable years ended December 31, 2002 and 2003, and the
Company shall not cause any of its subsidiaries to file any such returns,
reports or other documents without the prior review and comment of Parent,
which shall not be unreasonably delayed.
(d) The Company will afford Parent and its representatives the
opportunity to participate in (i) any discussions with the IRS regarding
the Genesis Ruling Request and (ii) conferences with the Company's advisors
in respect of the Genesis Ruling Request, including the opportunity to
review and comment upon any proposed submissions in advance.
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(e) The Company shall use commercially reasonable efforts to ensure
that the $5.0 million that is the subject of the Genesis Ruling Request is
received at the earliest practicable date, which efforts may include those
set forth on Section 6.7(e) of the Company Disclosure Letter.
Section 6.8. Coordination of Dividends. From and after the date hereof,
the Company shall not declare, pay or make any dividend or distribution to its
shareholders without the prior written consent of Parent; provided, however,
that the written consent of Parent shall not be required for the authorization
and payment of (i) dividends and distributions required for the Company to
maintain its status as a REIT under the Code (each, a "REIT Dividend") and (ii)
a quarterly distribution with respect to the Company Common Stock for the
Company's fiscal quarter ending December 31, 2003 of up to $.18 per share of
Company Common Stock. In the event that a distribution with respect to the
Company Common Stock permitted by this Section 6.8 has (x) a record date prior
to the Effective Time and (y) has not been paid as of the Effective Time, the
holders of Company Common Stock shall be entitled to receive such distribution
from the Company at the time such shares are exchanged pursuant to this
Agreement. Notwithstanding any provision in this Section 6.8 to the contrary,
Parent may, prior to the Effective Time, (a) request in writing that the
Company's Board authorize the declaration and payment (with the payment to be
made immediately prior to the Effective Time) of such dividends as may be
necessary to distribute the additional real estate investment trust taxable
income (as defined in Section 857(b)(2) of the Code) that Parent estimates would
result from an election under Section 338 of the Code (a "338 Dividend"); and
(b) request in writing that the Company's Board authorize the declaration and
payment at the time specified in the request of such REIT Dividends as may be
necessary to ensure the Company's continued qualification as a REIT under the
Code; provided as to clauses (a) and (b) that Parent provides such written
notice sufficiently in advance of the Effective Time so as to allow for the
setting of any record date and notices required by the New York Stock Exchange,
the Company's Declaration or Maryland law. Upon receipt of such request, the
Company's Board shall authorize the requested 338 Dividend (which 338 Dividend
may be conditional on the Closing) or REIT Dividend, as the case may be, subject
to requirements of law and rules of the New York Stock Exchange and compliance
with the Company's Declaration, including any liquidity requirements that may be
applicable as a condition precedent to declaration of a dividend. Any request by
Parent under clause (b) shall be accompanied by an opinion of a tax advisor of
recognized national standing (which may be Ernst & Young LLP or ▇▇▇▇▇▇▇ ▇▇▇▇ &
▇▇▇▇▇▇▇▇▇ LLP) which concludes that there is a significant risk that failure to
make such distribution would result in failure of the Company to qualify as a
REIT under the Code.
Section 6.9. New York Stock Exchange Listing. During the period from
the date hereof and continuing until the Effective Time: (i) the Company shall
take all such action that is required for the Company Common Stock to remain
listed on the New York Stock Exchange in accordance with Section 3-202(c)(1)(ii)
of the Maryland General Corporation Law, and (ii) Parent shall take all such
action that is required for its shares of common stock, par value $.25 per
share, to remain listed on the New York Stock Exchange in accordance with
Section 3-202(c)(1)(ii) of the Maryland General Corporation Law.
Section 6.10. Amendment of Company Disclosure Letter. The Company shall
be entitled to supplement any information disclosed in the Company Disclosure
Letter to disclose actions taken, or agreements entered into, by the Company or
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its Subsidiaries after the date of this Agreement, which are permitted to be
taken or entered into pursuant to Section 5.1 hereof and which, if existing at
the date of this Agreement, would have been required to be set forth or
described in such Company Disclosure Letter. Except for the Sections of the
Company Disclosure Letter expressly referring to a specific date certain, for
all purposes of this Agreement, including without limitation for purposes of
determining whether the conditions set forth in Section 7 (excluding Section
7.2(c)) have been fulfilled, the Company Disclosure Letter shall be deemed to be
the Company Disclosure Letter as amended or supplemented pursuant hereto to
reflect such supplemented information.
Section 6.11. Parent Indenture. The Company shall, and shall cause each
of its Subsidiaries to, use commercially reasonable efforts to effect any
modifications (to become effective as of the Effective Time) to any agreements
or organizational or other documents of the Company or its Subsidiaries
necessary for Parent and its Subsidiaries to comply, in such manner as is
determined by Parent, with the covenants in the outstanding indentures or credit
agreements of Parent and its Subsidiaries in connection with the implementation
of the transactions contemplated by this Agreement.
ARTICLE VII.
CONDITIONS
Section 7.1. Conditions to Each Party's Obligation to Effect the
Merger. The obligations of each party to effect the Merger and consummate the
other transactions contemplated herein to occur on the Closing Date shall be
subject to the fulfillment at or prior to the Closing Date of the following
conditions:
(a) The Company Shareholder Approval. The Company shall have received
the Company Shareholder Approval.
(b) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other Order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing
the consummation of the Merger or any of the other transactions
contemplated hereby shall be in effect.
Section 7.2. Additional Conditions to Obligations of Parent and Sub.
The obligations of Parent and Sub to effect the Merger and consummate the other
transactions contemplated herein to occur on the Closing Date are subject to the
following additional conditions, any one or more of which may be waived in
writing by Parent:
(a) Representations and Warranties. The representations and warranties
of the Company contained in this Agreement which are qualified as to
Company Material Adverse Effect are true and correct, and the other
representations and warranties of the Company contained in the Agreement
are true and correct in all material respects, in either case, on and as of
the Closing Date, with the same force and effect as if made on and as of
the Closing Date, except to the extent the representation or warranty is
expressly limited by its terms to another date. Parent shall have received
a certificate signed on behalf of the Company by its chief executive
officer or its chief financial officer, in such capacity, to such effect.
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(b) Performance of Obligations of the Company. The Company shall have
performed in all material respects all obligations required to be performed
by it under this Agreement at or prior to the Effective Time, and Parent
shall have received a certificate signed on behalf of the Company by its
chief executive officer or its chief financial officer, in such capacity,
to such effect.
(c) Material Adverse Effect. Since the date hereof, there shall have
been no Company Material Adverse Effect.
(d) Consents. All consents and approvals listed on Section 7.2(d)(i) of
the Company Disclosure Letter shall have been obtained. Each of the
transactions or conditions set forth on Section 7.2(d)(ii) of the Company
Disclosure Letter shall have been consummated or satisfied substantially in
accordance with the terms existing (if applicable) on the date hereof under
the relevant transaction documents previously made available to Parent (but
including therein the changes to certain lease amendments referenced in
Section 5.6 of the Company Disclosure Letter) or, if no such relevant
transaction documents exist on the date hereof, on terms reasonably
acceptable to Parent.
(e) Tax Opinions Relating to REIT Status. Parent shall have received an
opinion from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, dated as of the Closing Date, in the form
attached hereto as Exhibit F, to the effect that, commencing with its
taxable year ended December 31, 1998 through and including the end of its
taxable year ended December 31, 2002, the Company qualified as a REIT under
the Code, and from January 1, 2003 through the Closing Date, the Company's
proposed method of operation will enable the Company to continue to meet
the requirements for qualification as a REIT under the Code. In the event
that the Effective Time of the Merger is after December 31, 2003, (i) the
year ended immediately prior to the year in which the Effective Time occurs
shall be substituted for 2002 and (ii) the year in which the Effective Time
occurs shall be substituted for 2003.
(f) The Company Partnership. At or prior to the Effective Time, each
partner (excluding the Company and the holder of Class C Units, which has
executed the Class C Amendment Agreement) in the Company Partnership shall
sell such partner's partnership interests to Parent or Parent's designee,
(x) as to any partner who has executed a Unitholder Agreement as of the
date hereof, in accordance with the terms of the applicable Unitholder
Agreement, and (y) in the case of any other such partner, in accordance
with an agreement substantially identical to the Unitholder Agreements
executed as of the date hereof or pursuant to such other agreement
acceptable to Parent or pursuant to rights in favor of the Company to cause
such interests to be sold to Parent (or Parent's designee) in accordance
with the terms and conditions of the Second Amended and Restated Agreement
of Limited Partnership of the Company Partnership; and the representations
and warranties of the parties thereto (excluding Parent) contained in any
such agreement shall be true and correct in all material respects on and as
of the Closing Date, with the same force and effect as if made on and as of
the Closing Date, except to the extent the representation or warranty is
expressly limited by its terms to another date, and any covenants of the
parties thereto (excluding Parent) shall have been complied with in all
material respects.
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(g) The Class C Amendment Agreement. At or prior to the Effective Time,
the transactions contemplated by the Class C Amendment Agreement shall have
been consummated on the terms set forth therein, and the representations
and warranties of the parties thereto (other than Parent) set forth in the
Class C Amendment Agreement shall be true and correct in all material
respects on and as of the Closing Date, with the same force and effect as
if made on and as of the Closing Date, except to the extent the
representation or warranty is expressly limited by its terms to another
date, and any covenants of the parties thereto (excluding Parent) shall
have been complied with in all material respects.
(h) Defensive Measures. The Rights and the other Defensive Measures
shall not be applicable to the Merger, the Declaration Amendment, the
Voting Agreements, the Unitholder Agreements, the Class C Amendment
Agreement or the transactions contemplated by this Agreement, the Voting
Agreements, the Unitholder Agreements or the Class C Amendment Agreement.
(i) Company Cash. As of the Closing Date, (i) the Company and the
Company Subsidiaries shall own in the aggregate an amount of unrestricted
and restricted cash and cash equivalents at least equal to the respective
amounts thereof set forth on Section 7.2(i) of the Company Disclosure
Letter for such date; provided that the amount of unrestricted cash and
cash equivalents (x) may include up to $5.0 million of cash that is the
subject of the Genesis Ruling Request, but only if the IRS has issued a
ruling in response to the Genesis Ruling Request, such ruling is reasonably
satisfactory to Parent, or the ownership of such cash has otherwise been
established in a manner reasonably acceptable to Parent and, pending
distribution to the Company, such cash is held in escrow on terms
reasonably acceptable to Parent, (y) shall be deemed to include the amount
of any 338 Dividend or REIT Dividend paid by the Company prior to the
Closing Date, and (z) shall be deemed to include the amount of any Company
Transaction Expenses paid prior to the Closing Date in accordance with
Section 5.1(m) hereof; and (ii) the Company Transaction Expenses shall not
exceed $3.5 million; provided, however, that if as of the Closing Date the
Company 7.2 Liabilities do not exceed the amount set forth on Section
7.2(l) of the Company Disclosure Letter such expense limit shall be
increased from $3.5 million to $3.7 million. As used herein, "Company
Transaction Expenses" shall mean the expenses of the Company and its
Subsidiaries related to this Agreement and the consummation of the
transactions contemplated hereby, whether paid, accrued or otherwise
incurred as of the Closing Date, including, without limitation, fees and
expenses payable to investment bankers, attorneys and accountants, fees and
expenses of ▇▇▇▇▇▇▇▇ Capital, LLC, severance costs, proxy costs and fees
payable to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, but Company Transaction Expenses shall not
include consent fees and transfer taxes.
(j) Genesis Spin-off. Genesis shall have consummated the transaction
contemplated by that certain Separation and Distribution Agreement, dated
as of October 27, 2003, by and between Genesis Healthcare Ventures, Inc.
and GHC (the "Genesis Spin-off") in accordance with the terms thereof
existing on the date hereof, with such modifications as are specified in
Section 5.6 of the Company Disclosure Letter.
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(k) Estoppel Certificates. The Company shall have received and
delivered to Parent the estoppel certificates listed on Section 7.2(k) of
the Company Disclosure Letter, in a form to be reasonably agreed upon by
Parent and the Company or in such form as is required under any agreement
listed on Section 7.2(k) of the Company Disclosure Letter.
(l) Certain Liabilities. Immediately prior to the Effective Time, the
Company and its Subsidiaries shall not have or be subject to, on a
consolidated basis, Liabilities (excluding deferred revenue, Company
Transaction Expenses, mortgages, bonds, notes payable and capital lease
obligations, but including Indebtedness under existing lines of credit)
(collectively, "Company 7.2 Liabilities") in excess of the amount set forth
on Section 7.2(l) of the Company Disclosure Letter, which amount shall be
calculated in accordance with GAAP and on a basis consistent with the
financial statements described in Section 3.7(d). As used in this Section
7.2(l), "deferred revenue" shall include any Liability that the Company
accrues after September 30, 2003 as deferred revenue on account of its
receipt of a cash payment in exchange for (x) a consent to a change of
guarantor or (y) a lease reduction or modification, in either such case as
part of the Genesis and Benchmark restructurings, which deferred revenues
shall not be deemed Company 7.2 Liabilities. Compliance with this condition
shall be evidenced by a certificate executed by the principal financial
officer of the Company with reasonable supporting schedules and other
relevant information attached.
Section 7.3. Additional Conditions to Obligations of the Company. The
obligation of the Company to effect the Merger and to consummate the other
transactions contemplated herein to occur on the Closing Date is further subject
to the following additional conditions, any one or more of which may be waived
in writing by the Company:
(a) Representations and Warranties. The representations and warranties
of Parent contained in this Agreement which are qualified as to Parent
Material Adverse Effect are true and correct, and the other representations
and warranties of the Parent contained in the Agreement are true and
correct in all material respects, in either case, on and as of the Closing
Date, with the same force and effect as if made on and as of the Closing
Date, except to the extent the representation or warranty is expressly
limited by its terms to another date, and the Company shall have received a
certificate signed on behalf of Parent by its chief executive officer or
its chief financial officer, in such capacity, to such effect.
(b) Performance of Obligations of Parent. Parent shall have performed
in all material respects all obligations required to be performed by it
under this Agreement at or prior to the Effective Time, and the Company
shall have received a certificate signed on behalf of Parent by its chief
executive officer or its chief financial officer, in such capacity, to such
effect.
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ARTICLE VIII.
EMPLOYEE BENEFITS AND POST-CLOSING COVENANTS
Section 8.1. Employee Plans and Other Employee Arrangements. As of the
Effective Time, all Persons employed by the Company and the Company Subsidiaries
shall, at the option of Parent, either continue to be eligible to participate in
the Employee Plans then maintained by the Company and the Company Subsidiaries
or be eligible to participate in the same manner as other similarly situated
employees of Parent in any "employee benefit plan," as defined in Section 3(3)
of ERISA, sponsored or maintained by Parent for similarly situated employees
after the Effective Time. With respect to each such employee benefit plan,
service with the Company or any Company Subsidiary (as applicable) shall be
included only for purposes of determining eligibility to participate and vesting
(if applicable). With respect to medical benefits provided by Parent or any
Parent Subsidiary on and after the Closing Date, coverage that would otherwise
be denied due to a preexisting illness shall be provided to those employees who
had such coverage under a plan sponsored by the Company or any Company
Subsidiary before the Closing Date. Nothing contained in this Section 8.1 shall
be deemed to obligate Parent, the Company or their respective Subsidiaries to
continue the employment or benefits with respect to any Person employed by the
Company or any Company Subsidiary as of the Effective Time for any period of
time thereafter. From and after the Effective Time, the Surviving Entity shall
assume all severance obligations of the Company as set forth in Section 8.1 of
the Company Disclosure Letter.
Section 8.2. Indemnification of Company Officers and Trustees.
(a) From and after the Effective Time, the Surviving Entity shall
provide exculpation and indemnification for each person who is now or has
been at any time prior to the date hereof or who becomes prior to the
Effective Time, an officer or trustee (or person occupying a similar
position in any other entity) of the Company or any Company Subsidiary (the
"Indemnified Parties") which is the same as the exculpation and
indemnification provided to the Indemnified Parties by the Company
(including advancement of expenses, if so provided) in the Company
Organizational Documents, as in effect at the close of business on the date
hereof, which exculpation and indemnification shall not be amended,
repealed or otherwise modified in a manner that would adversely affect the
rights thereunder of individuals who were, at any time prior to the
Effective Time, trustees, officers or employees of the Company; provided,
that such exculpation and indemnification covers actions on or prior to the
Effective Time, including, without limitation, all transactions
contemplated by this Agreement.
(b) The Surviving Entity shall obtain and maintain in effect at the
Effective Time and continuing until the sixth anniversary thereof "run-off"
directors and officers liability insurance with a coverage amount and other
terms and conditions comparable to the Company's current directors and
officers liability insurance policy covering the trustees and officers of
the Company with respect to their service as such prior to the Effective
Time; provided, however, that in no event shall the Surviving Entity be
required to expend more than an amount per year equal to 175% of current
annual premiums paid by the Company for such insurance to obtain and
maintain insurance coverage pursuant hereto, in which case the Surviving
Entity shall obtain and maintain insurance coverage on comparable terms
that provides the maximum coverage that is then available for 175% of such
annual premiums.
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(c) The provisions of this Section 8.2 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party, his or her
heirs and his or her personal representatives and shall be binding on all
successors and assigns of Parent, the Surviving Entity and the Company.
Parent agrees to pay all costs and expenses (including fees and expenses of
counsel) that may be incurred by any Indemnified Party or his or her heirs
or his or her personal representatives in successfully enforcing the
indemnity or other obligations of Parent under this Section 8.2. The
provisions of this Section 8.2 shall survive the Merger and are in addition
to any other rights to which an Indemnified Party may be entitled.
(d) In the event that Parent, the Surviving Entity or any of their
respective successors or assigns transfers all or substantially all of its
properties and assets to any Person, then the transferee shall assume the
obligations set forth in this Section 8.2, which obligations are expressly
intended to be for the irrevocable benefit of, and shall be enforceable by,
each Indemnified Party covered hereby.
Section 8.3. Further Assurances. If, at any time after the Effective
Time, any further action is necessary or desirable to carry out the purposes of
this Agreement, or to vest, perfect or confirm of record or otherwise establish
in the Surviving Entity full right, title and interest in, to or under any of
the assets, property, rights, privileges, powers and franchises of the Company
and Sub, the officers and directors of the Surviving Entity are fully authorized
in the name and on behalf of each of the Constituent Entities or otherwise to
take all such lawful and reasonably necessary or desirable action.
ARTICLE IX.
TERMINATION AND FEES
Section 9.1. Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after the Company Shareholder
Approval:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company if any Governmental Agency shall
have issued an Order (which Order each party hereto shall use its
commercially reasonable efforts to have vacated or reversed), in each case
permanently restraining, enjoining or otherwise prohibiting the Merger, and
such Order shall have become final and non-appealable;
(c) by either Parent or the Company if the Company shareholders fail to
approve the Merger upon the taking of a vote at the Company Shareholders
Meeting or any adjournment thereof;
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(d) after May 31, 2004, by either Parent or the Company if the Merger
shall not have been consummated by such date for any reason; provided that
in such case the terminating party is not in material breach of its
representations, warranties, covenants or agreements under this Agreement
in any manner that shall have caused or resulted in the failure to
consummate the Merger on or before such date;
(e) by Parent, if (i) the Board shall have withdrawn or materially
modified its recommendation of this Agreement or the Merger in a manner
adverse to Parent or its shareholders or shall have resolved to do so; (ii)
the Board shall have approved or recommended an Acquisition Proposal made
by any Person other than Parent or Sub; or (iii) the Company shall have
entered into a definitive agreement with respect to an Acquisition
Proposal;
(f) by the Company, if prior to the approval of the Merger at the
Company Shareholders Meeting the Board shall have approved, and the Company
shall concurrently enter into, a definitive agreement providing for the
implementation of a Superior Acquisition Proposal; but only if (i) the
Company is not then in breach of Section 6.6, and (ii) prior to such
termination the Company shall have made payment of the full amounts
required by Section 9.3;
(g) by Parent, if: (i) any of the representations and warranties of the
Company contained in this Agreement which are qualified as to Company
Material Adverse Effect shall not be true and correct, (ii) any of the
other representations and warranties of the Company contained in this
Agreement shall not be true and correct in all material respects, or (iii)
the Company shall have failed to perform in all material respects any
obligation or to comply with any agreement or covenant to be performed or
complied with by it under this Agreement, subject to in the case of clauses
(i), (ii) or (iii) which breach is not cured by five (5) Business Days
following written notice to the Company; or
(h) by the Company, if (i) any of the representations and warranties of
Parent or Sub contained in this Agreement which are qualified as to Parent
Material Adverse Effect shall not be true and correct, (ii) any of the
other representations and warranties of Parent or Sub contained in this
Agreement shall not be true and correct in all material respects, or (iii)
Parent shall have failed to perform in all material respects any obligation
or to comply with any agreement or covenant to be performed or complied
with by it under this Agreement, subject to in the case of clauses (i),
(ii) or (iii) which breach is not cured by five (5) Business Days following
written notice to Parent.
Section 9.2. Effect of Termination. In the event of termination of this
Agreement by either Parent or the Company, as provided in Section 9.1, this
Agreement shall forthwith become void and of no further force and effect without
any liability or obligation on the part of Parent, Sub or the Company, except as
provided in Sections 5.3(c) and (d), Sections 9.2, 9.3, 10.2, 10.3, 10.4, and
10.6 through 10.12, which provisions shall survive the termination; provided,
however, that nothing herein shall relieve any party from any liability for any
breach by a party of any of its representations, warranties, covenants or
agreements set forth in this Agreement.
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Section 9.3. Fees and Expenses.
(a) Except as provided in paragraphs (b), (c) and (d) below, whether or
not the Merger is consummated, all costs and expenses incurred in
connection with this Agreement and the transactions contemplated by this
Agreement shall be paid by the party incurring such expenses (including
broker's or finder's fees and the expenses of its representatives).
(b) If any of the conditions set forth in paragraph (c) or (d) below
are satisfied, then the Company shall, subject to and in accordance with
such paragraphs, pay to Parent, by wire transfer of immediate available
funds to an account specified by Parent, the Break-Up Fee (as defined
below) or the Parent Expense Reimbursement (as defined below).
(c) The Company shall pay the Break-Up Fee (or the portion thereof
described below) as follows:
(i) if Parent terminates this Agreement pursuant to the
provisions of Section 9.1(e) or if the Company terminates this
Agreement pursuant to the provisions of Section 9.1(f) or if either
party terminates this Agreement at a time when Parent had the right to
terminate pursuant to Section 9.1(e), the Company shall pay to Parent
the Break-Up Fee, which payment shall be made concurrent with any such
termination by the Company and on the same day as any such termination
by Parent; or
(ii) if an Acquisition Proposal is received or publicly
disclosed after the date hereof, and thereafter Parent or the Company
terminates this Agreement pursuant to Section 9.1(c), and within twelve
(12) months following such termination, the Company enters into a
definitive agreement providing for, or consummates, an Acquisition
Proposal (whether or not such Acquisition Proposal is the same
Acquisition Proposal which had been received or publicly disclosed at
the time of termination of this Agreement), the Company shall,
concurrent with consummating such transaction, pay to Parent the
Break-Up Fee; or
(iii) if an Acquisition Proposal is received or publicly
disclosed after the date hereof, and thereafter Parent or the Company
terminates this Agreement pursuant to Section 9.1(d), and within twelve
(12) months following such termination, the Company enters into a
definitive agreement providing for, or consummates, an Acquisition
Proposal (whether or not such Acquisition Proposal is the same
Acquisition Proposal which had been received or publicly disclosed at
the time of termination of this Agreement), the Company shall,
concurrent with consummating such transaction, pay to Parent the
Break-Up Fee.
(d) The Company shall pay the Parent Expense Reimbursement (or the
portion thereof described below) to Parent (provided the Company was not
entitled to terminate this Agreement pursuant to Section 9.1(h)) if Parent
or the Company terminates this Agreement pursuant to (i) Section 9.1(b)
(but only on account of an Order resulting from a claim by a Person other
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than a Governmental Agency), (ii) Section 9.1(c) (and no Acquisition
Proposal was received or publicly disclosed after the date hereof and prior
to termination), (iii) Section 9.1(d) (and no Acquisition Proposal was
received or publicly disclosed after the date hereof and prior to
termination), unless the sole remaining unsatisfied or unwaived condition
as of such termination date is the failure to obtain any of the consents
and approvals listed on Section 7.2(d)(i) of the Company Disclosure Letter,
or (iv) Section 9.1(c) or (d), if an Acquisition Proposal was received or
publicly disclosed after the date hereof, but the Break-Up Fee is not
payable to Parent in accordance with the terms of Section 9.3(c)(ii) or
(iii), as the case may be. In the case of clauses (i), (ii), and (iii)
above, the payment of the Parent Expense Reimbursement (or the portion
thereof described below) shall be made within two Business Days after
termination of this Agreement, and in the case of clause (iv) above, such
payment shall be made within two Business Days after termination of the
Acquisition Proposal.
(e) "Break-Up Fee" shall be an amount equal to the lesser of (i)
$4,250,000 (the "Maximum Break-Up Fee") and (ii) the sum of (A) the maximum
amount that can be paid to Parent without causing it to fail to meet the
requirements of Sections 856(c)(2) and (3) of the Code determined as if the
payment of such amount did not constitute income described in Sections
856(c)(2)(A)-(H) and 856(c)(3)(A)-(I) of the Code ("Qualifying Income"), as
determined by independent accountants to Parent, and (B) in the event
Parent receives a letter from outside counsel (the "Break-Up Fee Tax
Opinion") indicating that Parent's receipt of the Maximum Break-Up Fee
would either constitute Qualifying Income or would be excluded from gross
income within the meaning of Sections 856(c)(2) and (3) of the Code (the
"REIT Requirements") or that the receipt by Parent of the excess of the
Maximum Break-Up Fee over the amount payable in clause (A) following the
receipt of such opinion would not be deemed constructively received prior
thereto, the Maximum Break-Up Fee less the amount payable under clause (A)
above. In the event that Parent is not able to receive the Maximum Break-Up
Fee, the Company shall place the unpaid amount in escrow and shall not
release any portion thereof to Parent unless and until the Company
receives, from time to time, any one or combination of the following: (i) a
letter from Parent's independent accountants indicating the maximum amount
that can be paid at that time to Parent without causing Parent to fail to
meet the REIT Requirements or (ii) a Break-Up Fee Tax Opinion indicating
the maximum amount that can be paid at that time to as Qualifying Income,
as gross income that is excluded under the REIT Requirements or as amounts
not constructively received prior to such time, in either of which events
the Company shall pay to Parent the lesser of the unpaid Maximum Break-Up
Fee or the maximum amount stated in the letter referred to in (i) above or
the opinion referred to in (ii) above.
(f) The "Parent Expense Reimbursement" shall be an amount equal to the
lesser of (i) Parent's out-of-pocket expenses incurred in connection with
this Agreement and the transactions contemplated hereby (including, without
limitation, all attorneys', accountants' and investment bankers' fees and
expenses), not to exceed $1,500,000, and (ii) the sum of (A) the maximum
amount that can be paid to Parent without causing it to fail to meet the
requirements of Sections 856(c)(2) and (3) of the Code determined as if the
payment of such amount did not constitute Qualifying Income, as determined
by independent accountants to Parent, and (B) in the event Parent receives
a Break-Up Fee Tax Opinion indicating that Parent's receipt of the Parent
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Expense Reimbursement would either constitute Qualifying Income or would be
excluded from gross income within the meaning of the REIT Requirements or
that receipt by Parent of the excess of the Parent Expense Reimbursement
over the amount payable under clause (A) following the receipt of such
opinion would not be deemed constructively received prior thereto, the
Parent Expense Reimbursement less the amount payable under clause (A)
above. In the event that Parent is not able to receive the full Parent
Expense Reimbursement, the Company shall pay Parent the unpaid amount
within two (2) Business Days after receipt, from time to time, of any one
or combination of the following: (i) a letter from Parent's independent
accountants indicating the maximum amount that can be paid at that time to
Parent without causing Parent to fail to meet the REIT Requirements or (ii)
a Break-Up Fee Tax Opinion indicating the maximum amount that can be paid
at that time to Parent as Qualifying Income, as gross income that is
excluded under the REIT Requirements or as amounts not constructively
received prior to such time, in either of which events the Company shall
pay to Parent the lesser of the unpaid Parent Expense Reimbursement or the
maximum amount stated in the letter referred to in (i) above or the opinion
referred to in (ii) above.
(g) The payment of the Break-Up Fee or the Parent Expense Reimbursement
shall be compensation and liquidated damages for the loss suffered by
Parent as a result of the failure of the Merger to be consummated and to
avoid the difficulty of determining damages under the circumstances, and
does not constitute a penalty. The Break-Up Fee or the Parent Expense
Reimbursement shall not be deemed to constitute the measure of damages
suffered by Parent in any instance in which the payment of the Break-Up Fee
or Parent Expense Reimbursement is not provided for under the terms of this
Agreement. In the event that Parent is required to commence litigation to
seek all or a portion of the amounts payable under this Section 9.3, and
Parent prevails in such litigation, Parent shall be entitled to receive, in
addition to all amounts that it is otherwise entitled to receive under this
Section 9.3, all expenses (including, without limitation, attorneys' fees)
which it has incurred in enforcing its rights hereunder. Subject to the
preceding sentence and excluding damages arising out of any breach by a
party of any of its representations, warranties, covenants or agreements
set forth in this Agreement, neither party shall have any other liability
to the other after the payment thereof.
(h) The Company's obligation to pay any unpaid portion of the Break-Up
Fee or Parent Expense Reimbursement shall terminate three years from the
date of this Agreement, provided the Company's obligation to pay any
amounts under this Section 9.3 shall have accrued within the applicable
time period set forth in this Section 9.3.
ARTICLE X.
GENERAL PROVISIONS
Section 10.1. Nonsurvival of Representations and Warranties. None of
the representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement confirming the representations and
warranties in this Agreement shall survive the Effective Time. This Section 10.1
shall not limit any covenant or agreement of the parties which by its terms
contemplates performance after the Effective Time.
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Section 10.2. Amendment. This Agreement may be amended by the parties
hereto, by or pursuant to action taken by their respective board of directors or
board of trustees, as applicable, at any time before or after approval hereof by
the Company shareholders, but, after such approval, no amendment shall be made
which reduces the Merger Consideration, or which under applicable Legal
Requirements requires the approval of Company shareholders without first
obtaining such approval. This Agreement may not be amended except by an
instrument in writing signed by each of the parties hereto.
Section 10.3. Notices. All notices, demands or other communications to
be given or delivered under or by reason of the provisions of this Agreement
shall be in writing and shall be deemed to have been given (a) when delivered
personally to the recipient, (b) one (1) Business Day after the date when
deposited with a reputable express courier service (charges prepaid) for
overnight delivery to the recipient, (c) when sent to the recipient by telecopy
(receipt electronically confirmed by sender's telecopy machine) or electronic
mail if during normal business hours of the recipient, otherwise on the next
Business Day, or (d) seven (7) Business Days after the date when mailed to the
recipient by certified or registered mail, return receipt requested and postage
prepaid. Such notices, demands and other communications shall be sent to the
Company and to Parent and Sub at the addresses indicated below:
If to the Company: ElderTrust
Little Falls Centre One
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇.▇▇▇
With a copy to: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP
(which shall not 3000 Two ▇▇▇▇▇ Square
constitute notice) Eighteenth and ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇.▇▇▇
or ▇▇▇▇▇@▇▇▇▇▇▇▇▇▇.▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esquire
or ▇▇▇▇▇ ▇. ▇▇▇▇, Esquire
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If to Parent or Sub: Ventas, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇.▇▇▇
Attention: T. ▇▇▇▇▇▇▇ ▇▇▇▇▇, Esquire
With a copy to: ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP
(which shall not ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
constitute notice) ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
or to such other address as either party hereto may, from time to time,
designate in writing delivered pursuant to the terms of this Section 10.3.
Section 10.4. Assignment and Parties in Interest.
(a) Neither this Agreement nor any of the rights, duties, or
obligations of any party hereunder may be assigned or delegated (by
operation of law or otherwise) by either party hereto except with the prior
written consent of the other party hereto.
(b) Except for the Indemnified Parties, who following the Effective
Time are express third party beneficiaries of Section 8.2, this Agreement
shall not confer any rights or remedies upon any person or entity other
than the parties hereto and their respective permitted successors and
assigns.
Section 10.5. Announcements. All press release or other written public
statements with respect to the transactions contemplated by this Agreement prior
to the Closing Date shall be approved by both Parent and the Company prior to
the issuance thereof; provided that (i) either party may make any public
disclosure it believes in good faith is required by Legal Requirement or rule of
any stock exchange on which its securities are traded (in which case the
disclosing party shall use its reasonable best efforts to advise the other party
prior to making such disclosure and to provide the other party a reasonable
opportunity to review the proposed disclosure) and (ii) the parties hereof
acknowledge and agree that they will file a copy of this Agreement as an exhibit
to their respective Form 8-Ks to be filed with the SEC promptly after the
execution hereof.
Section 10.6. Entire Agreement. This Agreement (including the Company
Disclosure Letter and the Exhibits attached hereto) and the Confidentiality
Agreement constitute the entire agreement among the parties hereto with respect
to the subject matter hereof, supersede and are in full substitution for any and
all prior agreements and understandings among them relating to such subject
matter, and no party shall be liable or bound to the other party hereto in any
manner with respect to such subject matter by any warranties, representations,
indemnities, covenants, or agreements except as specifically set forth herein or
in accordance with the Confidentiality Agreement. The Exhibits and the Company
Disclosure Letter to this Agreement are hereby incorporated and made a part
hereof and are an integral part of this Agreement.
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Section 10.7. Descriptive Headings. The descriptive headings of the
several sections of this Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.
Section 10.8. Counterparts. For the convenience of the parties, any
number of counterparts of this Agreement may be executed by any one or more
parties hereto, and each such executed counterpart shall be, and shall be deemed
to be, an original, but all of which shall constitute, and shall be deemed to
constitute, in the aggregate but one and the same instrument.
Section 10.9. Governing Law; Venue.
(a) Except to the extent to which the Merger is subject to the Maryland
General Corporation Law, this Agreement and the legal relations between the
parties hereto shall be governed by and construed in accordance with the
laws of the State of Delaware applicable to contracts made and performed
therein.
(b) Any proceeding seeking to enforce any provision of, or based on any
right arising out of, this Agreement may only be brought against any of the
parties in the courts of the State of New York, County of New York, or, if
it has or can acquire jurisdiction, in the United States District Court for
the Southern District of New York, and each of the parties consents to the
jurisdiction of such courts (and of the appropriate appellate courts) in
any such action or proceeding and waives any objection to venue laid
therein.
(c) Process in any proceeding referred to in the preceding sentence may
be served on any party anywhere in the world.
(d) Each party to this Agreement waives, to the fullest extent
permitted by applicable Legal Requirements, any right it may have to a
trial by jury in respect of any action, suit or proceeding arising out of
or relating to this Agreement.
Section 10.10. Construction. The language used in this Agreement shall
be deemed to be the language chosen by the parties to express their mutual
intent, and no rule of construction shall be applied against any party. Any
references to any Legal Requirement shall also refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise.
Unless otherwise specifically stated: (a) a term has the meaning assigned to it
by this Agreement; (b) including means "including but not limited to"; (c) "or"
is disjunctive but not exclusive; (d) words in the singular include the plural,
and in the plural include the singular; (e) provisions apply to successive
events and transactions; (f) "$" means the currency of the United States of
America; (g) "written" or "writing" includes "e-mail" and other similar forms of
electronic communication; and (h) "Knowledge" of any Person means the actual
knowledge of the executive officers of such Person, and in the case of the
Company, the persons listed on Section 10.10(a) of the Company Disclosure Letter
and in the case of Parent, the individuals listed on Section 10.10(b) of the
disclosure letter delivered by Parent to the Company prior to the execution of
this Agreement.
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Section 10.11. Severability. In the event that any one or more of the
provisions contained in this Agreement or in any other instrument referred to
herein, shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, then to the maximum extent permitted by Legal Requirements, such
invalidity, illegality or unenforceability shall not affect any other provision
of this Agreement or any other such instrument. Furthermore, in lieu of any such
invalid or unenforceable term or provision, the parties hereto intend that there
shall be added as a part of this Agreement a provision as similar in terms to
such invalid or unenforceable provision as may be possible and be valid and
enforceable.
Section 10.12. Specific Performance. Without limiting or waiving in any
respect any rights or remedies of Parent under this Agreement now or hereinafter
existing at law or in equity or by statute, each of the parties hereto shall be
entitled to seek specific performance of the obligations to be performed by the
other in accordance with the provisions of this Agreement.
Section 10.13. Tax Treatment. Solely for purposes of Section 332 of the
Code, this Merger Agreement and the transactions contemplated hereby are
intended to be treated as a plan of complete liquidation of the Company into
Parent following the Merger.
[The remainder of this page intentionally left blank.]
IN WITNESS WHEREOF, Parent, Sub and the Company have caused
this Agreement to be signed by their respective officers thereunto duly
authorized all as of the date first written above.
ELDERTRUST
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Acting President, Chief Executive Officer
and Chief Financial Officer
VENTAS, INC.
By: /s/ T. ▇▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------------------
Name: T. ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Executive Vice President
VENTAS SUB, LLC
By: Ventas, Inc.
By: /s/ T. ▇▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------------------
Name: T. ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Executive Vice President
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