Prometheus Senior Quarters LLC Lazard Senior Housing Partners LP LSHP Coinvestment Partnership I LP
Exhibit 10.2
Prometheus Senior Quarters LLC
Lazard Senior Housing Partners LP
LSHP Coinvestment Partnership I LP
Lazard Senior Housing Partners LP
LSHP Coinvestment Partnership I LP
May 12, 2011
Ventas, Inc.
000 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
000 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Re: Lock-Up Agreement
Ladies and Gentlemen:
This letter agreement is being delivered pursuant to the Merger Agreement, dated October 21,
2010, by and among Ventas, Inc., a Delaware corporation (“Acquiror”), Ventas SL I, LLC, a
Delaware limited liability company and a direct, wholly-owned subsidiary of Acquiror, Ventas XX XX,
LLC, a Delaware limited liability company and a direct, wholly-owned subsidiary of Acquiror, Ventas
SL III, LLC, a Delaware limited liability company and a direct, wholly-owned subsidiary of
Acquiror, Atria Holdings LLC, a Delaware limited liability company, Lazard Senior Housing Partners
LP, a Delaware limited partnership (“Senior Housing LP”), LSHP Coinvestment Partnership I
LP, a Delaware limited partnership (“Coinvestment LP”) (Senior Housing LP, Coinvestment LP
and Prometheus Senior Quarters LLC, a Delaware limited liability company, each, a
“Stockholder” and, collectively, the “Stockholders”), Atria Senior Living Group,
Inc., a Delaware corporation, One Lantern Senior Living Inc, a Delaware corporation, and LSHP
Coinvestment I Inc, a Delaware corporation (as amended, the “Merger Agreement”). For ease
of reference, capitalized terms used herein and not otherwise defined have the meanings assigned to
them in the Merger Agreement.
As contemplated in the Merger Agreement, Stockholders and Acquiror agree as follows.
(1) During the period (the “Lockup Period”) beginning on the date hereof and ending
on November 12, 2012, Stockholders will not (x) directly or indirectly offer for sale, sell,
contract to sell, announce the intention to sell, assign, pledge, sell any option to purchase,
purchase any option to sell, make any short sale of or otherwise dispose of (collectively,
“Transfer”) 3,697,541 shares of common stock of Acquiror, par value $0.25 per share
(“Acquiror Common Stock”), received by them as the stock portion of the Merger
Consideration (collectively, the “Escrow Shares”) or (y) enter into any swap or any other
agreement, transaction or series of transactions that xxxxxx or transfers, in whole or in part,
directly or indirectly, any of the economic consequences of Stockholders’ ownership
(“Hedge”) of any shares of Acquiror Common Stock, in each case, received by them as the
stock portion of the Merger Consideration (the “Shares”), whether any such Transfer or
Hedge is to be settled by delivery of any shares of Acquiror Common Stock, in cash or otherwise,
except as permitted below.
(2) During the Lockup Period, Stockholders will not Transfer any Escrow Shares, except that
the Stockholders: may Transfer Escrow Shares to Escrow Agent, or to Acquiror, as provided in the
Escrow Agreement; and may make Transfers of Escrow Shares to Acquiror pursuant to the terms of the
Merger Agreement and the Escrow Agreement.
(3) Stockholders shall not Transfer any Shares:
(a) (i) in one or more related transactions in which any person or “group”
(within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”)) purchases an aggregate number of Shares
representing 5% or more of the outstanding shares of the Acquiror Common Stock or
(ii) to any person or “group” (within the meaning of Section 13(d)(3) of the
Exchange Act) who, prior to such Transfer, beneficially owned 5% or more of the
outstanding shares of Acquiror Common Stock, provided that the restrictions
set forth in this Section 3(a) shall not apply to a Transfer to a person or
“group” (within the meaning of Section 13(d)(3) of the Exchange Act) if each of the
following conditions are satisfied: such transferee (A) has filed a Schedule 13G
under the Exchange Act with respect to Acquiror and has not subsequently filed a
Schedule 13D under the Exchange Act that remains in effect with respect to Acquiror
or (B) is an institutional investor, pension fund, foundation, sovereign wealth
fund, real estate fund, mutual fund, index fund or other similar passive investor
that invests in securities similar to Acquiror Common Stock and has not filed a
Schedule 13D with regard to Acquiror; and provided, further, that
the restrictions set forth in this Section 3(a) shall not apply to a
Transfer (x) consisting of a block trade executed at prevailing market prices
obtainable at the time of such transfer through brokers in transactions on the New
York Stock Exchange, provided that the Stockholder does not know or have
good reason to believe that such Transfer would result in a Transfer of Shares
representing 5% or more of the outstanding shares of Acquiror Common Stock to any
person or group that has filed a Schedule 13D with regard to Acquiror that remains
in effect, or (y) to or by one or more underwriters in connection with an
underwritten offering, including a block trade or a widely distributed public
offering, so long as the Stockholder does not know or have good reason to believe
that such offering would result in a Transfer of Shares representing 5% or more of
the outstanding shares of Acquiror Common Stock to any person or group that has
filed a Schedule 13D with regard to Acquiror, or (z) effected through a widely
distributed public offering; or
(b) until Stockholders have completed an underwritten offering, which for
purposes of this Agreement includes an underwritten block trade, of more than
10,630,501 Shares, to one or more Persons (it being understood that, notwithstanding
the other provisions of this letter agreement, the Stockholders are permitted to
complete such an underwritten offering at any time so long as it involves at least
10,630,501 Shares and is in accordance with the terms for such an offering set forth
in the Registration Rights Agreement, of even date herewith, by and among Acquiror
and each of the Stockholders), provided that this Clause
(b) shall not restrict, and any Stockholder or permitted transferee thereof will be
permitted to make: (i) Transfers to another Stockholder or an Affiliate of any
Stockholder or to any entity that is controlled, directly or indirectly, by Lazard
Alternative Investments LLC or a successor to all or substantially all of its
business (“LAI”) or a fund managed by a controlled affiliate of LAI, (ii)
Transfers to Atria Senior Living, Inc., (iii) a contribution or other Transfer to
one or more of Atria Senior Living, Inc.’s subsidiaries that serves as an employer,
or (iv) Transfers to employees of Atria Senior Living, Inc. or one of its direct or
indirect subsidiaries (the Transfers described in Clauses (i)-(iv), collectively,
“Internal Transfers”);
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(c) in market trades until Stockholders have completed an underwritten offering
of more than 10,630,501 Shares;
(d) on any given day in an amount greater than 20% of the average daily trading
volume of Acquiror Common Stock for the 20-trading day period immediately preceding
the date of such Transfer; provided that the foregoing restriction shall not
apply to Transfers of the type described by clauses (x) and (y) of Section
3(a), Internal Transfers or Transfers of the type described in Section
3(f) below;
(e) within any three-month period in one or more transactions having an
aggregate value exceeding $250,000,000; provided that the foregoing
restriction shall not apply to Transfers of the type described by clauses (x) and
(y) of Section 3(a), Internal Transfers or Transfers of the type described
in Section 3(f) below; or
(f) to direct or indirect members, partners or other equity holders of any
Stockholder until Stockholders have completed an underwritten offering or block
trade of more than 10,630,501 Shares.
The foregoing restrictions on Transfer may be waived by Acquiror with respect to any specific
Transfer. Any Transfer or attempted Transfer of Shares in violation of Sections 1,
2 or 3 shall, to the fullest extent permitted by law, be null and void ab initio,
and Acquiror shall not, and shall instruct its transfer agent and other third parties not to,
record or recognize any such purported transaction on the share register of Acquiror.
(4) Except to the extent such action is taken in connection with an Internal Transfer, no
Stockholder shall, and each Stockholder shall direct its officers, directors, employees, investment
bankers, advisors, agents and other representatives not to, directly or indirectly, take any action
for or on behalf of any Stockholder to solicit, initiate or encourage any Person to acquire a block
of Shares directly from Stockholders. Provided that Stockholders are in compliance with the
preceding sentence, Stockholders may consummate two, but not more than two, direct sales of Shares
in transactions registered with the Securities and Exchange Commission (“SEC”) initiated by
an inquiry or request from a third party or by Acquiror; provided, however, that no
more than 6,378,301 Shares, in the aggregate, may be Transferred by
Stockholders pursuant to this Section 4; and provided, further, that
Stockholders may only engage in a Transfer permitted by this Section 4 following the
completion of an underwritten offering, including a block trade, of more than 10,630,501 Shares.
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(5) As a condition to a Transfer of Shares by Stockholders to (i) another Stockholder or to
any entity that is controlled, directly or indirectly, by LAI, (ii) Atria Senior Living, Inc.,
(iii) one or more of Atria Senior Living, Inc.’s subsidiaries that serves as an employer, or (iv)
employees of Atria Senior Living, Inc. or one of its direct or indirect subsidiaries, such
transferee or other recipient of Shares in any such Transfer shall agree in writing to be bound by
the limitations on Transfer and other restrictions applicable to Stockholders in this letter
agreement with respect to such Shares for so long as those restrictions continue to apply to
Stockholders (it being agreed, however, that the employees of Atria Senior Living, Inc. who receive
shares as compensation will be exempt from the requirements of Section 6 below). As used
herein, “control” means the power to direct the business and policies of an entity, whether by
ownership of equity interests, by contractual right or otherwise.
(6) During the Standstill Period (as defined below), Stockholders shall not, and shall not
permit LAI to, directly or indirectly, without the prior written consent of Acquiror:
(a) acquire, agree to acquire or make any public proposal to acquire, directly
or indirectly, beneficial ownership of Acquiror Common Stock, or securities of the
Acquiror that are convertible into Acquiror Common Stock (other than (i) the
delivery of Shares pursuant to the Merger Agreement or (ii) the acquisition of
shares of Acquiror Common Stock or other securities of Acquiror as a result of any
stock splits, stock dividends or other distributions or recapitalizations or
offerings made available by Acquiror to holders of Acquiror Common Stock, including
rights offerings), or enter into any contract, arrangement, understanding or
relationship (other than the Merger Agreement) which gives Stockholders the economic
equivalent of ownership of Acquiror Common Stock due to the fact that the value of
the derivative is explicitly determined by reference to the price or value of
Acquiror Common Stock or of any interest therein, or otherwise enter into a
derivative transaction with respect to Acquiror Common Stock;
(b) deposit any shares of Acquiror Common Stock in a voting trust or similar
arrangement or subject any shares of Acquiror Common Stock to any voting agreement,
pooling arrangement or similar arrangement (other than (w) with another Stockholder,
or with LAI or any direct or indirect subsidiaries, or fund managed by a controlled
affiliate, of LAI, or (x) any transaction contemplated by the Merger Agreement), or
grant any proxy with respect to any shares of Acquiror Common Stock (other than to
(y) Acquiror or a person specified by Acquiror in a proxy card provided to
stockholders by or on behalf of Acquiror or (z) another Stockholder, or LAI or any
direct or indirect subsidiaries, or fund managed by a controlled affiliate, of LAI);
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(c) enter, agree to enter, propose or offer to enter into or facilitate any
merger, business combination, tender offer, recapitalization, restructuring, change
in control transaction or other similar extraordinary transaction involving Acquiror
or any of its subsidiaries;
(d) make, or in any way participate or engage in, any “solicitation” of
“proxies” (as such terms are used in the proxy rules of the SEC) to vote, or advise
or knowingly influence any person (other than a controlled affiliate of LAI ) with
respect to the voting of, any voting securities of Acquiror or its subsidiaries;
(e) call, or seek to call, a meeting of the stockholders of Acquiror or
initiate any stockholder proposal for action by stockholders of Acquiror;
(f) form, join or in any way participate in a “group” (within the meaning of
Section 13(d)(3) of the Exchange Act) (other than with another Stockholder or an
Affiliate of any Stockholder or LAI, or any direct or indirect subsidiaries, or fund
managed by a controlled affiliate, of LAI), with respect to any voting securities of
Acquiror;
(g) otherwise act, alone or in concert with others, to seek to control or
influence the management or the policies of Acquiror;
(h) publicly disclose any intention, plan or arrangement prohibited by, or
inconsistent with, the foregoing;
(i) advise or knowingly assist or encourage or enter into any discussions,
negotiations, agreements or arrangements with any other persons in connection with
the foregoing; or
(j) propose, seek or request permission to do any of the foregoing, request to
amend or waive any provision of this Section 6 (including, without
limitation, this clause (j)), make or seek permission to make any public
announcement with respect to any of the foregoing or take any action that such
person reasonably believes will require Acquiror to make a public announcement
regarding the possibility of a business combination, merger or other type or
transaction described above.
The foregoing will not be interpreted as preventing or restricting in any manner any right
Stockholders may have, pursuant to a separate agreement with Acquiror, to designate an individual
to serve as a member of Acquiror’s board of directors (the “Board”), or to have observer
status, or any other rights arising between Acquiror, on the one hand, and Stockholders or any
Affiliate of Stockholders, on the other hand, pursuant to any other agreement, or as restricting in
any manner any individual designated by any Stockholder to serve as a member of the Board, or as an
observer, from serving in his or her capacity as such and exercising all rights and
responsibilities relating thereto.
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For purposes of the foregoing, “Standstill Period” shall mean the period from the date
hereof until the later of (x) the date on which there are no Stockholder-designated directors on
the Board and Stockholders have no right to designate a director to the Board pursuant to the
Director Appointment Letter, of even date hereof, and (y) the first date on which Stockholders and
LAI no longer beneficially own Shares representing 5% or more of the outstanding shares of Acquiror
Common Stock.
(7) Until the expiration of the Standstill Period, each Stockholder agrees (x) to cause each
Share beneficially owned by it to be present in person or represented by proxy at all meetings of
stockholders of Acquiror, so that each such Share shall be counted as present for determining the
presence of a quorum at such meetings and (y) at any meeting of stockholders of Acquiror at which
directors are to be elected to the Board, to cause each such Share to be voted in favor of those
persons nominated by the Board or the Nominating and Corporate Governance Committee of the Board.
[Signature Page Follows]
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Very truly yours,
PROMETHEUS SENIOR QUARTERS LLC,
a Delaware limited liability company
a Delaware limited liability company
By: | LF Strategic Realty Investors II L.P., | |||
LFSRI II Alternative Partnership
L.P. and LFSRI II-CADIM Alternative Partnership L.P., |
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its Managing Members |
By: | Lazard Frères Real Estate Investors L.L.C., | |||
their General Partner |
By: | /s/ Xxxxxxx X. Xxxxxx | |||
Name: | Xxxxxxx X. Xxxxxx | |||
Title: | Managing Principal | |||
[Signature Page of Lock-Up Agreement]
LAZARD SENIOR HOUSING PARTNERS LP, a Delaware limited partnership |
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By: | Lazard Senior Housing Partners GP LLC, | |||
its General Partner |
By: | /s/ Xxxxxxx X. Xxxxxx | |||
Name: | Xxxxxxx X. Xxxxxx | |||
Title: | Managing Principal and Chief Executive Officer |
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LSHP COINVESTMENT PARTNERSHIP I LP, a Delaware limited partnership |
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By: | LSHP Coinvestment I GP LLC, | |||
its General Partner |
By: | /s/ Xxxxxxx X. Xxxxxx | |||
Name: | Xxxxxxx X. Xxxxxx | |||
Title: | Managing Principal and Chief Executive Officer |
[Signature Page of Lock-Up Agreement]
Accepted and agreed to as of the date first written above: VENTAS, INC., a Delaware corporation |
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By: | /s/ T. Xxxxxxx Xxxxx | |||
Name: | T. Xxxxxxx Xxxxx | |||
Title: | Executive Vice President, Chief Administrative Officer and General Counsel |
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[Signature Page of Lock-Up Agreement]