STOCK PURCHASE AGREEMENT
among
SENIOR HOUSING PROPERTIES TRUST
SNH/CSL PROPERTIES TRUST
CRESTLINE CAPITAL CORPORATION
and
CSL GROUP, INC.
Dated as of August 9, 2001
Table of Contents
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Page
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SECTION 1. DEFINITIONS AND INTERPRETATIONS......................................................... 1
1.1. Certain Definitions.............................................................. 1
1.2. Interpretation................................................................... 9
SECTION 2. SALE AND PURCHASE OF STOCK.............................................................. 10
2.1. Sale and Purchase of Stock, Etc.................................................. 10
2.2. Deposit.......................................................................... 10
2.3. Purchase Price Adjustments and Payment........................................... 10
2.4. The Closing...................................................................... 11
2.5. Post Closing Distributions....................................................... 11
2.6. Option to Purchase Lexington, Lafayette and Boynton Beach........................ 12
SECTION 3. REPRESENTATIONS AND WARRANTIES OF CLJ AND CSL........................................... 12
3.1. Organization, Good Standing and Power of CLJ..................................... 13
3.2. Organization; Qualification of CSL............................................... 13
3.3. Subsidiaries and Affiliates...................................................... 13
3.4. Capitalization of CSL............................................................ 13
3.5. Authorization; Validity of Agreement; Corporate Action........................... 14
3.6. Consents and Approvals; No Violations............................................ 14
3.7. Books and Records................................................................ 15
3.8. Financial Statements; No Undisclosed Liabilities................................. 15
3.9. Absence of Certain Changes....................................................... 16
3.10. Litigation....................................................................... 16
3.11. Compliance with Laws and Permits................................................. 16
3.12. Assets........................................................................... 17
3.13. Hazardous Materials.............................................................. 18
3.14. Contracts and Commitments........................................................ 19
3.15. Employee Benefit Plans........................................................... 19
3.16. Employee Matters................................................................. 19
3.17. Insurance........................................................................ 19
3.18. Certain Payments................................................................. 20
3.19. Taxes............................................................................ 20
3.20. FF&E Reserves, Mortgage Reserves and Working Capital............................. 23
3.21. Broker's or Finder's Fee......................................................... 23
3.22. Supplements to Disclosure Schedule............................................... 23
SECTION 4. REPRESENTATIONS AND WARRANTIES OF SNH AND ACQ. SUB...................................... 24
4.1. Due Organization, Good Standing and Power........................................ 24
4.2. Authorization and Validity of Agreement.......................................... 24
4.3. Consents and Approvals; No Violations............................................ 24
4.4. Financial Statements............................................................. 25
4.5. Bankruptcy....................................................................... 25
4.6. Litigation....................................................................... 25
4.7. Broker's or Finder's Fee......................................................... 25
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(continued)
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SECTION 5. ACCESS AND TRANSACTIONS PRIOR TO CLOSING DATE............................................ 25
5.1. Access to Information Concerning Properties and Records........................... 25
5.2. Title Matters..................................................................... 27
5.3. Survey Matters.................................................................... 27
5.4. Environmental and Engineering Reports............................................. 28
5.5. Conduct of the Business of the Acquired Companies Pending the Closing Date........ 28
5.6. Conversion of Certain Acquired Companies.......................................... 30
5.7. Cooperation....................................................................... 31
5.8. Dividends; Distributions.......................................................... 32
5.9. No Solicitation of Other Offers................................................... 32
5.10. Notification of Certain Matters................................................... 33
5.11. HSR Act Filing.................................................................... 33
5.12. Public Announcements.............................................................. 34
5.13. CLJ Stockholder Approval.......................................................... 34
SECTION 6. CONDITIONS............................................................................... 34
6.1. Conditions to Each Party's Obligations............................................ 34
6.2. Conditions to Obligations of CLJ and CSL.......................................... 36
6.3. Conditions to Obligations of SNH and ACQ. SUB..................................... 37
SECTION 7. NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATIONS; TAX MATTERS..... 39
7.1. Survival of Representations, Warranties, etc...................................... 39
7.2. CLJ's Agreement to Indemnify...................................................... 39
7.3. SNH's Agreement to Indemnify...................................................... 40
7.4. Third Party Claims................................................................ 40
7.5. Purchase Price Adjustment......................................................... 41
SECTION 8. TERMINATION.............................................................................. 41
8.1. Termination....................................................................... 41
8.2. Effect of Termination............................................................. 43
SECTION 9. MISCELLANEOUS PROVISIONS................................................................. 44
9.1. Notices........................................................................... 44
9.2. Schedules and Exhibits............................................................ 45
9.3. Computation of Time............................................................... 45
9.4. Assignment: Successors in Interest................................................ 45
9.5. No Third-Party Beneficiaries...................................................... 45
9.6. Expenses.......................................................................... 46
9.7. Investigations.................................................................... 46
9.8. Number; Gender.................................................................... 46
9.9. Captions.......................................................................... 46
9.10. Amendments........................................................................ 47
9.11. Integration: Waiver............................................................... 47
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(continued)
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9.12. Governing Law.................................................................. 47
9.13. Consent to Jurisdiction........................................................ 47
9.14. Severability................................................................... 48
9.15. Counterparts................................................................... 48
9.16. SNH Limitation of Liability.................................................... 48
9.17. ACQ. SUB Limitation of Liability............................................... 48
9.18. CLJ Limitation of Liability.................................................... 48
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT ("Agreement") is made and entered into as of
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August 9, 2001, among SENIOR HOUSING PROPERTIES TRUST ("SNH"), a Maryland real
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estate investment trust, with its principal office located in Newton,
Massachusetts, SNH/CSL PROPERTIES TRUST ("ACQ. SUB"), a Maryland real estate
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investment trust, with its principal office located in Newton, Massachusetts,
CRESTLINE CAPITAL CORPORATION ("CLJ"), a Maryland corporation, with its
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principal office located in Bethesda, Maryland, and CSL GROUP, INC. ("CSL"), an
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Indiana corporation, with its principal office located in Bethesda, Maryland.
RECITALS:
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CLJ is the record and beneficial owner of all of the issued and outstanding
equity securities of CSL, CCC Boynton Beach, Inc., a Delaware corporation ("CCC
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Boynton") and CCC Senior Living Corporation, a Delaware corporation ("CCC Senior
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Living"). CLJ and certain of its subsidiaries are engaged in the business of
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owning (or leasing) and operating the 32 senior living communities listed in
Exhibit A (collectively, the "Communities"), which Communities are managed by
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Marriott Senior Living Services, Inc. and its wholly owned subsidiaries. SNH is
the record and beneficial owner of all of the issued and outstanding equity
securities of ACQ. SUB.
On the terms and conditions set forth in this Agreement, CLJ desires to
sell and ACQ. SUB desires (i) to purchase and acquire the Communities by means
of acquiring all of the issued and outstanding equity securities of CSL, CCC
Boynton and CCC Senior Living, and (ii) to lease all of the Communities to an
entity to be designated by SNH ("Tenant").
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In consideration of the foregoing, and the representations, warranties,
covenants and agreements set forth in this Agreement, the parties agree as
follows:
SECTION 1.
DEFINITIONS AND INTERPRETATIONS
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1.1. Certain Definitions.
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For purposes of this Agreement, except as otherwise provided or unless the
context clearly requires otherwise, the terms set forth below shall have the
meanings set forth below:
(1) "Acquired Company": CSL, each CSL Subsidiary, CCC Boynton and CCC
Senior Living.
(2) "ACQ. SUB": SNH/CSL Properties Trust, a Maryland real estate
investment trust, which is 100% owned by SNH.
(3) "Affiliate": of any Person shall mean any Person directly or
indirectly controlling, controlled by, or under common control with, such
Person; provided that, for the
purposes of this definition, "control" (including with correlative meanings, the
terms "controlled by" and "under common control with"), as used with respect to
any Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities or partnership interests, by
contract or otherwise.
(4) "Agreement": this Stock Purchase Agreement as amended or otherwise
modified from time to time in accordance with its terms.
(5) "Alternative Proposal": as defined in Section 5.9(b).
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(6) "Antitrust Division": as defined in Section 5.11.
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(7) "Articles of Incorporation": the Articles of Incorporation of CSL, as
amended through the date hereof.
(8) "Asset": as defined in Section 3.12(a).
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(9) "Bankers Trust Line": a general line of credit from Bankers Trust to
CLJ, which line of credit is secured by, inter alia, the stock of CSL and
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certain of its Subsidiaries and mortgages on certain of the Properties listed in
Section 1.1(65) of the Disclosure Schedule, and guaranteed by certain of the CSL
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Subsidiaries.
(10) "Boynton Beach Mortgage Loan": the indebtedness secured by a Lien on
the property of Senior Living of Boynton Beach Limited Partnership, listed on
Section 1.1(10) to the Disclosure Schedule.
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(11) "Business Day": a day, other than a Saturday or a Sunday, on which
banking institutions in the State of Maryland are required to be open.
(12) "By-laws": the By-laws of CSL, as amended through the date hereof.
(13) "Capital Leases": any capital lease of any of the Acquired Companies
listed on Section 1.1(13) to the Disclosure Schedule.
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(14) "CCC Boynton": as defined in the Recitals.
(15) "CCC Boynton Stock": as defined in Section 2.1.
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(16) "CCC Senior Living": as defined in the Recitals.
(17) "CCC Senior Living Stock": as defined in Section 2.1.
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(18) "CLJ Woodlands Bonds": as defined in Section 3.12(a)(ix).
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(19) "Closing": the closing which will take place as described in Section
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2.4.
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(20) "Closing Date": the date on which the Closing occurs.
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(21) "Code": the Internal Revenue Code of 1986, as amended.
(22) "Communities": as defined in the Recitals.
(23) "Consent": any consent, registration, approval, authorization, waiver
or similar affirmation by or of, or filing with or notification to, a Person
pursuant to any Contract, Law, Order or Permit.
(24) "Consent Reduction Amount": in the case of (A) the failure to obtain
the Consent referred to in Section 6.1(c) with respect to CCC Boynton, the sum
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of $150,000; (B) the failure to obtain the Consent referred to in Section 6.1(c)
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relating to the Communities known as Lafayette at Country Place and/or Lexington
at Country Place, an amount equal to that determined by multiplying the Purchase
Price (less $150,000 but before any other adjustment), by a fraction, the
numerator of which is EBITDAR with respect to such Community for the fiscal year
ended December 28, 2001 less that portion of contributions made to the FF&E
Reserves attributable to that Community for the fiscal year ended December 28,
2001 and the denominator of which is EBITDAR with respect to all Communities for
the fiscal year ended December 28, 2001 less the total contributions made to the
FF&E Reserves for all Communities for the fiscal year ended December 28, 2001.
(25) "Contract": any written agreement, arrangement, commitment, contract,
indenture, instrument, lease, license or other obligation of any kind or
character, or other obligation that is binding on any Person or its capital
stock, properties or business.
(26) "CSL Stock": as defined in Section 2.1.
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(27) "CSL Subsidiary": each Person which is a direct or indirect Subsidiary
of CSL and listed on Section 1.1(27) of the Disclosure Schedule.
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(28) "Deposit": as defined in Section 2.2.
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(29) "Disclosure Schedule": as defined in Section 3.
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(30) "EBITDAR": earnings before interest, taxes, depreciation, amortization
and rent.
(31) "Environmental Claims": any and all administrative, regulatory or
judicial actions, suits, demands, demand letters, claims, liens, notices of
noncompliance or violation, investigations or proceedings under any
Environmental Law or any permit issued under any such Environmental Law
including without limitation (A) any and all claims by governmental or
regulatory authorities for enforcement, cleanup, removal, response, remedial or
other actions or damages pursuant to any applicable Environmental Law and (B)
any and all claims by any third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief resulting from
Hazardous Materials or arising from alleged injury or threat of injury to
health, safety or the environment.
(32) "Environmental Law": any federal, state, foreign or local statute,
law, rule, regulation, ordinance, guideline, policy, code or rule of common law
in effect and in each case as amended as of the date hereof and the Closing
Date, and any judicial or administrative
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interpretation thereof applicable to any Acquired Company or its operations or
property as of the date hereof and the Closing Date, including any judicial or
administrative order, consent decree or judgment, relating to the environment,
health, safety or Hazardous Materials, including the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C.(s) 9601
et seq.; the Resource Conservation and Recovery Act, as amended, 42 U.S.C.(s)
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6901 et seq.; the Federal Water Pollution Control Act, as amended, 33 U.S.C.(s)
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1251 et seq.; the Toxic Substances Control Act, 15 U.S.C.(s) 2601 et seq.; the
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Clean Air Act, 42 U.S.C.(s) 7401 et seq.; Occupational Safety and Health Act, 29
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U.S.C. 651 et seq.; Oil Pollution Act of 1990, 33 U.S.C.(s) 2701 et seq.; the
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Safe Drinking Water Act, 42 U.S.C.(s) 300f et seq., and their state and local
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counterparts and equivalents.
(33) "ERISA": as defined in Section 3.15.
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(34) "ERISA Affiliate": as defined in Section 3.15.
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(35) "Excess Life Care Amounts": any amounts paid after June 20, 1997 to
any of the Acquired Companies for so-called "continuing care contracts" (whether
or not refundable).
(36) "FF&E Reserves": as defined in the Operating Agreements.
(37) "FTC": as defined in Section 5.11.
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(38) "GAAP": generally accepted accounting principles as in effect from
time to time in the United States.
(39) "GMAC Fee": the fee due GMAC in an amount equal to 1% of the
outstanding principal balance, as of the Closing Date, of the GMAC Mortgage
Loans in connection with the assumption of the GMAC Mortgage Loans/change of
control.
(40) "GMAC Mortgage Loans": collectively, the Mortgage Loans listed as
items 1 through 5 on Section 1.1(62) of the Disclosure Schedule.
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(41) "Governmental Entity": a court, arbitral tribunal, administrative
agency or commission or other governmental or other regulatory authority or
agency.
(42) "Ground Lease": the ground lease described in Section 1.1(42) of the
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Disclosure Schedule.
(43) "Hazardous Materials": any (A) petroleum or petroleum products,
radioactive materials, asbestos in any form that is or could become friable,
urea formaldehyde foam insulation, transformers or other equipment that contain
dielectric fluid containing levels of polychlorinated biphenyls, and radon gas;
(B) chemicals, materials or substances defined as or included in the definition
of "hazardous substances," "hazardous wastes," "hazardous materials," "extremely
hazardous wastes," "extremely hazardous substances," "restricted hazardous
wastes," "toxic substances," "toxic pollutants," or words of similar import,
under any applicable Environmental Law; and (C) other chemical, material or
substance, exposure to which is prohibited, limited or regulated by any
Governmental Entity.
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(44) "HMC": Host Marriott Corporation, a Maryland corporation.
(45) "HPT": Hospitality Properties Trust, a Maryland real estate investment
trust.
(46) "HSR Act": as defined in Section 3.6.
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(47) "Indemnified Party": as defined in Section 7.4(a).
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(48) "Indemnifying Party": as defined in Section 7.4(a).
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(49) "Interim Balance Sheet": defined in Section 3.8(a).
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(50) "IRS": the United States Internal Revenue Service.
(51) "Knowledge": an individual will be deemed to have "Knowledge" of a
particular fact or other matter if without further inquiry such individual is
actually aware of such fact or other matter; and an entity (other than an
individual) will be deemed to have "Knowledge" of a particular fact or other
matter if any individual who is currently serving as a director, officer, a
manager whose title includes the term "director," partner, executor, or trustee
of such entity (or in any similar capacity) has Knowledge of such fact or other
matter. In no event will the Knowledge of MSLS or any "independent director" of
any CSL Subsidiary be imputed to CLJ, CSL or any of their respective officers,
other directors or agents.
(52) "Lakewood Loan Documents": as defined in Section 3.12(a)(xi).
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(53) "Law": any federal, state, local or foreign law, statute, ordinance,
rule, regulation, order, judgment or decree, administrative or judicial
decision, and any other executive or legislative proclamation.
(54) "Lease": the master lease agreement (or collectively, the individual
leases) dated the Closing Date, to be entered into as of the Closing Date by and
between each Acquired Company which owns the Communities and Tenant, such master
lease agreement (or individual leases, as the case may be) to be in form and
substance satisfactory to SNH and ACQ. SUB on the one hand, and Tenant on the
other.
(55) "Lien": any interest in property, whether such interest is based on
common law, statute, court decision or contract and including, without
limitation, any mortgage, pledge, security interest, lease, encumbrance
(including any easement, exception, reservation or limitation, right of way or
the like), lien, purchase option, call or right, or charge of any kind
(including any agreement to give or permit any of the foregoing), any
conditional sale or other title retention agreement, any lease of property
(whether real, personal or mixed) which is required, in accordance with GAAP, to
be recorded by the lessee as the acquisition of an asset and the incurrence of a
liability, and the filing of any financing statement under the Uniform
Commercial Code or personal property security legislation of any jurisdiction.
(56) "Losses": as defined in Section 7.2(a).
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(57) "Marriott Agreements": collectively, the Operating Agreements, the
Noncompetition Agreement, the MI Indemnity Agreement, the Pooling Agreements and
the Transition Agreements.
(58) "Material Adverse Effect": any adverse change in the business, assets,
liabilities, financial condition or results of operations of the Acquired
Companies taken as a whole (provided, that a matter or matters taken together
shall be deemed to have a material adverse change in the business, assets,
liabilities, financial condition or results of operations only if such matter or
matters have resulted in or are reasonably likely to have or result in an
adverse impact of at least $10,000,000 of value or a $1,000,000 reduction in net
annual cash flow from the Properties, the termination of any Marriott Agreement
(other than the Noncompetition Agreement), or any material adverse effect on the
ability of CLJ or CSL to perform its respective obligations under this Agreement
or to consummate the transactions contemplated hereby). The term "Material
Adverse Effect" shall not include (i) any change, circumstance, event or
consummation of the transactions contemplated by the Agreement or (ii) changes
in general economic conditions or financial markets (including fluctuations in
the price of the shares of common stock of CLJ or conditions in the business
sectors in which the Acquired Companies operate not disproportionally affecting
the Acquired Companies).
(59) "MGCL": the Maryland General Corporation Law.
(60) "MI": Marriott International, Inc., a Delaware corporation.
(61) "MI Indemnity Agreement": the Indemnity Agreement among MSLS, MI, HMC
Senior Communities, Inc. (the predecessor in interest to CLJ) and HMC dated as
of June 21, 1997, as modified by a letter agreement dated June 21, 1997.
(62) "Mortgage Loans": any indebtedness for borrowed money or for the
deferred purchase price of property or services that is secured by a Lien on the
property or assets of any Acquired Company, listed on Section 1.1(62) to the
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Disclosure Schedule, other than indebtedness secured by fixtures, furniture and
equipment and leases for the same that in either case are incurred or entered
into by MSLS in the ordinary course of business and in accordance with the terms
of the Operating Agreements. The term "Mortgage Loan" does not include
indebtedness under the Bankers Trust Line (provided that all indebtedness
thereunder is repaid at or prior to Closing) or the Boynton Beach Mortgage Loan.
(63) "Mortgage Reserves": any and all deposits, escrows and reserves
required by holders of Mortgage Loans or lessors under Capital Leases.
(64) "MSLS": Marriott Senior Living Services, Inc., a Delaware corporation.
(65) "New Loan": means indebtedness in the principal amount of not less
than $150,000,000 nor more than $175,000,000 to be incurred after the date of
this Agreement, but prior to the Closing Date, by CSL and/or one or more of the
CSL Subsidiaries and secured by a mortgage(s) on one or more Properties listed
in Section 1.1(65) of the Disclosure Schedule, the proceeds of which shall be
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paid as a dividend or otherwise distributed to CLJ in accordance with Section
5.8.
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(66) "Nomura Mortgage Loan": the Mortgage Loan listed as item 6 on Section
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1.1(62) of the Disclosure Schedule.
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(67) "Noncompetition Agreement": the Amended and Restated Noncompetition
Agreement dated as of December 28, 1998 among HMC, CLJ, Forum Group, Inc.
(predecessor to CSL), MSLS and MI.
(68) "Operating Agreements": collectively, the Operating Agreements between
CSL, any CSL Subsidiary (and/or their respective Subsidiaries) or Senior Living
of Boynton Beach Limited Partnership, as owner and MSLS, as operator and listed
in Section 1.1(68) the Disclosure Schedule.
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(69) "Order": any administrative decision or award, decree, injunction,
judgment, order, quasi-judicial decision or award, ruling, or writ of any
federal, state, local or foreign or other Governmental Entity.
(70) "Organizational Documents": any of (a) the articles or certificate of
incorporation and the by-laws of a corporation or other equivalent
organizational documents; (b) the partnership agreement and any statement of
partnership of a general partnership; (c) the limited partnership agreement and
the certificate of limited partnership; (d) any charter, certificate or similar
document adopted or filed in connection with the creation, formation, or
organization of a Person; (e) the operating agreement of a limited liability
company; and (f) any amendment to any of the foregoing.
(71) "Party": SNH, ACQ. SUB, CSL or CLJ, and "Parties" shall mean each of
SNH, ACQ. SUB, CSL and CLJ.
(72) "Permit": any federal, state, local or foreign governmental approval,
authorization, certificate, license, permit or exemption to which any Person is
a party or that is or may be binding upon or inure to the benefit of any Person
or its securities, properties or business.
(73) "Permitted Liens": collectively (i) Liens securing the Mortgage Loans,
the New Loan and the Boynton Beach Mortgage Loan, (ii) Liens set forth in
Section 1.1(73) of the Disclosure Schedule, (iii) any Liens for Taxes not yet
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due or delinquent; (iv) any statutory encumbrance arising in the ordinary course
of business by operation of law with respect to a liability that is not yet due
or delinquent; (v) any applicable zoning regulation or ordinance or other
governmental laws, ordinances and regulations, provided they do not prohibit or
impair in any material respect the use of a Property as a functioning senior
living community; (vi) any imperfection of title or similar non-monetary Lien
that, individually or in the aggregate with other such Liens, has not, and would
not be reasonably expected to, impair marketability and does not impair, in any
material respect, the use of a Property as a functioning senior living
community; (vii) any Lien created by MSLS which it is obliged to remove pursuant
to the terms of the Operating Agreements; and (viii) Liens on fixtures,
furniture and equipment securing indebtedness (including capitalized leases)
incurred or entered into by MSLS in the ordinary course of business and in
accordance with the terms of the Operating Agreements.
(74) "Person": any individual, corporation, limited liability company,
partnership, joint venture, trust, association, organization, Governmental
Entity or other entity.
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(75) "Pooling Agreements": collectively, the Pooling Agreements between
MSLS and HMC Senior Communities, Inc. (predecessor in interest to CLJ) listed in
Section 1.1(75) of the Disclosure Schedule.
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(76) "Properties": all the real property and improvements owned or leased,
directly or indirectly, by any Acquired Company and described in Section
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3.12(a)(ii) of the Disclosure Schedule and constituting one or more of the
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Communities, each a "Property", together with related furnishings, fixtures and
equipment.
(77) "Prior Tax Matters Agreements": as defined in Section 3.19(a).
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(78) "Purchase Price": $600,000,000, adjusted as provided in Section 2.3
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and Section 6.1(c).
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(79) "Subsidiary": with respect to any party, any corporation, limited
liability company, partnership, limited partnership, or other business
association or entity, at least a majority of the voting securities or economic
interests of which is directly or indirectly owned or controlled by such party
or by any one or more of its Subsidiaries.
(80) "Survey": as defined in Section 5.3.
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(81) "Tax" or "Taxes": all taxes imposed by any federal, state, local or
foreign governmental authority, including, but not limited to, income, gross
receipts, excise, profits, ad valorem, net worth, value added, service, special
assessments, workers' compensation, utility, severance, production, excise,
stamp, occupation, premiums, windfall profits, real or personal property, sales,
gain, use, license, custom duty, unemployment, capital stock, transfer,
franchise, payroll, withholding, alternative minimum, social security, and
estimated taxes, and other taxes, fees or assessments of a similar nature, and
shall include interest, penalties or additions attributable thereto.
(82) "Tax Allocation Agreement": as defined in Section 6.1(f).
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(83) "Tax Returns": all returns, reports, estimates, information
statements, declarations and other filings required or permitted to be filed
with any taxing authority related to Taxes.
(84) "Tenant": as defined in the Recitals.
(85) "Title Company": as defined in Section 5.2.
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(86) "Title Commitments": as defined in Section 5.2.
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(87) "Transfer Taxes": all Taxes imposed on or resulting from the sale of
the CSL Stock, the CCC Boynton Stock or the CCC Senior Living Stock or the
conversion of the Acquired Companies pursuant to Section 5.6 that are in the
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nature of (i) real property transfer Taxes, including Taxes levied upon the
transfer of stock or other equity interests in an entity on account of such
entity's direct or indirect ownership of real estate, (ii) excise, sales, use,
valued added, registration stamp, recording, documentary, conveyancing, transfer
or (iii) similar Taxes,
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in each case including any deficiencies, interest, penalties, additions to
Tax or additional amounts, but in all cases excluding Taxes imposed on income.
(88) "Transition Agreements": the agreements listed in Section 1.1(88) of
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the Disclosure Schedule.
(89) "Treasury Regulations": the Treasury Regulations promulgated under the
Code, including proposed and temporary regulations.
(90) "Unsecured Loans": any indebtedness for borrowed money or for the
deferred purchase price of property or services that is not secured by a Lien on
the property or assets of any Acquired Company, listed in Section 1.1(90) of the
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Disclosure Schedule unless incurred or entered into on behalf of an Acquired
Company by MSLS in the ordinary course of business and in accordance with the
terms of the Operating Agreements. The term Unsecured Loans shall not include
intercompany loans between or among the Acquired Companies all of which shall be
discharged prior to Closing.
(91) "Working Capital": the working capital controlled by MSLS, relating to
operation of the Properties and required to be maintained pursuant to the
Operating Agreements.
1.2. Interpretation.
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(1) When a reference is made in this Agreement to a section or article,
such reference shall be to a section or article of this Agreement unless
otherwise clearly indicated to the contrary.
(2) Whenever the words "include", "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation."
(3) The words "hereof", "herein" and "herewith" and words of similar
import shall, unless otherwise stated, be construed to refer to this Agreement
as a whole and not to any particular provision of this Agreement, and article,
section, paragraph, exhibit and schedule references are to the articles,
sections, paragraphs, exhibits and schedules of this Agreement unless otherwise
specified.
(4) The plural of any defined term shall have a meaning correlative to
such defined term, and words denoting any gender shall include all genders.
Where a word or phrase is defined herein, each of its other grammatical forms
shall have a corresponding meaning.
(5) A reference to any party to this Agreement or any other agreement or
document shall include such party's successors and permitted assigns.
(6) A reference to any legislation or to any provision of any legislation
shall include any amendment, modification or re-enactment thereof, any
legislative provision substituted therefor and all regulations and statutory
instruments issued thereunder or pursuant thereto.
(7) The parties have participated jointly in the negotiation and drafting
of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this
-9-
Agreement shall be construed as if drafted jointly by the parties, and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provision of this Agreement.
SECTION 2.
SALE AND PURCHASE OF STOCK
--------------------------
2.1. Sale and Purchase of Stock, Etc.
--------------------------------
At the Closing, in consideration of the Purchase Price to be paid by SNH to
CLJ, (i) CLJ shall sell to ACQ. SUB, and ACQ. SUB shall purchase from CLJ, all
of the issued and outstanding capital stock of CSL (the "CSL Stock"), CCC
---------
Boynton (the "CCC Boynton Stock") and CCC Senior Living (the "CCC Senior Living
----------------- -----------------
Stock"), in each case free and clear of all Liens, and (ii) CLJ shall assign to
-----
SNH or its designee the CLJ Woodland Bonds (unless terminated prior to closing),
the Lakewood Loan Documents, the Pooling Agreements, the MI Indemnity Agreement,
the Transition Agreements, all rights of CLJ under Section 7.16 of the Stock
Purchase Agreement dated as of June 17, 1997 between HMC and MSLS and all rights
of CLJ in respect of any expansion projects referenced in Section 7.14 of such
Stock Purchase Agreement and (to the extent contemplated by the Tax Allocation
Agreement) the Prior Tax Matters Agreements, in each case free and clear of all
Liens. At Closing, CSL will own all the issued and outstanding equity securities
of each of the CSL Subsidiaries, free and clear of all Liens other than those
Liens listed on Section 2.1 of the Disclosure Schedule.
-----------
2.2. Deposit.
-------
On the date of this Agreement, SNH shall deposit $7,500,000 (the "Deposit")
-------
with American Title Company to be held pursuant to the terms of an Escrow
Agreement in the form of Exhibit B. Except as otherwise provided in Section 8.2,
--------- -----------
on the Closing Date the Deposit will be paid to CLJ and applied to and
constitute a portion of the portion of the Purchase Price paid by wire transfer.
2.3. Purchase Price Adjustments and Payment.
--------------------------------------
(a) The Purchase Price shall be reduced by (a) the sum of (A) the
aggregate unpaid principal amount, together with accrued and unpaid
interest, of all Mortgage Loans, Capital Leases (unless the Communities
known as Lexington at Country Place and Lafayette at Country Place are not
acquired as a result of the failure to obtain Consents), Unsecured Loans
and the New Loan, in each case, as of the Closing Date, (B) the amount by
which the Acquired Companies (other than CCC Boynton) have funded less than
$4,707,092 of owner-funded capital expenditures required under the
Operating Agreements for fiscal year 2001 (other than FF&E Reserves), as of
the Closing Date, (C) any deficiency in Mortgage Reserves or amounts due
for real estate taxes, insurance or other expenses separately accounted for
by CLJ attributable to such expenses (and not provided for under the
Operating Agreements) for any period(s) prior to the Closing Date, (D) an
amount equal to the Excess Life Care Amounts not recognized as income
pursuant to GAAP as of the Closing Date and (E) the remaining
-10-
payments to which holders of the preferred depositary units representing
preferred limited partner interests in Forum Retirement Partners, L.P., a
Delaware limited partnership, are entitled but which have not been paid to
such holders as of the Closing Date, and shall be increased by (b) the sum
of (A) the amount of capital expenditures required under the Operating
Agreements for fiscal year 2002 (other than FF&E Reserves) which the
Acquired Companies (other than CCC Boynton) have funded, provided SNH
approved such additional capital expenditures to the extent of any approval
rights in the Operating Agreements, in each case, as of the Closing Date,
(B) all New Loan costs, including the fees and expenses paid to the lenders
by or for the account of CLJ or the Acquired Companies prior to the Closing
Date in connection with the New Loan (with CLJ to notify SNH in writing,
upon receipt of invoices from the lenders or their counsel, of the amount
and the basis for such fees and expenses) but without duplication for any
amounts paid under Section 9.6, (C) without duplication, all prepaid
-----------
interest under the Mortgage Loans, the Unsecured Loans and the Capital
Leases, and all prepaid rent under the Ground Leases, in each case to the
extent attributable to the period after the Closing Date, and that portion
of the Mortgage Reserves attributable to interest for the period after the
Closing Date, and (D) that portion of Mortgage Reserves and any other
prepayments of or deposits for real estate taxes, insurance or other
expenses separately accounted for by CLJ attributable to such expenses (and
not provided for under the Operating Agreements) for any period(s) after
the Closing Date. The Purchase Price will be subject to further adjustment
as provided in Section 6.1(c) and to the extent necessary to allocate costs
--------------
incurred by either Party in connection with the transaction to comply with
the provisions of Section 9.6.
-----------
(b) The Purchase Price (adjusted as provided in Section 2.3(a)
--------------
and Section 6.1(c)) shall be paid as follows: $25,000,000 by delivery on
--------------
the Closing Date of SNH's promissory note in the form of Exhibit C and the
---------
balance and all other amounts due at Closing shall be paid by SNH on the
Closing Date by wire transfer of immediately available funds to CLJ to an
account specified by CLJ to SNH at least two (2) Business Days prior to the
Closing Date.
2.4. The Closing.
-----------
Subject to the terms and conditions of this Agreement, the Closing shall
take place at the offices of Xxxxxxxx & Worcester LLP, in Boston, Massachusetts
at 9:00 a.m. (local time), on January 31, 2002, or, if later, the date on which
all conditions set forth in Section 6 have been satisfied, but not later than
---------
June 30, 2002, or at such other time, date or place as the Parties may agree.
2.5. Post Closing Distributions.
--------------------------
The owner's distribution under any Operating Agreement or Pooling Agreement
for the four week fiscal period in which the Closing Date occurs shall be
prorated between CLJ and SNH based on the number of days in such fiscal period
preceding the Closing Date (in the case of CLJ) or on or after the Closing Date
(in the case of SNH). If after the Closing Date, CSL or any CSL Subsidiary shall
receive any owner's distribution under any Operating Agreement or Pooling
Agreement for (i) the 2001 fiscal year, (ii) any four week fiscal period in the
2002 fiscal
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year that precedes the Closing Date, or (iii) the four week fiscal period in
which the Closing Date occurs, SNH and ACQ. SUB shall cause such amount to be
remitted promptly to CLJ (or the applicable portion of such amount in the case
of clause (iii)). SNH and ACQ. SUB shall use commercially reasonable efforts to
enforce the provisions of the Operating Agreements and Pooling Agreements that
require the distributions described in this Section 2.5.
-----------
2.6. Option to Purchase Lexington, Lafayette and Boynton Beach.
---------------------------------------------------------
If, because of the failure to obtain the Consents referred to in Section
-------
6.1(c) with respect to the Communities known as Lafayette at Country Place,
------
Lexington at Country Place and/or Boynton Beach (the "Applicable Consents"),
-------------------
such Community and the relevant CSL Subsidiary or CCC Boynton is excluded from
the transactions contemplated hereby, CLJ and CSL shall continue to use
commercially reasonable efforts to obtain the Applicable Consent, shall cause
the relevant CSL Subsidiary or CCC Boynton to comply with Section 5.5 and hereby
-----------
grant SNH an option to purchase all the issued and outstanding equity of such
CSL Subsidiary or CCC Boynton, or, at the election of SNH, all of the assets of
such CSL Subsidiary or CCC Boynton, for a price equal to the relevant Consent
Reduction Amount less the aggregate unpaid principal amount, together with
accrued and unpaid interest, of the related Capital Lease, and such purchase
shall be deemed to have been made with the benefit of the representations,
warranties and covenants contained in this Agreement; provided that if SNH
exercises such option before the Applicable Consents have been obtained, SNH
shall indemnify CLJ from any loss, cost or expense that CLJ incurs to the extent
attributable to the failure to obtain the Applicable Consents before the
exercise of such option, and SNH shall not be entitled to the benefit of the
representations and warranties to the extent pertaining to the Applicable
Consents. Such option shall expire on the eighteen month anniversary of the
Closing Date and may be exercised by written notice from SNH to CLJ given no
less than 60 days prior to the requested purchase date.
Subject to the prior receipt of the Applicable Consent for any excluded
Community and the relevant CSL Subsidiary or CCC Boynton Beach, CLJ may require
SNH or its designee to purchase all the issued and outstanding equity of such
CSL Subsidiary or CCC Boynton (or at the election of SNH, all of the assets of
such CSL Subsidiary or CCC Boynton), for a price equal to the relevant Consent
Reduction Amount less the aggregate unpaid principal amount, together with
accrued and unpaid interest, of the related Capital Lease, and such purchase
shall be deemed to have been made with the benefit of the representations,
warranties and covenants contained in this Agreement. CLJ's right to require
such purchase shall expire on the eighteen month anniversary of the Closing Date
and may be exercised by written notice from CLJ to SNH given no less than 60
days prior to the requested purchase date.
SECTION 3.
REPRESENTATIONS AND WARRANTIES OF CLJ AND CSL
---------------------------------------------
Except as specifically set forth in the disclosure schedule prepared by CLJ
and CSL and delivered to SNH simultaneously with the execution hereof (the
"Disclosure Schedule"), CLJ and CSL jointly and severally represent and warrant
-------------------
to SNH and ACQ. SUB that all of the statements contained in this Section 3 are
---------
true as of the date of this Agreement (or, if made as of a specified date, as of
such date), and will be true as of the Closing Date as though made on the
-12-
Closing Date. Each exception set forth in the Disclosure Schedule and each other
response to this Agreement set forth in the Disclosure Schedule is identified by
reference to, or has been grouped under a heading referring to, a specific
individual section of this Agreement and, except as otherwise specifically
stated with respect to such exception, relates only to such section.
3.1. Organization, Good Standing and Power of CLJ.
--------------------------------------------
CLJ is a corporation duly organized, validly existing and in good standing
under the laws of the State of Maryland and has all requisite corporate power
and authority to own, lease and operate its properties and to carry on its
business as now being conducted.
3.2. Organization; Qualification of CSL.
----------------------------------
CSL (a) is a corporation duly organized, validly existing and in good
standing under the laws of its state of incorporation; (b) has full corporate
power and authority to carry on its business as it is now being conducted and to
own and lease the properties and assets it now owns and leases; and (c) is duly
qualified to do business as a foreign corporation and is in good standing in
every jurisdiction in which ownership of property or the conduct of its business
requires such qualification, except where the failure to do so would not,
individually or in the aggregate, have a Material Adverse Effect. CSL has
heretofore delivered to SNH complete and correct copies of the Articles of
Incorporation and By-laws of CSL as presently in effect.
3.3. Subsidiaries and Affiliates.
---------------------------
Section 3.3 of the Disclosure Schedule sets forth for each current CSL
-----------
Subsidiary, and for each of CCC Boynton and CCC Senior Living, its name, type of
entity, jurisdiction of incorporation or formation, capitalization, the names of
the record holders of its equity interests and the jurisdictions in which it is
qualified to do business. Except as set forth in Section 3.3 of the Disclosure
-----------
Schedule, CSL currently does not own, directly or indirectly, any capital stock
or other equity interests in any Person. Except as set forth in Section 3.3 of
-----------
the Disclosure Schedule, all the equity interests in each CSL Subsidiary are
owned directly or indirectly by CSL, free and clear of all Liens, and are
validly issued, fully paid and nonassessable, and there are no outstanding
options, rights or agreements of any kind relating to the issuance, sale or
transfer of any capital stock or other equity securities of any CSL Subsidiary.
All the capital stock of CCC Boynton and CCC Senior Living is owned directly by
CLJ, free and clear of all Liens, and is validly issued, fully paid and
nonassessable, and there are no outstanding options, rights or agreements of any
kind relating to the issuance, sale or transfer of any capital stock or other
equity securities of CCC Boynton or CCC Senior Living. Each of the CSL
Subsidiaries, CCC Boynton and CCC Senior Living is duly organized, validly
existing and in good standing under the laws of its state of organization, and
is duly qualified to do business and in good standing in every jurisdiction in
which ownership of property or the conduct of its business requires such
qualification, except where the failure to do so would not, individually or in
the aggregate, have a Material Adverse Effect.
3.4. Capitalization of CSL.
---------------------
The authorized capital stock of CSL consists of 100 shares of common stock,
no par value, of which 100 shares are issued and outstanding. All the issued and
outstanding capital
-13-
stock of CSL has been duly authorized, validly issued, fully paid and
non-assessable, is owned beneficially and of record by CLJ, and, except for the
pledge of the CSL Stock securing obligations under the Bankers Trust Line, is
free and clear of any Liens. None of the outstanding capital stock of CSL has
been issued in violation of any federal or state securities Laws or any
preemptive right or rights to subscribe for or purchase its capital stock or
other securities. There is no indebtedness issued and outstanding having general
voting rights or debt convertible into capital stock or other securities of CSL
having such rights. Except as set forth above, (a) there is no capital stock or
other securities of CSL authorized, issued or outstanding; (b) there are no
securities outstanding which are convertible into or exercisable or exchangeable
for common stock or other securities of CSL; and (c) there are no outstanding
options, rights, Contracts, warrants, subscriptions, conversion rights or other
agreements or commitments of any character pursuant to which CSL may be required
to purchase, redeem, issue or sell any of its capital stock or other securities
of CSL or any CSL Subsidiary.
3.5. Authorization; Validity of Agreement; Corporate Action.
------------------------------------------------------
Subject to Section 3.6(b), each of CLJ and CSL has full power and authority
--------------
to execute and deliver this Agreement and to consummate the transactions
contemplated hereby. Subject to Section 3.6(b), the execution, delivery and
--------------
performance by each of CLJ and CSL of this Agreement and the consummation by it
of the transactions contemplated hereby have been duly authorized by their
respective Boards of Directors and no other action on the part of CLJ or CSL is
necessary to authorize the execution and delivery by CLJ or CSL of this
Agreement or the consummation by it of the transactions contemplated hereby.
Except as described in Section 3.6(b), no vote of, or consent by, the holders of
--------------
any capital stock issued by CLJ or CSL is necessary to authorize the execution
and delivery by CLJ or CSL of this Agreement or the consummation by it of the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by each of CLJ and CSL and, assuming due and valid authorization,
execution and delivery hereof by SNH and ACQ. SUB, this Agreement is a valid and
binding obligation of each of CLJ and CSL enforceable against each of CLJ and
CSL in accordance with its terms, except (a) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium, and other similar laws of
general application affecting enforcement of creditors' rights generally and (b)
the availability of the remedy of specific performance or injunctive or other
forms of equitable relief may be subject to equitable defenses and would be
subject to the discretion of the court before which any proceeding therefor may
be brought.
3.6. Consents and Approvals; No Violations.
-------------------------------------
Except for (a) the Consents as may be required under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended (the "HSR Act"); (b) the approval
-------
of the sale of the CSL Stock by the holders of the common stock of CLJ; (c)
compliance with the requirements of each of the Marriott Agreements (including,
without limitation, Section 18 of the several Operating Agreements and of
Section 2 of the Noncompetition Agreement); (d) the Consents listed in Section
-------
6.1(c) of the Disclosure Schedule; and (e) Consents required for healthcare
------
Permits (including Medicare and Medicaid provider agreements), none of the
execution, delivery or performance of this Agreement by CLJ or CSL, or the
consummation by CLJ or CSL of any of the transactions contemplated hereby, will
(i) conflict with or result in any breach of any provision of the Organizational
Documents of CLJ or any Acquired Company, (ii) require any
-14-
Consent of any Governmental Entity, or (iii) violate any Contract, Law, Order or
Permit to which CLJ or any Acquired Company is a party or that is binding on or
affects any of their properties or assets, excluding, however, from the
foregoing clauses (ii) and (iii), such Consents, the failure of which to obtain
would not, and violations, breaches or defaults, the occurrence of which would
not, in either case individually or in the aggregate, have a Material Adverse
Effect. SNH and ACQ. SUB acknowledge that (A) the representation and warranty
set forth in this Section 3.6, insofar as pertaining to the conversion of
-----------
certain Acquired Companies pursuant to Section 5.6, is given only to the
-----------
Knowledge of CLJ and (B) no representation is given with respect to any Consents
required in connection with the Leases.
3.7. Books and Records.
-----------------
For the period from and after January 1, 1998: (i) the books of account of
the Acquired Companies are complete and correct in all material respects and
have been maintained in accordance with sound business practices; (ii) each
Acquired Company has made and kept books, records and accounts which, in
reasonable detail, accurately and fairly reflect its transactions and the
dispositions of its assets and to permit preparation of financial statements in
conformity with GAAP; (iii) the stock ledger (or equivalent partnership or
limited liability company records) of each of the Acquired Companies is complete
and correct; (iv) the minute books (or equivalent partnership or limited
liability company records) of each of the Acquired Companies contain accurate
and complete records in all material respects of all meetings held of, and
corporate (or equivalent) action taken by, the stockholders (partners or
members) and the Boards of Directors (general partners or managers) of the
respective companies; and (v) no meeting of any such stockholders (partners or
members) or Board of Directors (general partners or managers) has been held for
which minutes have not been prepared and are not contained in such minute books.
At the Closing, the Acquired Companies will have possession of their respective
books and records.
3.8. Financial Statements; No Undisclosed Liabilities.
------------------------------------------------
(a) The unaudited balance sheet of each Acquired Company as of
June 15, 2001 (the "Interim Balance Sheet") and the related statements of
---------------------
income of each Acquired Company for the fiscal period then ended, complete
and correct copies of which shall be furnished to SNH on or before
September 15, 2001, present fairly, in all material respects, the financial
condition and results of operations of such Acquired Company as at such
date and for such period, as the case may be.
(b) The audited consolidated balance sheets of CSL and its
Subsidiaries as at January 1, 1999, December 31, 1999 and December 29,
2000, and the related consolidated statements of income and cash flows for
the fiscal years then ended, complete and correct copies of which shall be
furnished to SNH on or before September 15, 2001, present fairly, in all
material respects, the consolidated financial condition and results of
operations and cash flows of CSL and its Subsidiaries as at such dates and
for such fiscal years, as the case may be.
(c) Except (i) as and to the extent of the amounts specifically
reflected or reserved on the Interim Balance Sheet, (ii) obligations under
Contracts and other
-15-
liabilities entered into in the ordinary course of business and consistent
with past practice and not in excess of current requirements which are not
required by GAAP to be reflected on the Interim Balance Sheet, and (iii)
liabilities and obligations incurred in the ordinary course of business
consistent with past practice since the date of the Interim Balance Sheet,
no Acquired Company has any liabilities or obligations of any nature
(whether absolute, accrued, contingent or otherwise) that would be required
to be reflected on a consolidated balance sheet of the Acquired Company or
in the notes thereto prepared in accordance with GAAP.
(d) On the Closing Date, all real property owned or leased by the
Acquired Companies will continue to be owned or leased by the Acquired
Companies "AS IS and WHERE IS", but subject to no liabilities (whether
absolute, accrued, known, or unknown, contingent or otherwise and whether
due or to become due) other than (i) the Ground Lease, Capital Leases, the
Mortgage Loans, the Unsecured Loans, the Boynton Beach Mortgage Loan and
the New Loan, (ii) liabilities incurred by MSLS in the ordinary course of
business in accordance with the Operating Agreements and (iii) those
liabilities set forth on the appropriate Title Commitment for the Property
(provided that the exclusion provided in this clause (iii) shall not limit
the right of SNH to object to any such liability nor limit any obligation
of CLJ to cure any title exception objected to by SNH under Section 5.2 or
-----------
5.3).
----
(e) The financial statements referred to in this Section 3.8 have
-----------
been prepared in accordance with GAAP consistently applied throughout the
periods involved, except as set forth in the notes thereto.
3.9. Absence of Certain Changes.
--------------------------
Since June 15, 2001, (a) there has not occurred any event, change, effect,
fact, circumstance or other occurrence which has had, or which could reasonably
be expected to have, a Material Adverse Effect; (b) the business of each
Acquired Company has been conducted only in the ordinary course consistent with
past practice; and (c) no Acquired Company has engaged in any material
transaction or entered into any material agreement outside the ordinary course
of business.
3.10. Litigation.
----------
Neither CLJ nor CSL has received written notice of and, to the Knowledge of
each of CLJ and CSL, no action or proceeding is pending or threatened and no
investigation looking toward such an action or proceeding has begun, which (a)
questions the validity of this Agreement or any action taken or to be taken
pursuant hereto; (b) will have a Material Adverse Effect; (c) result in or
subject any Acquired Company or any of the Properties to a material liability;
or (d) involves any material condemnation or eminent domain proceedings against
any of the Properties.
3.11. Compliance with Laws and Permits.
--------------------------------
To the Knowledge of each of CLJ and CSL, (a) the Acquired Companies, the
Properties and the use and operation of the Properties do not violate any
material Laws including, without
-16-
limitation, those relating to construction, occupancy, zoning, adequacy of
parking, environmental protection, occupational health and safety and fire
safety applicable thereto; and (b) except as set forth in Section 3.11 of the
------------
Disclosure Schedule, there are presently in effect all material Permits
(including all healthcare licenses) necessary to operate the businesses of the
Acquired Companies and for the current use, occupancy and operation of the
Properties. Neither CLJ nor CSL has received written notice of any threatened
request, application, proceeding, plan, study or effort which would materially
adversely affect the present use or zoning of any of the Properties or which
would modify or realign any adjacent street or highway.
3.12. Assets.
------
(a) The assets being acquired, directly or indirectly, by SNH
and ACQ. SUB pursuant to Section 2.1 hereof (collectively, the "Assets")
----------- ------
consist of (1) the CSL Stock, the CCC Boynton Stock and the CCC Senior
Living Stock and (2) the following assets of the Acquired Companies
(including certain assets of CLJ that are to be sold, transferred and
assigned to SNH or its designee at Closing as contemplated by Section 2.1):
-----------
(i) as to CSL, the equity securities of each of the CSL
Subsidiaries;
(ii) the real property owned or leased, directly or
indirectly by an Acquired Company and described in Section
-------
3.12(a)(ii) of the Disclosure Schedule (which Section identifies
-----------
the Acquired Company that so owns or leases such property);
(iii) the general partnership interest of CCC Boynton in
Senior Living of Boynton Beach Limited Partnership;
(iv) the interest of CCC Senior Living as the independent
member of CCFL Senior Living LLC, CCOP Senior Living LLC, CCCP
Senior Living LLC, CCSL Senior Living LLC and CCDE Senior Living
LLC;
(v) the rights and interests of the Acquired Companies
under the Marriott Agreements, the Ground Lease, and the Capital
Leases;
(vi) the FF&E Reserves and the Mortgage Reserves;
(vii) the Working Capital;
(viii) except as set forth in Section 3.12(b) of the
---------------
Disclosure Schedule with respect to any Property (and except for
any items subject to a lease entered into by MSLS in the ordinary
course of business and in accordance with the Operating
Agreements), all furniture, fixtures and equipment and all
supplies used in connection with such Property;
-17-
(ix) all the outstanding bonds issued in respect of the
Woodlands Community (unless terminated prior to closing),
$16,765,000 of which are held by Panther Holdings Level I, L.P.,
a Delaware limited partnership and a CSL Subsidiary and the
remaining $15,450,000 of which are currently held by CLJ (and
will be assigned in accordance with Section 2.1) (the "CLJ
----------- ---
Woodlands Bonds");
---------------
(x) the rights and interests of the Acquired Companies in
respect of the agreements listed in Section 3.12(a)(x) of the
------------------
Disclosure Schedule;
(xi) a promissory note in the original principal amount of
$3,166,451 dated December 31, 1997 made by Senior Living of
Lakewood, LLC, together with a Loan Agreement dated December 31,
1997 and the Loan Documents, as defined therein (collectively,
the "Lakewood Loan Documents") to which the Parties agree to
-----------------------
ascribe no value; and
(xii) the books and records of each Acquired Company
referenced in Section 3.7.
-----------
(b) Except (i) for Permitted Liens, and (ii) as disclosed in
Section 3.12(b) of the Disclosure Schedule and on the Title Commitment for
---------------
each Property (subject to the parenthetical in clause (iii) of Section
-------
3.8(d), to the Knowledge of CLJ and CSL, at the Closing CLJ and each
------
Acquired Company will have good and marketable title, free and clear of all
Liens, to all of its Assets, other than Assets that are leased or licensed
by an Acquired Company, with respect to which such Acquired Company has
valid and enforceable leases or licenses under which there exists no
default, event of default or event which, with notice or lapse of time or
both, would constitute a default, except for such defaults which have not
had or are not reasonably likely to have, either individually or in the
aggregate, a Material Adverse Effect.
3.13. Hazardous Materials.
-------------------
Except as disclosed to SNH in writing or as described in any environmental
report identified in Section 3.13 of the Disclosure Schedule, true and complete
------------
copies of which have been furnished to SNH, to the Knowledge of CLJ and CSL,
none of the Acquired Companies nor any tenant or other occupant or user of any
Property, or any portion thereof, has stored or disposed of (or engaged in the
business of storing or disposing of) or has released or caused the release of
any Hazardous Materials on any Property or any portion thereof, the removal of
which is required or the maintenance of which is regulated, prohibited or
penalized by any Environmental Law, and, to the Knowledge of CLJ and CSL, except
as disclosed to SNH in writing or as set forth in any environmental report
identified in Section 3.13 of the Disclosure Schedule, each Property is free
------------
from any such Hazardous Materials, except any such materials maintained in
accordance with applicable Environmental Law.
-18-
3.14. Contracts and Commitments.
-------------------------
Other than the Marriott Agreements, the Ground Lease, the Capital Leases, the
agreements evidencing or securing the Mortgage Loans, the Unsecured Loans and
the Boynton Beach Mortgage Loan (which agreements are listed on Sections
--------
1.1(62), 1.1(90) and 1.1(10) to the Disclosure Schedule), the agreements
------- ------- -------
evidencing or securing the New Loan, the Prior Tax Matters Agreements, matters
shown on the Title Commitments, Medicare and Medicaid provider agreements, and
agreements entered into by MSLS, or by the Acquired Companies at the direction
of MSLS, in the ordinary course of business and in accordance with the Operating
Agreements for the Properties, and other than the matters set forth in Section
-------
3.14 of the Disclosure Schedule there are no material Contracts affecting any
----
of the Acquired Companies which will be binding on the Acquired Companies
subsequent to the Closing Date.
3.15. Employee Benefit Plans.
----------------------
No Acquired Company sponsors, maintains or contributes or has maintained or
contributed to any: deferred compensation, incentive compensation, stock
purchase, stock option or other equity compensation plan, program, agreement or
arrangement; severance or termination pay, medical, surgical, hospitalization,
life insurance or other "welfare" plan, fund or program (within the meaning of
Section 3(1) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")); profit-sharing, stock bonus or other "pension" plan, fund or program
-----
(within the meaning of Section 3(2) of ERISA); employment, termination or
severance agreement; Contract with any officer or director; or any other
employee benefit plan, fund, program, agreement or arrangement; provided that
the foregoing representation is given only as to the Knowledge of CLJ and CSL
insofar as relating to the period prior to June 21, 1997. No Acquired Company
nor any trade or business, whether or not incorporated, that together with any
Acquired Company would be deemed a "single employer" within the meaning of
Section 4001(b) of ERISA (an "ERISA Affiliate") has incurred any liability under
---------------
Title IV of ERISA that has not been satisfied in full, and no condition exists
that presents a material risk of any such liability being incurred by an
Acquired Company.
3.16. Employee Matters.
-----------------
Since June 20, 1997, no Acquired Company has had any employees.
3.17. Insurance.
---------
Each Acquired Company has policies of insurance of the type and in amounts
customarily carried by Persons conducting businesses or owning assets similar to
those of the Acquired Companies. All such policies are in full force and effect,
all premiums due thereon have been paid and the Acquired Companies are otherwise
in compliance in all material respects with the terms and provisions of such
policies. Furthermore, except as would not, individually or in the aggregate,
have a Material Adverse Effect, to the Knowledge of CLJ and CSL, (a) no Acquired
Company has received any notice of cancellation or non-renewal of any such
policy or arrangement nor is the termination of any such policies or
arrangements threatened, (b) there is no claim pending under any of such
policies or arrangements as to which coverage has been questioned, denied or
disputed by the underwriters of such policies or arrangements, (c) no
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Acquired Company has received any written notice from any of its insurance
carriers that any insurance premiums will be increased in the future or that any
insurance coverage presently provided for will not be available to it in the
future on substantially the same terms as now in effect and (d) none of such
policies or arrangements provides for any retrospective premium adjustment,
experienced-based liability or loss sharing arrangement affecting any Acquired
Company.
3.18. Certain Payments.
----------------
No Acquired Company, or director, officer or agent of any Acquired Company
or, to the Knowledge of CLJ and CSL, any other Person associated with or acting
for or on behalf of CLJ or CSL, 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 obtain special concessions or for special concessions already obtained,
for or in respect of any Acquired Company, or (iii) in violation of any Law; or
(b) established or maintained any fund or asset that has not been recorded in
the books and records of the Acquired Companies; provided that the foregoing
representation is given only as to the Knowledge of CLJ and CSL insofar as
relating to the period prior to June 21, 1997. No representation is made under
this Section 3.18 as to any "independent director" of any CSL Subsidiary.
------------
3.19. Taxes.
-----
(a) With respect to periods ending after December 28, 1998, all
material Tax Returns required to be filed with respect to each of the
Acquired Companies have been timely filed and such Tax Returns are complete
and accurate in all material respects. All material Taxes required to be
paid by or on behalf of the Acquired Companies (other than Taxes for which
CLJ or the Acquired Companies are indemnified) have been paid when due and
payable or, to the extent of Taxes not yet due and payable, required
estimated Tax payments have been made in respect thereof. With respect to
periods ending after December 28, 1998, no request has been made for an
extension of time within which to file any Tax Return in respect of any of
the Acquired Companies, which Tax Return is due and has not yet been filed;
to CLJ's Knowledge, none of CLJ, its Subsidiaries, or any Acquired Company
has after December 28, 1998 requested an extension of time within which to
file any Tax Return in respect of any of the Acquired Companies, which Tax
Return is due and has not yet been filed. After December 28, 1998, none of
CLJ, its Subsidiaries, or any Acquired Company has received written notice
from any governmental agency in a jurisdiction in which a particular
Acquired Company does not file a Tax Return stating that such Acquired
Company is or may be subject to taxation by that jurisdiction. There are no
Liens on any of the assets of any Acquired Company with respect to Taxes,
other than statutory liens for Taxes not yet due and payable. The
responsibility for filing Tax Returns and paying Taxes for CLJ and its
Subsidiaries for periods prior to December 29, 1998 (and certain periods
which straddle December 28, 1998) is addressed in a Tax Matters Agreement,
dated as of June 21, 1997, by and among MI, MSLS, HMC, HMC Senior
Communities, Inc., and Forum Group, Inc. (the predecessor of CSL), and/or a
Tax Sharing Agreement, dated as of December 28, 1998 by and among HMC, Host
Marriott L.P. and CLJ (collectively, the "Prior Tax
---------
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Matters Agreements"). Each of CLJ and CSL, and to the Knowledge of CLJ and
------------------
CSL (except as disclosed on Section 3.19(a) of the Disclosure Schedule)
---------------
each other party thereto, has complied in all material respects with each
of the Prior Tax Matters Agreements, and each such Prior Tax Matters
Agreement is a valid and binding obligation of each of the parties thereto
enforceable in accordance with its terms. After December 28, 1998, each of
CLJ, its Subsidiaries, and the Acquired Companies have taken all actions
necessary to, and none of them have failed to take any actions necessary
to, preserve and enforce all material rights which CLJ, its Subsidiaries,
or the Acquired Companies may have or may have had under each Prior Tax
Matters Agreement, including without limitation the rights to have parties
other than CLJ, its Subsidiaries, or the Acquired Companies bear
responsibility for Tax Returns and Taxes in respect of the Acquired
Companies in respect of Tax periods (including partial periods and straddle
periods) covered by the Prior Tax Matters Agreements. There is no claim
pending or threatened by any party to any Prior Tax Matters Agreement to
the effect (i) that any of CLJ, its Subsidiaries or the Acquired Companies
has failed to duly comply with the terms of such Prior Tax Matters
Agreement or (ii) that such party does not bear responsibility under such
Prior Tax Matters Agreement for Tax Returns or Taxes in respect of the
Acquired Companies for periods (including partial periods or straddle
periods) prior to December 29, 1998.
(b) With respect to periods ending after December 28, 1998,
except as disclosed on Section 3.19(b) of the Disclosure Schedule (i) no
---------------
deficiencies for any material Taxes have been proposed, assessed or
asserted in writing in respect of any Tax Returns filed by or on behalf of
any Acquired Company or claimed in writing to be due by any taxing
authority or otherwise that have not been settled and paid in full; (ii)
other than Tax Returns relating to sales and use Taxes and personal
property Taxes wherein the contested Taxes for all such Tax Returns in the
aggregate do not exceed $200,000, no Tax Return with respect to any
Acquired Company has been or is currently being audited by the IRS or other
taxing authority (whether foreign or domestic); (iii) none of CLJ, CSL, or
any Acquired Company has executed or filed with the IRS or any other taxing
authority (whether foreign or domestic) any agreement, waiver, or other
document extending, or having the effect of extending, the period for
assessment or collection of any Taxes, which extension or waiver is still
in effect, and except for the Prior Tax Matters Agreements, no Acquired
Company has entered into any tax allocation or sharing agreement with any
other entity; (iv) each of CLJ and CSL has delivered to SNH correct and
complete copies of all examination reports, statements of deficiencies and
similar documents prepared by the IRS or any other taxing authority
(whether foreign or domestic) that was received by CLJ or any of its
Subsidiaries and involving any Acquired Company and a material amount of
Taxes; (v) all final adjustments made by the IRS with respect to any Tax
Return involving any Acquired Company have been reported to the relevant
state, local, or foreign taxing authorities to the extent required by Law.
Except under the Prior Tax Matters Agreements, (i) no requests for ruling
or determination letters filed by CLJ or any Acquired Company are pending
with any taxing authority, and (ii) no Acquired Company has any liability
to any Person with respect to Taxes paid, owed or to be paid for periods of
time during which any Acquired Company or any predecessor thereof were
members of a consolidated group other than the consolidated group of which
CLJ is the common parent. No Acquired Company is bound by any
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currently effective private ruling, closing agreement, or similar agreement
with any Taxing Authority relating to Taxes.
(c) No Acquired Company has filed a consent pursuant to Section
341(f) of the Code, or agreed to have Section 341(f)(2) of the Code apply
to any disposition of a subsection (f) asset (as such term is defined in
Section 341(f)(4) of the Code) owned by it. No Acquired Company has a
permanent establishment in any foreign country or operates or conducts
business through any branch in any foreign country. No Acquired Company has
agreed to or is required to make any adjustment pursuant to Section 481(a)
of the Code by reason of a change in the accounting method initiated by CLJ
or any Acquired Company, and neither CLJ nor CSL has any Knowledge that the
IRS has proposed any such adjustment or change in accounting method.
(d) Each of CSL and CLJ is a "United States person" within the
meaning of Section 7701(a)(30) of the Code.
(e) No Acquired Company is or has been a "reporting corporation"
subject to the information reporting and record maintenance requirements of
Section 6038A of the Code and the Treasury Regulations thereunder. No
Acquired Company or predecessors by merger or consolidation of any of them
has within the past three (3) years been a party to a transaction intended
to qualify under Section 355 of the Code or under so much of Section 356 of
the Code as relates to Section 355 of the Code.
(f) SNH has been provided access by CLJ and CSL to true and
complete copies of (i) relevant portions of income tax audit reports,
statements of deficiencies, closing or other agreements received by or on
behalf of CLJ or any Acquired Company relating to any material amount of
Taxes owed by any Acquired Company, and (ii) all material federal, state,
local and foreign income, franchise and value added Tax Returns and sales,
use and property Tax Returns, together with all schedules and attachments
thereto, for each Acquired Company for periods ending after December 28,
1998.
(g) Except for those Acquired Companies listed in Section
-------
3.19(g) of the Disclosure Schedule, each Acquired Company is (and through
-------
the Closing will remain) for federal income tax purposes either a
partnership or a disregarded entity that is not separate from its owner, in
each case pursuant to Treasury Regulation Section 301.7701-3, and to the
extent allowed under applicable Law, each such Acquired Company is (and
through the Closing will remain) similarly classified for state and local
income tax purposes. No Acquired Company is classified for federal income
tax purposes as a publicly traded partnership under Section 7704(b) of the
Code.
(h) Neither CSL nor any Acquired Company owns 10% or more, by
vote or value, of the stock or securities of any one issuer, except for
stock or securities in an Acquired Company.
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3.20. FF&E Reserves, Mortgage Reserves and Working Capital.
-----------------------------------------------------
(a) Section 3.20(a) of the Disclosure Schedule contains a true,
------------
accurate and complete description of all property comprising the FF&E
Reserves as of June 15, 2001, and such FF&E Reserves have, to the Knowledge
of CLJ and CSL, been maintained in accordance with the Operating
Agreements.
(b) Section 3.20(b) of the Disclosure Schedule contains a true,
---------------
accurate and complete description of all property comprising the Mortgage
Reserves as of July 13, 2001, and such Mortgage Reserves have, to the
Knowledge of CLJ and CSL, been maintained in accordance with the documents
governing the Mortgage Loans and the Capital Leases.
(c) Section 3.20(c) of the Disclosure Schedule contains a true,
---------------
accurate and complete description of all Working Capital as of July 13,
2001, and the Working Capital has, to the Knowledge of CLJ and CSL, been
maintained in accordance with the Operating Agreements.
3.21. Broker's or Finder's Fee.
------------------------
Except for Deutsche Banc Alex. Xxxxx, no agent, broker, Person or firm
acting on behalf of CLJ or CSL is, or will be, entitled to any fee, commission
or broker's or finder's fees from CLJ or any Acquired Company, or from any
Person controlling, controlled by, or under common control with CLJ or any
Acquired Company, in connection with this Agreement or any of the transactions
contemplated hereby.
3.22. Supplements to Disclosure Schedule.
-----------------------------------
From time to time prior to the Closing Date, CLJ will promptly supplement
or amend the Disclosure Schedule with respect to any matter arising which, if
existing or occurring at the date of this Agreement would have been required to
have been set forth in the Disclosure Schedule or which is necessary to correct
the information set forth therein which has been rendered inaccurate. The
delivery of any such supplement or amendment shall not in any way constitute a
waiver by SNH of any requirement that the representations and warranties of CLJ
and CSL be true and correct on the date of this Agreement and on the Closing
Date or of any of the conditions set forth in Section 6, provided that the
---------
disclosure in any such supplement or amendment of any matter arising after the
date of this Agreement shall not form the basis of a claim for misrepresentation
or breach of a representation under Section 7.
---------
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SECTION 4.
REPRESENTATIONS AND WARRANTIES OF SNH AND ACQ. SUB
--------------------------------------------------
SNH and ACQ. SUB each hereby represent and warrant to CLJ and CSL as
follows:
4.1. Due Organization, Good Standing and Power.
-----------------------------------------
SNH is a real estate investment trust duly organized, validly existing and
in good standing under the laws of the State of Maryland and has all requisite
power and authority to own, lease and operate its properties and to carry on its
business as now being conducted. ACQ. SUB is a Maryland real estate investment
trust, duly organized, validly existing and in good standing under the laws of
the State of Maryland and has all requisite power and authority to own, lease
and operate its properties and to carry on its business as now being conducted.
4.2. Authorization and Validity of Agreement.
---------------------------------------
Each of SNH and ACQ. SUB has full power and authority to execute and
deliver this Agreement, to perform its obligations hereunder and to consummate
the transactions contemplated hereby. The execution, delivery and performance of
this Agreement by each of SNH and ACQ. SUB, and the consummation by it of the
transactions contemplated hereby, have been duly authorized and approved by its
Board of Trustees. No other action on the part of SNH or ACQ. SUB is necessary
to authorize the execution, delivery and performance of this Agreement by SNH or
ACQ. SUB and the consummation of the transactions contemplated hereby. This
Agreement has been duly executed and delivered by SNH and ACQ. SUB and is a
valid and binding obligation of SNH and ACQ. SUB, enforceable against SNH and
ACQ. SUB in accordance with its terms, except that (a) such enforcement may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the enforcement of creditors' rights generally and
(b) the availability of the remedy of specific performance or injunctive or
other forms of equitable relief may be subject to equitable defenses and would
be subject to the discretion of the court before which any proceeding therefor
may be brought.
4.3. Consents and Approvals; No Violations.
-------------------------------------
Except for any filings required under the HSR Act, Consents required for
healthcare Permits, and Consents required in connection with the Lease, none of
the execution, delivery or performance of this Agreement by SNH or ACQ. SUB, or
the consummation by SNH or ACQ. SUB of any of the transactions contemplated
hereby will (i) conflict with or result in any breach of any provision of the
Organizational Documents of SNH or ACQ. SUB, (ii) require any Consent of any
Governmental Entity, or (iii) violate any Contract, Law, Order or Permit
applicable to SNH, ACQ. SUB or any of their properties or assets, excluding from
the foregoing clauses (ii) and (iii), such Consents, violations, breaches or
defaults which would not, individually or in the aggregate, have a material
adverse effect on SNH or ACQ. SUB.
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4.4. Financial Statements.
--------------------
The audited consolidated balance sheets of SNH and its Subsidiaries as at
December 31, 2000, and the related consolidated statements of income and cash
flows for the fiscal year then ended, complete and correct copies of which have
been furnished to CLJ, present fairly, in all material respects, the
consolidated financial condition and results of operations and cash flows of SNH
and its Subsidiaries as at such date and for such fiscal year, as the case may
be.
4.5. Bankruptcy.
----------
None of SNH, ACQ. SUB or their Subsidiaries are now, or have in the past
three years has been: a debtor in any bankruptcy or similar proceeding,
insolvent, made an assignment for the benefit of creditors, or the subject of a
receivership. None of SNH, ACQ. SUB or any of their Subsidiaries is
contemplating any of the foregoing or is aware of any credible threat by any
third party to file an involuntary bankruptcy petition against any of them.
4.6. Litigation.
----------
Neither SNH nor ACQ. SUB has received written notice of and, to the
Knowledge of SNH and ACQ. SUB, no action or proceeding is pending or threatened
and no investigation looking toward such an action or proceeding has begun,
which (a) questions the validity of this Agreement or any action taken or to be
taken pursuant thereto; (b) will have a material adverse effect on SNH or ACQ.
SUB; or (c) result in or subject SNH or ACQ. SUB to a material liability.
4.7. Broker's or Finder's Fee.
------------------------
Except for UBS Warburg LLC, no agent, broker, Person or firm acting on
behalf of SNH or ACQ. SUB is, or will be, entitled to any fee, commission or
broker's or finder's fees from SNH or ACQ. SUB or from any Person controlling,
controlled by, or under common control with, SNH or ACQ. SUB in connection with
this Agreement or any of the transactions contemplated hereby.
SECTION 5.
ACCESS AND TRANSACTIONS PRIOR TO CLOSING DATE
---------------------------------------------
5.1. Access to Information Concerning Properties and Records.
-------------------------------------------------------
(a) Between the date of this Agreement and the Closing Date, CLJ
and CSL shall, and shall cause each Acquired Company to, upon reasonable
notice, afford SNH, and its counsel, accountants, consultants, financing
sources and other authorized representatives, reasonable access, during
normal business hours, to employees of CLJ familiar with the business of
the Acquired Companies and the Properties, to perform due diligence
investigations and to examine the books of account and records of the
Acquired Companies, including, without limitation, all Contracts affecting
the Properties, and make copies thereof, at such reasonable times as SNH or
its representatives may request by notice to CLJ (which notice may be
oral). No such investigation shall affect the
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representations and warranties made by CLJ and CSL in this Agreement. Each
of CLJ and CSL agrees to cause its officers and the employees of CLJ, in a
manner consistent with the fulfillment of their ongoing duties and
obligations, to furnish such data and other information and respond to such
inquiries as SNH and its representatives shall from time to time reasonably
request.
(b) Between the date of this Agreement and the Closing Date, SNH
shall, upon reasonable notice, afford CLJ, and its counsel, accountants,
consultants, financing sources and other authorized representatives, access
to employees of SNH familiar with the business of SNH and ACQ. SUB, to
perform due diligence investigations and to examine the books of account
and records of SNH and ACQ. SUB, and make copies thereof, at such
reasonable times as CLJ or its representatives may request by notice to SNH
(which notice may be oral). No such investigation shall affect the
representations and warranties made by SNH or ACQ. SUB in this Agreement.
SNH agrees to cause its officers and the employees of SNH and ACQ. SUB, in
a manner consistent with the fulfillment of their ongoing duties and
obligations, to furnish such data and other information and respond to such
inquiries as CLJ and its representatives shall from time to time reasonably
request.
(c) Unless otherwise required by Law, SNH shall keep
confidential, and cause its counsel, accountants, consultants and other
authorized representatives to keep confidential, any nonpublic information
obtained pursuant to this Section 5.1; notwithstanding the foregoing,
------------
however, SNH shall not be required to keep confidential information that
(i) is already in its possession (unless such information has been received
from CLJ pursuant to the Confidentiality Agreement among CLJ, SNH, HPT and
HRPT Properties Trust dated December 5, 2000, as amended by a letter dated
July 31, 2001), or (ii) becomes generally available to the public other
than as a result of a disclosure by SNH, HPT or HRPT Properties Trust, or
(iii) becomes available to SNH on a non-confidential basis from a source
other than an Acquired Company or CLJ (provided that SNH has no Knowledge
that such source obtained such information subject to confidentiality
restrictions).
(d) Unless otherwise required by Law, CLJ shall keep
confidential, and cause its counsel, accountants, consultants and other
authorized representatives to keep confidential, any nonpublic information
obtained pursuant to this Section 5.1; notwithstanding the foregoing,
however, CLJ shall not be required to keep confidential information that
(i) is already in its possession (unless such information has been received
from SNH pursuant to the Confidentiality Agreement between CLJ and SNH
dated February 20, 2001), or (ii) becomes generally available to the public
other than as a result of a disclosure by CLJ or an Acquired Company, or
(iii) becomes available to CLJ on a non-confidential basis from a source
other than SNH (provided that CLJ has no Knowledge that such source
obtained such information subject to confidentiality restrictions).
-26-
5.2. Title Matters.
--------------
Prior to the execution of this Agreement, SNH has ordered from American
Title Company (the "Title Company") and directed the Title Company promptly to
-------------
deliver to SNH and CLJ a preliminary title commitment, having an effective date
after the date of this Agreement, for an ALTA extended owner's policy of title
insurance with respect to each of the Properties, together with complete and
legible copies of all instruments and documents referred to as exceptions to
title (collectively, the "Title Commitments").
-----------------
On or before September 30, 2001 (which date shall be extended for an
additional period of fifteen days upon the written request of SNH, provided that
SNH is proceeding in good faith), SNH shall give CLJ notice of any title
exceptions (other than Permitted Liens) which adversely affect any of the
Properties in any material respect and as to which SNH reasonably objects, and
CLJ shall, within ten Business Days of its receipt of such notice, notify SNH
whether CLJ elects to take such action as may be required to cause such
exceptions to be removed from the Title Commitments. If CLJ elects to remove the
title exception objected to by SNH, such title exception shall be removed from
the Title Commitment at or prior to Closing. If CLJ elects not to remove the
title exception, SNH shall, within five Business Days of its receipt of notice
of CLJ's election not to remove the title exception, elect whether to terminate
this Agreement. If SNH does not so terminate this Agreement, the objected to
exception shall become a Permitted Lien.
5.3. Survey Matters.
--------------
Prior to the execution of this Agreement, SNH has arranged for the
preparation of an ALTA survey with respect to each of the Properties (the
"Surveys"), by a licensed surveyor in the jurisdiction in which each of the
-------
Properties is located, which (i) contains an accurate legal description, (ii)
shows the exact location, dimension and description (including applicable
recording information) of all utilities, easements, encroachments and other
physical matters affecting such Property, the number of striped parking spaces
located thereon and all applicable building set-back lines, (iii) states whether
the applicable Property is located within a 100-year flood plain and (iv)
includes a certification in a form reasonably acceptable to SNH, addressed to
SNH, the Title Company and any other persons requested by SNH. SNH will deliver
a copy of each Survey promptly to CLJ.
On or before September 30, 2001 (which date shall be extended for an
additional period of fifteen days upon the written request of SNH, provided that
SNH is proceeding in good faith), SNH shall give CLJ notice of any matters shown
on the Surveys (other than Permitted Liens) which adversely affect any of the
Properties in any material respect and as to which SNH reasonably objects, and
CLJ shall, within ten Business Days of its receipt of such notice, notify SNH
whether CLJ elects to take such action as may be required to cause such matter
to be remedied. If CLJ elects to remedy the matter objected to by SNH, such
matter shall be remedied at or prior to Closing. If CLJ elects not to remedy
such matter, SNH shall, within five Business Days of its receipt of notice of
CLJ's election not to remedy the matter, elect whether to terminate this
Agreement. If SNH does not so terminate this Agreement, the objected to
exception shall become a Permitted Lien.
-27-
5.4. Environmental and Engineering Reports.
--------------------------------------
Prior to the date of this Agreement, CLJ has delivered to SNH, all
environmental audits, evaluations, assessments, studies or tests and engineering
reports (with respect to roofs, electric, mechanical and structural elements of
the Properties) in their possession. After the date hereof, SNH may arrange for
the preparation of additional environmental audits, evaluations, assessments,
studies or tests and engineering reports with respect to any of the Properties.
SNH will direct each firm preparing such audit or report to deliver a copy of
such audit or report promptly to CLJ.
On or before September 30, 2001 (which date shall be extended for an
additional period of fifteen days upon the written request of SNH, provided that
SNH is proceeding in good faith), SNH shall give CLJ notice of any matters shown
thereon which adversely affect any of the Properties in any material respect and
as to which SNH reasonably objects, and CLJ shall, within ten Business Days of
its receipt of such notice, notify SNH whether CLJ elects to take such action as
may be required to cause such matter to be remedied. If CLJ elects to remedy the
matter objected to by SNH, such matter shall be remedied at or prior to Closing,
or, if such matter cannot be completed by Closing, CLJ shall promptly begin such
remediation and diligently pursue completion through and, if necessary, after
Closing. If CLJ elects not to remedy such matter, SNH shall, within five
Business Days of its receipt of notice of CLJ's election not to remedy the
matter, elect whether to terminate this Agreement.
5.5. Conduct of the Business of the Acquired Companies Pending the
-------------------------------------------------------------
Closing Date.
------------
Except as specifically contemplated by this Agreement, or as set forth in
Section 5.5 of the Disclosure Schedule, or as required in connection with
-----------
obtaining the New Loan, and unless CLJ obtains SNH's prior written approval in
each instance, until the earlier of (i) the termination of this Agreement or
(ii) the Closing Date:
(1) CLJ shall and shall cause each Acquired Company to conduct its
operations only according to its ordinary and usual course of business
consistent with past practice and shall use all commercially reasonable efforts
to preserve intact their current business operations, maintain their material
Contracts, and maintain satisfactory relationships with lessors, lessees,
suppliers, customers, joint venture partners and others having business
relationships with them; and
(2) no Acquired Company shall:
(a) except as required by Section 5.6, make any change in or
-----------
amendment to its Organizational Documents other than amendments to change
the name of an Acquired Company or amendments or other changes that are
ministerial or immaterial to such Acquired Company;
(b) issue or sell, or authorize the issuance or sale of, any
shares of its capital stock or any other equity securities, or issue or
sell, or authorize the issuance or sale of, any securities convertible
into, or options, warrants or rights to purchase or subscribe to, or enter
into or create any Contract with respect to the issuance or sale of, any
shares of its capital stock or any other equity securities, or make any
other changes in its capital structure;
-28-
(c) sell or pledge or agree to sell or pledge any stock or other
equity interest owned by it in any other Person;
(d) declare, pay or set aside any dividend or other distribution
or payment with respect to, or split, combine, redeem or reclassify, or
purchase or otherwise acquire, any shares of its capital stock or its other
securities; provided the Acquired Companies (i) shall pay a dividend or
other distribution to CLJ in an aggregate amount equal to the proceeds
(after reduction for expenses) of the New Loan required by Section 5.8,
-----------
(ii) may make distributions of net income to CLJ and (iii) may upstream all
cash in the CSL Subsidiaries and CCC Boynton to CLJ;
(e) enter into any Contract which is reasonably expected to
involve payment or receipts by any Acquired Company in excess of $100,000
during any twelve month period, or, in cases where the Acquired Company is
the party responsible for such payment, which is not terminable without
penalty upon 30 days notice, provided, however, that nothing in this
Section 5.5 shall be deemed to prohibit (i) MSLS as agent for any Acquired
-----------
Company from entering into any such Contract on behalf of such Acquired
Company to the extent contemplated by the Operating Agreements or (ii) CSL
or any CSL Subsidiary from purchasing an interest rate cap or other hedge
device in respect of the GMAC Mortgage Loans out of monies held as part of
the Mortgage Reserves for such purpose, and the remaining balance of such
part of the Mortgage Reserves, if released, may be distributed or paid to
CLJ;
(f) grant any options to purchase common stock or provide for
compensation or fringe benefits to any of its directors or officers; enter
into any employment, consulting or severance agreement or arrangement with
any Person;
(g) other than in the ordinary course of business and draws taken
under CLJ's corporate lines of credit, transfer, lease, license, guarantee,
sell, mortgage, pledge, dispose of, encumber or subject to any Lien (except
as contemplated by Section 5.7(b) any of the Properties or any other
--------------
material assets or incur or modify any indebtedness or other material
liability; issue any debt securities or assume, guarantee or endorse or
otherwise as an accommodation become responsible for the obligations of any
Person; or make any loan or other extension of credit;
(h) sell, assign, transfer, license or modify or amend any rights
to any intellectual property owned by or licensed to any Acquired Company,
except in the ordinary course of business consistent with past practice;
(i) agree to the settlement of any material claim or litigation,
other than settlements agreed to by MSLS on behalf of any Acquired Company
to the extent contemplated by the Operating Agreements;
(j) make or rescind any material Tax election or settle or
compromise any material Tax liability (except as permitted to MSLS in the
ordinary course of business and in accordance with the Operating
Agreements);
-29-
(k) make any material change in its accounting principles,
practices or methods;
(l) (A) incur any indebtedness for borrowed money or guarantee
any such indebtedness of another Person (except as contemplated by Section
-------
5.7(b)) or (B) make any loans or advances to any other Person, other than
------
to CSL or any CSL Subsidiary; provided, however, that CSL and its
Subsidiaries may make draws under the Bankers Trust Line, in any amount,
provided that such draws are repaid at or prior to Closing;
(m) pay, discharge or satisfy any liabilities other than the
payment, discharge or satisfaction of any liabilities in the ordinary
course of business if now due and payable and consistent with past
practice;
(n) delay or postpone the payment of accounts payable or other
liabilities, other than in the ordinary course of business consistent with
past practice;
(o) other than such actions as are permitted to be taken by MSLS
in the ordinary course of business and in accordance with the Operating
Agreements, take any action, engage in any transaction or enter into any
agreement which could reasonably be expected to cause (A) any of the
conditions in Section 6 not to be satisfied, or (B) a Material Adverse
---------
Effect;
(p) other than in the ordinary course of business, and except
for such actions as may be taken by MSLS in the ordinary course of business
and in accordance with the Operating Agreements, modify, amend or terminate
any material Contract to which it is a party or waive any of its material
rights or claims; or
(q) agree, in writing or otherwise, to take any of the foregoing
actions.
5.6. Conversion of Certain Acquired Companies.
----------------------------------------
On or before the date the Acquired Companies make a distribution or pay a
dividend of the proceeds of the New Loan to CLJ, and subject to the receipt of
applicable Consents under the Mortgage Loans, the Unsecured Loans, the Capital
Leases and the Ground Leases and from partners of the relevant entities, each of
the Acquired Companies listed in Section 5.6 of the Disclosure Schedule shall be
-----------
reorganized as a business trust organized under the laws of the State of
Maryland so that each such Acquired Company (as reorganized) shall for United
States federal income and (to the extent allowed under applicable Law) state and
local income tax purposes be classified as a disregarded entity that is not
separate from its owner pursuant to Treasury Regulations Section 301.7701-3;
provided that if, after the date hereof, CLJ identifies a material state or
--------
local tax liability that would be incurred by CLJ if an identified Acquired
Company were to be reorganized as a business trust organized under the laws of
the State of Maryland, such Acquired Company shall instead be reorganized as a
Delaware limited liability company that would be classified as a disregarded
entity that is not separate from its owner pursuant to Treasury Regulations
Section 301.7701-3 unless SNH shall agree to indemnify CLJ against such tax
liability. None of CLJ, CSL or any Acquired Company shall take or permit any
action to materially modify such tax classification.
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5.7. Cooperation.
-----------
(a) Subject to the terms and conditions provided herein, each of
CLJ, CSL, ACQ. SUB and SNH shall, and CLJ shall cause each Acquired Company
to, cooperate and use their reasonable best efforts to take, or cause to be
taken, all appropriate action, and to make, or cause to be made, all
filings necessary, proper or advisable under applicable Laws to consummate
and make effective the transactions contemplated by this Agreement,
including, without limitation, all their reasonable best efforts to obtain,
prior to the Closing Date, all Permits and Consents as are necessary for
consummation of the transactions contemplated by this Agreement.
(b) Each of CLJ and CSL shall, and CLJ shall cause each Acquired
Company to, and SNH shall, and shall cause ACQ. SUB to, cooperate and use
their reasonable best efforts to take, or cause to be taken, all
appropriate action, and to execute and deliver, or cause to be executed and
delivered all such instruments and documents necessary or desirable in
connection with the New Loan, on such business terms as are reasonably
acceptable to each of CLJ and SNH and evidenced by instruments and
documents which are substantially the same as those evidencing the GMAC
Mortgage Loans.
(c) Each of CLJ and CSL shall, and CLJ shall cause each Acquired
Company to conduct negotiations with MSLS relating to capital expenditure
budgets required by the Operating Agreements for each of the Properties for
fiscal year 2002, jointly with SNH and ACQ. SUB.
(d) SNH shall cooperate with CLJ in providing all necessary
information concerning SNH and its Subsidiaries (i) as required by
applicable Law including, without limitation, audited financial statements
for CLJ to distribute to its shareholders in connection with seeking
approval of the transactions contemplated by this Agreement and in
connection with other reports required to be filed by CLJ with the
Securities and Exchange Commission and (ii) to the extent required in
connection with obtaining any Consents (including Consents under the
Mortgage Loans, the Unsecured Loans, the Capital Leases and the Ground
Leases) required to consummate the transactions contemplated hereby and to
obtain the New Loan.
(e) CLJ and CSL shall and CLJ shall cause each Acquired Company
to cooperate with SNH in providing all necessary information concerning CLJ
and its Subsidiaries (i) as required by applicable Law, including, without
limitation, additional unaudited and audited financial statements in
connection with the distribution by SNH to its shareholders of the equity
of the Tenant and other reports required to be filed by SNH with the
Securities and Exchange Commission and (ii) to the extent required in
connection with obtaining any Consents (including Consents under the
Mortgage Loans, the Unsecured Loans, the Capital Leases and the Ground
Leases) required to consummate the transactions contemplated hereby and to
obtain the New Loan.
(f) If the Consent of HMC, as guarantor of the Unsecured Loan in
respect of the Leisure Park Community, identified as item 31 in Section
-------
3.12(a)(ii) of the
-----------
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Disclosure Schedule, pursuant to a Guaranty Agreement dated December 1,
1997 in favor of Marine Midland Bank, is required to permit the
transactions contemplated by this Agreement, SNH will agree to replace HMC
as the guarantor of such Unsecured Loan. If such replacement is not
permitted, CLJ will use commercially reasonable efforts to obtain the
Consent of HMC prior to Closing, if required. If SNH does not replace HMC
as the guarantor, SNH shall indemnify CLJ for the liability of CLJ to HMC
(if any) to reimburse HMC for payments made by HMC as guarantor.
(g) SNH agrees to replace CLJ as guarantor or indemnitor, as the
case may be under the several Guaranties of Recourse Obligations and
Environmental Indemnity Agreements (each dated July 3, 2000 or July 28,
2000) each executed by CLJ for the benefit of GMAC in respect of a GMAC
Mortgage Loan, subject to the Consent of GMAC. If such Consent is not
obtained by the Closing Date with respect to any such Guaranty of Recourse
Obligations or Environmental Indemnity Agreement, SNH agrees to indemnify
CLJ against any payment made or required to be made by it as guarantor or
indemnitor after the Closing Date in accordance with the terms of such
Guaranty of Recourse Obligations or Environmental Indemnity Agreement.
5.8. Dividends; Distributions.
------------------------
The Acquired Companies will declare and pay dividends and/or make
distributions to CLJ in an aggregate amount equal to the proceeds (after
reduction for transaction expenses) of the New Loan not later than one Business
Day prior to the Closing Date. Such dividends or other distributions shall be
treated by the Parties as "distributions" to CLJ for federal income tax purposes
under Sections 301, 857(a)(2), and 857(d)(3) of the Code, and under Treasury
Regulations 1.1502-13 and 1.1502-33. Solely for federal income (and, to the
extent allowable under applicable Law, state and local) tax purposes, such
dividends or other distributions shall not be treated by the Parties as part of
the Purchase Price.
5.9. No Solicitation of Other Offers.
-------------------------------
(a) Until this Agreement has been terminated in accordance with
Section 8 (and the payments, if any, required to be made by CLJ in
---------
connection with such termination pursuant to Section 8.2 have been made),
-----------
none of CLJ, CSL, any of their respective Affiliates, nor any of their
respective officers (or other senior management employees), directors,
representatives, consultants, investment bankers, attorneys, accountants
and other agents (collectively, the "Representatives") shall Knowingly (i)
---------------
encourage, solicit, initiate or facilitate the making of, or take any other
action to facilitate any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, any Alternative
Proposal, (ii) participate in any way in discussions or negotiations with,
or furnish or disclose any nonpublic information to, any Person (other than
SNH) in connection with any Alternative Proposal, or (iii) enter into any
agreement, letter of intent or similar document contemplating or otherwise
relating to any Alternative Proposal; provided, however, that this Section
-------
5.9(a) shall not prohibit CLJ, CSL or the Representatives from: (i)
------
complying with all applicable laws, rules and regulations, including Rules
14d-9 and 14e-2 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act") or publicly disclosing the existence of an Alternative
------------
Proposal to
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the extent required by applicable law, or (ii) furnishing non-public
information to, or entering into discussions or negotiations with, or
accepting an Alternative Proposal from, any person or entity in connection
with an unsolicited bona fide written proposal or proposals from any person
or entity relating to an Alternative Proposal if CLJ determines in good
faith based upon the advice of counsel that such action is required in
order for CLJ to comply with its fiduciary obligations under the MGCL. If
CLJ or CSL shall receive any offer to purchase (or any request for
non-public information concerning CSL's assets in connection with a
potential offer to purchase such assets), which it determines it must
respond to, it shall (i) inform SNH that an offer or request has been
received, and (ii) furnish to SNH the identity of the offeror or Person
making the request, and a description of the material terms thereof.
(b) As used herein, "Alternative Proposal" shall mean (i) any
--------------------
written proposal or offer from any Person relating to any direct or
indirect acquisition or purchase of a substantial amount of assets of any
Acquired Company or of any class of equity securities of any Acquired
Company (including any transaction in the nature of a management
acquisition or "going private" transaction involving the Acquired
Companies), (ii) any tender offer or exchange offer that, if consummated,
would result in any Person beneficially owning any shares of equity
securities of any Acquired Company, (iii) any merger, consolidation,
business combination, sale of substantially all the assets,
recapitalization, liquidation, dissolution or similar transaction effecting
the transfer of any Acquired Company or (iv) any other transaction that
relates to the Acquired Companies, the consummation of which could
reasonably be expected to impede, interfere with, prevent or materially
delay the purchase of the CSL Stock, the CCC Boynton Stock or the CCC
Senior Living Stock contemplated hereby or any other transaction that
relates to the Acquired Companies that could reasonably be expected to
dilute materially the benefits to SNH of the transactions contemplated
hereby; provided, however, that no proposal or offer or other transaction
-------- -------
described in any of clauses (i) through (iii) above that occurs after the
eighteen month period referred to in Section 2.6 and that involves one of
the Communities or CSL Subsidiaries or CCC Boynton that was excluded from
the transaction in accordance with Section 6.1(c) shall constitute an
--------------
Alternative Proposal.
5.10. Notification of Certain Matters.
-------------------------------
CLJ shall give prompt notice to SNH, and SNH shall give prompt notice to
CLJ, of the occurrence, or failure to occur, of any event, which occurrence or
failure to occur would be likely to cause any representation or warranty
contained in this Agreement to be untrue in any material respect at any time
from the date of this Agreement to the Closing. Each of CLJ and SNH shall give
prompt notice to the other party of any notice or other communication from any
third party alleging that the consent of such third party is or may be required
in connection with the transactions contemplated by this Agreement.
5.11. HSR Act Filing.
--------------
SNH and CLJ shall, as promptly as practicable, file, or cause to be filed,
any required notification and report forms under the HSR Act with the Federal
Trade Commission (the
-33-
"FTC") and the Antitrust Division of the United States Department of Justice
---
(the "Antitrust Division") in connection with the transactions contemplated by
------------------
this Agreement, and will use all commercially reasonable efforts to respond as
promptly as practicable to all inquiries received from the FTC or the Antitrust
Division for additional information or documentation and to cause the waiting
periods under the HSR Act to terminate or expire at the earliest possible date.
SNH and CLJ will each furnish to the other such necessary information and
reasonable assistance as the other may reasonably request in connection with its
preparation of necessary filings or submissions to any governmental or
regulatory agency, including, without limitation, any filings necessary under
the provisions of the HSR Act.
5.12. Public Announcements.
--------------------
CLJ and SNH shall consult with each other before issuing any press release
or otherwise making any public statements with respect to the transactions
contemplated by this Agreement and shall not issue any such press release or
make any such public statement prior to such consultation and review by the
other party of such release or statement or without the prior consent of the
other party, which consent shall not be unreasonably withheld or delayed;
provided, however, that a party may, without the prior consent of the other
party, issue such press release or make such public statement as may be required
by Law or any listing agreement with a national securities exchange or automated
quotation system which CLJ or SNH is a party to, if it has used all reasonable
efforts to consult with the other party and to obtain such party's consent but
has been unable to do so in a timely manner.
5.13. CLJ Stockholder Approval.
------------------------
CLJ shall submit this Agreement and the transactions contemplated by this
Agreement for the approval by its stockholders at a special meeting of
stockholders to be held not later than March 31, 2002 (provided that such date
may be postponed to not later than June 30, 2002 upon the written request of
CLJ, provided that CLJ is proceeding in good faith), and, subject to the
fiduciary duties of its Board of Directors, CLJ shall recommend approval of this
Agreement and the transactions contemplated by this Agreement and shall use its
reasonable business efforts to obtain stockholder approval.
SECTION 6.
CONDITIONS
----------
6.1. Conditions to Each Party's Obligations.
--------------------------------------
The respective obligations of each Party to consummate the transactions
contemplated hereby shall be subject to the fulfillment or waiver (subject to
applicable Law) at or prior to the Closing of each of the following conditions:
(a) Approval of Sale of Stock. The sale of the CSL Stock to ACQ.
-------------------------
SUB pursuant to this Agreement shall have been approved and adopted by the
requisite vote of or consent by the holders of common stock of CLJ entitled
to vote thereon in accordance with applicable Law and CLJ's Organizational
Documents.
-34-
(b) HSR Act. Any waiting period (and any extension thereof) under
-------
the HSR Act applicable to the transactions contemplated hereby shall have
expired or been terminated and no action shall have been instituted by the
Antitrust Division or the FTC challenging or seeking to enjoin the
consummation of the transactions contemplated hereby, which action shall
have not been withdrawn or terminated.
(c) Consents. All Consents (i) listed in Section 6.1(c) of the
-------- --------------
Disclosure Schedule, (ii) that are required in connection with the Lease,
(iii) that pertain to the conversion of certain of the Acquired Companies
in accordance with Section 5.6, and (iv) relating to healthcare Permits
(including Medicare and Medicaid provider agreements) shall have been
obtained and shall (to the extent required) contemplate and permit the
Lease; provided if, using commercial reasonable efforts, CLJ is unable to
obtain one or more of the Consents referenced on Section 6.1(c) of the
--------------
Disclosure Schedule for CCC Boynton, Lexington at Country Place or
Lafayette at Country Place (A) the Purchase Price shall be reduced by the
relevant Consent Reduction Amount, (B) the relevant CSL Subsidiary and
Community shall be deleted from the definitions of Communities, Properties,
CSL Subsidiaries and from the description of the Assets and (C) the
Acquired Companies shall be relieved from and indemnified against any
liabilities of CCC Boynton or CCC of Kentucky, Inc., as the case may be, on
terms acceptable to SNH, whereupon the conditions of obtaining those
Consents (subject to the provisions of Section 2.6) is deemed waived. To
-----------
the extent modifications to the Lease are reasonably required to obtain any
Consent required pursuant to this Agreement, so long as such modifications
do not (taking into account the plan of SNH to spin off Tenant as a
separate public company) affect the qualification of SNH or any Subsidiary
of SNH as a "real estate investment trust" or a "qualified REIT
subsidiary", as the case may be, under the Code, SNH will not, and will
cause Tenant not to, unreasonably decline to make such modifications.
(d) Injunction. No preliminary or permanent injunction, judgment
----------
or other order shall have been issued by any federal, state or foreign
court or by any Governmental Entity and be in effect on the Closing Date
which prohibits, restrains, restricts or enjoins the consummation of the
transactions contemplated by this Agreement.
(e) Statutes. No federal, state or foreign statute, law, rule,
--------
regulation, executive order, judgment, decree or order of any kind shall
have been enacted, entered, promulgated or enforced by any court or
Governmental Entity which prohibits, restrains, restricts or enjoins the
consummation of the transactions contemplated by this Agreement or has the
effect of making the transactions contemplated by this Agreement illegal.
(f) Tax Allocation Agreement. CLJ, CSL, the Acquired Companies,
------------------------
ACQ. SUB and SNH shall have entered into a Tax Allocation Agreement in the
form of Exhibit E.
---------
(g) Marriott Agreements. The Marriott Agreements shall be in full
-------------------
force and effect on the Closing Date (except for the Noncompetition
Agreement and the Transition Agreements, so long as such agreements have
been terminated without
-35-
expense or liability to any of the Acquired Companies); MI, MSLS and HMC,
as the case may be, shall have given their Consent to the assignment of the
Operating Agreements to Tenant, the assignment of the Pooling Agreements to
CSL, the assignment of the MI Indemnity Agreement to SNH and given such
other Consents as are required in connection with the transactions
contemplated by this Agreement. CLJ and CSL, on the one hand, and SNH, ACQ.
SUB and Tenant, on the other, shall have fully complied with all applicable
provisions of the Marriott Agreements; provided the Marriott Agreements
shall have been amended to provide that neither SNH nor any Subsidiary of
SNH shall be subject to any agreement not to compete or which would
otherwise limit the conduct of their businesses and further provided that
if, in connection with any Consent, MI, MSLS or HMC shall require any
modification of or supplement to any of the Marriott Agreements or shall
impose any other condition on their Consent, such modification, supplement
or condition shall be in form and substance acceptable to SNH.
6.2. Conditions to Obligations of CLJ and CSL.
----------------------------------------
The obligations of CLJ and CSL to consummate the transactions contemplated
hereby shall be subject to the fulfillment (or waiver by CLJ and CSL) at or
prior to the Closing of each of the following conditions:
(a) Representations and Warranties. The representations and
------------------------------
warranties of SNH and ACQ. SUB set forth in this Agreement shall be true
and correct in all material respects as of the date of this Agreement and
as of the Closing Date, provided, however, that such representations and
warranties shall be deemed to be true and correct unless the failure or
failures of such representations and warranties to be so true and correct,
without regard to any materiality qualifiers contained therein,
individually or in the aggregate, results or could reasonably be likely to
result in a material adverse effect on the ability of SNH or ACQ. SUB to
consummate the transactions contemplated by this Agreement.
(b) Lease Amendments. The subleases (and the related pledge
----------------
agreements) between CLJ and HPT listed in Section 6.2(b) of the Disclosure
--------------
Schedule for the properties known as CYBM and RIBM hotels shall have been
amended as provided in Exhibit F; the costs and expenses of HPT in
---------
connection therewith shall have been paid by SNH and the costs and expenses
of HMC in connection therewith shall have been paid by CLJ.
(c) Covenants. SNH and ACQ. SUB shall have complied in all
---------
material respects with their respective obligations under the terms of this
Agreement.
(d) Certificate. CLJ shall have received a certificate signed by
-----------
the president and chief financial officer of SNH certifying to the
fulfillment of the conditions set forth above in this Section 6.2.
-----------
(e) Opinion of Counsel. CLJ shall have received an opinion of
------------------
Xxxxxxxx & Worcester LLP, counsel to SNH and ACQ. SUB, in form and
substance reasonably acceptable to CLJ.
-36-
6.3. Conditions to Obligations of SNH and ACQ. SUB.
---------------------------------------------
The obligations of SNH and ACQ. SUB to consummate the transactions
contemplated hereby shall be subject to the fulfillment (or waiver by SNH) at or
prior to the Closing Date of each of the following conditions:
(a) Representations and Warranties. The representations and
------------------------------
warranties of CSL and CLJ set forth in this Agreement shall be true and
correct as of the date of this Agreement and as of the Closing Date,
provided, however, that such representations and warranties shall be deemed
to be true and correct unless the failure or failures of such
representations and warranties to be so true and correct, without regard to
any materiality qualifiers contained therein, individually or in the
aggregate, results or could reasonably be likely to result in a Material
Adverse Effect.
(b) Covenants. CLJ and CSL shall have complied in all material
---------
respects with their obligations under the terms of this Agreement.
(c) Estoppel Certificates. SNH shall have received estoppel
---------------------
certificates dated within sixty (60) days of the Closing Date executed by
(i) each lender holding a Mortgage Loan, the lessor under the Ground Lease
and each lessor under a Capital Lease, which shall specify the principal
and interest balance outstanding and/or future rent(s), the amount of the
Mortgage Reserves and other reserves held by such lender or lessor, and the
date of the most recent payment thereunder, the prepayment premium (for the
GMAC Mortgage Loans only), if any, and shall confirm whether a notice of
default has been sent to the applicable borrower or lessee, and shall
otherwise be in a form reasonably acceptable to SNH; and (ii) MI and/or
MSLS with respect to each of the Operating Agreements, which shall specify
the FF&E Reserves balance as of the end of the 2001 fiscal year and amounts
due for owner funded capital expenditures for the 2001 fiscal year and the
capital expenditures budget (including separately, those expenditures
expected to be paid from the FF&E Reserve and those expected to be paid by
owners) for the 2002 fiscal year, and shall confirm whether a notice of
default has been sent to the applicable Acquired Company, and shall
otherwise be in a form reasonably acceptable to SNH.
(d) Title Insurance; Absence of Liens. The Title Company shall be
---------------------------------
prepared, subject only to payment of the applicable premiums, to issue
title insurance policies, or endorsements thereto, to the Acquired
Companies, insuring title to the Properties is vested in the Acquired
Companies, pursuant to ALTA title insurance policies in form and substance
reasonably satisfactory to SNH, subject only to the Permitted Liens, or
such other exceptions as may be approved by SNH. No Liens shall exist on
any Assets (including the CSL Stock, the CCC Boynton Stock and the CCC
Senior Living Stock), except for Permitted Liens and Liens disclosed in
Sections 2.1 or 3.12(b) of the Disclosure Schedule, and the CSL
------------ -------
Subsidiaries that guarantied the Bankers Trust Line shall have been
released as guarantors thereunder.
(e) Operating Agreements. The Operating Agreements shall be in
--------------------
full force and effect on the Closing Date, the FF&E Reserves shall have
been fully funded
-37-
through the Closing Date as required by the Operating Agreements, Working
Capital shall have been maintained in a manner consistent with past
practice and shall be at customary levels on the Closing Date and all
amounts due MI/MSLS with respect to any of the Properties, whether arising
under the Operating Agreements or otherwise, shall have been paid in full
on the Closing Date.
(f) Mortgage Reserves. The Mortgage Reserves shall have been
-----------------
fully funded through the Closing Date as required by the Mortgage Loans and
the Capitalized Leases.
(g) Conversion of Certain Acquired Companies. Not later than two
----------------------------------------
Business Days prior to the Closing Date (and in any event prior to the
closing of the New Loan) each of the Acquired Companies listed in Section
-------
5.6 of the Disclosure Schedule shall have been reorganized as a business
---
trust organized under the laws of the State of Maryland (or, subject to the
proviso to the first sentence of Section 5.6, a Delaware limited liability
-----------
company) in accordance with Section 5.6.
-----------
(h) Closing of New Loan. The New Loan shall have closed, and New
-------------------
Loan proceeds of not less than $150,000,000 and not more than $175,000,000
(before reduction for all transaction expenses associated with the New
Loan) shall have been disbursed to one or more of the Acquired Companies,
not later than two Business Days prior to the Closing Date.
(i) Dividends; Distributions. The Acquired Companies shall have
------------------------
declared and paid dividends and/or made distributions to CLJ in an
aggregate amount equal to the proceeds (after reduction for all transaction
expenses associated with the New Loan) of the New Loan not later than one
Business Day prior to the Closing Date.
(j) Prior Tax Matters Agreements. MI, MSLS, HMC and Host Marriott
----------------------------
L.P., as the case may be, shall have consented to the assignment by CLJ of
certain of its rights under the Prior Tax Matters Agreements to SNH
pursuant to the Tax Allocation Agreement and shall have confirmed the Prior
Tax Matters Agreements are in force and effect.
(k) Woodlands. The limited partnership interests in Panther
---------
Holdings Level I, L. P., a Delaware limited partnership ("Panther
-------
Holdings") that are not owned by an Acquired Company on the date hereof
--------
shall either have been acquired by an Acquired Company prior to the Closing
Date, or CLJ shall have entered into an agreement with SNH in form
reasonably acceptable to SNH pursuant to which CLJ shall agree to indemnify
SNH for 50% of the actual costs incurred by SNH or its Affiliates after the
Closing Date to purchase or redeem such limited partnership interests in
Panther Holdings; provided that CLJ's obligation to pay such costs shall be
limited to $250,000.
(l) Gables. CLJ shall have either paid the Contingent Purchase
------
Price payable under Section 1.2.3 of the Agreement for Purchase and Sale
for the Community known as Gables of Winchester dated as of December 10,
1997 on or prior to the Closing Date, or CLJ shall have entered into an
agreement with SNH in form reasonably
-38-
acceptable to SNH pursuant to which CLJ shall agree to indemnify SNH for any
amounts payable or paid by SNH or its Affiliates after the Closing Date pursuant
to such provision.
(m) Certain Resignations. The existing officers, directors and
--------------------
managers of each of the Acquired Companies shall have resigned effective as
of the Closing Date (provided that any "independent" manager or director of
any Acquired Company will only be required to resign if s/he is replaced
with another qualified "independent" manager or director).
(n) Certificate. SNH shall have received a certificate signed on
-----------
behalf of CLJ and CSL by their respective chief executive officers and
chief financial officers certifying to the fulfillment of the conditions
set forth above in this Section 6.3.
-----------
(o) Opinion of Counsel. SNH shall have received an opinion of
------------------
Xxxxxx & Xxxxxx, counsel to CLJ, in form and substance reasonably
acceptable to SNH.
SECTION 7.
NATURE AND SURVIVAL OF REPRESENTATIONS
--------------------------------------
AND WARRANTIES; INDEMNIFICATIONS; TAX MATTERS
---------------------------------------------
7.1. Survival of Representations, Warranties, etc.
---------------------------------------------
All representations and warranties of the parties set forth in this
Agreement, and the rights of the parties to seek indemnification with respect
thereto, shall survive the Closing. Such representations and warranties, and the
rights of the parties to seek indemnification with respect thereto, shall
expire, except with respect to claims asserted prior to and pending at the time
of expiration, twelve (12) months following the Closing provided that the
representations and warranties contained in Sections 3.1, 3.2, 3.3 and 3.4 shall
------------ --- --- ---
survive indefinitely (or if indefinite survival is not permitted by law, then
for the maximum period permitted by applicable law) and provided further that
the representations and warranties contained in Sections 3.13 and 3.19 shall
------------- ----
survive until the expiration of the applicable statute of limitations (including
any waivers or extensions thereof). All such representations and warranties
shall be deemed to have been given and made on the date hereof and as of the
Closing Date.
7.2. CLJ's Agreement to Indemnify.
-----------------------------
(a) Subject to Section 7.1, CLJ shall defend, indemnify and hold
-----------
harmless SNH, its Affiliates and their respective officers, trustees,
employees and agents (the "SNH Indemnitee"), from and against and in
--------------
respect of any and all losses, damages, liabilities, deficiencies, taxes,
costs and expenses including, without limitation, interest, penalties, and
reasonable attorney's fees and expenses (collectively, "Losses"), asserted
------
against, relating to, imposed upon or incurred by the SNH Indemnitee
resulting from, arising out of, or in connection with: (i) any breach by
CLJ or CSL of any of their respective representations or warranties
contained in this Agreement; (ii) any breach by CLJ or CSL of any of their
respective covenants, agreements or obligations contained in
-39-
this Agreement and (iii) any and all actions, suits, proceedings, claims,
demands, assessments and judgments incident to any of the foregoing.
(b) Anything in this Section 7 to the contrary
---------
notwithstanding: (i) no amounts of indemnity shall be payable as a result
of a claim, unless and until the SNH Indemnitee has suffered, incurred,
sustained or become subject to Losses with respect thereto in excess of
$500,000 in the aggregate, and (ii) the indemnification obligations of CLJ
in respect of the Losses indemnified against shall not exceed the Purchase
Price.
7.3. SNH's Agreement to Indemnify.
----------------------------
(a) Subject to Section 7.1, SNH shall defend, indemnify and
-----------
hold harmless CLJ, its Affiliates and their respective, officers,
directors, employees and agents (the "CLJ Indemnitee"), against and in
--------------
respect of any Losses resulting from: (i) any breach by SNH of any of its
representations or warranties contained in this Agreement; (ii) any breach
by SNH of any of its covenants, agreements or obligations contained in this
Agreement and (iii) any and all actions, suits, proceedings, claims,
demands, assessments and judgments incident to any of the foregoing.
(b) Anything in this Section 7 to the contrary
---------
notwithstanding, no amounts of indemnity shall be payable as a result of a
claim, unless and until the CLJ Indemnitee has suffered, incurred,
sustained or become subject to Losses with respect thereto in excess of
$500,000 in the aggregate.
7.4. Third Party Claims.
------------------
(a) Promptly after the receipt by any party hereto of notice
of any claim, action, suit or proceeding of any third party which is
subject to indemnification hereunder, such party ("Indemnified Party")
-----------------
shall give written notice of such claim to the party obligated to provide
indemnification hereunder ("Indemnifying Party"), stating the nature and
------------------
basis of such claim and the amount thereof, to the extent known. Failure of
the Indemnified Party to give such notice shall not relieve the
Indemnifying Party from any liability which it may have on account of its
indemnification obligation or otherwise, except to the extent that the
Indemnifying Party is materially prejudiced thereby.
(b) The Indemnifying Party shall be entitled to elect to
participate in the defense of and, if it so chooses, to assume the defense
of such claim, action, suit or proceeding with counsel selected by the
Indemnifying Party and reasonably satisfactory to the Indemnified Party.
Upon any such election by the Indemnifying Party to assume the defense of
such claim, action, suit or proceeding, the Indemnifying Party shall not be
liable for any legal or other expenses subsequently incurred by the
Indemnified Party in connection with the defense thereof, provided,
--------
however, that (i) if the Indemnified Party shall have reasonably concluded
-------
that separate counsel is required because a conflict of interest would
otherwise exist, then the Indemnified Party shall have the right to select
separate counsel to participate in the defense of such action on its
behalf, at the expense of the Indemnifying Party and (ii) the Indemnified
Party may, at its option and at its own expense, participate in such
defense and employ counsel separate from the counsel
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employed by the Indemnifying Party. The Indemnifying Party shall be liable
for the reasonable fees and expenses of counsel employed by the Indemnified
Party for any period in which the Indemnifying Party has not assumed the
defense thereof (other than during any period in which the Indemnified
Party failed to give the notice provided above). The parties shall use
commercially reasonable efforts to minimize Losses from claims by third
parties and shall act in good faith in responding to, defending against,
settling or otherwise dealing with such claims, notwithstanding any dispute
as to liability as between the parties under this Section 7. The parties
---------
shall also cooperate in any such defense, give each other full access to
all non-privileged information relevant thereto and make employees and
other representatives available on a mutually convenient basis to provide
additional information and explanation of any material provided hereunder.
Whether or not the Indemnifying Party shall have assumed the defense, the
Indemnifying Party shall not be obligated to indemnify the Indemnified
Party hereunder for any settlement entered into without the Indemnifying
Party's prior written consent, which consent shall not be unreasonably
withheld or delayed. Unless the sole relief is monetary damages which are
payable in full by the Indemnifying Party, the Indemnifying Party shall not
settle any claim without the prior written consent of the Indemnified
Party, which consent shall not be unreasonably withheld or delayed.
7.5. Purchase Price Adjustment.
--------------------------
Any amount paid by CLJ on the one hand, or SNH on the other hand, to the
other pursuant to this Section 7 will be treated for federal income tax purposes
---------
as an adjustment to the Purchase Price.
SECTION 8.
TERMINATION
-----------
8.1. Termination.
-----------
This Agreement may be terminated at any time (subject to the provisions of
this Section 8.1 prior to the Closing Date:
-----------
(a) by mutual agreement of CLJ and SNH;
(b) by either SNH or CLJ, in writing, if for any reason (other
than a default by the noticing Party) the Closing has not occurred by June
30, 2002, except that no Party shall have the right to terminate under this
Section 8.1(b) if the conditions precedent to such Party's obligation to
--------------
close have been or at Closing would be satisfied or have been waived by
such Party and such Party has nonetheless failed or refused to close;
(c) by either SNH or CLJ in writing, if there shall be any order,
writ, injunction or decree of any court or governmental or regulatory
agency binding on SNH and/or CSL or CLJ, which prohibits or restrains SNH
and/or CSL or CLJ from consummating the transactions contemplated by this
Agreement, provided that SNH and CSL and CLJ shall have used their
commercially reasonable efforts to have any such
-41-
order, writ, injunction or decree lifted and the same shall not have been lifted
within 90 days after entry, by any such court or governmental or regulatory
agency;
(d) by CLJ in writing:
(i) if the conditions set forth in Sections 6.1 and 6.2 shall
------------ ---
not have been complied with or performed and such noncompliance or
nonperformance shall not have been cured or eliminated (or by its
nature cannot be cured or eliminated) by SNH or otherwise by June 30,
2002;
(ii) if, by September 15, 2001, HPT shall not have agreed,
subject to the occurrence of the Closing, to satisfy the condition
contained in Section 6.2(b) pursuant to an amendment acceptable to
--------------
each of HPT and CLJ;
(iii) if SNH shall have (i) failed to perform in any material
respect its agreements contained in this Agreement required to be
performed by it on or prior to the Closing Date or (ii) breached any
of its representations or warranties contained in this Agreement,
provided that the breach of such representations or warranties,
without regard to any materiality qualifiers contained therein,
individually or in the aggregate, results or could reasonably be
likely to result in a material adverse effect on the ability of SNH or
ACQ. SUB to consummate the transactions contemplated by this
Agreement;
(e) by SNH in writing:
(i) pursuant to Section 5.2, Section 5.3 or Section 5.4;
----------- ----------- -----------
(ii) the conditions set forth in Sections 6.1 and 6.3 shall not
------------ ---
have been complied with or performed and such noncompliance or
nonperformance shall not have been cured or eliminated (or by its
nature cannot be cured or eliminated) by CLJ or otherwise by June 30,
2002;
(iii) if CSL or CLJ shall have (i) failed to perform in any
material respect its agreements contained in this Agreement required
to be performed by it on or prior to the Closing Date, or (ii)
breached any of its representations or warranties contained in this
Agreement, provided that the breach of such representations or
warranties, without regard to any materiality qualifiers contained
therein, individually or in the aggregate, results or could reasonably
be likely to result in a Material Adverse Effect; or
(f) by either SNH or CLJ, in writing, (i) at any time following the
rejection of this transaction by CLJ's shareholders or (ii) if CLJ accepts an
Alternative Proposal.
-42-
8.2. Effect of Termination.
---------------------
(a) If this Agreement is terminated by either SNH or CLJ
pursuant to Section 8.1, this Agreement shall become void and there shall
-----------
be no further obligation on the part of any of SNH, CSL or CLJ (except for
the provisions of Section 9.6 and as set forth in this Section 8.2, which
----------- -----------
shall survive such termination).
(b) If this Agreement is terminated by either SNH or CLJ
pursuant to Section 8.1, except as provided in Section 8.2(g), the Deposit
----------- --------------
shall be paid to SNH.
(c) If CLJ or SNH terminates this Agreement because, on or
prior to December 14, 2001, CLJ's shareholders have rejected this
transaction at a meeting of stockholders called to approve this
transaction, CLJ shall immediately pay to SNH $7,500,000 by wire transfer
of immediately available funds to an account designated by SNH. If
thereafter CSL or substantially all of the Assets are sold or contracted
for sale to a third party on or before August 9, 2003, then, on the date of
the closing of such sale, CLJ will pay SNH an additional $7,500,000.
(d) If CLJ or SNH terminates this Agreement because, after
December 14, 2001, CLJ's shareholders have rejected this transaction at a
meeting of stockholders called to approve this transaction, CLJ shall
immediately pay to SNH $15,000,000 by wire transfer of immediately
available funds to an account designated by SNH.
(e) If CLJ or SNH terminates this Agreement because CLJ
accepts an Alternative Proposal, CLJ shall immediately pay SNH $15,000,000
by wire transfer of immediately available funds to an account designated by
SNH.
(f) If SNH terminates this Agreement because any of the
conditions set forth in Sections 6.1 or 6.3 shall not have been complied
------------ ---
with as a result of the willful acts or omissions of CLJ or an Acquired
Company, CLJ shall immediately pay SNH a fee of $15,000,000 by wire
transfer of immediately available funds to an account designated by SNH.
(g) If CLJ terminates this Agreement because any of the
conditions set forth in Sections 6.1 or 6.2 shall not have been complied
------------ ---
with as a result of the willful acts or omissions of SNH or if SNH fails to
close because it does not have sufficient funds to pay the Purchase Price
(other than as a result of the failure to obtain or close the New Loan),
the Deposit shall be paid to CLJ and SNH shall immediately pay CLJ an
amount by wire transfer of immediately available funds to an account
designated by CLJ which, together with the Deposit, represents a fee of
$15,000,000.
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SECTION 9.
MISCELLANEOUS PROVISIONS
------------------------
9.1. Notices.
-------
Except where oral notice is specifically provided for herein, all notices,
communications and deliveries required or permitted by this Agreement shall be
made in writing signed by the Party making the same, shall specify the Section
of this Agreement pursuant to which it is given or being made, and shall be
deemed given or made (i) on the date delivered if delivered by telecopy or in
person, (ii) on the third Business Day after it is mailed if mailed by
registered or certified mail (return receipt requested) (with postage and other
fees prepaid), or (iii) on the day after it is delivered, prepaid, to an
overnight express delivery service that confirms to the sender delivery on such
day, as follows:
To SNH:
Senior Housing Properties Trust
000 Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxx, President and Chief Operating Officer
Telecopy No.: (000) 000-0000
with a copy to (which shall not constitute notice):
Xxxxxxxx & Worcester LLP
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxxxx Xxxxxx
Telecopy No.: (000) 000-0000
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To CSL or CLJ:
c/o Crestline Capital Corporation
0000 Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx X. X. Xxxxxx, Senior Vice President and General Counsel
Telecopy No.: (000) 000-0000
with a copy to (which shall not constitute notice):
c/o Crestline Capital Corporation
0000 Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxxx, Senior Vice President and Treasurer
Telecopy No.: (000) 000-0000
or to such other representative or at such other address of a Party as such
Party may furnish to the other Party by notice similarly given.
9.2. Schedules and Exhibits.
----------------------
The Schedules, Exhibits and all documents expressly referred to in this
Agreement, are incorporated into this Agreement and are made a part of this
Agreement as if set out in full.
9.3. Computation of Time.
-------------------
Whenever the last day for the exercise of any privilege or the discharge of
any duty under this Agreement shall fall upon a day other than a Business Day,
the Party having such privilege or duty may exercise such privilege or discharge
such duty on the next succeeding day which is a regular Business Day.
9.4. Assignment: Successors in Interest.
----------------------------------
No assignment or transfer by SNH, CSL or CLJ, of its rights and obligations
under this Agreement prior to the Closing shall be made except with the prior
written consent of the other Party. This Agreement shall be binding upon and
shall inure to the benefit of the Parties and their permitted successors and
assigns, and any reference to a Party shall also be a reference to a permitted
successor or assign.
9.5. No Third-Party Beneficiaries.
----------------------------
With the exception of the Parties, there shall exist no right of any
person, including, without limitation, creditors of CSL or CLJ, to claim a
beneficial interest in this Agreement or any rights occurring by virtue of this
Agreement.
-45-
9.6. Expenses.
---------
Except as otherwise provided below, CLJ (for itself and CSL) and SNH (for
itself and ACQ. SUB) shall each pay their own attorneys', accountants' and other
advisors' fees and costs, costs of internal personnel and filing fees charged by
a governmental authority with respect to filings made by such Party in
connection with the transactions contemplated by this Agreement. SNH shall pay:
(i) the GMAC Fee and all other fees and expenses incurred in connection with the
assumption or termination of the GMAC Mortgage Loans; (ii) all costs for Permits
relating to healthcare licensing of the Communities arising out of the
transactions contemplated by this Agreement (which shall not include costs
incurred in connection with such Permits not being in full force and effect as
of the date of this Agreement, which costs shall be paid by CLJ); (iii) all fees
and costs (including any Transfer Taxes) incurred in connection with the
conversion of any Subsidiaries pursuant to Section 5.6 or in connection with the
-----------
New Loan (without duplication for amounts by which the Purchase Price is
increased pursuant to Section 2.3(a)(b)(B)) or as required in connection with
--------------------
the GMAC Mortgage Loans; (iv) the cost of any "Earnings and Profits" analysis;
and (v) any prepayment penalty or fee, or other fees and costs incurred in
connection with the prepayment of the Nomura Mortgage Loan. All other costs
associated with the transactions contemplated by this Agreement and not paid for
as provided above in this Section 9.6, including, without limitation, filing
-----------
fees paid in connection with filings under the HSR Act, Transfer Taxes, title
insurance premiums, costs of surveys and environmental reports, any fees or
costs paid to obtain the Consent of any Person (whether or not listed in Section
-------
6.1(c) of the Disclosure Schedule), and the fees and costs incurred in
------
connection with preparing audited financial statements pursuant to Section
-------
3.8(b) of this Agreement, shall be paid one-half by SNH and one-half by CLJ,
------
provided that fees paid to obtain the Consent of any Person (other than the GMAC
Fee) including without limitation, any fees paid or costs incurred in connection
with the matters set forth in Sections 5.7(f) and 6.3(k), but excluding fees
--------------- ------
paid by either SNH or CLJ and referred to in Section 6.2(b) shall not be
--------------
incurred by either Party (if included as a fee or cost to be paid under this
sentence) without the consent of the other, such consent not to be unreasonably
withheld.
9.7. Investigations.
--------------
The respective representations and warranties of CSL, CLJ and SNH contained
in this Agreement or in any Schedule, certificate, or other document delivered
by any Party prior to Closing shall not be deemed waived or otherwise affected
by any investigation made by a Party.
9.8. Number; Gender.
--------------
Whenever the context so requires, the singular number shall include the
plural and the plural shall include the singular, and the gender of any pronoun
shall include the other genders.
9.9. Captions.
--------
The titles, captions and table of contents contained in this Agreement are
inserted in this Agreement only as a matter of convenience and for reference and
in no way define, limit, extend or describe the scope of this Agreement or the
intent of any provision of this Agreement. Unless otherwise specified to the
contrary, all references to Sections are references to Sections of this
-46-
Agreement and all references to Schedules and Exhibits are references to
Schedules and Exhibits to this Agreement.
9.10. Amendments.
----------
To the extent permitted by Law, this Agreement may be amended by a
subsequent writing signed by all of the Parties upon the approval of the general
partner, board of directors or board of trustees, as the case may be, of each of
the Parties.
9.11. Integration: Waiver.
-------------------
This Agreement supersedes all negotiations, agreements and understandings
among the Parties with respect to the subject matter of this Agreement (except
(i) the, Confidentiality Agreement among CLJ, SNH, HPT and HRPT Properties Trust
dated December 5, 2000, as amended by a letter dated July 31, 2001 and (ii) by a
Confidentiality Agreement dated as of February 20, 2001 between SNH and CLJ,
each of which shall continue in full force and effect) and constitutes the
entire agreement among the Parties. The failure of any Party at any time or
times to require performance of any provisions of this Agreement shall in no
manner affect the right to enforce the same. No waiver by any Party of any
conditions, or of the breach of any term, provision, warranty, representation,
agreement or covenant contained in this Agreement, whether by conduct or
otherwise, in any one or more instances shall be deemed or construed as a
further or continuing waiver of any such condition or breach of any other term,
provision, warranty, representation, agreement or covenant contained in this
Agreement.
9.12. Governing Law.
-------------
This Agreement is to be construed and enforced in accordance with, and the
rights of the parties shall be governed by, the law of the State of Maryland
(without giving effect to any laws or rules relating to conflicts of laws that
would cause the application of the laws of any jurisdiction other than the State
of Maryland).
9.13. Consent to Jurisdiction.
------------------------
To the extent permitted by applicable Law, the Parties absolutely and
irrevocably consent and submit to the nonexclusive jurisdiction of the courts of
the State of Maryland and of any federal court located in said jurisdiction in
connection with any actions or proceedings brought against a Party by any other
Party arising out of or relating to the transactions contemplated by this
agreement and hereby irrevocably agrees that all claims in respect of any such
action or proceeding may be heard and determined in any such court. Each Party
hereby waives and agrees not to assert in any such action or proceeding, in each
case, to the fullest extent permitted by applicable Law, any claim that (a) it
is not personally subject to the jurisdiction of any such court, (b) it is
immune from any legal process (whether through service or notice, attachment
prior to judgment, attachment in aid of execution, execution or otherwise) with
respect to it or its property, or (c) any such suit, action or proceeding is
brought in an inconvenient forum in any such action or proceeding. To the
fullest extent permitted by applicable Law, each Party hereby absolutely and
irrevocably waives trial by jury.
-47-
9.14. Severability.
------------
Any provision of this Agreement which is prohibited or unenforceable in any
jurisdiction will, as to such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions of
this Agreement, and any such prohibition or unenforceability in any jurisdiction
will not invalidate or render unenforceable such provision in any other
jurisdiction. To the extent permitted by Law, the Parties waive any provision of
law which renders any such provision prohibited or unenforceable in any respect.
9.15. Counterparts.
------------
This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original and all of which shall together be considered one
and the same agreement, and it shall not be necessary in making proof of this
Agreement or the terms of this Agreement to produce or account for more than one
of such counterparts.
9.16. SNH Limitation of Liability.
---------------------------
The Declaration of Trust of SNH, a copy of which is duly filed with the
Department of Assessments and Taxation of the State of Maryland, provides that
the name "Senior Housing Properties Trust" refers to the trustees under such
Declaration of Trust collectively as trustees, but not individually or
personally, and that no trustee, officer, shareholder, employee or agent of SNH
shall be held to any personal liability, jointly or severally, for any
obligation of, or claim against, SNH. All persons dealing with SNH in any way
shall look only to the assets of SNH for the payment of any sum or the
performance of any obligation.
9.17. ACQ. SUB Limitation of Liability.
---------------------------------
The Declaration of Trust of ACQ. SUB, a copy of which is duly filed with
the Department of Assessments and Taxation of the State of Maryland, provides
that the name "SNH/CSL Properties Trust" refers to the trustees under such
Declaration of Trust collectively as trustees, but not individually or
personally, and that no trustee, officer, shareholder, employee or agent of ACQ.
SUB shall be held to any personal liability, jointly or severally, for any
obligation of, or claim against, ACQ. SUB. All persons dealing with ACQ. SUB in
any way shall look only to the assets of ACQ. SUB for the payment of any sum or
the performance of any obligation
9.18. CLJ Limitation of Liability.
---------------------------
No director, officer, shareholder, employee or agent of CLJ shall be held
to any personal liability, jointly or severally, for any obligation of, or claim
against, CLJ or its Subsidiaries hereunder. All persons dealing with CLJ in any
way shall look only to the assets of CLJ for the payment of any sum or the
performance of any obligation.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-48-
EXECUTED under seal as of the date first above written.
SENIOR HOUSING PROPERTIES TRUST
By:_____________________________________
Name: Xxxxx X. Xxxxxxx
Title: President
SNH/CSL PROPERTIES TRUST
By:_____________________________________
Name: Xxxxx X. Xxxxxxx
Title: President
-49-
CSL GROUP, INC.
By:__________________________
Name:
Title:
CRESTLINE CAPITAL CORPORATION
By:_________________________________
Name:
Title:
-50-
