Exhibit 10.8
Provident Senior Living Trust
26,842,290 Common Shares of Beneficial Interest
PSLT OP, L.P.
1,824,377 Class A Common Units of Limited Partnership Interest
PURCHASE/PLACEMENT AGREEMENT
August 2, 2004
PURCHASE/PLACEMENT AGREEMENT
August 2, 2004
FRIEDMAN, BILLINGS, XXXXXX & CO., INC.
0000 Xxxxxxxxxx Xxxxxx Xxxxx, 00xx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
Provident Senior Living Trust, a Maryland real estate investment trust
(the "Issuer"), proposes to sell to Friedman, Billings, Xxxxxx & Co., Inc.
("FBR"), pursuant and subject to the terms of this purchase/placement
agreement (the "Agreement"), 26,842,290 common shares of beneficial interest,
par value $.001 per share (the "Common Shares"), of the Issuer less the number
of Initial Regulation D Shares (as defined below) sold in the Private
Placement (as defined below) (the "Initial Rule 144A/Regulation S Shares").
The Issuer also proposes to grant to FBR, pursuant and subject to the terms of
this Agreement, the option described in Section 1(b) hereof to purchase
additional Common Shares (the "Rule 144A/Regulation S Option Shares" and,
together with the Initial Rule 144A/Regulation S Shares, the "Rule
144A/Regulation S Shares") to cover additional allotments, if any, made to
investors from whom orders were solicited prior to the date hereof.
PSLT OP, L.P., a Delaware limited partnership (the "Operating
Partnership"), through FBR in its capacity as placement agent, will offer and
sell 1,824,377 Class A common units of limited partnership interest in the
Operating Partnership (the "Units") to Fortress Brookdale Acquisition LLC
("Fortress") (the "Unit Issuance") pursuant to the terms of a subscription
agreement to be entered into by and between the Operating Partnership and
Fortress (the "Unit Subscription Agreement").
In addition, the Issuer, through FBR in its capacity as placement agent,
will offer and sell that number of the 26,842,290 Common Shares that are not
Initial Rule 144A/Regulation S Shares as described in the preceding paragraph
(the "Initial Regulation D Shares" and, together with any Regulation D Option
Shares (as defined below), the "Regulation D Shares"), to certain individual
and institutional accredited investors (the "Private Placement"), including,
but not limited to, certain of the Issuer's trustees, officers, employees and
other related persons selected by the Issuer (collectively, "Participants").
The Issuer also proposes to grant to FBR, pursuant and subject to the terms of
this Agreement, the option described in Section 2(d) hereof to place
additional Common Shares (the "Regulation D Option Shares" and, together with
the Rule 144A/Regulation S Option Shares, the "Option Shares") to cover
additional allotments, if any, made to investors from whom orders were
solicited prior to the date hereof. The Regulation D Shares will be sold by
the Issuer in accordance with this Agreement on the terms set forth in the
Final Offering Memorandum (as defined below). The Rule 144A/Regulation S
Shares and the Regulation D Shares are collectively referred to herein as the
"Shares."
The Option Shares that may be issued and sold or placed pursuant to
Sections 1(b) and 2(d) hereof shall not exceed 4,026,344 Common Shares. Such
shares may be, at FBR's option, in the form of either Rule 144A/Regulation S
Shares or Regulation D Shares or any combination thereof.
The sale of (1) the Rule 144A/Regulation S Shares to FBR, (2) the
Regulation D Shares to the Participants and (3) the Units to Fortress,
respectively, will be made without registration of the Shares or Units under
the Securities Act of 1933, as amended (the "Securities Act"), and the rules
and regulations thereunder (the "Securities Act Regulations"), in reliance
upon the exemptions from the registration requirements of the Securities Act
provided by Sections 4(1) and 4(2) thereof. FBR has advised the Issuer that
FBR will make offers and resales ("Exempt Resales") of the Rule
144A/Regulation S Shares purchased by FBR hereunder in accordance with Section
3 hereof on the terms set forth in the Final Offering Memorandum (as defined
below), at such time as FBR deems advisable after this Agreement has been
executed and delivered. Rule 144A/Regulation S Shares sold in reliance on (i)
Rule 144A under the Securities Act ("Rule 144A") are referred to herein as
"Rule 144A Shares" and (ii) Regulation S under the Securities Act ("Regulation
S") are referred to herein as "Regulation S Shares."
In connection with the sale of the Shares, the Issuer has prepared a
preliminary offering memorandum, subject to completion and dated June 21, 2004
(as supplemented by the supplement to preliminary offering memorandum, dated
July 23, 2004, the "Preliminary Offering Memorandum"), and a final offering
memorandum, dated August 2, 2004 (the "Final Offering Memorandum" and,
together with the Preliminary Offering Memorandum, as either or both may be
amended or supplemented, the "Offering Memorandum"). Each of the Preliminary
Offering Memorandum and the Final Offering Memorandum sets forth certain
information concerning the Issuer and the Shares. In connection with the sale
of the Units, the Operating Partneship has prepared a private placement
memorandum, dated August 2, 2004 (the "Private Placement Memorandum"). The
Private Placement Memorandum sets forth certain information concerning the
Operating Partnership and the Units. The Issuer and the Operating Partnership
each hereby confirms that it has authorized the use of the Offering Memorandum
or the Private Placement Memorandum, as the case may be, in connection with
(i) the offering and resale of the Rule 144A/Regulation S Shares by FBR and by
all dealers to whom Rule 144A/Regulation S Shares may be sold, (ii) the
Private Placement and (iii) the Unit Issuance. Any references to the
Preliminary Offering Memorandum, the Final Offering Memorandum or the Private
Placement Memorandum shall be deemed to include all amendments, supplements,
exhibits and annexes thereto.
It is understood and acknowledged that holders (including certain
subsequent transferees) of the Shares will have the registration rights set
forth in the registration rights agreement in substantially the form attached
hereto as Exhibit A between the Issuer and FBR (the "Registration Rights
Agreement"), to be dated as of the Closing Time, for so long as such Shares
constitute "Registrable Shares" (as defined in the Registration Rights
Agreement).
The Issuer, the Operating Partnership and FBR agree as follows:
1. Sale and Purchase:
(a) Initial Rule 144A/Regulation S Shares. Upon the basis of the
representations and warranties and subject to the other terms and conditions
set forth herein, the Issuer shall issue and sell to FBR and FBR shall
purchase from the Issuer the Initial Rule 144A/Regulation S Shares at a
purchase price of $13.95 per share (the "Rule 144A/Regulation S Purchase
Price").
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(b) Rule 144A/Regulation S Option Shares. Upon the basis of the
representations and warranties and subject to the other terms and conditions
set forth herein, the Issuer hereby grants an option to FBR to purchase from
the Issuer the Rule 144A/Regulation S Option Shares at the Rule
144A/Regulation S Purchase Price set forth in paragraph (1)a above. The option
hereby granted will expire thirty (30) days after the date hereof and may be
exercised in whole or in part from time to time in one or more installments
only for the purpose of covering additional allotments which may be made in
connection with the offering and distribution of the Initial Rule
144A/Regulation S Shares upon written notice by FBR to the Issuer setting
forth (i) the aggregate number of Rule 144A/Regulation S Option Shares as to
which FBR is then exercising the option and the respective number of such Rule
144A/Regulation S Option Shares that are Rule 144A Shares and Regulation S
Shares, (ii) the names and denominations in which the certificates for the
Rule 144A/Regulation S Option Shares exercised are to be registered, and (iii)
the time and date of payment for and delivery of the certificates for such
Rule 144A/Regulation S Option Shares. Any such time and date of delivery which
may occur on or after the Closing Time (a "Date of Delivery") shall be
determined by FBR, but shall not be later than seven (7) full business days
nor earlier than three (3) full business days after the exercise of said
option, nor in any event prior to the Closing Time (as defined, below), unless
otherwise agreed in writing by FBR and the Issuer.
(c) Private Placement. The Issuer agrees to issue and sell the Initial
Regulation D Shares for which the Participants have subscribed pursuant to the
terms and conditions set forth in subscription agreements substantially in the
form attached as Annex III to the Offering Memorandum (each a "Subscription
Agreement"), it being understood that the Issuer is reserving up to 150,000
Initial Regulation D Shares for sale to Participants who are trustees,
officers and other related persons selected by the Issuer (the "Directed
Shares"). As the exclusive placement agent for the Issuer in connection with
the Private Placement, FBR will collect Subscription Agreements from each of
the Participants and confirm that such agreements have been completed by such
Participants and that each such Participant has indicated thereon that he, she
or it is an "accredited investor" (as defined in Rule 501(a) of Regulation D).
The Initial Regulation D Shares, including the Directed Shares, will be sold
by the Issuer to the Participants at a purchase price of $15.00 per share (the
"Regulation D Purchase Price"). The purchase price for the Initial Regulation
D Shares shall be collected by FBR and held in a FBR account pending the
Closing Time. The Issuer shall pay FBR a placement fee of $1.05 per share (the
"Placement Fee") (without duplication) for each Initial Regulation D Share
sold to Participants, provided that any Directed Shares shall be sold at the
Regulation D Purchase Price per share without payment by the Issuer to FBR of
any Placement Fee.
(d) Unit Issuance. The Operating Partnership agrees to issue and sell
the Units for which Fortress has subscribed pursuant to the terms and
conditions set forth in the Unit Subscription Agreement. As the exclusive
placement agent for the Operating Partnership in connection with the Unit
Issuance, FBR will collect the Unit Subscription Agreement from Fortress and
confirm that such agreement has been completed by Fortress and that it has
indicated thereon that it is an "accredited investor" (as defined in Rule
501(a) of Regulation D). The Units will be sold by the Operating Partnership
to Fortress at a purchase price of $15.00 per unit (the "Unit Purchase
Price"). The purchase price for the Units shall be collected by FBR and held
in a FBR account pending the Closing Time. The Issuer shall pay FBR a
placement fee of $1.05 per unit (the "Unit Placement Fee") (without
duplication) for each Unit sold to Fortress.
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2. Payment and Delivery:
(a) Initial Rule 144A/Regulation S Shares. The closing of FBR's purchase
of the Initial Rule 144A/Regulation S Shares shall be held at the offices of
Sidley Xxxxxx Xxxxx & Xxxx LLP in New York, New York (unless another place
shall be agreed upon by FBR and the Issuer). At the closing, subject to the
satisfaction or waiver of the closing conditions set forth herein, FBR shall
pay to the Issuer the aggregate purchase price for the Initial Rule
144A/Regulation S Shares by wire transfer of immediately available funds
against the Issuer's delivery of the certificates for such Initial Rule
144A/Regulation S Shares to FBR for FBR's account as set forth below. Such
payment and delivery shall be made at 10:00 a.m., New York City time, on the
third (fourth, if execution of this Agreement occurs after 4:00 p.m. New York
City time on the date hereof) business day after the date hereof (unless
another time, not later than ten (10) business days after the date hereof
shall be agreed to by the Issuer and FBR) (the "Closing Time"). Delivery of
the Initial Rule 144A/Regulation S Shares shall be made in fully registered
global form through the facilities of The Depository Trust Company ("DTC")
unless FBR shall otherwise instruct. The global certificate shall be
registered in the name of CEDE & Co., as nominee for DTC (or such other
nominee as DTC may appoint), for the respective accounts specified by FBR not
later than the close of business on the business day prior to the Closing Time
or such other date and time as agreed by DTC or American Stock Transfer &
Trust Company, as the transfer agent (the "Transfer Agent"). The global
certificates shall be delivered to DTC or the Transfer Agent for the Shares,
as custodian for DTC. For the purpose of expediting the checking of the global
certificates for the Initial Rule 144A/Regulation S Shares by FBR, the Issuer
agrees to make such certificates available to FBR for such purpose at least
one (1) full business day preceding the Closing Time.
(b) Rule 144A/Regulation S Option Shares. The closing of FBR's purchase
of the Rule 144A/Regulation S Option Shares shall occur at any time on or
after the Closing Time at the offices of Sidley Xxxxxx Xxxxx & Xxxx LLP in New
York, New York (unless another place shall be agreed upon by FBR and the
Issuer). On the applicable Date of Delivery, subject to the satisfaction or
waiver of the closing conditions set forth herein, FBR shall pay to the Issuer
the aggregate purchase price for the Rule 144A/Regulation S Option Shares then
purchased by FBR by wire transfer of immediately available funds against the
Issuer's delivery of the certificates for the Rule 144A/Regulation S Option
Shares to FBR for FBR's account. Such payment and delivery shall be made at
10:00 a.m., New York City time, on each Date of Delivery. Delivery of the Rule
144A/Regulation S Option Shares shall be made in fully registered global form
through the facilities of DTC unless FBR shall otherwise instruct. The global
certificate shall be registered in the name of CEDE & Co., as nominee for DTC
(or such other nominee as DTC may appoint), for the respective accounts
specified by FBR not later than the close of business on the business day
prior to the Date of Delivery or such other date and time as agreed by DTC or
the Transfer Agent. The global certificates shall be delivered to DTC or the
Transfer Agent for the Shares, as custodian for DTC. For the purpose of
expediting the checking of the global certificates for the Rule
144A/Regulation S Option Shares by FBR, the Issuer agrees to make such
certificates available to FBR for such purpose at least one (1) full business
day preceding the applicable Date of Delivery.
(c) Regulation D Shares. The closing of the issuance and sale of the
Initial Regulation D Shares shall be held at the offices of Sidley Xxxxxx
Xxxxx & Xxxx LLP in New York, New York (unless another place shall be agreed
upon by FBR and the Issuer). At the Closing Time, subject to the satisfaction
or waiver of the closing conditions set forth herein, FBR shall pay to the
Issuer the
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aggregate applicable purchase price for the Initial Regulation D Shares
received by FBR prior to the Closing Time (net of the Placement Fee) by wire
transfer of immediately available funds against the Issuer's delivery of the
certificates for the Initial Regulation D Shares to FBR for FBR's or its
affiliate's account and for each such other Participant's account. Delivery of
the Initial Regulation D Shares shall be made in fully registered global form
through the facilities of DTC unless FBR shall otherwise instruct. The global
certificate shall be registered in the name of CEDE & Co., as nominee for DTC
(or such other nominee as DTC may appoint), for the respective accounts
specified by FBR not later than the close of business on the business day
prior to the Closing Time or such other date and time as agreed by DTC or the
Transfer Agent. The global certificates shall be delivered to DTC or the
Transfer Agent for the Shares, as custodian for DTC. For the purpose of
expediting the checking of the global certificates for the Initial Regulation
D Shares by FBR, the Issuer agrees to make such certificates available to FBR
for such purpose at least one (1) full business day preceding the Closing
Time.
(d) Regulation D Option Shares. Upon the basis of the representations
and warranties and subject to the other terms and conditions herein set forth,
the Issuer hereby grants an option to FBR to place, as the exclusive placement
agent for the Issuer in connection with the Private Placement, the Regulation
D Option Shares at the Regulation D Purchase Price. The closing of the
issuance and sale of the Regulation D Option Shares shall occur at any time on
or after the Closing Time and shall be held at the offices of Sidley Xxxxxx
Xxxxx & Xxxx LLP in New York, New York (unless another place shall be agreed
upon by FBR and the Issuer). The option hereby granted will expire thirty (30)
days after the date hereof and may be exercised in whole or in part from time
to time in one or more installments only for the purpose of covering
additional allotments which may be made in connection with the offering and
distribution of the Regulation D Shares upon written notice by FBR to the
Issuer which shall include (i) the aggregate number of Regulation D Option
Shares as to which FBR is then exercising the option, (ii) the names and
denominations in which the certificates for the Regulation D Option Shares
exercised are to be registered and (iii) the time and date of payment for and
delivery of the certificates for such Regulation D Option Shares. If FBR has
placed additional Regulation D Option Shares, FBR shall pay to the Issuer the
applicable Regulation D Purchase Price (net of the Placement Fee) for such
Regulation D Option Shares by wire transfer of immediately available funds
against the Issuer's delivery of the certificates for the applicable
Regulation D Option Shares to FBR for each such Participant's account.
Delivery of such Regulation D Option Shares shall be made in fully registered
global form through the facilities of DTC (unless FBR shall otherwise
instruct) under the same manner and procedures as the Regulation D Shares
issued at the Closing Time. Each time at which such payment and delivery are
actually made is hereinafter sometimes called a "Secondary Closing Time." The
Issuer agrees to make the global certificates available to FBR at least one
(1) full business day preceding the applicable Secondary Closing Time.
(e) Units. The closing of the issuance and sale of the Units shall be
held at the offices of Sidley Xxxxxx Xxxxx & Xxxx LLP in New York, New York
(unless another place shall be agreed upon by FBR and the Operating
Partnership). At the Closing Time, subject to the satisfaction or waiver of
the closing conditions set forth herein, FBR shall pay to the Operating
Partnership the aggregate applicable purchase price for the Units received by
FBR prior to the Closing Time (net of the Placement Fee) by wire transfer of
immediately available funds against the Operating Partnership's delivery of an
executed copy of the supplement to the amended and restated partnership
agreement of the Operating Partnership, establishing the Units.
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3. Offering of the Shares and Units; Restrictions on Transfer:
(a) FBR, as of the date of this Agreement, the Closing Time and
each Secondary Closing Time, represents and warrants to, and agrees with
the Issuer or the Operating Partnership, as the case may be, that, (i)
it has not solicited and will not solicit any offer to buy or offer to
sell the Shares or Units by means of any form of general solicitation or
general advertising (within the meaning of Regulation D), and, with
respect to Regulation S Shares, by means of any directed selling efforts
(within the meaning of Regulation S) in the United States and (ii) it
has solicited and will solicit offers to buy the Rule 144A/Regulation S
Shares only from, and has offered and will offer, sell or deliver (A)
the 144A Shares only to persons whom it reasonably believes to be
"qualified institutional buyers" (as defined in Rule 144A) (each a
"QIB") or, if any such person is buying for one or more institutional
accounts for which such person is acting as fiduciary or agent, only
when such person has represented to it that each such account is a QIB
to whom notice has been given that such sale or delivery is being made
in reliance on Rule 144A, and, in each case, in transactions under Rule
144A, or (B) the Regulation S Shares only to persons to whom, and under
circumstances which, it reasonably believes offers and sales of
Regulation S Shares may be made without registration under the
Securities Act in reliance on Regulation S thereunder (each a
"Regulation S Purchaser") (such persons specified in clauses (A) and (B)
being referred to herein as the "Eligible Purchasers") and, in each
case, who provide to it a fully completed and executed Purchaser's
letter substantially in the form of Annex I or Annex II to the Offering
Memorandum, as applicable. FBR represents and warrants that it is
familiar with the rules and restrictions set forth in Regulation S and
that it has not undertaken any activity for the purpose of, or that
could reasonably be expected to have the effect of, conditioning the
market in the United States for any Regulation S Shares. FBR further
represents and warrants that, in the case of any sale of Regulation S
Shares to a distributor, a dealer (as defined in Section 2(a)(12) of the
Securities Act) or a person receiving a selling concession, fee or other
remuneration, prior to the expiration of the one (1) year restricted
period set forth in Rule 903(b)(3)(iv) of Regulation S, it will send a
confirmation or other notice to the purchaser stating that the purchaser
is subject to the same restrictions on offers and sales that apply to
FBR and will sell Regulation S Shares only if the purchaser represents
and warrants that it is familiar with the rules and restrictions set
forth in Regulation S and that it has not undertaken any activity for
the purpose of, or that could reasonably be expected to have the effect
of, conditioning the market in the United States for any Regulation S
Shares.
(b) FBR, as of the date of this Agreement, the Closing Time and
each Secondary Closing Time, represents and warrants to and agrees with
the Issuer or the Operating Partnership, as the case may be, that it (i)
has not solicited and will not solicit, as placement agent for the
Issuer, any offer to buy or offer to sell the Shares or Units by means
of any form of general solicitation or general advertising (within the
meaning of Regulation D) and (ii) has acted as placement agent for the
Issuer and the Operating Partnership in the solicitation of offers to
buy the Regulation D Shares and Units only from, and has acted and will
act as placement agent for the Issuer in the offer, sale or delivery of
the Regulation D Shares and Units only to, persons who it reasonably
believes to be "accredited investors" (as defined in Rule 501(a)(1),
(2), (3), (4), (5), (6), (7) or (8) of Regulation D) (each an
"Accredited Investor"). The Issuer and the Operating Partnership each
also represents and warrants and
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agrees that it has offered and will offer to sell the Regulation D
Shares or Units, as the case may be, only to persons that have executed
a Subscription Agreement or Unit Subscription Agreement, as the case may
be. FBR shall provide the Issuer with Subscription Agreements for the
Regulation D Shares prior to the Closing Time and any Secondary Closing
Time. FBR shall provide the Operating Partnership with the Unit
Subscription Agreement prior to the Closing Time. FBR shall also timely
provide the Issuer with information regarding sales of the Regulation D
Shares, including any information necessary for the Issuer to complete
and file Form D under the Securities Act.
(c) FBR, as of the date of this Agreement, the Closing Time and
each Secondary Closing Time, represents and warrants to and agrees with
the Issuer that it has offered or sold and will offer or sell Shares to
persons in countries other than the United States in material compliance
with all applicable laws, regulations and rules of those countries.
(d) Each of FBR, the Operating Partnership and the Issuer, as of
the date of this Agreement, the Closing Time and each Secondary Closing
Time, represents and warrants to and agrees with the other that no
action has been or is being taken by it or is contemplated by it that
would permit an offering or sale of the Shares or Units, as the case may
be, or possession or distribution of the Preliminary Offering
Memorandum, the Final Offering Memorandum or the Private Placement
Memorandum or any other offering material relating to the Shares in any
jurisdiction where, or in any other circumstances in which, action for
those purposes is required (other than in jurisdictions where such
action has been duly taken by such party).
(e) FBR agrees with the Issuer and the Operating Partnership that
FBR may arrange (i) for the private offer and resale of a portion of the
Shares to QIBs in the United States (which may include affiliates of
FBR) in accordance with Rule 144A, (ii) for the private offer and resale
of a portion of the Shares by FBR outside of the United States (which
may include affiliates of FBR) in accordance with Regulation S, (iii)
for the private offer and sale of the Regulation D Shares by the Issuer
to Accredited Investors (which may include affiliates of FBR) and (iv)
for the private offer and sale of the Units by the Operating Partnership
to Fortress, in each case, under restrictions and other circumstances
designed to preclude a distribution of the Shares or Units that would
require registration of the Shares or Units under the Securities Act.
(f) FBR agrees with the Issuer and the Operating Partnership that
the Shares and Units may be resold or otherwise transferred by the
holders thereof only if such Shares or Units are registered under the
Securities Act or if an exemption from registration is available. FBR
hereby establishes and agrees, as of the date of this Agreement, the
Closing Time and each Secondary Closing Time, that it has observed and
will observe the following procedures in connection with offers, sales
and subsequent resales or other transfers of the Shares or Units:
(i) Sales only to certain investors. Initial offers and
resales of the Rule 144A/Regulation S Shares will be made only in
Exempt Resales by FBR to investors that FBR reasonably believes to
be Eligible Purchasers.
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(ii) No general solicitation. The Shares and Units will be
offered only by approaching prospective purchasers on an
individual basis. No general solicitation or general advertising
within the meaning of Rule 502(c) under the Securities Act has
been or will be used in connection with the offering of the Shares
or Units.
(iii) Delivery of Offering Memorandum. Within three (3) days
after a sale of Shares by FBR, FBR will deliver to each purchaser
of such Shares a copy of the Final Offering Memorandum, as amended
and supplemented by the Issuer as of the date of such delivery,
together with a confirmation of the sale of the Shares, in
accordance with applicable laws.
(iv) Delivery of Private Placement Memorandum. Within three
(3) days after the sale of Units by FBR, FBR will deliver to
Fortress a copy of the Private Placement Memorandum, as amended
and supplemented by the Operating Partnership as of the date of
such delivery, together with a confirmation of the sale of the
Units, in accordance with applicable laws.
(g) FBR shall provide to the Issuer at the Closing Time and at
each Secondary Closing Time and Date of Delivery, a copy of the "Blue
Sky Survey" or other memorandum (collectively, the "Blue Sky
Memorandum") received by FBR from its counsel, which shall describe in
all material respects the required qualifications or registrations (or
exemptions from the qualification or registration) under the applicable
state securities laws (the "Blue Sky Laws"). FBR shall not take any
action in violation of the Blue Sky Laws with respect to its performance
of its obligations under this Agreement.
(h) FBR agrees, as of the date of this Agreement, the Closing Time
and each Secondary Closing Time, with the Issuer that each initial
resale of Rule 144A/Regulation S Shares by FBR (and each purchase of
Rule 144A/Regulation S Shares from the Issuer by FBR) in accordance with
this Section 3 shall be deemed to have been made on the basis of and in
reliance on the representations, warranties, covenants and agreements
(including, without limitation, agreements with respect to
indemnification and contribution) of the Issuer and FBR herein
contained.
4. Representations and Warranties of the Issuer and PSLT OP, L.P.: The
Issuer and PSLT OP, L.P., a Delaware limited partnership (the "Operating
Partnership"), each, jointly and severally, represents and warrants to FBR, as
of the date of this Agreement that:
(a) the Preliminary Offering Memorandum did not, as of its date,
and each of the Final Offering Memorandum and the Private Placement
Memorandum (as each may be amended or supplemented) does not, as of its
date, and will not at the Closing Time, at each Secondary Closing Time
(if any) and at each Date of Delivery (if any), contain an untrue
statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
however, that this representation and warranty shall not apply to any
statement in or omission from the Final Offering Memorandum or the
Private Placement Memorandum that is made in reliance upon and in
conformity with information furnished to
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the Issuer in writing by or on behalf of FBR expressly for use therein
(that information being limited to the information described in the last
sentence of Section 8(b) hereof);
(b) the Preliminary Offering Memorandum includes, as of its date,
and each of the Final Offering Memorandum and the Private Placement
Memorandum includes, as of its date, and will include at the Closing
Time, at each Secondary Closing Time (if any) and at each Date of
Delivery (if any), in all material respects the information required by
Rule 144A, Regulation S and Regulation D, as applicable;
(c) the Issuer is a real estate investment trust and the Operating
Partnership is a limited partnership, each duly organized and validly
existing and in good standing under the laws of its state of formation
or organization, as the case may be, with full power and authority to
own, lease or operate its properties and to conduct its business as
described in the Offering Memorandum and the Private Placement
Memorandum and to execute and deliver this Agreement and, in the case of
the Issuer only, the Registration Rights Agreement, and to consummate
the transactions contemplated hereby (including the issuance, sale and
delivery of the Shares) and, in the case of the Issuer only, thereby;
each of the Issuer's other direct and indirect subsidiaries (each, a
"Subsidiary," and, collectively, the "Subsidiaries") is a corporation,
limited partnership, or limited liability company duly organized and
validly existing and in good standing under the laws of its jurisdiction
of organization, with full power and authority to own, lease or operate
its properties and to conduct its business as presently conducted;
(d) the Issuer had, at March 31, 2004 and at the Closing Time
(assuming for purposes of the as-adjusted column the sale of all Shares,
other than the Option Shares sold and/or placed pursuant to Sections
1(b) and 2(d), shall have occurred by such dates), the duly authorized
and outstanding capitalization, on an actual and as adjusted basis, as
set forth in each of the Final Offering Memorandum and the Private
Placement Memorandum under the caption "Capitalization;" all of the
issued and outstanding shares of beneficial interest of the Issuer have
been duly and validly authorized and issued and are fully paid and
non-assessable and free of preemptive rights and other rights to
subscribe for or purchase securities; all of the issued and outstanding
partnership interests, membership interests or capital stock, as
applicable, of the Operating Partnership and each Subsidiary have been
duly and validly authorized and issued and are fully paid and
non-assessable; except as disclosed in the Final Offering Memorandum or
the Private Placement Memorandum, there are no outstanding (i)
securities or obligations of the Issuer, the Operating Partnership or
any of the Subsidiaries convertible into or exchangeable for any
beneficial interest of the Issuer, (ii) warrants, rights or options to
subscribe for or purchase from the Issuer any such shares of beneficial
interest or any such convertible or exchangeable securities or
obligations or (iii) obligations of the Issuer, the Operating
Partnership or any of the Subsidiaries to issue or sell any shares of
beneficial interest, shares of capital stock, partnership interests or
membership interests, as applicable, any such convertible or
exchangeable securities or obligation, or any such warrants, rights or
options;
(e) as of the date of this Agreement and immediately prior to the
Closing Time, all of the outstanding shares of beneficial interest of
the Issuer are directly owned of record and beneficially by Xxxxxx X.
Xxxxxxxx, Xx. and Xxxxxxx X. Post; all of the outstanding
9
partnership interests of the Operating Partnership are directly or
indirectly owned of record and beneficially by the Issuer; all of the
outstanding shares of capital stock, partnership interests or membership
interests of the Subsidiaries are directly or indirectly owned of record
and beneficially by the Issuer; neither the Issuer nor the Operating
Partnership owns any capital stock of or other equity interest in any
corporation, limited liability company, partnership, joint venture,
trust or other entity or association other than as described in the
Offering Memorandum and the Private Placement Memorandum;
(f) the Shares and Units have been duly authorized for issuance
and sale pursuant to this Agreement and, when issued by the Issuer or
the Operating Partnership, as the case may be, and delivered against
payment therefor in accordance with the terms of this Agreement, will be
validly issued, fully paid and nonassessable, free and clear of any
pledge, lien, encumbrance, security interest or other claim, and the
issuance, sale and delivery of the Shares by the Issuer and the Units by
the Operating Partnership is not subject to any preemptive right,
co-sale right, registration right, right of first refusal or other
similar rights arising by operation of law, under the Issuer Charter
Documents (as defined below), or under any agreement to which the Issuer
or the Operating Partnership is a party or otherwise, other than as
provided for in the Registration Rights Agreement; the Shares satisfy
the requirements set forth in Rule 144A and Regulation S; the Shares and
Units satisfy the requirements set forth in Regulation D; assuming the
accuracy of FBR's representations and warranties set forth in Section 3
of this Agreement and that (i) the purchasers who buy the Rule
144A/Regulation S Shares in Exempt Resales are Eligible Purchasers, (ii)
the Purchasers who buy the Regulation D Shares in the Private Placement
are Accredited Investors, and (iii) Fortress and Alterra Healthcare
Corp. ("Alterra") each is an Accredited Investor, the sale of the Rule
144A/Regulation S Shares to FBR as contemplated hereby, the Exempt
Resales, the Private Placement and the Unit Issuance are exempt from the
registration requirements of the Securities Act;
(g) each of the Issuer, the Operating Partnership and the
Subsidiaries is duly qualified or licensed by, and is in good standing
in, each jurisdiction in which it conducts its business or in which it
owns or leases property or maintains an office and in which such
qualification or licensing is necessary and in which the failure,
individually or in the aggregate, to be so qualified or licensed could
reasonably be expected to have, individually or in the aggregate, a
material adverse effect on the condition, financial or otherwise,
earnings, business affairs or business prospects of the Issuer, the
Operating Partnership and the Subsidiaries, taken as a whole (a
"Material Adverse Effect");
(h) each of the Issuer, the Operating Partnership and the
Subsidiaries has good and marketable title in fee simple to all real
property, if any, and good title to all personal property, if any, owned
by it, in each case free and clear of all liens, security interests,
pledges, charges, encumbrances, mortgages and defects, except such as
are disclosed in the Final Offering Memorandum or the Private Placement
Memorandum or as could not reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect; any real property held
under lease by the Issuer, the Operating Partnership or any of the
Subsidiaries is held under a lease which is valid, binding and
enforceable against the Issuer or such Subsidiary, except as may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting creditors' rights generally, and by general principles of
equity;
10
(i) to the extent applicable, the Issuer, the Operating
Partnership and each of the Subsidiaries owns or possesses such licenses
or other rights to use all patents, trademarks, service marks, trade
names, copyrights, software, trade secrets, other intangible property
rights and know-how (collectively, "Intangibles"), as are necessary to
entitle the Issuer, the Operating Partnership and each of the
Subsidiaries, taken as a whole, to conduct their business as described
in each of the Offering Memorandum and the Private Placement Memorandum,
and none of the Issuer, the Operating Partnership or any of the
Subsidiaries has violated or received written notice of any infringement
of or conflict with (and none of the Issuer, the Operating Partnership
or any of the Subsidiaries knows of any such infringement of or conflict
with) asserted rights of others with respect to any Intangibles which
could reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect;
(j) each of the Issuer, the Operating Partnership and each of the
Subsidiaries is in compliance with laws, rules, regulations, orders,
decrees and judgments applicable to it and its business as described in
each of the Final Offering Memorandum and the Private Placement
Memorandum, including those relating to transactions with affiliates,
except where the failure to so comply could not reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect;
(k) except as otherwise described in each of the Offering
Memorandum and the Private Placement Memorandum, none of the Issuer, the
Operating Partnership nor any of the Subsidiaries has violated, received
notice of or knows of any violation by the Issuer, the Operating
Partnership or any of the Subsidiaries with respect to any applicable
environmental, safety or similar law, nor any federal or state law
relating to discrimination in the hiring, promotion or pay of employees,
nor any applicable federal or state wages and hours law, nor any
provisions of the Employee Retirement Income Security Act or the rules
and regulations promulgated thereunder, the violation of any of which
could reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect;
(l) none of the Issuer, the Operating Partnership nor any of the
Subsidiaries, nor, to the Issuer's knowledge, any officer or trustee (or
to the Issuer's knowledge, any officer nominee or trustee nominee)
purporting to act on behalf of the Issuer, the Operating Partnership or
any of the Subsidiaries has at any time (i) made any contributions to
any candidate for political office, (ii) made any payment to any state,
federal or foreign governmental officer or official, or other person
charged with similar public or quasi-public duties, or (iii) engaged in
any transactions, maintained any bank account or used any trust funds
except for transactions, bank accounts and funds which have been and are
reflected in the normally maintained books and records of the Issuer,
the Operating Partnership and each of the Subsidiaries;
(m) except as otherwise disclosed in each of the Offering
Memorandum and the Private Placement Memorandum, there are no
outstanding loans, advances or guarantees of indebtedness by the Issuer,
the Operating Partnership or any of the Subsidiaries to or for the
benefit of any of the officers, directors, trustees, affiliates or
representatives of the Issuer, the Operating Partnership or any of the
Subsidiaries or any of the members of the families of any of them;
11
(n) except as disclosed in each of the Offering Memorandum and the
Private Placement Memorandum, the Operating Partnership is not
prohibited or restricted by its respective Charter Documents (defined
below), under applicable law or by any agreement or instrument to which
it is a party, directly or indirectly, from making any distributions to
the Issuer, or from repaying the Issuer for any loans or advances to it
from the Issuer, or from transferring its property or assets to the
Issuer;
(o) except for the initial purchaser's discount, the Placement Fee
and any other compensation payable by the Issuer to FBR in connection
with the transactions contemplated herein or as otherwise disclosed in
each of the Offering Memorandum and the Private Placement Memorandum,
the Issuer has not incurred any liability for any finder's fees or
similar payments in connection with the transactions herein
contemplated;
(p) none of the Issuer, the Operating Partnership or any of the
Subsidiaries is (i) in breach of, or in default under (nor has any event
occurred which with notice, lapse of time, or both would constitute a
breach of, or default under), its declaration of trust, certificate of
limited partnership, partnership agreement, by-laws or analogous
governing documents (collectively, the "Charter Documents") or (ii) in
breach or default (nor has any event occurred which with notice, lapse
of time or both would constitute a breach or default) in the performance
or observance of any of its obligations, agreements, covenants or
conditions contained in any license, indenture, mortgage, deed of trust,
bank loan or credit agreement or other agreement or instrument to which
the Issuer, the Operating Partnership or any of the Subsidiaries is a
party or by which it or its properties are bound or affected, except
with respect to (ii) above for any breaches or defaults that could not
reasonably be expected to have a Material Adverse Effect; the execution,
delivery and performance of this Agreement and the Registration Rights
Agreement, the issuance, sale and delivery of the Shares by the Issuer,
the consummation by the Issuer and the Operating Partnership of the
transactions contemplated hereby and, in the case of the Issuer only,
the transactions contemplated by the Registration Rights Agreement, and
compliance by the Issuer and the Operating Partnership with the terms
and provisions hereunder and, in the case of the Issuer only,
thereunder, will not conflict with, or result in any breach of or
constitute a default under (nor constitute any event which with notice,
lapse of time, or both would constitute a breach of, or default under),
(A) any provision of the Charter Documents, (B) any of the Issuer's or
the Operating Partnership's obligations under any provision of any
license, indenture, mortgage, deed of trust, bank loan or credit
agreement or other agreement or instrument to which the Issuer or the
Operating Partnership is a party or by which it or its properties are
bound or affected, or (C) under any federal, state, local or foreign
law, regulation or rule or any decree, judgment, permit or order
applicable to the Issuer or the Operating Partnership, except in the
case of clauses (B) and (C) for such breaches or defaults which would
not reasonably be expected to have a Material Adverse Effect or result
in the creation or imposition of any material lien, charge, claim or
encumbrance upon any property or assets of the Issuer or its
subsidiaries.;
(q) this Agreement has been duly authorized, executed and
delivered by the Issuer and the Operating Partnership and, assuming due
authorization, execution and delivery of this Agreement by FBR, is a
legal, valid and binding agreement of the Issuer and the Operating
Partnership, enforceable in accordance with its terms, except as such
enforcement
12
may be limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' rights generally, and by general
principles of equity, and except to the extent that the indemnification
provisions hereof may be limited by federal or state securities laws and
public policy considerations in respect thereof; the Registration Rights
Agreement has been duly authorized by the Issuer and at the Closing Time
will have been duly executed and delivered by the Issuer and, assuming
due authorization, execution and delivery of the Registration Rights
Agreement by FBR, will constitute a legal, valid and binding agreement
of the Issuer enforceable in accordance with its terms, except as may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting creditors' rights generally, and by general principles of
equity, and except to the extent that the indemnification provisions
thereof may be limited by federal or state securities laws and public
policy considerations in respect thereof;
(r) the shares of beneficial interest of the Issuer, including the
Shares, the units of limited partnership interest in the Operating
Partnership, including the Units, and the Registration Rights Agreement
conform in all material respects to the descriptions thereof contained
in each of the Final Offering Memorandum and the Private Placement
Memorandum; the form of certificate used to evidence the Common Shares
complies in all material respects with all applicable statutory
requirements and with any applicable requirements of the Charter
Documents of the Issuer and has been duly authorized and approved by the
trustees of the Issuer;
(s) assuming the accuracy of FBR's representations and warranties
set forth in Section 3 of this Agreement and that (i) the purchasers who
buy the Rule 144A/Regulation S Shares in Exempt Resales are Eligible
Purchasers and (ii) the purchasers who buy Regulation D Shares and
Fortress are Accredited Investors, no approval, authorization, consent
or order of or filing with any federal, state or local governmental or
regulatory commission, board, body, authority or agency is required for
the execution, delivery and performance by the Issuer and the Operating
Partnership of this Agreement or, in the case of the Issuer only, the
Registration Rights Agreement, the consummation by the Issuer and the
Operating Partnership of the transactions contemplated hereby and, in
the case of the Issuer only, thereby, or the issuance, sale and delivery
of the Shares and Units as contemplated hereby, other than (i) such as
have been obtained or made, or will have been obtained or made at or
prior to the Closing Time, (ii) such as may be required by applicable
state securities or blue sky laws of the various jurisdictions in which
the Shares or Units are being offered or placed by FBR, (iii) with or by
federal or state securities regulatory authorities in connection with or
pursuant to the Registration Rights Agreement, including, without
limitation, the filing of the registration statement(s) required thereby
with the Securities and Exchange Commission (the "SEC"), (iv) the filing
of a Form D with the SEC and (v) filings with any applicable stock
exchange or over-the-counter quotation service;
(t) each of the Final Offering Memorandum and the Private
Placement Memorandum includes in all material respects the information
required by Rule 144A, Regulation S and Regulation D;
13
(u) except as disclosed in each of the Offering Memorandum and the
Private Placement Memorandum, each of the Issuer and the Operating
Partnership has all necessary licenses, authorizations, consents and
approvals and has made all necessary filings required under any federal,
state, local or foreign law, regulation or rule, and has obtained all
necessary licenses, authorizations, consents and approvals from other
persons, required in order to conduct its business as it is being
conducted at this time as described in each of the Final Offering
Memorandum and the Private Placement Memorandum, except where the
failure to have, file or obtain any of the foregoing would not,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect; none of the Issuer, the Operating Partnership
nor any Subsidiary is in material violation of, or in material default
under, any of its obligations under any such license, authorization,
consent or approval of any federal, state, local or foreign law,
regulation or rule or any decree, order or judgment applicable to the
Issuer, the Operating Partnership or any Subsidiary;
(v) each of the Final Offering Memorandum and the Private
Placement Memorandum contains summaries, which are complete and accurate
in all material respects, of any material contracts, agreements,
instruments and other documents, if any, of the Issuer, the Operating
Partnership and any of the Subsidiaries, and the copies of all such
contracts, agreements, instruments and other documents (including all
amendments or waivers relating to any of the foregoing) that have been
previously furnished to FBR or its counsel are complete and genuine and
include all material collateral and supplemental agreements thereto;
(w) except as disclosed in each of the Final Offering Memorandum
and the Private Placement Memorandum, there are no actions, suits,
proceedings, inquiries or investigations pending or, to the knowledge of
the Issuer, threatened against the Issuer or the Operating Partnership,
or any of their properties, trustees, officers or employees at law or in
equity, or before or by any federal, state, local or foreign
governmental or regulatory commission, board, body, arbitration panel,
authority or agency the adverse outcome of which could reasonably be
expected to have, individually or in the aggregate, a Material Adverse
Effect;
(x) since March 31, 2004, and except as may be otherwise stated in
or contemplated by the Final Offering Memorandum and the Private
Placement Memorandum, there has not been (i) any event, circumstance or
change that could reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect, (ii) any transaction, other than
in the ordinary course of business, which is material to the Issuer, the
Operating Partnership and the Subsidiaries, taken as a whole,
contemplated or entered into by the Issuer, the Operating Partnership or
any of the Subsidiaries, (iii) any liability or obligation, contingent
or otherwise, directly or indirectly incurred by the Issuer, the
Operating Partnership or any of the Subsidiaries of the kind and nature
that would be required to be disclosed or set forth on a financial
statement prepared in accordance with generally accepted accounting
principles other than liabilities and obligations incurred in the
ordinary course of business, (iv) any dividend or distribution of any
kind declared, paid or made by the Issuer on any class of its shares of
beneficial interest, (v) any purchase or pledge by the Issuer of any of
the Issuer's outstanding shares of beneficial interest or (vi) any
change in the capital stock, long-term debt
14
(including off-balance sheet activities or transactions) or, outside the
ordinary course of business, short-term debt of the Issuer;
(y) neither the Issuer nor the Operating Partnership is required
to register, and the sale of the Shares as herein contemplated and the
application of the net proceeds therefrom as described in each of the
Final Offering Memorandum and the Private Placement Memorandum under the
caption "Use of Proceeds" will not cause the Issuer or the Operating
Partnership to be required to register as, an "investment company," as
such term is defined in the Investment Company Act of 1940, as amended
(the "1940 Act");
(z) as of the date hereof and the Closing Time, there are no
persons with registration or other similar rights to have any securities
registered by the Issuer under the Securities Act, other than pursuant
to the Registration Rights Agreement;
(aa) none of the Issuer, the Operating Partnership or any of their
respective trustees, officers, representatives or affiliates has taken,
directly or indirectly, any action intended, or which might reasonably
be expected, to cause or result in, or which has constituted, any
unlawful stabilization or manipulation of the price of any security of
the Issuer to facilitate the sale or resale of the Shares;
(bb) the Issuer has not relied upon FBR or legal counsel for FBR
for any legal, tax or accounting advice in connection with the offering
and sale of the Shares;
(cc) the historical financial statements included in each of the
Offering Memorandum and the Private Placement Memorandum present fairly
in accordance with generally accepted accounting principles the
financial condition and results of operations of the Issuer at the
respective dates or for the respective periods to which they apply and
such financial statements have been prepared in each case in accordance
with generally accepted accounting principles consistently applied
throughout the periods covered except to the extent otherwise noted
therein; KPMG LLP has audited the financial statements included in each
of the Offering Memorandum and the Private Placement Memorandum and such
firm are independent public or independent certified public accountants
with respect to the Issuer as defined under Rule 101 of the American
Institute of Certified Public Accountants' Code of Professional Conduct,
and its interpretations and rulings; the financial forecast included in
each of the Offering Memorandum and the Private Placement Memorandum
under the caption "Selected Financial Information" represents good faith
estimates of the performance of the Issuer for the period stated therein
based upon assumptions that were believed in good faith to be reasonable
when made and continue to be reasonable as of the date hereof;
(dd) the industry, statistical and market-related data included in
each of the Offering Memorandum and the Private Placement Memorandum is
based on or derived from sources that the Issuer believes are reliable
and accurate; the Issuer has no reason to believe that the data derived
from such sources is inaccurate;
(ee) neither the Issuer nor the Operating Partnership has taken
any action nor have any other steps been taken or have any legal
proceedings been started, nor to the actual knowledge of the Issuer or
the Operating Partnership, threatened, against the Issuer or the
15
Operating Partnership, for the winding up, liquidation or dissolution of
the Issuer or the Operating Partnership;
(ff) each of the independent trustee nominees (or independent
trustees once appointed) named in each of the Offering Memorandum and
the Private Placement Memorandum has not since the formation of the
Issuer and/or the Operating Partnership been employed by or affiliated,
directly or indirectly with, the Issuer or the Operating Partnership,
whether by ownership of, ownership interest in, employment by, any
material business or professional relationship with, or serving as an
officer, trustee or director of the Issuer or any of its subsidiaries;
(gg) other than FBR, the Issuer and the Operating Partnership have
not authorized anyone to make any representations regarding the offer
and sale of the Shares, or regarding the Issuer and the Operating
Partnership in connection therewith, except as set forth in the
Preliminary Offering Memorandum, the Final Offering Memorandum, the
Private Placement Memorandum or any related marketing materials
developed jointly and approved by the Issuer and FBR; the Issuer has not
received notice of any stop order or other similar order or decree
preventing the use of the Preliminary Offering Memorandum, the Final
Offering Memorandum or the Private Placement Memorandum or any amendment
or supplement thereto, or any order asserting that the transactions
contemplated by this Agreement are subject to the registration
requirements of the Securities Act, and no proceeding for that purpose
has commenced or is pending or, to its knowledge, is contemplated;
(hh) except as permitted by the Securities Act, the Issuer and the
Operating Partnership have not distributed and, prior to the later to
occur of (i) the Closing Time, any Secondary Closing Time or any Date of
Delivery and (ii) completion of the distribution of the Shares, will not
distribute any offering material in connection with the offering and
sale of the Shares other than the Preliminary Offering Memorandum, the
Final Offering Memorandum and the Private Placement Memorandum; the
Issuer and the Operating Partnership have not directly, or through any
agent or person acting on its behalf (other than FBR and any of its
dealers), (A) sold, offered for sale, solicited offers to buy or
otherwise negotiated in respect of, any security (as defined in the
Securities Act) which is or will be integrated with the offering and
sale of the Shares or Units in a manner that would require the
registration of the Shares or Units under the Securities Act or (B)
engaged in any form of general solicitation or general advertising
(within the meaning of Regulation D) in connection with the offering of
the Shares and Units;
(ii) assuming the accuracy of FBR's representations and warranties
set forth in Section 3 of this Agreement, none of the Issuer or its
affiliates or any person acting on behalf of it or its affiliates has
engaged in any directed selling efforts (as that term is defined in
Regulation S) with respect to the Regulation S Shares, and the Issuer
and any person acting on its behalf (other than FBR as to which the
Issuer makes no representation) have complied with the offering
restrictions requirement of Regulation S; the sale of the Regulation S
Shares is not part of a plan or scheme to evade the registration
provisions of the Securities Act;
16
(jj) commencing with the Issuer's taxable year ending December 31,
2004, the Issuer will be organized in conformity with the requirements
for qualification as a real estate investment trust (a "REIT") pursuant
to Sections 856 through 860 of the Internal Revenue Code of 1986, as
amended (the "Code"); the Issuer's proposed method of operation as
described in each of the Offering Memorandum and the Private Placement
Memorandum will enable it to meet the requirements for qualification and
taxation as a REIT under the Code; and all statements in each of the
Offering Memorandum and the Private Placement Memorandum regarding the
Issuer's qualification as a REIT are true, complete and correct in all
material respects;
(kk) each of the Issuer and the Operating Partnership has filed on
a timely basis all necessary federal, state, local and foreign income
and franchise tax returns, if any such returns were required to be
filed, through the date hereof and have paid all taxes shown as due
thereon, except in any case in which the failure to so file or pay could
not reasonably be expected to result, individually or in the aggregate,
in a Material Adverse Effect; and no tax deficiency has been asserted
against the Issuer or the Operating Partnership, nor do the Issuer or
the Operating Partnership know of any tax deficiency which is likely to
be asserted against it which, if determined adversely to the Issuer or
the Operating Partnership, could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect; all tax
liabilities, if any, are adequately provided for on the respective books
of such entities;
(ll) neither the Issuer nor the Operating Partnership are required
to be registered as a commodity pool operator under the Commodity
Exchange Act, as amended; none of the Issuer, the Operating Partnership
or any of the Issuer's affiliates or, to their knowledge, any person
acting on their behalf (other than FBR as to whom the Issuer and the
Operating Partnership make no representation) have offered or sold, and
prior to the date six months after the date of issue of the Shares will
not offer or sell, any Shares to persons in the United Kingdom;
(mm) each of the stock purchase agreements relating to the
acquisition of Initial Properties (as defined in each of the Offering
Memorandum and the Private Placement Memorandum) by the Issuer
(collectively, the "Acquisition Agreements"), has been duly authorized,
executed and delivered by the Issuer; and each of the Acquisition
Agreements is a legal, valid and binding agreement of the Issuer,
enforceable in accordance with its terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally, and by general principles of
equity.
5. Certain Covenants of the Issuer: The Issuer hereby agrees with FBR as
follows:
(a) to furnish such information as may be reasonably required to
qualify the Shares for offer and resale under the securities or blue sky
laws of such states and other jurisdictions as FBR may reasonably
designate or as required for the Private Placement and to maintain such
qualifications in effect as long as required by such laws for the
distribution of the Shares and for the Exempt Resales of the Rule
144A/Regulation S Shares, provided that the Issuer shall not be required
to qualify as a foreign entity or to consent to the service of process
under the laws of any such state or subject itself to taxation as doing
business in
17
any jurisdiction (except service of process with respect to the offering
and sale of the Shares);
(b) to furnish promptly (and with respect to the initial delivery
of such Final Offering Memorandum, not later than 10:00 a.m. (New York
City time) on the second day following the execution and delivery of
this Agreement) to FBR as many copies of the Final Offering Memorandum
(and any amendments or supplements thereto) as FBR may reasonably
request for the purposes contemplated by this Agreement;
(c) to file or cause to be filed, in a timely manner and in
accordance with the Blue Sky Memorandum, any filing or notice, and to
pay any fee, required to be filed or paid, as applicable, under federal
or state law; and to not take any action in violation of the Issuer's
obligation in this Section 5(c);
(d) to advise FBR promptly, confirming the general nature of such
advice in writing, of (i) the happening of any event known to the Issuer
within thirty (30) days after the date of this Agreement that, in the
reasonable judgment of the Issuer, would require the making of any
change in the Final Offering Memorandum or the Private Placement
Memorandum then being used so that the Final Offering Memorandum or the
Private Placement Memorandum would not include an untrue statement of a
material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they
are made, not misleading and to prepare and furnish, at the Issuer's
expense, to FBR (and to any persons reasonably designated by FBR)
promptly any proposed amendments or supplements to the Final Offering
Memorandum or the Private Placement Memorandum as may be necessary so
that the Final Offering Memorandum or the Private Placement Memorandum
does not include an untrue statement of a material fact or omit to state
such material fact (provided that no such amendment or supplement shall
be necessary solely to update the Issuer's quarterly or annual results),
and (ii) the receipt of any notification or order with respect to the
modification, rescission, withdrawal or suspension of the qualification
of the Shares or of any exemption from such qualification or from
registration of the Shares, for offering or sale in any jurisdiction, or
of the initiation or threatening of any proceedings for any of such
purposes and, if any government agency or authority should give such
notification or issue any such order, to use its reasonable best efforts
to obtain the lifting or removal of such notification or order as soon
as possible;
(e) not to amend or supplement the Preliminary Offering
Memorandum, the Final Offering Memorandum or the Private Placement
Memorandum unless FBR shall previously have been advised thereof and
shall have consented thereto (which consent shall not be unreasonably
withheld) or not have reasonably objected thereto in writing within a
reasonable time after being furnished a copy thereof and the Issuer
shall promptly, upon reasonable request by FBR, make any amendment or
supplement to the Offering Memorandum or the Private Placement
Memorandum that may be necessary or advisable in the reasonable opinion
of counsel to FBR;
(f) to the extent not publicly available on the SEC's website, to
furnish to FBR for a period of three (3) years from the Closing Time (i)
copies of all annual, quarterly and current reports of the Issuer after
the Issuer has become subject to the reporting
18
requirements of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") and (ii) such other reports and documents of the Issuer
as FBR may reasonably request;
(g) during any period in which the Issuer is not subject to
Section 13 or 15(d) of the Exchange Act, to make available the
information (the "Rule 144A Information") as required by, and so long as
necessary to permit the sales of the Shares of any holder pursuant to,
Rule 144A and any additional information required by the PORTAL Market
("PORTAL Information"), and any such Rule 144A Information and PORTAL
Information will not, as of its date, contain any untrue statement of a
material fact or omit to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they are made, not misleading;
(h) to apply the net proceeds from the sale of the Shares (the
"Offering Proceeds") in the manner set forth under the caption "Use of
Proceeds" in the Final Offering Memorandum;
(i) that none of the Issuer, the Operating Partnership nor any
"affiliate" (as defined in Rule 501(b) of Regulation D) of the Issuer or
the Operating Partnership will solicit any offer to buy or offer or sell
the Shares or Units by means of any form of "general solicitation or
general advertising" (within the meaning of Regulation D) or engage in
any "directed selling efforts" (as defined in Regulation S) with regard
to the Shares and Units;
(j) that none of the Issuer, the Operating Partnership nor any
"affiliate" (as defined in Rule 501(b) of Regulation D) of the Issuer or
the Operating Partnership will sell, offer for sale or solicit offers to
buy or otherwise negotiate in respect of any "security" (as defined in
the Securities Act) the offering of which security will be integrated
with the Exempt Resales of the Rule 144A/Regulation S Shares and/or the
Private Placement and/or the Unit Issuance in a manner which would
require the registration under the Securities Act of the sale to FBR or
the Eligible Purchasers of the Rule 144A/Regulation S Shares or to the
Participants of the Regulation D Shares or to Fortress of the Units;
(k) that neither the Issuer nor any affiliate of the Issuer will
take, directly or indirectly, any action designed to, or that might be
reasonably expected to, cause or result in stabilization or manipulation
of the price of the Shares;
(l) that, except as permitted by the Securities Act, neither the
Issuer nor any affiliate of the Issuer will distribute any offering
materials in connection with Exempt Resales, other than the Preliminary
Offering Memorandum and the Final Offering Memorandum;
(m) to pay all expenses, fees and taxes in connection with (i) the
preparation of the Preliminary Offering Memorandum, the Final Offering
Memorandum and the Private Placement Memorandum, and any amendments or
supplements thereto, and the printing and furnishing of copies of each
thereof to FBR (including costs of mailing and shipment), (ii) the
preparation, issuance, sale and delivery of the Shares and Units,
including any stock or other transfer taxes or duties payable upon the
sale of the Rule 144A/Regulation S Shares to FBR or the placement of the
Regulation D Shares and Units by FBR and the sale of such
19
Shares and Units to the Participants or Fortress, as the case may be,
(iii) the qualification of the Shares for offering and sale under state
laws and the determination of their eligibility for investment under
state law as aforesaid (including any filing fees and the reasonable
legal fees and filing fees and other disbursements of counsel for FBR)
and the printing and furnishing of copies of any blue sky surveys or
legal investment surveys to FBR and to dealers, (iv) the designation of
the Shares as PORTAL-eligible securities by the National Association of
Securities Dealers, Inc.'s PORTAL Market, (v) the fees and expenses of
any transfer agent or registrar for the Common Shares, (vi) the costs
and expenses of the Issuer incurred in connection with the marketing of
the Shares, including "road show" costs and expenses, (vii) the costs
and expenses required to fulfill the Issuer's obligations under the
Registration Rights Agreement, and (vii) the performance of the Issuer's
other obligations hereunder;
(n) to use its reasonable best efforts in cooperation with FBR to
obtain permission for the Shares to be eligible for clearance and
settlement through DTC;
(o) in connection with Shares offered and sold in an "offshore
transaction" (as defined in Regulation S), not to register any transfer
of such Shares not made in accordance with the provisions of Regulation
S and not, except in accordance with the provisions of Regulation S, if
applicable, to issue any such Shares in the form of definitive
securities;
(p) to affix to each global certificate, an appropriate legend to
facilitate compliance with Rule 144A, Regulation S, Regulation D, the
policies, rules and regulations of DTC, and any other transfer
restrictions (as set forth in the Offering Memorandum), as the case may
be;
(q) the Issuer shall refrain during a period of one hundred eighty
(180) days from the date of the Final Offering Memorandum, without the
prior written consent of FBR, from (i) offering, pledging, selling,
contracting to sell, selling any option or contract to purchase,
purchasing any option or contract to sell, granting any option, right or
warrant for the sale of, or otherwise disposing of, directly or
indirectly, any equity securities of the Issuer or any securities
convertible into or exercisable or exchangeable for equity securities of
the Issuer, or filing any registration statement under the Securities
Act with respect to any of the foregoing, or (ii) entering into any swap
or any other agreement or any transaction that transfers, in whole or in
part, directly or indirectly, the economic consequence of ownership of
equity securities of the Issuer, whether any such swap or transaction
described in clause (i) or (ii) above is to be settled by delivery of
Common Shares or such other securities, in cash or otherwise, except as
contemplated by the terms of the Units and the Acquisition Agreements.
The foregoing sentence shall not apply to (A) the Shares to be sold
hereunder, (B) the registration and sale of the Shares in accordance
with the terms of the Registration Rights Agreement, (C) the issuance of
Common Shares and the grant and exercise of options under the Issuer's
long-term incentive plan in effect on the date of this Agreement and
upon redemption of any LTIP Units, (D) the issuance of Common Shares or
other equity securities of the Issuer in connection with acquisitions by
the Issuer or a subsidiary, and (E) the issuance of Common Shares or
other equity securities of the Issuer in connection with the Issuer's
qualification as a REIT, as each of (A), (B) and (C) above is described
in the Final Offering Memorandum;
20
(r) as soon as practicable, but not later than ninety (90) days
after the Closing Time, the Issuer shall have in place and comply with
no less stringent corporate governance procedures, guidelines and
standards than those described under the caption "Our Management and
Board of Trustees," or elsewhere, in each of the Offering Memorandum and
the Private Placement Memorandum; from and after the Closing Time, the
Issuer shall maintain reasonable disclosure controls and procedures;
(s) from and after the Closing Time, the Issuer shall have in
place and maintain a system of internal and financial accounting
controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or
specific authorizations, (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability,
(iii) access to assets is permitted only in accordance with management's
general or specific authorization, (iv) the recorded accountability for
assets is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences, (v)
management is made aware of all material transactions concerning the
Issuer or its properties, and (vi) until such time as the Board of
Trustees has determined otherwise, the Issuer qualifies as a REIT under
the requirements of the Code, commencing with its taxable year ending
December 31, 2004;
(t) that, until the board of trustees has determined otherwise,
commencing with the Issuer's taxable year ending December 31, 2004, the
Issuer will be organized in conformity with the requirements for
qualification as a REIT under the Code, and the Issuer will conduct its
operations in a manner that will enable the Issuer to continue to meet
the requirements for qualification and taxation as a REIT under the
Code;
(u) that, until such time as the Board of Trustees has determined
otherwise, the Issuer will conduct its affairs in such a manner so as to
ensure that the Issuer will not be required to register as an
"investment company" within the meaning of the 1940 Act;
(v) to use its commercially reasonable best efforts to satisfy all
conditions, including obtaining all lender and other third-party
consents, to the closing of the transactions contemplated by the
Acquisition Agreements on such terms and by such dates as set forth
therein;
(w) to use its reasonable best efforts to effect the eligibility
of the Shares as PORTAL-eligible securities in accordance with the rules
and regulations of the National Association of Securities Dealers, Inc.;
and
(x) to establish an investment account for the purpose of
investing the Offering Proceeds only in interest-bearing, short-term
investment grade securities, and requiring (1) authorization by two of
the Issuer's officers to withdraw any portion of the Offering Proceeds
from the account that exceeds $1,000,000 and (2) pending consummation of
the Brookdale Acquisition (as defined in the Offering Memorandum), that
any withdrawal of any portion of the Offering Proceeds be used solely
(A) to pay the Issuer's expenses incurred in connection with the
offering of Shares and Units contemplated hereunder, (B) to advance as a
deposit a portion of the purchase price for,
21
respectively, the Brookdale Acquisition and the Alterra Acquisition (as
defined in the Offering Memorandum), in each case as set forth in the
Acquisition Agreements; (C) to make payments or contributions to the
Operating Partnership to maintain the Issuer's status as a REIT under
the Code; (D) to pay expenses incurred in connection with the
acquisition of the Initial Properties; (E) to pay expenses incurred in
connection with the liquidation of the Issuer contemplated by Section 9
hereof; and (F) for the Issuer's other general and administrative
expenses (the "Investment Account"); provided that, upon consummation of
the Brookdale Acquisition, the Issuer shall no longer be required to
maintain the Investment Account.
6. Conditions of FBR's Obligations: The obligations of FBR hereunder are
subject to the following other conditions:
(a) The Issuer shall have furnished to FBR at the Closing Time,
each Secondary Closing Time and each Date of Delivery opinions of Sidley
Xxxxxx Xxxxx & Xxxx LLP and Xxxxxxx LLP, counsels for the Issuer,
addressed to FBR and dated the Closing Time, each Secondary Closing or
each Date of Delivery, as the case may be, and in form satisfactory to
FBR, as set forth on Exhibits B and C hereto.
(b) FBR shall have received at the Closing Time, each Secondary
Closing Time and each Date of Delivery the favorable opinion of Winston
& Xxxxxx LLP, counsel for FBR, dated the Closing Time, each Secondary
Closing or each Date of Delivery, as the case may be, and in form and
substance satisfactory to FBR. In giving such opinion, such counsel may
rely on the opinion of Xxxxxxx LLP as to matters of Maryland law.
(c) Prior to the Closing Time, each Secondary Closing Time and
each Date of Delivery, as the case may be, (i) no suspension of the
qualification of the Shares or Units for offering or sale in any
jurisdiction, or of the initiation or threatening of any proceedings for
any of such purposes, shall have occurred; and (ii) each of the Final
Offering Memorandum and the Private Placement Memorandum and all
amendments or supplements thereto, or modifications thereof, if any,
shall not contain an untrue statement of material fact or omit to state
a material fact necessary to make the statements therein, in the light
of the circumstances under which they are made, not misleading.
(d) Between the time of execution of this Agreement and the
Closing Time, each Secondary Closing Time and each Date of Delivery, as
the case may be, (i) no event constituting a Material Adverse Effect
shall occur or become known, (ii) no transaction which is material to
the Issuer or the Operating Partnership shall have been entered into by
the Issuer or the Operating Partnership that has not been fully and
accurately disclosed in all material respects in each of the Final
Offering Memorandum and the Private Placement Memorandum and (iii) no
order, decree or stop order preventing the use of the Final Offering
Memorandum or the Private Placement Memorandum, or any amendment or
supplement thereto or any order asserting that any of the transactions
contemplated by this Agreement are subject to the registration
requirements of the Securities Act shall have been issued.
(e) The representations and warranties of the Issuer and the
Operating Partnership set forth in this Agreement, (1) to the extent
such representations and warranties are subject to
22
qualifications and exceptions contained therein relating to knowledge,
materiality or Material Adverse Effect, shall be true and correct as of
the Closing Time, each Secondary Closing Time and each Date of Delivery,
as the case may be, as though made on and as of such date (except to the
extent that such representations and warranties speak as of another
date, in which case such representations and warranties shall be true
and correct as of such other date) and (2) to the extent such
representations and warranties are not subject to any such
qualifications or exceptions, shall be true and correct in all material
respects as of the Closing Time, each Secondary Closing Time and each
Date of Delivery, as the case may be, as though made on and as of such
date (except to the extent that such representations and warranties
speak as of another date, in which case such representations and
warranties shall be true and correct in all material respects as of such
other date); the conditions set forth in paragraph (c) and paragraph (d)
shall have been met and shall be true and correct as of the Closing
Time, each Secondary Closing Time and each Date of Delivery, as the case
may be; each of the Issuer and the Operating Partnership shall have
complied with all covenants and agreements and satisfied all conditions
on their respective parts to be performed or satisfied under this
Agreement at or prior to such Closing Time, each Secondary Closing Time
and each Date of Delivery, as the case may be; and the Issuer for itself
and, as the sole member of the general partner of the Operating
Partnership, on behalf of the Operating Partnership will, at the Closing
Time, each Secondary Closing Time and each Date of Delivery, as the case
may be, deliver to FBR a certificate of its chief executive officer and
chief financial officer confirming the matters set forth in this
subsection (e).
(f) FBR shall have received from KPMG LLP a "comfort" letter or
letters dated the date hereof, the Closing Time and each Secondary
Closing Time, as the case may be, in form and substance satisfactory to
FBR. In the event that the letters referred to above set forth any such
changes, decreases or increases that, in the judgment of FBR, are
reasonably likely to result in a Material Adverse Effect, it shall be a
further condition to the obligations of FBR that such letters shall be
accompanied by a written explanation of the Issuer as to the
significance thereof, unless FBR deems such explanation unnecessary.
References to the Offering Memorandum or the Private Placement
Memorandum with respect to any comfort letter or agreed-upon procedures
letter referred to in this paragraph (f) shall include any amendment or
supplement thereto at the date of such letter.
(g) On or before the Closing Time, the Issuer shall have executed
and delivered to FBR the Registration Rights Agreement and such
agreement shall be in full force and effect.
(h) FBR shall have received prior to the Closing Time a written
agreement (a "Lock-up Agreement") signed by the persons listed on
Exhibit D hereto in substantially the form attached hereto as Exhibits E
and F.
(i) The application to have the Shares included in the PORTAL
Market shall have been approved by the National Association of
Securities Dealers, Inc. and the Shares shall have been designated as
PORTAL-eligible securities.
23
(j) The Issuer and the Operating Partnership shall have furnished
to FBR at the Closing Time, any Secondary Closing Time and any Date of
Delivery, as the case may be, such further information, certificates,
letters and documents as FBR may reasonably request.
(k) On or before the Closing Time, the Issuer, the Operating
Partnership and the Subsidiaries (to the extent a party thereto) shall
have executed and delivered to FBR copies of each of the Acquisition
Agreements and such agreements shall be in full force and effect.
(l) On or before the Closing Time, the Issuer shall have
established the Investment Account.
(m) On or before the Closing Time, the Operating Partnership shall
have entered into the Unit Subscription Agreement.
(n) On or before the Closing Time, the Issuer shall have entered
into a subscription agreement with each of Fortress and Alterra to
purchase 2,675,623 Shares and 1,500,000 Shares, respectively.
7. Termination: The obligations of FBR hereunder shall be subject to
termination in the absolute discretion of FBR at any time prior to the Closing
Time or any Secondary Closing Time or any Date of Delivery, (i) if any of the
conditions specified in Section 6 shall not have been fulfilled or waived when
and as required by this Agreement to be fulfilled, (ii) if trading in
securities generally on the New York Stock Exchange, or the American Stock
Exchange or the Nasdaq National Market shall have been suspended or minimum
prices shall have been established on either of such exchanges or the Nasdaq
National Market, (iii) if there has been a material disruption in the
securities settlement, payment or clearance services in the United States,
(iv) if a banking moratorium shall have been declared by any of the United
States, New York State or Maryland authorities, (v) if the Issuer or the
Operating Partnership shall have sustained a substantial loss by fire, flood,
accident or other calamity which renders it impracticable or inadvisable, in
the reasonable judgment of FBR, to consummate the offering and sale of the
Shares on the terms set forth herein, (vi) if the United States shall have
declared a national emergency or war or there shall have occurred any national
or international act of terror, outbreak or escalation of hostilities or other
national or international calamity or crisis or change in economic, political
or other conditions of such magnitude in its effect on the national or
international financial markets as, in the reasonable judgment of FBR, to make
it impracticable or inadvisable to consummate the offering and sale of the
Shares on the terms set forth herein.
If FBR elects to terminate this Agreement as provided in this Section 7,
it shall notify the Issuer promptly by letter, fax or telegram.
If the sale to FBR of the Rule 144A/Regulation S Shares or the placement
of the Regulation D Shares or Units by FBR, as contemplated by this Agreement,
is not carried out by FBR for any reason permitted under this Agreement or if
such sale is not carried out because the Issuer shall be unable to comply with
any of the terms of this Agreement, the Issuer shall not be under any
obligation or liability under this Agreement (except to the extent provided in
Sections 5(m), 8, 9 and 12 hereof) and
24
FBR shall be under no obligation or liability to the Issuer under this
Agreement (except to the extent provided in Section 8, 9 and 11 hereof).
8. Indemnity by the Issuer and FBR:
(a) Each of the Issuer and the Operating Partnership, jointly and
severally, agrees to indemnify, defend and hold harmless FBR and any
person who controls FBR within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, from and against any
loss, expense, liability or claim (including the reasonable cost of
defense or investigation) which, jointly or severally, FBR or any such
controlling person may incur under the Securities Act, the Exchange Act
or otherwise, insofar as such loss, expense, liability or claim arises
out of or is based upon any untrue statement or alleged untrue statement
of a material fact contained in the Offering Memorandum or the Private
Placement Memorandum, or arises out of or is based upon any omission or
alleged omission to state a material fact necessary to make the
statements made in the Offering Memorandum and the Private Placement
Memorandum, in the light of the circumstances under which they were
made, not misleading, except insofar as any such loss, expense,
liability or claim arises out of or is based upon (A) any untrue
statement or alleged untrue statement of a material fact contained in
and in conformity with information furnished in writing by FBR to the
Issuer expressly for use in the Offering Memorandum or the Private
Placement Memorandum (that information being limited to that described
in the last sentence of Section 8(b) hereof) or (B) FBR's failure to
send or give a copy of the Final Offering Memorandum or the Private
Placement Memorandum to the person asserting an untrue statement or
alleged untrue statement or omission or alleged omission at or prior to
the written confirmation of the sale of Shares or Units to such person
if such statement or omission was corrected in the Final Offering
Memorandum or the Private Placement Memorandum, unless such failure to
deliver the Final Offering Memorandum or the Private Placement
Memorandum was a result of noncompliance by the Issuer with its
obligations under this Agreement.
(b) FBR agrees to indemnify, defend and hold harmless the Issuer
and the Operating Partnership and their respective trustees and officers
and any person who controls the Issuer within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act from and against
any loss, expense, liability or claim (including the reasonable cost of
defense or investigation) which the Issuer, the Operating Partnership or
any such controlling person may incur under the Securities Act, the
Exchange Act or otherwise, insofar as such loss, expense, liability or
claim arises out of or is based upon any untrue statement or alleged
untrue statement of a material fact contained in and in conformity with
information furnished in writing by FBR to the Issuer expressly for use
in the Offering Memorandum and the Private Placement Memorandum, or
arises out of or is based upon any omission or alleged omission to state
therein a material fact in connection with such information necessary to
make such information not misleading, such information being limited to
the following: the last paragraph on the cover page immediately
preceding FBR's name at the bottom of the page and, under the section
heading "Plan of Distribution," the second sentence of the first
paragraph, the second paragraph and the fourth sentence of the ninth
paragraph.
(c) If any action is brought against any person or entity (each an
"Indemnified Party"), in respect of which indemnity may be sought
pursuant to Section 8(a) or (b) above,
25
the Indemnified Party shall promptly notify the party(ies) obligated to
provide such indemnity (each an "Indemnifying Party") in writing of the
institution of such action and the Indemnifying Party shall assume the
defense of such action, including the employment of counsel and payment
of expenses; provided that the failure so to notify the Indemnifying
Party will not relieve the Indemnifying Party from any liability that
the Indemnifying Party may have to any Indemnified Party unless and to
the extent the Indemnifying Party did not otherwise know of such action
and such failure results in the forfeiture by the Indemnifying Party of
substantial rights and defenses. The Indemnified Party(ies) shall have
the right to employ its or their own counsel in any such case, but the
fees and expenses of such counsel shall be at the expense of the
Indemnified Party unless the employment of such counsel shall have been
authorized in writing by the Indemnifying Party in connection with the
defense of such action or the Indemnifying Party shall not have employed
counsel to have charge of the defense of such action within a reasonable
time after notice of commencement of the action or such Indemnified
Party(ies) shall have reasonably concluded (based on the advice of
counsel) that there may be defenses available to it or them which are
different from or additional to those available to the Indemnifying
Party (in which case the Indemnifying Party shall not have the right to
direct the defense of such action on behalf of the Indemnified
Party(ies)), in any of which events such fees and expenses shall be
borne by the Indemnifying Party and paid as incurred (it being
understood, however, that the Indemnifying Party shall not be liable for
the fees and expenses of more than one separate firm of counsel (in
addition to local counsel) for all Indemnified Parties in any one action
or series of related actions in the same jurisdiction representing the
Indemnified Parties who are parties to such action). The Indemnifying
Party under this Section 8 shall not be liable for any settlement of any
claim or proceeding effected without its written consent, but if settled
with such consent or if there be a final judgment for the plaintiff, the
Indemnifying Party agrees to indemnify (to the extent provided in this
Section 8) the Indemnified Party against any loss, claim, damage,
liability or expense by reason of such settlement or judgment. No
Indemnifying Party shall, without the prior written consent of the
Indemnified Party, effect any settlement, compromise or consent to the
entry of judgment in any pending or threatened action, suit or
proceeding in respect of which any Indemnified Party is or could have
been a party and indemnity was or could have been sought hereunder by
such Indemnified Party, unless such settlement, compromise or consent
includes an unconditional release of such Indemnified Party from all
liability on claims that are the subject matter of such action, suit or
proceeding.
(d) If the indemnification provided for in this Section 8 is
unavailable to an Indemnified Party under subsections (a) and (b) of
this Section 8 in respect of any losses, expenses, liabilities or claims
referred to therein, then each applicable Indemnifying Party, in lieu of
indemnifying such Indemnified Party, shall contribute to the amount paid
or payable by such Indemnified Party as a result of such losses,
expenses, liabilities or claims (i) in such proportion as is appropriate
to reflect the relative benefits received by the Issuer and the
Operating Partnership on the one hand and FBR on the other hand from the
offering of the Shares or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in
clause (i) above but also the relative fault of the Issuer and the
Operating Partnership on the one hand and of FBR on the other hand in
connection with the statements or omissions which resulted in such
losses, expenses, liabilities or claims, as well as any other relevant
equitable
26
considerations. The relative benefits received by the Issuer and the
Operating Partnership on the one hand and FBR on the other hand shall be
deemed to be in the same proportion as the total proceeds from the
offering (net of discounts, commissions and any Placement Fee, but
before deducting expenses) received by the Issuer and the Operating
Partnership bear to discounts, commissions and any Placement Fee
received by FBR. The relative fault of the Issuer and the Operating
Partnership on the one hand and of FBR on the other hand shall be
determined by reference to, among other things, whether the untrue
statement or alleged untrue statement of a material fact or omission or
alleged omission relates to information supplied by the Issuer or the
Operating Partnership on the one hand or by FBR on the other and the
parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The amount
paid or payable by a party as a result of the losses, claims, damages
and liabilities referred to above shall be deemed to include any legal
or other fees or expenses reasonably incurred by such party in
connection with investigating or defending any claim or action.
(e) The Issuer, the Operating Partnership and FBR agree that it
would not be just and equitable if contribution pursuant to this Section
8 were determined by pro rata allocation or by any other method of
allocation which does not take into account the equitable considerations
referred to in subsection (d) above. Notwithstanding the provisions of
this Xxxxxxx 0, XXX shall not be required to contribute any amount in
excess of the sum of (i) the aggregate amount of any Placement Fee
actually received by FBR with respect to the Regulation D Shares and
Units plus (ii) the aggregate amount of FBR's discount (as described in
the Final Offering Memorandum) with respect to the Rule 144A/Regulation
S Shares purchased by FBR. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
(f) The indemnity and contribution agreements contained in this
Section 8 shall remain in full force and effect regardless of any
investigation made by or on behalf of FBR, or any person who controls
FBR within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act, or by or on behalf of the Issuer, its trustees and
officers or any person who controls the Issuer within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act, and
shall survive any termination of this Agreement or the issuance, sale
and delivery of the Shares or Units. The Issuer and FBR agree promptly
to notify each other of the commencement of any litigation or proceeding
against it and, in the case of the Issuer, against any of the Issuer's
officers and trustees, in connection with the sale and delivery of the
Shares, or in connection with the Offering Memorandum or the Private
Placement Memorandum.
9. Liquidation: In the event that the Issuer fails to consummate the
Brookdale Acquisition in accordance with the terms of the Brookdale Purchase
Agreement (as defined in each of the Offering Memorandum and the Private
Placement Memorandum), subject to the approval of holders of a majority of the
outstanding Common Shares, the Issuer shall commence a voluntary liquidation
upon which holders of Shares shall be entitled to receive assets of the Issuer
available for distribution in accordance with applicable law (the "Liquidation
Amount"). Notwithstanding the foregoing, Shares and Units sold to Fortress and
Alterra shall be returned to
27
the Issuer and the Operating Partnership by the holders thereof in accordance
with the terms of the Acquisition Agreements, and such Shares and Units shall
be cancelled. As a result, the holders of the Shares and Units sold to
Fortress and Alterra shall not be entitled to any portion of the Liquidation
Amount upon the return of such Shares and Units by such holders. Furthermore,
FBR and/or its affiliates, as applicable, shall be entitled to a pro rata
portion of the Liquidation Amount, less $1.05 per Share with respect to Shares
purchased pursuant to this Agreement by FBR or its affiliates. Holders of
Directed Shares shall be entitled to a pro rata portion of the Liquidation
Amount, less $1.05 per Directed Share.
10. Engagement Letter: All of the obligations and agreements under the
Engagement Letter, dated April 23, 2004, between the Issuer and FBR, shall
survive the execution, delivery, any termination and the performance of this
Agreement and the consummation of the transactions contemplated hereby without
any modification thereof; provided that to the extent there is a conflict
between the provisions of the Engagement Letter and the provisions of this
Agreement, the provisions of this Agreement shall prevail to that extent.
11. Notices: Except as otherwise herein provided, all statements,
requests, notices and agreements shall be in writing delivered by facsimile
(with receipt confirmed), overnight courier or registered or certified mail,
return receipt requested, or by telegram and, if to FBR, shall be sufficient
in all respects if delivered or sent to Friedman, Billings, Xxxxxx & Co.,
Inc., 0000 X. Xxxxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxx 00000, Attention: Xxxxx
Xxxxx (facsimile (000) 000-0000), with a copy to Winston & Xxxxxx LLP, 00 Xxxx
Xxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000, Attention: Xxxxx X. Xxxxxx (facsimile:
(000) 000-0000); and, if to the Issuer or the Operating Partnership, shall be
sufficient in all respects if delivered to the Issuer at the offices of the
Issuer at c/o Fortress Investment Group LLC, 1251 Avenue of the Xxxxxxxx, 00xx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxx X. Xxxxxxxx, Xx. (facsimile
(000) 000-0000), with a copy to Sidley Xxxxxx Xxxxx & Xxxx LLP, 000 Xxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxx Xxxxxxx (facsimile (212)
839-5599).
12. GOVERNING LAW; Consent to Jurisdiction; Headings: THIS AGREEMENT
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE
OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES. The parties
hereto agree to be subject to, and hereby irrevocably submit to, the
nonexclusive jurisdiction of any United States federal or New York state court
sitting in New York, New York, in respect of any suit, action or proceeding
arising out of or relating to this Agreement or the transactions contemplated
herein, and irrevocably agree that all claims in respect of any such suit,
action or proceeding may be heard and determined in any such court. Each of
the parties hereto irrevocably waives, to the fullest extent permitted by
applicable law, any objection to the laying of the venue of any such suit,
action or proceeding brought in any such court and any claim that any such
suit, action or proceeding has been brought in an inconvenient forum. The
section headings in this Agreement have been inserted as a matter of
convenience of reference and are not a part of this Agreement.
13. Parties at Interest: The agreement herein set forth has been and is
made solely for the benefit of FBR, the Issuer, the Operating Partnership and
the controlling persons, trustees and officers referred to in Section 8
hereof, and their respective successors, assigns, executors and
28
administrators. No other person, partnership, association or corporation
(including a purchaser, as such purchaser, from FBR) shall acquire or have any
right under or by virtue of this Agreement.
14. Counterparts: This Agreement may be signed by the parties in
counterparts, which together shall constitute one and the same agreement among
the parties.
[Signature Page Follows]
29
If the foregoing correctly sets forth the understanding among the
Issuer, the Operating Partnership and FBR, please so indicate in the space
provided below for the purpose, whereupon this letter shall constitute a
binding agreement among the Issuer, the Operating Partnership and FBR.
Very truly yours,
PROVIDENT SENIOR LIVING TRUST
By: /s/ Xxxxxx X. Xxxxxxxx, Xx.
----------------------------------
Name: Xxxxxx X. Xxxxxxxx, Xx.
Title: Chief Executive Officer
PSLT OP, L.P.
By: PSLT GP, LLC, its General Partner
By: Provident Senior Living Trust, its
sole member
By: /s/ Xxxxxx X. Xxxxxxxx, Xx.
----------------------------------
Name: Xxxxxx X. Xxxxxxxx, Xx.
Title: Chief Executive Officer
Accepted and agreed to as of the date first above written:
FRIEDMAN, BILLINGS, XXXXXX & CO., INC.
By: /s/ J. Rock Xxxxxx, Jr.
-----------------------
Name: J. Rock Xxxxxx, Jr.
Title: PresidentExhibit A
30
Exhibit A
---------
[Form of Registration Rights Agreement]
[Attached hereto]
A-1
Exhibit B
---------
[Form of Opinion of Sidley Xxxxxx Xxxxx & Xxxx LLP]
B-1
Exhibit C
---------
[Form of Opinion of Xxxxxxx LLP]
C-1
Exhibit D
---------
[Persons Executing Lock-Up Agreements]
Xxxxxx X. Xxxxxxxx, Xx.
Xxxxxxx X. Post
Xxxxxxx X. Xxxxxxxxx
Xxxx X. Xxxxx
Xxxxxxxx X. Xxxxx
Xxxxxxxx X. Xxxxxxxxx
C-2
Exhibit E
---------
[Form of Lock-Up Agreement]
E-1
Exhibit F
---------
[Form of Lock-Up Agreement]
F-2
