AGREEMENT AND PLAN OF MERGER By and Among VENTAS, INC., NEEDLES ACQUISITION LLC and NATIONWIDE HEALTH PROPERTIES, INC. Dated as of February 27, 2011
Exhibit 2.1
EXECUTION VERSION
By and Among
VENTAS, INC.,
NEEDLES ACQUISITION LLC
and
NATIONWIDE HEALTH PROPERTIES, INC.
Dated as of February 27, 2011
TABLE OF CONTENTS
Page | ||||
Article I |
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DEFINITIONS |
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Section 1.1 Definitions |
2 | |||
Article II |
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THE MERGER |
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Section 2.1 Merger |
13 | |||
Section 2.2 Closing |
13 | |||
Section 2.3 Effective Time |
14 | |||
Section 2.4 Organizational Documents |
15 | |||
Section 2.5 Tax Consequences |
15 | |||
Section 2.6 Transaction Structure |
15 | |||
Article III |
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EFFECT OF THE MERGER |
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Section 3.1 Effect on Shares |
15 | |||
Section 3.2 Exchange Fund; Exchange Agent |
16 | |||
Section 3.3 Stock Options; Restricted Stock Units; Restricted Stock; Performance Shares; Dividend Equivalent Rights |
20 | |||
Section 3.4 Withholding Rights |
23 | |||
Section 3.5 Lost Certificates |
24 | |||
Section 3.6 Dissenters’ Rights |
24 | |||
Section 3.7 Fractional Shares |
24 | |||
Article IV |
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REPRESENTATIONS AND WARRANTIES OF THE COMPANY |
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Section 4.1 Organization and Qualification; Subsidiaries |
25 | |||
Section 4.2 Organizational Documents |
25 | |||
Section 4.3 Capital Structure |
26 | |||
Section 4.4 Authority |
28 | |||
Section 4.5 No Conflict; Required Filings and Consents |
28 | |||
Section 4.6 Permits; Compliance With Law |
29 |
i
Page | ||||
Section 4.7 SEC Filings; Financial Statements |
30 | |||
Section 4.8 Disclosure Documents |
32 | |||
Section 4.9 Absence of Certain Changes or Events |
33 | |||
Section 4.10 Employee Benefit Plans |
33 | |||
Section 4.11 Labor and Other Employment Matters |
35 | |||
Section 4.12 Material Contracts |
35 | |||
Section 4.13 Litigation |
37 | |||
Section 4.14 Environmental Matters |
37 | |||
Section 4.15 Intellectual Property |
38 | |||
Section 4.16 Properties |
39 | |||
Section 4.17 Taxes |
43 | |||
Section 4.18 Insurance |
46 | |||
Section 4.19 Opinion of Financial Advisor |
46 | |||
Section 4.20 Takeover Statutes |
46 | |||
Section 4.21 Vote Required |
46 | |||
Section 4.22 Brokers |
46 | |||
Section 4.23 Investment Company Act |
47 | |||
Section 4.24 Affiliate Transactions |
47 | |||
Section 4.25 No Other Representations or Warranties |
47 | |||
Article V |
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REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB |
||||
Section 5.1 Organization and Qualification; Subsidiaries |
48 | |||
Section 5.2 Organizational Documents |
48 | |||
Section 5.3 Capital Structure |
49 | |||
Section 5.4 Authority |
50 | |||
Section 5.5 No Conflict; Required Filings and Consents |
51 | |||
Section 5.6 Permits; Compliance With Law |
52 | |||
Section 5.7 SEC Filings; Financial Statements |
53 | |||
Section 5.8 Disclosure Documents |
55 | |||
Section 5.9 Absence of Certain Changes or Events |
55 | |||
Section 5.10 Certain ERISA Matters |
55 | |||
Section 5.11 Absence of Labor Dispute |
56 | |||
Section 5.12 Material Contracts |
56 | |||
Section 5.13 Litigation |
56 | |||
Section 5.14 Environmental Matters |
56 | |||
Section 5.15 Intellectual Property |
57 | |||
Section 5.16 Properties |
58 | |||
Section 5.17 Taxes |
61 | |||
Section 5.18 Insurance |
63 | |||
Section 5.19 Vote Required |
64 | |||
Section 5.20 Brokers |
64 | |||
Section 5.21 Investment Company Act |
64 | |||
Section 5.22 Sufficient Funds |
64 |
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Page | ||||
Section 5.23 Ownership of Merger Sub; No Prior Activities |
64 | |||
Section 5.24 Ownership of Company Common Stock |
64 | |||
Section 5.25 Affiliate Transactions |
65 | |||
Section 5.26 No Other Representations or Warranties |
65 | |||
Article VI |
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COVENANTS AND AGREEMENTS |
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Section 6.1 Conduct of Business by the Company |
65 | |||
Section 6.2 Conduct of Business by Parent |
71 | |||
Section 6.3 Preparation of Form S-4 and Joint Proxy Statement; Stockholder Meetings |
74 | |||
Section 6.4 Access to Information; Confidentiality |
76 | |||
Section 6.5 Company Acquisition Proposals |
77 | |||
Section 6.6 Appropriate Action; Consents; Filings |
81 | |||
Section 6.7 Notification of Certain Matters; Transaction Litigation |
82 | |||
Section 6.8 Public Announcements |
83 | |||
Section 6.9 Directors’ and Officers’ Indemnification and Insurance |
84 | |||
Section 6.10 Employee Benefit Matters |
86 | |||
Section 6.11 Certain Tax Matters |
88 | |||
Section 6.12 Dividends |
88 | |||
Section 6.13 Merger Sub |
88 | |||
Section 6.14 Section 16 Matters |
89 | |||
Section 6.15 Stock Exchange Listing |
89 | |||
Section 6.16 Voting of Shares |
89 | |||
Section 6.17 Parent Board of Directors |
89 | |||
Article VII |
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CONDITIONS |
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Section 7.1 Conditions to the Obligations of Each Party |
89 | |||
Section 7.2 Conditions to the Obligations of Parent and Merger Sub |
90 | |||
Section 7.3 Conditions to the Obligations of the Company |
91 | |||
Article VIII |
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TERMINATION, AMENDMENT AND WAIVER |
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Section 8.1 Termination |
93 | |||
Section 8.2 Effect of Termination |
94 | |||
Section 8.3 Termination Fee |
95 | |||
Section 8.4 Amendment |
98 | |||
Section 8.5 Waiver |
98 | |||
Section 8.6 Fees and Expenses |
99 |
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Page | ||||
Article IX |
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GENERAL PROVISIONS |
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Section 9.1 Non-Survival of Representations and Warranties |
99 | |||
Section 9.2 Notices |
99 | |||
Section 9.3 Interpretation; Certain Definitions |
100 | |||
Section 9.4 Severability |
101 | |||
Section 9.5 Assignment; Delegation |
101 | |||
Section 9.6 Entire Agreement |
101 | |||
Section 9.7 No Third-Party Beneficiaries |
101 | |||
Section 9.8 Specific Performance |
101 | |||
Section 9.9 Counterparts |
102 | |||
Section 9.10 Governing Law |
102 | |||
Section 9.11 Consent to Jurisdiction |
102 | |||
Section 9.12 WAIVER OF JURY TRIAL |
103 |
iv
THIS AGREEMENT AND PLAN OF MERGER, dated as of February 27, 2011 (this “Agreement”),
is made by and among Ventas, Inc., a Delaware corporation (“Parent”), Needles Acquisition
LLC, a Delaware limited liability company and a direct wholly owned subsidiary of Parent
(“Merger Sub”), and Nationwide Health Properties, Inc., a Maryland corporation (the
“Company”).
W I T N E S S E T H:
WHEREAS, the parties hereto wish to effect a business combination transaction in which the
Company will be merged with and into Merger Sub, with Merger Sub being the surviving entity (the
“Merger”), and each outstanding share of common stock, par value $0.10 per share (the
“Company Common Stock”), of the Company will be converted into the right to receive the
Merger Consideration (as defined herein), upon the terms and subject to the conditions set forth in
this Agreement and in accordance with the MGCL and the DLLCA;
WHEREAS, the respective boards of directors of the Company and Parent have approved this
Agreement, the Merger and the other transactions contemplated by this Agreement and declared that
this Agreement, the Merger and the other transactions contemplated by this Agreement are advisable;
WHEREAS, the respective boards of directors of the Company and Parent have directed that this
Agreement, the Merger and the other transactions contemplated by this Agreement be submitted for
consideration at meetings of their respective stockholders and have resolved to recommend that
their respective stockholders vote to approve this Agreement and the Merger and the other
transactions contemplated by this Agreement;
WHEREAS, Parent, in its capacity as the sole member of Merger Sub, has taken all actions
required for the execution of this Agreement by Merger Sub and to adopt and approve this Agreement
and to approve the consummation by Merger Sub of the Merger and the other transactions contemplated
by this Agreement;
WHEREAS, for United States federal income tax purposes (and, where applicable, state and local
income tax purposes), the parties intend that the Merger will qualify as a reorganization within
the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”)
and that this Agreement be, and is hereby adopted as, a plan of reorganization for purposes of
Sections 354 and 361 of the Code; and
WHEREAS, each of the Company, Parent and Merger Sub desire to make certain representations,
warranties, covenants and agreements in connection with the Merger, and also to prescribe various
conditions to the Merger.
NOW, THEREFORE, in consideration of the foregoing and the mutual representations, warranties
and covenants and subject to the conditions herein contained, and intending to be legally bound
hereby, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions.
(a) For purposes of this Agreement:
“1989 Plan” shall mean the Company’s 1989 Stock Option Plan, as amended and restated.
“2005 Plan” shall mean the Company’s 2005 Performance Incentive Plan, as amended.
“Acceptable Confidentiality Agreement” shall mean a customary confidentiality
agreement containing terms no less favorable to the Company than the terms set forth in the Company
Confidentiality Agreement; provided, however, that such confidentiality agreement
shall not prohibit compliance by the Company with any of the provisions of Section 6.5.
“Action” shall mean any claim, action, suit, proceeding, arbitration, mediation or
other investigation.
“Affiliate” of a specified Person shall mean a Person who, directly or indirectly
through one or more intermediaries, controls, is controlled by, or is under common control with,
such specified Person.
“Aggregate Cash Consideration” shall mean the sum of (i) the Cash Option Payment, if
applicable, and (ii) the aggregate amount paid with respect to fractional shares in accordance with
Section 3.7.
“Atria Agreement” shall mean that certain Merger Agreement, dated as of October 21,
2010, by and among Parent, Ventas SL I, LLC, Ventas XX XX, LLC, Ventas SL III, LLC, Atria Holdings
LLC, Lazard Senior Housing Partners LP, LSHP Coinvestment Partnership I LP, Atria Senior Living
Group, Inc., One Lantern Senior Living Inc, and LSHP Coinvestment I Inc.
“Business Day” shall mean any day other than a Saturday, Sunday or a day on which all
banking institutions in New York, New York or Los Angeles, California are authorized or obligated
by Law or executive order to close.
“Company Benefit Plan” shall mean each material “employee pension benefit plan” (as
defined in Section 3(2) of ERISA), each material “employee welfare benefit plan” (as
2
defined in
Section 3(1) of ERISA), each employment, termination or severance agreement and each other material
plan, arrangement or policy (written or oral) relating to stock options, stock purchases, deferred
compensation, bonus, severance, retention, fringe benefits, cash- or equity-based incentive,
health, medical, dental, disability, accident, life insurance, vacation, paid time off, perquisite,
severance, change of control, retention, employment, separation, retirement, pension, or savings or
other employee benefits, in each case maintained or contributed to, or required to be maintained or
contributed to, by the Company or the Company Subsidiaries, other than any Multiemployer Plan or
any plan, arrangement or policy mandated by applicable Law.
“Company Confidentiality Agreement” shall mean the letter agreement, dated November
19, 2010, as amended from time to time, between the Company and Parent.
“Company Employment Agreement” shall mean each contract or agreement (whether written
or unwritten) of the Company or any Company Subsidiary with or addressed to any individual who is
rendering or has rendered services thereto as an employee, director or consultant pursuant to which
any Company or Subsidiary has any actual or contingent liability or obligation to provide
compensation and/or benefits in consideration for past, present or future services.
“Company Material Adverse Effect” shall mean any event, circumstance, change or effect
(a) that is material and adverse to the business, assets, properties, liabilities, condition
(financial or otherwise) or results of operations of the Company and the Company Subsidiaries,
taken as a whole or (b) that will, or would reasonably be expected to, prevent or materially impair
the ability of the Company, Parent or Merger Sub to consummate the Merger before the Outside Date;
provided, however, that for purposes of clause (a) “Company Material Adverse
Effect” shall not include any event, circumstance, change or effect to the extent arising out of or
resulting from (i) any failure of the Company to meet any projections or forecasts or any decrease
in the market price of the Company Common Stock (it being understood and agreed that any event,
circumstance, change or effect giving rise to such failure or decrease shall be taken into account
in determining whether there has been a Company Material Adverse Effect), (ii) any events,
circumstances, changes or effects that affect the healthcare REIT industry generally, (iii) any
changes in the United States or global economy or capital, financial or securities markets
generally, including changes in interest or exchange rates, (iv) any changes in the legal or
regulatory conditions in the geographic regions in which the Company and the Company Subsidiaries
operate or own or lease properties, (v) the commencement, escalation or worsening of a war or armed
hostilities or the occurrence of acts of terrorism or sabotage, (vi) the negotiation, execution or
announcement of this Agreement, or the consummation or anticipation of the Merger or other
transactions contemplated hereby, including the impact of any of the foregoing on relationships,
contractual or otherwise, with tenants, suppliers, lenders, investors, future partners or
employees, (vii) the taking of any action expressly required by, or the failure to take any action
expressly prohibited by, this Agreement, or the taking of any action at the written request or with
the prior written consent of an executive officer of Parent, (viii) earthquakes, hurricanes or
other natural disasters,
(ix) any damage or destruction of any Company Property that is substantially covered by
insurance, or (x) changes in Law or GAAP, which in the case of each of clauses (ii), (iii), (v) and
(x) do not disproportionately affect the Company and the Company Subsidiaries, taken as a whole,
relative to other participants in the healthcare REIT industry in the United States, and in the
case of clauses (iv) and (viii) do not disproportionately
3
affect the Company and the Company
Subsidiaries, taken as a whole, relative to other participants in the healthcare REIT industry in
the geographic regions in which the Company and the Company Subsidiaries operate or own or lease
properties.
“Company Option” shall mean any outstanding option to purchase shares of Company
Common Stock under any of the Company Plans.
“Company Performance Share” shall mean any shares of Company Common Stock that are
subject to performance-based conditions granted pursuant to the Company Plans.
“Company Plans” shall mean the 1989 Plan and the 2005 Plan.
“Company Restricted Stock” shall mean any shares of Company Common Stock that are
subject to restrictions on transfer and/or forfeiture granted pursuant to the Company Plans or
otherwise.
“Company Restricted Stock Unit” shall mean any restricted stock units granted pursuant
to the Company Plans.
“Company Severance Pay Plan” shall mean a Company Benefit Plan that is (i) an employee
welfare benefit plan” within the meaning of Section 3(1) of ERISA and (2) constitutes a “severance
pay plan” that satisfies each of the conditions set forth in Department of Labor Regulation Section
2510.3-2.
“Company Stockholder Meeting” shall mean the meeting of the holders of shares of
Company Common Stock for the purpose of seeking the Company Stockholder Approval, including any
postponement and adjournment thereof.
“Company Subsidiary” shall mean (a) any corporation of which more than fifty percent
(50%) of the outstanding voting securities is directly or indirectly owned by the Company, (b) any
partnership, limited liability company, joint venture or other entity of which more than fifty
percent (50%) of the total equity interest is directly or indirectly owned by the Company or of
which the Company or any Company Subsidiary is a general partner, manager, managing member or the
equivalent and (c) MS NHP Mass, Inc.
“Company Title Insurance Policy” shall mean each policy of title insurance insuring
the Company’s or the applicable Company Subsidiary’s (or the applicable predecessor’s) title to or
leasehold interest in
Company Properties, subject to the matters and printed exceptions set forth in the Company
Title Insurance Policies.
“Confidentiality Agreements” shall mean the Company Confidentiality Agreement and the
Parent Confidentiality Agreement.
“control” (including the terms “controlled by” and “under common control with”) shall
mean the possession, directly or indirectly, of the power to direct or cause the direction of the
management and policies of a person, whether through the ownership of voting securities, as trustee
or executor, by contract or otherwise.
4
“Delaware Secretary” shall mean the Secretary of State of the State of Delaware.
“DLLCA” shall mean the Delaware Limited Liability Company Act.
“Environmental Law” shall mean any Law relating to the pollution or protection of the
environment (including air, surface water, groundwater, land surface or subsurface land), or human
health or safety (as such matters relate to Hazardous Materials), including Laws relating to the
use, handling, presence, transportation, treatment, storage, disposal, release or discharge of
Hazardous Materials.
“Environmental Permit” shall mean any permit, approval, license or other authorization
required under any applicable Environmental Law.
“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended.
“ERISA Affiliate” shall mean, with respect to any entity, trade or business, any other
entity, trade or business that is, or was at the relevant time, a member of a group described in
Section 414(b), (c), (m) or (o) of the Code or Section 4001(b)(1) of ERISA that includes or
included the first entity, trade or business, or that is, or was at the relevant time, a member of
the same “controlled group” as the first entity, trade or business pursuant to Section 4001(a)(14)
of ERISA.
“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.
“Expense Amount” shall mean $20,000,000.
“Expenses” shall mean all expenses (including all fees and expenses of counsel,
accountants, investment bankers, experts and consultants to a party hereto and its affiliates)
incurred by a party or on its behalf in connection with or related to the authorization,
preparation, negotiation, execution and performance of this
Agreement, the preparation, printing, and filing of the Form S-4, the preparation, printing,
filing and mailing of the Joint Proxy Statement and all SEC and other regulatory filing fees
incurred in connection with the Form S-4 and the Joint Proxy Statement, the solicitation of
stockholder approvals, engaging the services of the Exchange Agent, obtaining third party consents,
any other filings with the SEC and all other matters related to the closing of the Merger and the
other transactions contemplated by this Agreement.
“GAAP” shall mean the United States generally accepted accounting principles.
“Governmental Authority” shall mean any United States (federal, state or local) or
foreign government, arbitration panel, or any governmental or quasi-governmental, regulatory,
judicial or administrative authority, board, bureau, agency, commission or self-regulatory
organization.
“Hazardous Substances” shall mean (i) those substances listed in, defined in or
regulated under any Environmental Law, including without limitation, the following federal statutes
and their state counterparts, as each may be amended from time to time, and all
5
regulations
thereunder: the Resource Conservation and Recovery Act, the Comprehensive Environmental Response,
Compensation and Liability Act, the Toxic Substances Control Act, the Clean Water Act, the Safe
Drinking Water Act, the Atomic Energy Act and the Clean Air Act; (ii) petroleum and petroleum
products, including crude oil and any fractions thereof; and (iii) polychlorinated biphenyls,
methane, asbestos, and radon.
“Indebtedness” shall mean, with respect to any Person, (i) all indebtedness, notes
payable, accrued interest payable or other obligations for borrowed money, whether secured or
unsecured, (ii) all obligations under conditional sale or other title retention agreements, or
incurred as financing, in either case with respect to property acquired by such Person, (iii) all
obligations issued, undertaken or assumed as the deferred purchase price for any property or
assets, (iv) all obligations under capital leases, (v) all obligations in respect of bankers
acceptances or letters of credit, (vi) all obligations under interest rate cap, swap, collar or
similar transaction or currency hedging transactions, and (vii) any guarantee of any of the
foregoing, whether or not evidenced by a note, mortgage, bond, indenture or similar instrument.
“Indemnitee” shall mean any individual who, on or prior to the Effective Time, was an
officer, director, partner, member, or trustee of the Company or served on behalf of the Company as
an officer, director, partner, member or trustee of any of the Company Subsidiaries.
“Intellectual Property” shall mean all United States and foreign (i) patents, patent
applications, invention disclosures, and all related continuations, continuations-in-part,
divisionals, reissues, re-examinations, substitutions and extensions thereof, (ii) trademarks,
service marks, trade dress, logos, trade names, corporate names, Internet domain names, design
rights and other source identifiers, together with the goodwill symbolized by any of the foregoing,
(iii) copyrightable works and copyrights,
(iv) confidential and proprietary information, including trade secrets, know-how, ideas,
formulae, models and methodologies, (v) all rights in the foregoing and in other similar intangible
assets, and (vi) all applications and registrations for the foregoing.
“Investment Company Act” shall mean the Investment Company Act of 1940, as amended.
“IRS” shall mean the United States Internal Revenue Service.
“knowledge” shall mean the actual knowledge of the following officers and employees of
the Company and Parent, as applicable, after inquiry reasonable under the circumstances: (i) for
the Company: Xxxxxxx X. Xxxxxxxx, Xxxx X. Xxxxxx, Xxxxxx X. Xxxxxxx, and Xxxxx X. Xxxx; and
(ii) for Parent: Xxxxx X. Xxxxxx, Xxxxxxx X. Xxxxx, T. Xxxxxxx Xxxxx and Xxxxx X. Xxxx.
“Law” shall mean any and all domestic (federal, state or local) or foreign laws,
rules, regulations, orders, judgments or decrees promulgated by any Governmental Authority.
“Lien” shall mean with respect to any asset (including any security), any mortgage,
deed of trust, claim, condition, covenant, lien, pledge, charge, security interest, preferential
arrangement, option or other third party right (including right of first refusal or first offer),
restriction, right of way, easement, or title defect or encumbrance of any kind in respect of
6
such
asset, including any restriction on the use, voting, transfer, receipt of income or other exercise
of any attributes of ownership.
“MGCL” shall mean the Maryland General Corporation Law.
“Minimum Distribution Dividend” shall mean a distribution with respect to the
Company’s taxable year ending at the Effective Time which is sufficient to allow the Company to (i)
satisfy the distribution requirements set forth in Section 857(a) of the Code and (ii) avoid, to
the extent possible, the imposition of income tax under Section 857(b) of the Code and the
imposition of excise tax under Section 4981 of the Code.
“Multiemployer Plan” shall mean any “multiemployer plan” within the meaning of Section
3(37) of ERISA.
“NHP/PMB” shall mean NHP/PMB L.P., a Delaware limited partnership.
“NHP/PMB Partnership Agreement” shall mean that certain Amended and Restated Agreement
of Limited Partnership of NHP/PMB, dated as of April 1, 2008, as amended.
“NYSE” shall mean the New York Stock Exchange.
“Order” shall mean a judgment, order or decree of a Governmental Authority.
“Parent Benefit Plan” shall mean each material “employee pension benefit plan” (as
defined in Section 3(2) of ERISA), each material “employee welfare benefit plan” (as defined in
Section 3(1) of ERISA), each employment, termination or severance agreement and each other material
plan, arrangement or policy (written or oral) relating to stock options, stock purchases, deferred
compensation, bonus, severance, retention, fringe benefits, cash- or equity-based incentive,
health, medical, dental, disability, accident, life insurance, vacation, paid time off, perquisite,
severance, change of control, retention, employment, separation, retirement, pension, or savings or
other employee benefit, in each case maintained or contributed to, or required to be maintained or
contributed to, by Parent or the Parent Subsidiaries, other than any Multiemployer Plan or any
plan, arrangement or policy mandated by applicable Law.
“Parent Confidentiality Agreement” shall mean the letter agreement, dated January 25,
2011, as amended from time to time, between Parent and the Company.
“Parent Lease” shall mean each lease and sublease that was in effect as of December
31, 2010 and to which Parent, Merger Sub or the other Parent Subsidiaries are parties as lessors or
sublessors with respect to each of the applicable Parent Properties.
“Parent Material Adverse Effect” shall mean any event, circumstance, change or effect
(a) that is material and adverse to the business, assets, properties, liabilities, condition
(financial or otherwise) or results of operations of Parent, Merger Sub and the other Parent
Subsidiaries, taken as a whole or (b) that will, or would reasonably be expected to, prevent or
materially impair the ability of the Company, Parent or Merger Sub to consummate the Merger before
the Outside Date; provided, however, that for purposes of clause (a) “Parent
Material Adverse Effect” shall not include any event, circumstance, change or effect to the extent
arising
7
out of or resulting from (i) any failure of Parent to meet any projections or forecasts or
any decrease in the market price of the Parent Common Stock (it being understood and agreed that
any event, circumstance, change or effect giving rise to such failure or decrease shall be taken
into account in determining whether there has been a Parent Material Adverse Effect), (ii) any
events, circumstances, changes or effects that affect the healthcare REIT industry generally, (iii)
any changes in the United States or global economy or capital, financial or securities markets
generally, including changes in interest or exchange rates, (iv) any changes in the legal or
regulatory conditions in the geographic regions in which Parent and the Parent Subsidiaries operate
or own or lease properties, (v) the commencement, escalation or worsening of a war or armed
hostilities or the occurrence of acts of terrorism or sabotage, (vi) the negotiation, execution or
announcement of this Agreement, or the consummation or anticipation of the Merger or other
transactions contemplated hereby, including the impact of any of the foregoing on relationships,
contractual or otherwise, with tenants,
suppliers, lenders, investors, future partners or employees, (vii) the taking of any action
expressly required by, or the failure to take any action expressly prohibited by, this Agreement,
or the taking of any action at the written request or with the prior written consent of an
executive officer of the Company, (viii) earthquakes, hurricanes or other natural disasters, (ix)
any damage or destruction of any Parent Property that is substantially covered by insurance, or (x)
changes in Law or GAAP, which in the case of each of clauses (ii), (iii), (v) and (x) do not
disproportionately affect Parent and the Parent Subsidiaries, taken as a whole, relative to other
participants in the healthcare REIT industry in the United States, and in the case of clauses (iv)
and (viii) do not disproportionately affect Parent and the Parent Subsidiaries, taken as a whole,
relative to other participants in the healthcare REIT industry in the geographic regions in which
Parent and the Parent Subsidiaries operate or own or lease properties.
“Parent Material Contract” shall mean each contract or agreement in effect as of the
date of this Agreement to which Parent or any Parent Subsidiary is a party (specifically excluding
(x) any contract or agreement that will no longer be in effect following the Closing and (y) any
contract or agreement that is, or at the Closing will be, terminable-at-will (as defined below) or
terminable upon not more than ninety (90) days’ notice by Parent or any Parent Subsidiary without
penalty) that is required to be filed as an exhibit to the Parent SEC Filings pursuant to Items
601(b)(2), (4), (9) and (10) of Regulation S-K promulgated by the SEC. A contract or agreement is
“terminable-at-will”, as that expression is used in this definition if it expressly provides that
it is terminable-at-will, regardless of whether any covenant of good faith and fair dealing may be
implied as a matter of law in connection with the termination thereof.
“Parent Stockholder Meeting” shall mean the meeting of the holders of shares of Parent
Common Stock for the purpose of seeking the Parent Stockholder Approval, including any postponement
and adjournment thereof.
“Parent Subsidiary” shall mean (a) any corporation of which more than fifty percent
(50%) of the outstanding voting securities is directly or indirectly owned by Parent, or (b) any
partnership, limited liability company, joint venture or other entity of which more than fifty
percent (50%) of the total equity interest is directly or indirectly owned by Parent or of which
Parent or any Parent Subsidiary is a general partner, manager, managing member or the equivalent.
8
“Parent Title Insurance Policy” shall mean each policy of title insurance insuring
Parent’s or the applicable Parent Subsidiary’s (or the applicable predecessor’s) title to or
leasehold interest in Parent Properties, subject to the matters and printed exceptions set forth in
the Parent Title Insurance Policies.
“Person” shall mean an individual, corporation, partnership, limited partnership,
limited liability company, person (including, without limitation, a “person” as defined in Section
13(d)(3) of the Exchange Act), trust, association or other entity or a government or a political
subdivision, agency or instrumentality of a government.
“Representative” shall mean, with respect to any Person, such Person’s directors,
officers, employees, consultants, advisors (including, without limitation, attorneys, accountants,
consultants, investment bankers, and financial advisors), agents and other representatives.
“Xxxxxxxx-Xxxxx Act” shall mean the Xxxxxxxx-Xxxxx Act of 2002, as amended.
“SEC” shall mean the United States Securities and Exchange Commission (including the
staff thereof).
“Securities Act” shall mean the Securities Act of 1933, as amended.
“Tax” or “Taxes” shall mean any federal, state, local or foreign or other
taxes of any kind, together with any interest, penalties and additions to tax, imposed by any
Governmental Authority, including taxes on or with respect to income, franchises, gross receipts,
property, sales, use, capital stock, payroll, employment, unemployment and net worth, and taxes in
the nature of excise, withholding, and value added taxes.
“Tax Return” shall mean any return, report or similar statement, together with any
attached schedule, that is required to be provided to a Governmental Authority with respect to
Taxes, including information returns, refunds claims, amended returns and declarations of estimated
Tax.
“Termination Payment” shall mean the Expense Amount or the sum of the Termination Fee
and the Expense Amount, as applicable and payable pursuant to Section 8.3.
“Third Party” shall mean any Person or group of Persons other than Parent, Merger Sub
and their respective Affiliates.
“VWAP of Parent Common Stock” shall mean the volume weighted average price of Parent
Common Stock for the ten (10) trading days immediately prior to the Closing Date, starting with the
opening of trading on the first trading day to the closing of the last trading day prior to the
Closing Date, as reported by Bloomberg.
(b) The following terms shall have the respective meanings set forth in the Section set forth
below opposite such term:
1989 Plan |
Section 1.1(a) | |||
2005 Plan |
Section 1.1(a) |
9
Acceptable Confidentiality Agreement |
Section 1.1(a) | |||
Action |
Section 1.1(a) | |||
Additional Dividend Amount |
Section 6.12(a) | |||
Adverse Recommendation Change |
Section 6.5(d) | |||
Affiliate |
Section 1.1(a) | |||
Aggregate Cash Consideration |
Section 1.1(a) | |||
Aggregate Merger Consideration |
Section 3.2(a) | |||
Agreement |
Preamble | |||
Alternative Acquisition Agreement |
Section 6.5(a) | |||
Articles of Merger |
Section 2.3(a) | |||
Atria Agreement |
Section 1.1(a) | |||
Book-Entry Share |
Section 3.1(b) | |||
Business Day |
Section 1.1(a) | |||
Cash Option Payment |
Section 3.3(a)(i) | |||
Certificate |
Section 3.1(b) | |||
Charter Amendment |
Section 5.4(a) | |||
Class A Units |
Section 4.3(a) | |||
Closing |
Section 2.2 | |||
Closing Date |
Section 2.2 | |||
Code |
Recitals | |||
Company |
Preamble | |||
Company Acquisition Proposal |
Section 6.5(h)(i) | |||
Company Assumed Award |
Section 3.3(f) | |||
Company Benefit Plan |
Section 1.1(a) | |||
Company Board |
Section 4.4(a) | |||
Company Bylaws |
Section 4.2 | |||
Company Charter |
Section 4.2 | |||
Company Common Stock |
Recitals | |||
Company Confidentiality Agreement |
Section 1.1(a) | |||
Company DER |
Section 3.3(e) | |||
Company Disclosure Letter |
Article IV | |||
Company Employees |
Section 6.10(a) | |||
Company Employment Agreement |
Section 1.1(a) | |||
Company Insurance Policies |
Section 4.18 | |||
Company Leases |
Section 4.16(h) | |||
Company Material Adverse Effect |
Section 1.1(a) | |||
Company Material Contract |
Section 4.12(a) | |||
Company MOBs |
Section 4.16(h) | |||
Company Option |
Section 1.1(a) | |||
Company Performance Share |
Section 1.1(a) | |||
Company Permits |
Section 4.6(a) | |||
Company Permitted Liens |
Section 4.16(b) | |||
Company Plans |
Section 1.1(a) | |||
Company Preferred Stock |
Section 4.3(a) | |||
Company Properties |
Section 4.16(a) | |||
Company Property |
Section 4.16(a) |
10
Company Quarterly Dividend |
Section 6.1(b)(ii) | |||
Company Recommendation |
Section 4.4(a) | |||
Company Restricted Stock |
Section 1.1(a) | |||
Company Restricted Stock Unit |
Section 1.1(a) | |||
Company SEC Filings |
Section 4.7(a) | |||
Company Severance Pay Plan |
Section 1.1(a) | |||
Company Stockholder Approval |
Section 4.21 | |||
Company Stockholder Meeting |
Section 1.1(a) | |||
Company Subsidiary |
Section 1.1(a) | |||
Company Tax Protection Agreements |
Section 4.17(h) | |||
Company Third Party |
Section 4.16(l) | |||
Company Title Insurance Policy |
Section 1.1(a) | |||
Confidentiality Agreements |
Section 1.1(a) | |||
control |
Section 1.1(a) | |||
D&O Insurance |
Section 6.9(c) | |||
Delaware Secretary |
Section 1.1(a) | |||
Delayed Closing |
Section 2.2(b) | |||
DER Payment |
Section 3.3(e) | |||
DLLCA |
Section 1.1(a) | |||
Effective Time |
Section 2.3(a) | |||
Environmental Law |
Section 1.1(a) | |||
Environmental Permit |
Section 1.1(a) | |||
ERISA |
Section 1.1(a) | |||
ERISA Affiliate |
Section 1.1(a) | |||
Exchange Act |
Section 1.1(a) | |||
Exchange Agent |
Section 3.2(a) | |||
Exchange Fund |
Section 3.2(a) | |||
Exchange Ratio |
Section 3.1(b) | |||
Expense Amount |
Section 1.1(a) | |||
Expenses |
Section 1.1(a) | |||
Form S-4 |
Section 4.5(b) | |||
GAAP |
Section 1.1(a) | |||
Governmental Authority |
Section 1.1(a) | |||
Hazardous Substances |
Section 1.1(a) | |||
Indebtedness |
Section 1.1(a) | |||
Indemnitee |
Section 1.1(a) | |||
Inquiry |
Section 6.5(a) | |||
Intellectual Property |
Section 1.1(a) | |||
Interim Period |
Section 6.1(a) | |||
Investment Company Act |
Section 1.1(a) | |||
IRS |
Section 1.1(a) | |||
X.X. Xxxxxx |
Section 4.19 | |||
Joint Proxy Statement |
Section 4.5(b) | |||
knowledge |
Section 1.1(a) | |||
Law |
Section 1.1(a) | |||
Letter of Transmittal |
Section 3.2(c)(i) |
11
Lien |
Section 1.1(a) | |||
Material Company Leases |
Section 4.16(i) | |||
Material Parent Leases |
Section 5.16(g) | |||
Merger |
Recitals | |||
Merger Consideration |
Section 3.1(b) | |||
Merger Sub |
Preamble | |||
Merger Sub Common Stock |
Section 3.1(c) | |||
MGCL |
Section 1.1(a) | |||
Minimum Distribution Dividend |
Section 1.1(a) | |||
Multiemployer Plan |
Section 1.1(a) | |||
New Plans |
Section 6.10(c) | |||
NHP/PMB |
Section 1.1(a) | |||
NHP/PMB Partnership Agreement |
Section 1.1(a) | |||
Notice of Superior Proposal |
Section 6.5(e) | |||
NYSE |
Section 1.1(a) | |||
Option Payment |
Section 3.3(a) | |||
Order |
Section 1.1(a) | |||
Outside Date |
Section 8.1(b)(i) | |||
Parent |
Preamble | |||
Parent Acquisition Proposal |
Section 8.3(e) | |||
Parent Benefit Plan |
Section 1.1(a) | |||
Parent Board |
Section 5.7(c) | |||
Parent Bylaws |
Section 5.2 | |||
Parent Charter |
Section 5.2 | |||
Parent Common Stock |
Section 3.1(b) | |||
Parent Confidentiality Agreement |
Section 1.1(a) | |||
Parent Disclosure Letter |
Article V | |||
Parent Insurance Policies |
Section 5.18 | |||
Parent Lease |
Section 1.1(a) | |||
Parent Material Adverse Effect |
Section 1.1(a) | |||
Parent Material Contract |
Section 5.12 | |||
Parent Permits |
Section 5.6(a) | |||
Parent Permitted Liens |
Section 5.16(a) | |||
Parent Preferred Stock |
Section 5.3(a) | |||
Parent Properties |
Section 5.16(a) | |||
Parent Property |
Section 5.16(a) | |||
Parent Quarterly Dividend |
Section 6.2(b)(ii) | |||
Parent Recommendation |
Section 5.4(a) | |||
Parent SEC Filings |
Section 5.7(a) | |||
Parent Stock |
Section 5.3(a) | |||
Parent Stockholder Approval |
Section 5.19 | |||
Parent Stockholder Meeting |
Section 1.1(a) | |||
Parent Subsidiary |
Section 1.1(a) | |||
Parent Subsidiary Partnership |
Section 5.17(h) | |||
Parent Tax Protection Agreements |
Section 5.17(h) | |||
Parent Third Party |
Section 5.16(j) |
12
Parent Title Insurance Policy |
Section 1.1(a) | |||
Performance Share Payment |
Section 3.3(d) | |||
Person |
Section 1.1(a) | |||
Qualifying Income |
Section 8.3(d) | |||
REIT |
Section 4.17(b) | |||
Representative |
Section 1.1(a) | |||
Restricted Stock Payment |
Section 3.3(c) | |||
Restricted Stock Unit Payment |
Section 3.3(b) | |||
Rollover RSUs |
Section 3.3(b) | |||
Xxxxxxxx-Xxxxx Act |
Section 1.1(a) | |||
SDAT |
Section 2.3(a) | |||
SEC |
Section 1.1(a) | |||
Securities Act |
Section 1.1(a) | |||
Stock Award Payment |
Section 3.1(d) | |||
Superior Proposal |
Section 6.5(h)(i) | |||
Surviving Entity |
Section 2.1 | |||
Takeover Statutes |
Section 4.20 | |||
Tax |
Section 1.1(a) | |||
Tax Return |
Section 1.1(a) | |||
Taxes |
Section 1.1(a) | |||
Termination Fee |
Section 8.3(a)(i) | |||
Termination Fee Payee |
Section 8.3(d) | |||
Termination Fee Payor |
Section 8.3(d) | |||
Termination Payment |
Section 1.1(a) | |||
Third Party |
Section 1.1(a) | |||
VWAP of Parent Common Stock |
Section 1.1(a) |
ARTICLE II
THE MERGER
Section 2.1 Merger. Upon the terms and subject to the conditions of this Agreement, and in
accordance with the MGCL and the DLLCA, at the Effective Time, the Company shall be merged with and
into Merger Sub, whereupon the separate existence of the Company shall cease, and Merger Sub shall
continue under the name “Nationwide Health Properties, LLC” as the surviving entity in the Merger
(the “Surviving Entity”) and shall be governed by the laws of the State of Delaware. The
Merger shall have the effects specified in the MGCL and the DLLCA.
Section 2.2 Closing.
(a) The closing of the Merger (the “Closing”) shall occur as promptly as practicable
(but in no event later than the second (2nd) Business Day) after all of the conditions
set forth in Article VII (other than those conditions that by their terms are required to
be satisfied or waived at the Closing, but subject to the satisfaction or waiver of such
conditions) shall have
13
been satisfied or waived by the party entitled to the benefit of the same
and, subject to the foregoing, shall take place at such time and on a date to be specified by the
parties (the “Closing Date”). The Closing shall take place at the offices of Skadden,
Arps, Slate, Xxxxxxx & Xxxx LLP, 000 Xxxxx Xxxxx
Xxxxxx, Xxxxx 0000, Xxx Xxxxxxx, Xxxxxxxxxx, 00000, or at such other place as agreed to by the
parties hereto.
(b) If (i) Parent has directed or intends to direct the Company or any of the Company
Subsidiaries to give notice of prepayment or defeasance of any of the Company’s Indebtedness and
the earliest permitted prepayment or defeasance date for any of such Indebtedness falls after the
then-scheduled Closing Date or (ii) any regulatory approvals or significant third party consents
shall not have been obtained, then on a one-time basis, Parent may, by written notice to the
Company at least three (3) Business Days prior to the then scheduled Closing Date, defer the
Closing Date until a date no later than the earliest to occur of (x) such earliest permitted
prepayment or defeasance date (in the case of clause (i)), (y) thirty (30) days after the
previously-scheduled Closing Date, and (z) the Outside Date (such deferred Closing, a “Delayed
Closing”). In the event that Parent causes a Delayed Closing as contemplated by this
Section 2.2(b), all references in this Agreement to the Closing (except the references in
the preceding sentence) shall be deemed references to the Delayed Closing and the Closing Date
shall be deemed to occur on the date on which the Delayed Closing occurs.
Section 2.3 Effective Time.
(a) At the Closing, the Company, Parent and Merger Sub shall (i) cause articles of merger with
respect to the Merger (the “Articles of Merger”) to be duly executed and filed with the
State Department of Assessments and Taxation of Maryland (the “SDAT”) as provided under the
MGCL, (ii) cause a certificate of merger with respect to the Merger (the “Certificate of
Merger”) to be duly executed and filed with the Delaware Secretary as provided under the DLLCA
and (iii) make any other filings, recordings or publications required to be made by the Company or
Merger Sub under the MGCL or DLLCA in connection with the Merger. The Merger shall become
effective following the close of business on the Closing Date, with such date and time specified in
the Articles of Merger and the Certificate of Merger, or on such other date and time, not to exceed
thirty-one (31) days from the filing, as shall be agreed to by the Company and Parent and specified
in the Articles of Merger, following acceptance for record by SDAT, and the Certificate of Merger,
following acceptance by the Delaware Secretary (such date and time being hereinafter referred to as
the “Effective Time”).
(b) The Merger shall have the effects set forth in the MGCL, the DLLCA and this Agreement.
Without limiting the generality of the foregoing, and subject thereto, from and after the Effective
Time, the Surviving Entity shall possess all properties, rights, privileges, powers and franchises
of the Company and Merger Sub, and all of the claims, obligations, liabilities, debts and duties of
the Company and Merger Sub shall become the claims, obligations, liabilities, debts and duties of
the Surviving Entity.
14
Section 2.4 Organizational Documents. Subject to Section 6.9, at the Effective
Time, the certificate of formation and limited liability company agreement of Merger Sub, as in
effect immediately prior to the Effective Time, shall be the certificate of formation and limited
liability company agreement of the Surviving Entity, until thereafter amended in accordance with
applicable Law and the applicable provisions of such certificate of formation and limited liability
company agreement.
Section 2.5 Tax Consequences. It is intended that, for U.S. federal income tax purposes,
the Merger shall qualify as a reorganization within the meaning of Section 368(a) of the Code, and
that this Agreement be, and is hereby adopted as, a plan of reorganization for purposes of
Sections 354 and 361 of the Code.
Section 2.6 Transaction Structure. Notwithstanding anything in this Agreement to the
contrary, the Company shall, if requested by Parent at least five (5) Business Days prior to the
Company Stockholder Meeting, (a) agree to, and cooperate in the implementation of, certain
reorganization transactions by the Company prior to the Effective Time, including any transactions
that may be necessary to implement a holding company structure for the Company, (b) agree to, and
cooperate in the implementation of, any changes to the structure of the transactions contemplated
by this Agreement, including (i) changing the direction of the Merger so that the Company is the
Surviving Entity, (ii) adding new parties to the Agreement in the event that the holding company
structure contemplated by clause (a) is implemented, or (iii) switching to an exchange offer plus
back-end merger structure, and (c) cooperate with Parent with respect to any other reasonable
changes regarding the structure of the transactions contemplated herein (in the case of each of the
foregoing clauses (a) through (c), such cooperation shall include entering into appropriate
amendments to this Agreement and the Company Disclosure Letter and seeking a private letter ruling
from the IRS with respect to any reorganization by the Company or other change to the structure of
the transactions contemplated by this Agreement); provided, however, that such
cooperation contemplated by this Section 2.6 shall not (w) have any adverse impact on the
Company, (x) alter or change the amount or kind of the consideration to be issued to holders of
Company Common Stock, (y) adversely affect the tax consequences of the Merger to holders of Company
Common Stock, or (z) materially impede or delay consummation of the Merger.
ARTICLE III
EFFECT OF THE MERGER
Section 3.1 Effect on Shares. At the Effective Time, by virtue of the Merger and without
any action on the part of the Company, Parent, Merger Sub or the holder of any securities of the
Company, Parent or Merger Sub:
(a) Cancellation of Company Securities. Each share of Company Common Stock issued and
outstanding immediately prior to the Effective Time that is held by any wholly owned Company
Subsidiary, by Parent or by any Parent Subsidiary shall
15
automatically be canceled and retired and shall cease to exist, and no payment shall be made
with respect thereto.
(b) Conversion of Company Securities. Each share of Company Common Stock issued and
outstanding immediately prior to the Effective Time (other than shares to be canceled in accordance
with Section 3.1(a)) shall automatically be converted into the right to receive 0.7866
shares (the “Exchange Ratio”) of common stock, par value $0.25 per share (the “Parent
Common Stock”), of Parent, subject to adjustment as provided in Section 3.1(d) (the
“Merger Consideration”). All shares of Company Common Stock, when so converted, shall no
longer be outstanding and shall automatically be cancelled and retired and shall cease to exist,
and each holder of a certificate (a “Certificate”) or book-entry share registered in the
transfer books of the Company (a “Book-Entry Share”) that immediately prior to the
Effective Time represented shares of Company Common Stock shall cease to have any rights with
respect to such Company Common Stock other than the right to receive the Merger Consideration in
accordance with Section 3.2, including the right, if any, to receive, pursuant to
Section 3.7, cash in lieu of fractional shares of Parent Common Stock into which such
shares of Company Common Stock have been converted pursuant to this Section 3.1(b),
together with the amounts, if any, payable pursuant to Section 3.2(d).
(c) Treatment of Merger Sub Membership Interests. All membership interests of Merger
Sub (the “Merger Sub Interests”) issued and outstanding immediately prior to the Effective
Time shall remain as outstanding membership interests of the Surviving Entity.
(d) Adjustments. Without limiting the other provisions of this Agreement and subject
to Section 6.1(b)(ii) and Section 6.1(b)(iii), if at any time during the period
between the date of this Agreement and the Effective Time, the Company should split, combine or
otherwise reclassify the Company Common Stock, or make a distribution in Company Common Stock, or
otherwise change the Company Common Stock into any other securities, then (without limiting any
other rights of Parent or Merger Sub hereunder), the Merger Consideration and any Option Payment,
Restricted Stock Unit Payment, Restricted Stock Payment and/or Performance Share Payment to be
received in the form of Parent Common Stock (each such payment, a “Stock Award Payment”)
shall be ratably adjusted to reflect any such change. Without limiting the other provisions of
this Agreement and subject to Section 6.2(b)(ii) and Section 6.2(b)(iii), if at any
time during the period between the date of this Agreement and the Effective Time, Parent should
split, combine or otherwise reclassify the Parent Common Stock, or make a distribution in Parent
Common Stock, or otherwise change the Parent Common Stock into other securities, then the Exchange
Ratio shall be ratably adjusted to reflect any such change.
Section 3.2 Exchange Fund; Exchange Agent.
(a) Prior to the Effective Time, Parent shall appoint a bank or trust company reasonably
satisfactory to the Company to act as exchange agent (the “Exchange Agent”) for the payment
and delivery of the Merger Consideration, the Stock Award Payments
16
and the Aggregate Cash
Consideration, as provided in Section 3.1(b) and Section 3.3. On or before the
Effective Time, Parent shall deposit, or cause to be deposited, with the Exchange Agent
(i) certificates representing the shares of Parent Common Stock sufficient to pay the Merger
Consideration and the Stock Award Payments, and (ii) cash in immediately available funds in an
amount sufficient to pay the Aggregate Cash Consideration (such certificates representing shares of
Parent Common Stock and cash amounts, the “Aggregate Merger Consideration”, and such
Aggregate Merger Consideration as deposited with the Exchange Agent, the “Exchange Fund”),
in each case, for the benefit of the holders of shares of Company Common Stock, Company Options,
Company Restricted Stock Units, shares of Company Restricted Stock and Company Performance Shares.
In the event the Exchange Fund shall be insufficient to make the payments contemplated by
Section 3.3, Parent shall promptly deposit, or cause to be deposited, additional funds with
the Exchange Agent in an amount which is equal to the deficiency in the amount required to make
such payment. Parent shall cause the Exchange Agent to make, and the Exchange Agent shall make,
payments of the Merger Consideration, amounts in respect of Company Options, Company Restricted
Stock Units, shares of Company Restricted Stock and Company Performance Shares and any amounts
payable in respect of dividends or distributions on shares of Parent Common Stock in accordance
with Section 3.2(d) or otherwise payable pursuant to Section 3.7 out of the
Exchange Fund in accordance with this Agreement and the Articles of Merger and the Certificate of
Merger. The Exchange Fund shall not be used for any other purpose. Any and all interest earned on
cash deposited in the Exchange Fund shall be paid to the Surviving Entity.
(b) Share Transfer Books. At the Effective Time, the share transfer books of the
Company shall be closed, and thereafter there shall be no further registration of transfers of
shares of Company Common Stock. From and after the Effective Time, persons who held shares of
Company Common Stock immediately prior to the Effective Time shall cease to have rights with
respect to such shares, except as otherwise provided for herein. On or after the Effective Time,
any Certificates presented to the Exchange Agent or the Surviving Entity for any reason shall be
exchanged for the Merger Consideration with respect to the shares of Company Common Stock formerly
represented thereby.
(c) Exchange Procedures.
(i) As promptly as practicable following the Effective Time (but in no event later than
two (2) Business Days thereafter), the Surviving Entity shall cause the Exchange Agent to
mail (and to make available for collection by hand) (A) to each holder of record of a
Certificate (x) a letter of transmittal (a “Letter of Transmittal”), which shall
specify that delivery shall be effected, and risk of loss and title to the Certificates
shall pass only upon proper delivery of the Certificates (or affidavits of loss in lieu
thereof) to the Exchange Agent, and which
Letter of Transmittal shall be in such form and have such other provisions as the
Surviving Entity may reasonably specify, and (y) instructions for use in effecting the
surrender of the Certificates in exchange for the Merger Consideration into which the number
of shares of Company Common Stock previously represented by such Certificate shall have been
converted pursuant to this
17
Agreement, together with any amounts payable in respect of
dividends or distributions on shares of Parent Common Stock in accordance with Section
3.2(d) (which instructions shall provide that, at the election of the surrendering
holder, (1) Certificates may be surrendered by hand delivery or otherwise or (2) the Merger
Consideration in exchange therefor, together with any amounts payable in respect of
dividends or distributions on shares of Parent Common Stock in accordance with Section
3.2(d), may be collected by hand by the surrendering holder or by check or wire transfer
to the surrendering holder), (B) to each holder of a Company Option, a certificate
representing an option to acquire shares of Parent Common Stock or a check or direct
deposit, in each case in an amount due and payable to such holder pursuant to Section
3.3(a) in respect of such Company Option, (C) to each holder of a Company Restricted
Stock Unit, a certificate representing a Rollover RSU or a check or direct deposit, in each
case in an amount due and payable to such holder pursuant to Section 3.3(b) in
respect of such Company Restricted Stock Unit, (D) to each holder of a share of Company
Restricted Stock, a certificate representing shares of Parent Common Stock in an amount due
and payable to such holder pursuant to Section 3.3(c) in respect of such share of
Company Restricted Stock, (E) to each holder of a Company Performance Share, a certificate
representing shares of Parent Common Stock in an amount due and payable to such holder
pursuant to Section 3.3(d) in respect of such Company Performance Share, and (F) to
each holder of a Company DER, the payment due and payable to such holder pursuant to
Section 3.3(e).
(ii) Upon surrender of a Certificate (or affidavit of loss in lieu thereof) for
cancellation to the Exchange Agent, together with a Letter of Transmittal duly completed and
validly executed in accordance with the instructions thereto, and such other documents as
may reasonably be required by the Exchange Agent, the holder of such Certificate shall be
entitled to receive in exchange therefor the Merger Consideration for each share of Company
Common Stock formerly represented by such Certificate pursuant to the provisions of this
Article III plus any cash such holder is entitled to receive in lieu of fractional
shares of Parent Common Stock that such holder has the right to receive pursuant to the
provisions of Section 3.1(b) and any amounts that such holder has the right to
receive in respect of dividends or distributions on shares of Parent Common Stock in
accordance with Section 3.7, to be mailed, made available for collection by hand or
delivered by wire transfer, within two (2) Business Days following the later to occur of (A)
the Effective Time or (B) the Exchange Agent’s receipt of such Certificate (or affidavit of
loss in lieu thereof), and the Certificate (or affidavit of loss in lieu thereof) so
surrendered shall be forthwith canceled. The Exchange Agent shall accept such Certificates
(or affidavits of loss in lieu thereof) upon compliance with such reasonable terms and
conditions as the Exchange Agent may impose to effect an orderly exchange thereof in
accordance with normal exchange practices. Until surrendered as contemplated by this
Section 3.2, each Certificate shall be deemed, at any time after the Effective Time,
to represent only the right to receive, upon such surrender, the Merger
Consideration as contemplated by this Article III. No interest shall be paid
or accrued for the benefit of holders of the Certificates on the Merger Consideration
payable upon the surrender of the Certificates.
18
(iii) As promptly as practicable following the Effective Time (but in no event later
than two (2) Business Days thereafter), the Surviving Entity shall cause the Exchange Agent
(A) to issue to each holder of Book-Entry Shares that number of uncertificated whole shares
of Parent Common Stock that such holder is entitled to receive pursuant to Section
3.1(b) in respect of such Book-Entry Shares, and (B) to issue and deliver to each holder
of Book-Entry Shares a check or wire transfer for any amounts payable in respect of
dividends or distributions on shares of Parent Common Stock in accordance with Section
3.2(d) and any other amount such holder is entitled to receive in lieu of fractional
shares of Parent Common Stock that such holder has the right to receive pursuant to the
provisions of Section 3.1(b), in each case without such holder being required to
deliver a Certificate or an executed Letter of Transmittal to the Exchange Agent, and such
Book-Entry Shares shall then be canceled. No interest shall be paid or accrued for the
benefit of holders of Book-Entry Shares on the Merger Consideration payable in respect of
the Book-Entry Shares.
(iv) In the event of a transfer of ownership of shares of Company Common Stock that is
not registered in the transfer records of the Company, it shall be a condition of payment
that any Certificate surrendered in accordance with the procedures set forth in this
Section 3.2(c) shall be properly endorsed or shall be otherwise in proper form for
transfer, or any Book-Entry Share shall be properly transferred, and that the Person
requesting such payment shall have paid any Transfer Taxes and other Taxes required by
reason of the payment of the Merger Consideration to a person other than the registered
holder of the Certificate or Book-Entry Share surrendered or shall have established to the
satisfaction of Parent that such Tax either has been paid or is not applicable.
(d) Dividends with Respect to Parent Common Stock. No dividends or other
distributions with respect to Parent Common Stock with a record date after the Effective Time shall
be paid to the holder of any unsurrendered Certificate with respect to the shares of Parent Common
Stock issuable hereunder, and all such dividends and other distributions shall be paid by Parent to
the Exchange Agent and shall be included in the Exchange Fund, in each case until the surrender of
such Certificate (or affidavit of loss in lieu thereof) in accordance with this Agreement.
Following surrender of any such Certificate (or affidavit of loss in lieu thereof) there shall be
paid to the holder thereof in addition to the other amounts payable hereunder (i) promptly after
the time of such surrender, the amount of dividends or other distributions with a record date after
the Effective Time theretofore paid with respect to such whole shares of Parent Common Stock to
which such holder is entitled pursuant to this Agreement and (ii) at the appropriate payment date,
the amount of dividends or other distributions with a record date after the Effective Time but
prior to such surrender and with a payment date subsequent to such surrender payable with respect
to such whole shares of Parent Common Stock.
(e) Termination of Exchange Fund. Any portion of the Exchange Fund (including any
interest and other income received with respect thereto) which remains undistributed to the former
holders of shares of Company Common Stock on the first (1st)
19
anniversary of the
Effective Time shall be delivered to Parent, upon demand, and any former holders of shares of
Company Common Stock who have not theretofore received any Merger Consideration to which they are
entitled under this Article III shall thereafter look only to the Surviving Entity for
payment of their claims with respect thereto.
(f) No Liability. None of Parent, Merger Sub, the Company, the Surviving Entity or
the Exchange Agent, or any employee, officer, director, agent or Affiliate of any of them, shall be
liable to any holder of shares of Company Common Stock in respect of any part of the Merger
Consideration delivered to a public official pursuant to any applicable abandoned property, escheat
or similar Law. Any amounts remaining unclaimed by holders of any such shares immediately prior to
the time at which such amounts would otherwise escheat to, or become property of, any Governmental
Authority shall, to the extent permitted by applicable Law, become the property of the Surviving
Entity, free and clear of any claims or interest of any such holders or their successors, assigns
or personal representatives previously entitled thereto.
(g) Investment of Exchange Fund. The Exchange Agent shall invest any cash included in
the Exchange Fund as directed by Parent or, after the Effective Time, the Surviving Entity;
provided, however, that (i) no such investment shall relieve Parent or the Exchange
Agent from making the payments required by this Article III and, to the extent that there
are losses with respect to such investments, or the Exchange Fund diminishes for other reasons
below the level required to make prompt payments of the Aggregate Merger Consideration as
contemplated hereby, Parent shall promptly replace or restore the portion of the Exchange Fund lost
through investments or other events so as to ensure that the Exchange Fund is, at all times,
maintained at a level sufficient to make such payments, (ii) no such investment shall have
maturities that could prevent or delay payments to be made pursuant to this Agreement, and
(iii) such investments shall be in short-term obligations of the United States of America with
maturities of no more than thirty (30) days or guaranteed by the United States of America and
backed by the full faith and credit of the United States of America. Any net profit resulting
from, or interest or income produced by, such investments, shall be property of, and paid to, the
Surviving Entity.
Section 3.3 Stock Options; Restricted Stock Units; Restricted Stock; Performance Shares;
Dividend Equivalent Rights.
(a) Treatment of Stock Options. At the Effective Time, without any action on the part
of any holder or the Company, each outstanding Company Option (whether or not then vested or
exercisable) shall be vested and exercisable as of the Effective Time and, in the sole discretion
of Parent, shall be treated in accordance with either (i) or (ii), except that the Company Options
set forth on Section 3.3(a) of the Company Disclosure Letter shall not become fully vested
and exercisable and shall be treated in accordance with (ii):
(i) Each outstanding Company Option as of the Effective Time shall thereafter be
exchanged for a cash payment by the Parent or the Surviving Entity as promptly as
practicable following the Effective Time (but in no event later than three (3) Business Days
thereafter) equal to the excess, if any, of (1) the product of (x) the
20
Exchange Ratio and
(y) the VWAP of Parent Common Stock over (2) the exercise price per share of Company Common
Stock subject to such Company Option, less any required withholding Taxes (which may be
covered by withholding shares) (the “Cash Option Payment”), and the holder of any
such Company Option shall cease to have any right thereunder to acquire any equity interest
in the Company, Company Subsidiary, Parent, Surviving Entity or any of their Affiliates; or
(ii) Each outstanding Company Option, as of the Effective Time, shall be assumed by
Parent, without any action on the part of any holder or the Company, and will otherwise
continue to have, and be subject to, the same terms and conditions (after taking into
account any acceleration of vesting and exercisability provided in the foregoing provisions
of this Section 3.3(a)) as were applicable immediately prior to the Effective Time
as set forth in the applicable Company Plan (including any applicable award agreement, other
agreement or other document evidencing such Company Option) immediately prior to the
Effective Time, except that, from and after the Effective Time, (A) each such Company Option
will be exercisable for that number of whole shares of Parent Common Stock equal to the
product (rounded down to the nearest whole number) of (x) the number of shares of Company
Common Stock subject to such Company Option as of immediately prior to the Effective Time
and (y) the Exchange Ratio, and (B) the per share exercise price for the shares of Parent
Common Stock issuable upon exercise of such assumed Company Option will be equal to the
quotient (rounded to the nearest whole cent) determined by dividing (x) the exercise price
of each share of Company Common Stock at which the assumed Company Options were exercisable
immediately prior to the Effective Time by (y) the Exchange Ratio.
Parent shall notify the Company in writing, at least five (5) Business Days prior to the
Effective Time regarding whether Company Options shall be treated in accordance with (i) or (ii) of
this Section 3.3(a). Amounts payable pursuant to Section 3.3(a)(i) or
(ii), as applicable, are referred to herein as the “Option Payment”.
(b) Treatment of Restricted Stock Units.
(i) Each Company Restricted Stock Unit which is outstanding and unvested
immediately prior to the Effective Time shall become fully vested and all
restrictions with respect thereto shall lapse immediately prior to the Effective
Time; provided, however, that the Company Restricted Stock Units
listed on Section 3.3(b)(i) of the Company Disclosure Letter shall vest, and
their restrictions shall lapse, solely in accordance with their terms; and
provided, further, however, that the Company Restricted
Stock Units set forth on Section 3.3(b)(ii) of the Company Disclosure Letter
(the “Rollover RSUs”) shall not become fully vested and their restrictions
shall not fully lapse, and they shall be treated in accordance with Section
3.3(b)(ii) hereof. Each Company Restricted Stock Unit for which vesting
accelerates and restrictions lapse at the Effective Time shall be canceled by virtue
of the Merger and without any action on the part of any holder of any Company
Restricted Stock Unit in consideration for the right
21
at the Effective Time to
receive, as promptly as practicable following the Effective Time (but in no event
later than three (3) Business Days thereafter), a cash amount with respect thereto
equal to the product of (A) the number of shares of Company Common Stock previously
subject to such Company Restricted Stock Unit and (B) the product of (x) the
Exchange Ratio and (y) the VWAP of Parent Common Stock, less any required
withholding Taxes (which may be covered by withholding shares) (the “Restricted
Stock Unit Payment”). As of the Effective Time, all Company Restricted Stock
Units (other than Rollover RSUs) shall no longer be outstanding and shall
automatically terminate and cease to exist, and each holder of a Company Restricted
Stock Unit (other than a Rollover RSU) shall cease to have any rights with respect
thereto, except the right to receive the Restricted Stock Unit Payment.
(ii) Each outstanding Rollover RSU, as of the Effective Time, shall be assumed
by Parent, without any action on the part of any holder or the Company, and will
otherwise continue to have, and be subject to, the same terms and conditions
(including vesting terms and conditions) as were applicable immediately prior to the
Effective Time as set forth in the applicable Company Plan (including any applicable
award agreement, other agreement or the document evidencing such Rollover RSU)
immediately prior to the Effective Time, except that, from and after the Effective
Time, each Rollover RSU will relate to a number of whole shares of Parent Common
Stock equal to the product (rounded down to the nearest whole number) of (A) the
number of shares of Company Common Stock subject to such Rollover RSU as of
immediately prior to the Effective Time and (B) the Exchange Ratio.
(c) Treatment of Restricted Stock. Each share of Company Restricted Stock which is
outstanding immediately prior to the Effective Time shall become fully vested and all restrictions
with respect thereto shall lapse immediately prior to the Effective Time, and each such share of
Company Restricted Stock shall be converted into a number of shares of Parent Common Stock equal to
the Exchange Ratio in accordance with Section 3.1(b) of this Agreement without any action on the
part of the holder of any share of Company Restricted Stock (the “Restricted Stock
Payment”). As of the Effective Time, each holder of shares of Company Restricted Stock shall
cease to have any rights with respect thereto, except the right to receive shares of Parent Common
Stock.
(d) Treatment of Performance Shares. With respect to any Company Performance Shares
outstanding immediately prior to the Effective Time, the performance period
shall terminate immediately prior to the Effective Time and the number of Company Performance
Shares subject to the award which shall vest as of the Effective Time shall be determined in
accordance with the relevant award agreement based on the Company’s actual performance for the
shortened performance period. Each Company Performance Share for which vesting accelerates and
restrictions lapse at the Effective Time shall be converted into a number of shares of Parent
Common Stock equal to the Exchange Ratio in accordance with
22
Section 3.1(b) of this
Agreement without any action on the part of the holder of any share of Company Performance Shares
(the “Performance Share Payment”). Any Company Performance Shares subject to the award
which do not vest after giving effect to the first sentence of this Section 3.3(d) shall
terminate as of the Effective Time and each holder thereof shall cease to have any rights with
respect thereto.
(e) Dividend Equivalent Rights. Any dividend equivalent right granted in connection
with another award pursuant to a Company Plan which is outstanding (whether or not
vested), immediately prior to the Effective Time, whether denominated in restricted stock units or
otherwise (each, a “Company DER”), shall, if unvested, become fully vested immediately
prior to the Effective Time and all Company DERs shall be paid in accordance with their terms (any
such payment, the “DER Payment”). As of the Effective Time, all Company DERs shall no
longer be outstanding and shall automatically terminate and cease to exist, and each holder thereof
shall cease to have any rights with respect thereto, except the right to receive the DER Payment.
(f) Company Assumed Awards. As soon as reasonably practicable after the Effective
Time, but in no event later than five (5) Business Days following the Effective Time, Parent shall
deliver to each holder of any Rollover RSU or Company Option treated in accordance with Section
3.3(a)(ii) (each such Rollover RSU or Company Option, a “Company Assumed Award”) an
appropriate notice setting forth such holder’s rights pursuant to such Company Assumed Award.
Unless the shares of Parent Common Stock issuable upon exercise or settlement of the Company
Assumed Awards are otherwise covered by an existing registration statement on Form S-8 immediately
upon the Effective Time, Parent shall prepare and file with the SEC such a registration statement
with respect to such shares of Parent Common Stock no later than ten (10) Business Days following
the Effective Time and Parent shall exercise reasonable best efforts to maintain the effectiveness
of such registration statement for so long as such Company Assumed Awards remain outstanding
(subject to blackout periods and similar restrictions in accordance with Parent’s policies). The
Company and its counsel shall reasonably cooperate with and assist Parent in the preparation of any
such registration statement.
Section 3.4 Withholding Rights. Parent, the Surviving Entity or the Exchange Agent, as
applicable, shall be entitled to deduct and withhold from the Merger Consideration and any amounts
otherwise payable pursuant to this Agreement to any holder of shares of Company Common Stock,
Company Options, Company Restricted Stock Units, shares of Company Restricted Stock, Company
Performance Shares and Company DERs, such amounts as Parent, the Surviving Entity or the Exchange
Agent is required to deduct and withhold with respect to the making of such payment under the Code,
and the rules and regulations promulgated
thereunder, or any provision of applicable Tax Law. To the extent that amounts are so deducted or
withheld and paid over to the appropriate Governmental Authority by Parent, the Surviving Entity or
the Exchange Agent, as applicable, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the person in respect of which such deduction and withholding was
made by Parent, the Surviving Entity or the Exchange Agent, as applicable.
23
Section 3.5 Lost Certificates. If any Certificate shall have been lost, stolen or
destroyed, then upon the making of an affidavit of that fact by the Person claiming such
Certificate to be lost, stolen or destroyed and, if required by the Surviving Entity, the posting
by such Person of a bond in such reasonable amount as the Surviving Entity may direct, as indemnity
against any claim that may be made against it with respect to such Certificate, the Exchange Agent
will issue in exchange for such lost, stolen or destroyed Certificate the Merger Consideration to
which the holder thereof is entitled pursuant to this Article III.
Section 3.6 Dissenters’ Rights. No dissenters’ or appraisal rights shall be available with
respect to the Merger or the other transactions contemplated by this Agreement, so long as the
provisions of Section 3-202(c)(1)(ii) of the MGCL are applicable to the transaction.
Section 3.7 Fractional Shares. No certificate or scrip representing fractional shares of
Parent Common Stock shall be issued upon the surrender for exchange of Certificates or with respect
to Book-Entry Shares, and such fractional share interests shall not entitle the owner thereof to
vote or to any other rights of a stockholder of Parent. Notwithstanding any other provision of
this Agreement, each holder of shares of Company Common Stock converted pursuant to the Merger who
would otherwise have been entitled to receive a fraction of a share of Parent Common Stock shall
receive, in lieu thereof, cash, without interest, in an amount equal to such fractional part of a
share of Parent Common Stock multiplied by the VWAP of Parent Common Stock.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
OF THE COMPANY
Except (a) as set forth in the disclosure letter that has been prepared by the Company and
delivered by the Company to Parent in connection with the execution and delivery of this Agreement
(the “Company Disclosure Letter”) (it being agreed that disclosure of any item in any
Section of the Company Disclosure Letter with respect to any Section or subsection of Article
IV of this Agreement shall be deemed disclosed with respect to any other Section or subsection
of Article IV of this Agreement to the extent such relationship is reasonably apparent,
provided that nothing in the Company Disclosure Letter is intended to broaden the scope of
any representation or warranty of the Company made herein), or (b) as disclosed in Company SEC
Filings publicly available, filed with, or furnished to, as applicable, the SEC on or after January
1, 2010 and prior to the date of this Agreement (excluding any risk factor disclosures contained in
such documents under the heading “Risk Factors” and any disclosure of risks or other matters
included in any “forward-looking statements” disclaimer or other statements that are cautionary, predictive or
forward-looking in nature), the Company hereby represents and warrants to Parent and Merger Sub
that:
24
Section 4.1 Organization and Qualification; Subsidiaries.
(a) The Company is a corporation duly organized, validly existing and in good standing under
the laws of the State of Maryland and has the requisite organizational power and authority and any
necessary governmental authorization to own, lease and, to the extent applicable, operate its
properties and to carry on its business as it is now being conducted. The Company is duly
qualified or licensed to do business, and is in good standing, in each jurisdiction where the
character of the properties owned, operated or leased by it or the nature of its business makes
such qualification, licensing or good standing necessary, except for such failures to be so
qualified, licensed or in good standing that, individually or in the aggregate, have not had and
would not reasonably be expected to have a Company Material Adverse Effect.
(b) Each Company Subsidiary is duly organized, validly existing and in good standing under the
Laws of the jurisdiction of its incorporation or organization, as the case may be, and has the
requisite organizational power and authority and any necessary governmental authorization to own,
lease and, to the extent applicable, operate its properties and to carry on its business as it is
now being conducted. Each Company Subsidiary is duly qualified or licensed to do business, and is
in good standing, in each jurisdiction where the character of the properties owned, operated or
leased by it or the nature of its business makes such qualification, licensing or good standing
necessary, except for such failures to be so qualified, licensed or in good standing that,
individually or in the aggregate, have not had and would not reasonably be expected to have a
Company Material Adverse Effect.
(c) Section 4.1(c) of the Company Disclosure Letter sets forth a true and complete
list of the Company Subsidiaries, including a list of each Company Subsidiary that is a “qualified
REIT subsidiary” within the meaning of Section 856(i)(2) of the Code, or a “taxable REIT
subsidiary” within the meaning of Section 856(l) of the Code, together with (i) the jurisdiction of
incorporation or organization, as the case may be, of each Company Subsidiary, (ii) the type of and
percentage of interest held, directly or indirectly, by the Company in each Company Subsidiary,
(iii) the names of and the type of and percentage of interest held by any Person other than the
Company or a Company Subsidiary in each Company Subsidiary, and (iv) the classification for United
States federal income tax purposes of each Company Subsidiary.
(d) Neither the Company nor any Company Subsidiary directly or indirectly owns any interest or
investment (whether equity or debt) in any person (other than in the Company Subsidiaries and
investments in short-term investment securities).
Section 4.2 Organizational Documents. The Company has made available to Parent complete
and correct copies of (i) the Company’s articles of incorporation, as amended and supplemented to
date (the “Company Charter”) and the Company’s Bylaws (the “Company Bylaws”),
and (ii) the organizational documents of each Company Subsidiary, each as in effect on the date
hereof.
25
Section 4.3 Capital Structure.
(a) The authorized capital stock of the Company consists of 200,000,000 shares of Company
Common Stock and 5,000,000 shares of preferred stock, par value $1.00 per share (the “Company
Preferred Stock”). At the close of business on February 24, 2011, (i) 126,462,665 shares of
Company Common Stock were issued and outstanding, (ii) no shares of Company Preferred Stock were
issued and outstanding, (iii) 1,458,248 shares of Company Common Stock were reserved for issuance
pursuant to the terms of outstanding awards granted pursuant to the Company Plans, (iv) 3,815,976
shares of Company Common Stock are available for grant under the Company Plans, (v) 2,673,641
shares of Company Common Stock were reserved for issuance upon redemption of Class A Partnership
Units of NHP/PMB (“Class A Units”), (vi) 345,639 shares of Company Common Stock were
reserved for issuance under the Company’s Dividend Reinvestment and Stock Purchase Plan, and (vii)
1,322,200 shares of Company Common Stock were reserved for issuance under the Company’s
at-the-market equity offering program. All issued and outstanding shares of the capital stock of
the Company are duly authorized, validly issued, fully paid and non-assessable, and no class of
capital stock is entitled to preemptive rights. There are no outstanding bonds, debentures, notes
or other indebtedness of the Company having the right to vote (or convertible into, or exchangeable
for, securities having the right to vote) on any matter on which holders of shares of Company
Common Stock may vote. Section 4.3(a) of the Company Disclosure Letter sets forth a
complete and correct list, as of the date of this Agreement, of the total number of outstanding (A)
Company Options, (B) Company Restricted Stock Units, (C) Company Restricted Stock, (D) Company
Performance Shares, and (E) Company DER and (F) the number of shares of Company Common Stock
subject to each outstanding Company Option, the name of the holder, the exercise price, the grant
date, and the general terms and conditions including vesting provisions and exercise period of
Company Options and the Company Benefit Plan under which such Company Options were granted; the
number of shares of Company Common Stock subject to each outstanding award of Company Restricted
Stock Units and Company Restricted Stock, the name of the holder, the grant date, and the general
terms and conditions including the vesting schedule and the other material terms of each award of
Company Restricted Stock Units and Company Restricted Stock, as applicable, and the Company Benefit
Plan under which Company Restricted Stock Units and Company Restricted Stock, as applicable, were
granted; the number of shares of Company Common Stock subject to each Company Performance Shares
award, the name of the holder, the grant date, and the general terms and conditions including the
vesting schedule and other material terms of such Company Performance Shares award and the Company
Benefit Plan under Company Performance Shares award were granted; and any other rights to purchase
or receive Company Common Stock granted under the Company Benefit Plans or otherwise and the names
and positions of the holders, the grant date and the terms thereof and the Company Benefit Plan
under which such rights were granted. There are no other rights to purchase or receive the Company
Common Stock granted under the Company Benefit Plans or otherwise other than the Company Options,
Company Restricted Stock Units, Company Restricted Stock, Company Performance Shares, and
Company DERs disclosed on Section 4.3(a) of the Company Disclosure Letter. Immediately
prior to the Closing, the Company will provide to Parent a complete and correct list that contains
the information required to be provided in Section 4.3(a) of the Company Disclosure
Schedule that is correct and complete as of the Closing Date.
26
(b) All of the outstanding shares of capital stock of each of the Company Subsidiaries that is
a corporation are duly authorized, validly issued, fully paid and nonassessable. All equity
interests in each of the Company Subsidiaries that is a partnership or limited liability company
are duly authorized and validly issued. All shares of capital stock of (or other ownership
interests in) each of the Company Subsidiaries which may be issued upon exercise of outstanding
options or exchange rights are duly authorized and, upon issuance will be validly issued, fully
paid and nonassessable. Except as set forth in Section 4.1(c) of the Company Disclosure
Letter, the Company owns, directly or indirectly, all of the issued and outstanding capital stock
and other ownership interests of each of the Company Subsidiaries, free and clear of all
encumbrances other than statutory or other liens for Taxes or assessments which are not yet due or
delinquent or the validity of which is being contested in good faith by appropriate proceedings and
for which adequate reserves are being maintained, and there are no existing options, warrants,
calls, subscriptions, convertible securities or other securities, agreements, commitments or
obligations of any character relating to the outstanding capital stock or other securities of any
Company Subsidiary or which would require any Company Subsidiary to issue or sell any shares of its
capital stock, ownership interests or securities convertible into or exchangeable for shares of its
capital stock or ownership interests.
(c) Except as set forth in this Section 4.3, as of the date of this Agreement, there
are no securities, options, warrants, calls, rights, commitments, agreements, rights of first
refusal, arrangements or undertakings of any kind to which the Company or any Company Subsidiary is
a party or by which any of them is bound, obligating the Company or any Company Subsidiary to
issue, deliver or sell or create, or cause to be issued, delivered or sold or created, additional
shares of Company Common Stock, shares of Company Preferred Stock or other equity securities or
phantom stock or other contractual rights the value of which is determined in whole or in part by
the value of any equity security of the Company or any of the Company Subsidiaries or obligating
the Company or any Company Subsidiary to issue, grant, extend or enter into any such security,
option, warrant, call, right, commitment, agreement, right of first refusal, arrangement or
undertaking. As of the date of this Agreement, except as expressly provided in the NHP/PMB
Partnership Agreement, there are no outstanding contractual obligations of the Company or any
Company Subsidiary to repurchase, redeem or otherwise acquire any shares of Company Common Stock,
shares of Company Preferred Stock, Class A Units or other equity securities of the Company or any
Company Subsidiary (other than in satisfaction of withholding Tax obligations pursuant to certain
awards outstanding under the Company Plans in the event the grantees fail to satisfy withholding
Tax obligations). Neither the Company nor any Company Subsidiary is a party to or, to the
knowledge of the Company, bound by any agreements or understandings concerning the voting
(including voting trusts and proxies) of any capital stock of the Company or any of the Company
Subsidiaries.
(d) All dividends or distributions on the shares of Company Common Stock, Company Preferred
Stock and Class A Units and any material dividends or distributions on any securities of any
Company Subsidiary which have been authorized or declared prior to the date hereof have been paid
in full (except to the extent such dividends have been publicly announced and are not yet due and
payable).
27
Section 4.4 Authority.
(a) The Company has the requisite organizational power and authority to execute and deliver
this Agreement, to perform its obligations hereunder and, subject to receipt of the Company
Stockholder Approval, to consummate the transactions contemplated by this Agreement. The execution
and delivery of this Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby have been duly and validly authorized by all necessary corporate
action, and no other corporate proceedings on the part of the Company are necessary to authorize
this Agreement or the Merger or to consummate the transactions contemplated hereby, subject, with
respect to the Merger, to receipt of the Company Stockholder Approval and the filing and acceptance
for record of the Articles of Merger with the SDAT and the Certificate of Merger with the Delaware
Secretary. The Company’s board of directors (the “Company Board”) at a duly held meeting
has, by unanimous vote, (i) duly and validly authorized the execution and delivery of this
Agreement and declared advisable the consummation of the Merger and the other transactions
contemplated hereby, (ii) directed that the Merger be submitted for consideration at the Company
Stockholder Meeting, and (iii) resolved to recommend that the stockholders of the Company vote in
favor of the adoption of this Agreement and the approval of the Merger and the other transactions
contemplated hereby (the “Company Recommendation”) and to include such recommendation in
the Joint Proxy Statement, subject to Section 6.5.
(b) This Agreement has been duly executed and delivered by the Company and, assuming due
authorization, execution and delivery by each of Parent and Merger Sub, constitutes a legally valid
and binding obligation of the Company, enforceable against the Company in accordance with its
terms, except as such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar Laws affecting creditors’ rights generally and by
general principles of equity (regardless of whether enforceability is considered in a proceeding in
equity or at law).
Section 4.5 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by the Company does not, and the performance
of this Agreement and the consummation of the Merger and the other transactions contemplated hereby
by the Company will not, (i) assuming receipt of the Company Stockholder Approval, conflict with or
violate any provision of the Company Charter or Company Bylaws or any equivalent organizational or
governing documents of any Company
Subsidiary, (ii) assuming that all consents, approvals, authorizations and permits described
in Section 4.5(b) have been obtained, all filings and notifications described in
Section 4.5(b) have been made and any waiting periods thereunder have terminated or
expired, conflict with or violate any Law applicable to the Company or any Company Subsidiary or by
which any property or asset of the Company or any Company Subsidiary is bound, or (iii) require any
consent or approval under, result in any breach of or any loss of any benefit or material increase
in any cost or obligation of the Company or any Company Subsidiary under, or constitute a default
(or an event which with notice or lapse of time or both would become a default) under, or
28
give to
others any right of termination, acceleration or cancellation (with or without notice or the lapse
of time or both) of, or give rise to any right of purchase, first offer or forced sale under or
result in the creation of a Lien on any property or asset of the Company or any Company Subsidiary
pursuant to, any note, bond, debt instrument, indenture, contract, agreement, ground lease,
license, permit or other legally binding obligation to which the Company or any Company Subsidiary
is a party, except, as to clauses (ii) and (iii), respectively, for any such conflicts, violations,
breaches, defaults or other occurrences which, individually or in the aggregate, have not had and
would not reasonably be expected to have a Company Material Adverse Effect.
(b) The execution and delivery of this Agreement by the Company does not, and the performance
of this Agreement by the Company will not, require any consent, approval, authorization or permit
of, or filing with or notification to, any Governmental Authority, except (i) the filing with the
SEC of (A) a joint proxy statement in preliminary and definitive form relating to the Company
Stockholder Meeting and the Parent Stockholder Meeting (together with any amendments or supplements
thereto, the “Joint Proxy Statement”) and of a registration statement on Form S-4 pursuant
to which the offer and sale of shares of Parent Common Stock in the Merger will be registered
pursuant to the Securities Act and in which the Joint Proxy Statement will be included as a
prospectus (together with any amendments or supplements thereto, the “Form S-4”), and
declaration of effectiveness of the Form S-4, and (B) such reports under, and other compliance
with, the Exchange Act (and the rules and regulations promulgated thereunder) and the Securities
Act (and the rules and regulations promulgated thereunder) as may be required in connection with
this Agreement and the transactions contemplated hereby, (ii) as may be required under the rules
and regulations of the NYSE, (iii) the filing of the Articles of Merger and the acceptance for
record by SDAT of the Articles of Merger pursuant to the MGCL, (iv) the filing of the Certificate
of Merger and the acceptance for record by the Delaware Secretary of the Certificate of Merger
pursuant to the DLLCA, (v) such filings and approvals as may be required by any applicable state
securities or “blue sky” Laws, (vi) such filings as may be required in connection with state and
local transfer Taxes, and (vii) where failure to obtain such consents, approvals, authorizations or
permits, or to make such filings or notifications, individually or in the aggregate, has not had
and would not reasonably be expected to have a Company Material Adverse Effect.
Section 4.6 Permits; Compliance With Law.
(a) Except for the authorizations, licenses, permits, certificates, approvals, variances,
exemptions, orders, franchises, certifications and clearances that are the subject of Section
4.14 or Section 4.16, which are addressed solely in those Sections, the Company and
each Company Subsidiary is in possession of all authorizations, licenses, permits, certificates,
approvals, variances, exemptions, orders, franchises, certifications and clearances of any
Governmental Authority and accreditation and certification agencies, bodies or other organizations,
including building permits and certificates of occupancy, necessary for the Company and each
Company Subsidiary to own, lease and, to the extent applicable, operate its properties or to carry
on its respective business substantially as it is being conducted as of the date hereof (the
“Company Permits”), and all such Company Permits are valid and in full force
29
and effect,
except where the failure to be in possession of, or the failure to be valid or in full force and
effect of, any of the Company Permits, individually or in the aggregate, has not had and would not
reasonably be expected to have a Company Material Adverse Effect. All applications required to have
been filed for the renewal of the Company Permits have been duly filed on a timely basis with the
appropriate Governmental Authority, and all other filings required to have been made with respect
to such Company Permits have been duly made on a timely basis with the appropriate Governmental
Authority, except in each case for failures to file which, individually or in the aggregate, have
not had and would not reasonably be expected to have a Company Material Adverse Effect. Neither
the Company nor any Company Subsidiary has received any claim or notice nor has any knowledge
indicating that the Company or any Company Subsidiary is currently not in compliance with the terms
of any such Company Permits, except where the failure to be in compliance with the terms of any
such Company Permits, individually or in the aggregate, have not had and would not reasonably be
expected to have a Company Material Adverse Effect.
(b) Neither the Company nor any Company Subsidiary is or has been in conflict with, or in
default or violation of (i) any Law applicable to the Company or any Company Subsidiary or by which
any property or asset of the Company or any Company Subsidiary is bound (except for Laws addressed
in Section 4.10, Section 4.11, Section 4.14ý, Section 4.15 or
Section 4.17), or (ii) any Company Permits (except for the Company Permits addressed in
Section 4.14 or Section 4.16), except in each case for any such conflicts, defaults
or violations that, individually or in the aggregate, have not had and would not reasonably be
expected to have a Company Material Adverse Effect.
Section 4.7 SEC Filings; Financial Statements.
(a) The Company has filed with, or furnished (on a publicly available basis) to, the SEC all
forms, reports, schedules, statements and documents required to be filed or furnished by it under
the Securities Act or the Exchange Act, as the case may be, including any amendments or supplements
thereto, from and after January 1, 2009 (collectively, the “Company SEC Filings”). Each
Company SEC Filing, as amended or supplemented, if applicable, (i) as of its date, or, if amended
or supplemented, as of the date of the most recent amendment or supplement thereto, complied in all
material respects with the requirements of the Securities Act or the Exchange Act, as the case may
be, and the
applicable rules and regulations of the SEC thereunder, and (ii) did not, at the time it was
filed (or became effective in the case of registration statements), or, if amended or supplemented,
as of the date of the most recent amendment or supplement thereto, contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein or necessary in
order to make the statements made therein, in the light of the circumstances under which they were
made, not misleading. As of the date of this Agreement, no Company Subsidiary is separately
subject to the periodic reporting requirements of the Exchange Act.
(b) Each of the consolidated financial statements contained or incorporated by reference in
the Company SEC Filings (as amended, supplemented or restated, if
30
applicable), including the
related notes and schedules, was prepared (except as indicated in the notes thereto) in accordance
with GAAP applied on a consistent basis throughout the periods indicated, and each such
consolidated financial statement presented fairly, in all material respects, the consolidated
financial position, results of operations, stockholders’ equity and cash flows of the Company and
its consolidated subsidiaries as of the respective dates thereof and for the respective periods
indicated therein (subject, in the case of unaudited quarterly financial statements, to normal
year-end adjustments).
(c) The records, systems, controls, data and information of the Company and the Company
Subsidiaries that are used in the system of internal accounting controls described in the following
sentence are recorded, stored, maintained and operated under means that are under the exclusive
ownership and direct control of the Company or the Company Subsidiaries or accountants, except for
any non-exclusive ownership and non-direct control that would not reasonably be expected to have a
materially adverse effect on the system of internal accounting controls. The Company and the
Company Subsidiaries have devised and maintain a system of internal accounting controls sufficient
to provide reasonable assurances regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with GAAP, including that:
(1) transactions are executed only in accordance with management’s authorization; (2) transactions
are recorded as necessary to permit preparation of the financial statements of the Company and the
Company Subsidiaries and to maintain accountability for the assets of the Company and the Company
Subsidiaries; (3) access to such assets is permitted only in accordance with management’s
authorization; (4) the reporting of such assets is compared with existing assets at regular
intervals; and (5) accounts, notes and other receivables and inventory are recorded accurately, and
proper and adequate procedures are implemented to effect the collection thereof on a current and
timely basis. The Company’s principal executive officer and its principal financial officer have
disclosed to the Company’s auditors and the audit committee of the Company Board (i) all
significant deficiencies and material weaknesses in the design or operation of internal controls
over financial reporting that are reasonably likely to adversely affect the Company’s ability to
record, process, summarize and report financial data, and (ii) any fraud, whether or not material,
that involves management or other employees who have a significant role in the Company’s internal
controls, and the Company has made available to Parent copies of any material written materials
relating to the foregoing. The Company has established and maintains disclosure controls and
procedures (as such term is defined in Rule 13a-15 promulgated under the Exchange Act) designed to
ensure that material information relating to the Company required to be included in reports filed
under
the Exchange Act, including its consolidated subsidiaries, is made known to the Company’s
principal executive officer and its principal financial officer by others within those entities,
particularly during the periods in which the periodic reports required under the Exchange Act are
being prepared, and, to the knowledge of the Company, such disclosure controls and procedures are
effective in timely alerting the Company’s principal executive officer and its principal financial
officer to material information required to be included in the Company’s periodic reports required
under the Exchange Act. Since the enactment of the Xxxxxxxx-Xxxxx Act, none of the Company or any
Company Subsidiary has made any prohibited loans to any director or executive officer of the
Company (as defined in Rule 3b-7 promulgated under the Exchange Act).
31
(d) None of the Company or its consolidated subsidiaries has any liabilities or obligations of
any nature (whether accrued, absolute, contingent or otherwise), except for liabilities or
obligations (i) expressly contemplated by or under this Agreement, including without limitation
Section 6.1 hereof, (ii) incurred in the ordinary course of business consistent with past
practice since the most recent balance sheet set forth in the Company SEC Filings made through and
including the date of this Agreement, (iii) described in any section of the Company Disclosure
Letter or (iv) that, individually or in the aggregate, have not had and would not reasonably be
expected to have a Company Material Adverse Effect.
(e) To the knowledge of the Company, none of the Company SEC Filings is the subject of ongoing
SEC review and the Company has not received any comments from the SEC with respect to any of the
Company SEC Filings since January 1, 2009 which remain unresolved, nor has it received any inquiry
or information request from the SEC as to any matters affecting the Company which has not been
adequately addressed. The Company has made available to Parent true and complete copies of all
written comment letters from the staff of the SEC received since January 1, 2009 through the date
of this Agreement relating to the Company SEC Filings and all written responses of the Company
thereto through the date of this Agreement. None of the Company SEC Filings is the subject of any
confidential treatment request by the Company.
Section 4.8 Disclosure Documents.
(a) None of the information supplied or to be supplied by or on behalf of the Company or any
Company Subsidiary for inclusion or incorporation by reference in (i) the Form S-4 will, at the
time such document is filed with the SEC, at any time such document is amended or supplemented or
at the time such document is declared effective by the SEC, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein or necessary to make
the statements therein not misleading, or (ii) the Joint Proxy Statement will, at the date it is
first mailed to the stockholders of the Company and of Parent, at the time of the Company
Stockholder Meeting and the Parent Stockholder Meeting, at the time the Form S-4 is declared
effective by the SEC or at the Effective Time, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they were made, not misleading. All documents that
the Company is responsible for filing with the SEC in
connection with the transactions contemplated herein, to the extent relating to the Company or
any Company Subsidiary or other information supplied by or on behalf of the Company or any Company
Subsidiary for inclusion therein, will comply as to form, in all material respects, with the
provisions of the Securities Act or Exchange Act, as applicable, and the rules and regulations of
the SEC thereunder and each such document required to be filed with any Governmental Authority
(other than the SEC) will comply in all material respects with the provisions of any applicable Law
as to the information required to be contained therein.
32
(b) The representations and warranties contained in this Section 4.8 will not apply to
statements or omissions included in the Form S-4 or the Joint Proxy Statement to the extent based
upon information supplied to the Company by or on behalf of Parent or Merger Sub.
Section 4.9 Absence of Certain Changes or Events. Since September 30, 2010, except as
contemplated by this Agreement or as set forth in Section 4.9 of the Company Disclosure
Letter, (a) the Company and each Company Subsidiary has conducted its business in the ordinary
course consistent with past practice, (b) except as set forth on Section 6.1(b) of the
Company Disclosure Letter, neither the Company nor any Company Subsidiary has taken any action that
it would not be permitted to take after the date of this Agreement without the prior written
consent of Parent pursuant to Section 6.1(b)(i), Section 6.1(b)(iii), Section
6.1(b)(vii), Section 6.1(b)(viii), Section 6.1(b)(ix), Section
6.1(b)(xiii), Section 6.1(b)(xv) or Section 6.1(b)(xx), or agreed to do any of
the foregoing, and (c) there has not been any Company Material Adverse Effect or any effect, event,
development or circumstance that, individually or in the aggregate with all other effects, events,
developments and changes, would reasonably be expected to result in a Company Material Adverse
Effect.
Section 4.10 Employee Benefit Plans.
(a) Section 4.10 of the Company Disclosure Letter sets forth a true and complete list
of each material Company Benefit Plan and Company Employment Agreement. Company has delivered or
made available to Parent a true, correct and complete copy of each material Company Benefit Plan
and Company Employment Agreement and, with respect thereto, if applicable, (A) all amendments,
trust (or other funding vehicle) agreements, summary plan descriptions and insurance contracts, (B)
the most recent annual report (Form 5500 series including, where applicable, all schedules and
actuarial and accountants’ reports) filed with the IRS and the most recent actuarial report or
other financial statement relating to such Company Benefit Plan, and (C) the most recent
determination letter from the IRS.
(b) Each Company Benefit Plan and Company Employment Agreement has been administered in all
material respects in accordance with its terms and all applicable Laws, including ERISA and the
Code and in compliance with Section 409A of the Code to avoid income inclusion under Section
409A(a)(1) of the Code.
(c) Each Company Benefit Plan that is intended to qualify under Section 401(a) of the Code has
either received a favorable determination letter from the IRS as to its qualified status or may
rely upon an opinion letter for a prototype plan and, to the Company’s knowledge, there is no fact,
event or existing circumstances that would adversely affect the qualified status of any such
Company Benefit Plan. To the Company’s knowledge, neither the Company nor any Company Subsidiary
has engaged in a non-exempt prohibited transaction (within the meaning of Section 406 of ERISA or
Section 4975 of the Code) with respect to any Company Benefit Plan that could result in material
liability to the Company and the Company Subsidiaries, taken as a whole. No material suit,
administrative proceeding, action or other litigation has been brought, or to the knowledge of the
Company, is threatened against or with
33
respect to any such Company Benefit Plan, including any
audit or inquiry by the IRS or United States Department of Labor (other than routine benefits
claims).
(d) None of the Company, any Company Subsidiaries or any of their ERISA Affiliates, maintains,
contributes to, or participates in, or has ever during the past six (6) years maintained,
contributed to, or participated in, or otherwise has any obligation or liability in connection
with: (i) an employee pension benefit plan subject to Title IV or Section 302 of ERISA or Section
412 or 4971 of the Code, (ii) a “multiple employer welfare arrangement” (as defined in Section
3(40) of ERISA), a “multiple employer plan” (as defined in Section 413(c) of the Code) or a
“multiemployer plan” (as defined in Section 3(37) of ERISA), (iii) any plan or arrangement which
provides post-employment retiree medical or welfare benefits, except as required by applicable Law;
or (iv) any plan established or maintained outside of the United States or for the benefit of
current or former employees of the Company or any Company Subsidiaries residing outside the United
States.
(e) Except as set forth in Section 4.10(e) of the Company Disclosure Letter, neither
the execution of this Agreement nor the consummation of the transactions contemplated hereby will:
(A) entitle any employee, director or consultant of the Company or Company Subsidiaries to
severance pay or any increase in severance pay under any of the Company Benefit Plans or Company
Employment Agreements upon any termination of employment on or after the date of this Agreement,
(B) accelerate the time of payment, vesting or funding or result in any payment of compensation or
benefits under, or increase the amount or value of any payment to any employee, officer or director
of any Company or Company Subsidiary, or could limit the right to amend, merge, terminate or
receive a reversion of assets from any Company Benefit Plan or related trust or (C) result in
payments or benefits under any Company Benefit Plan or Company Employment Agreement which would not
be deductible under Section 162(m) or Section 280G of the Code. The Company has delivered to
Parent the most recent analysis of PricewaterhouseCoopers, advisor to the Company, as to
implications of Sections 280G and 4999 of the Code on each applicable “disqualified individual” of
the consummation of the transactions contemplated hereby (assuming that the employment of each such
disqualified individual were terminated upon the Closing).
(f) Except as set forth in Section 4.10(f) of the Company Disclosure Letter, there are
no material funded benefit obligations of the Company or the Company
Subsidiaries under a Company Benefit Plan for which contributions have not been made or
properly accrued and there are no material unfunded benefit obligations under a Company Benefit
Plan that have not been accounted for by reserves or otherwise reflected as may be required in the
consolidated financial statements in the Company SEC Filings made through and including the date of
this Agreement.
(g) The Company has delivered or made available to Parent a true and complete description of
the terms and conditions of each Company Severance Pay Plan.
34
Section 4.11 Labor and Other Employment Matters. The Company and each Company Subsidiary
is in compliance with all applicable Laws in all material respects with respect to labor,
employment, fair employment practices, terms and conditions of employment, workers’ compensation,
occupational safety and health, plant closings, wages and hours and immigration. Neither the
Company nor any Company Subsidiary is a party to, or bound by any, collective bargaining agreement
and no labor union has been certified to represent any employee of the Company or any Company
Subsidiary, or has applied, or threatened to apply, to represent or is attempting to organize so as
to represent such employees, including any representation or certification proceedings or petitions
seeking a representation proceeding presently pending or threatened to be brought or filed, with
the National Labor Relations Board or any other labor relations tribunal or authority. There is no
pending or, to the knowledge of the Company, threatened work stoppage, slowdown lockouts, material
arbitrations or material grievances, labor strike or other material labor disputes against the
Company or any Company Subsidiary.
Section 4.12 Material Contracts.
(a) Except for contracts listed in Section 4.12 of the Company Disclosure Letter, as
of the date of this Agreement, neither the Company nor any Company Subsidiary is a party to or
bound by any contract that, as of the date hereof:
(i) is required to be filed as an exhibit to the Company’s Annual Report on Form 10-K
pursuant to Item 601(b)(2), (4), (9) or (10) of Regulation S-K promulgated by the SEC;
(ii) obligates the Company or any Company Subsidiary to make non-contingent aggregate
annual expenditures (other than principal and/or interest payments or the deposit of other
reserves with respect to debt obligations) in excess of $1,000,000 and is not cancelable
within ninety (90) days without material penalty to the Company or any Company Subsidiary,
except for any Company Lease or any ground lease affecting any Company Property;
(iii) contains any non-compete or exclusivity provisions with respect to any line of
business or geographic area that restricts the business of the
Company or any Company Subsidiary, or that otherwise restricts the lines of business
conducted by the Company or any Company Subsidiary or the geographic area in which the
Company or any Company Subsidiary may conduct business;
(iv) is an agreement which obligates the Company or any Company Subsidiary to indemnify
any past or present directors, officers, trustees, employees and agents of the Company or
any Company Subsidiary pursuant to which the Company or Company Subsidiary is the
indemnitor, other than any operating agreements or property management agreements or any
similar agreement pursuant to which a
35
Company Subsidiary that is not wholly owned, directly
or indirectly, by the Company provides such an indemnification to any such directors,
officers, trustees, employees or agents in connection with the indemnification by such
non-wholly owned Company Subsidiary of the Company or another Company Subsidiary thereunder;
(v) constitutes a debt obligation of the Company or any Company Subsidiary with a
principal amount outstanding as of the date hereof greater than $25,000,000;
(vi) would prohibit or materially delay the consummation of the Merger as contemplated
by this Agreement;
(vii) requires the Company or any Company Subsidiary to dispose of or acquire assets or
properties (other than in connection with the expiration of a Company Lease or a ground
lease affecting a Company Property) with a fair market value in excess of $5,000,000, or
involves any pending or contemplated merger, consolidation or similar business combination
transaction, except for any Company Lease or any ground lease affecting any Company
Property;
(viii) constitutes an interest rate cap, interest rate collar, interest rate swap or
other contract or agreement relating to a hedging transaction;
(ix) sets forth the operational terms of a joint venture, partnership, limited
liability company or strategic alliance of the Company or any Company Subsidiary; or
(x) constitutes a loan to any Person (other than a wholly owned Company Subsidiary) by
the Company or any Company Subsidiary (other than advances made pursuant to and expressly
disclosed in the Company Leases or pursuant to any disbursement agreement, development
agreement, or development addendum entered into in connection with a Company Lease with
respect to the development, construction, or
equipping of Company Properties or the funding of improvements to Company Properties)
in an amount in excess of $5,000,000.
Each contract listed on Section 4.12 of the Company Disclosure Letter to which the Company
or any Company Subsidiary is a party or by which it is bound as of the date hereof is referred to
herein as a “Company Material Contract”.
(b) Except as, individually or in the aggregate, has not had and would not reasonably be
expected to have a Company Material Adverse Effect, each Company Material Contract is legal, valid,
binding and enforceable on the Company and each Company Subsidiary
36
that is a party thereto and, to
the knowledge of the Company, each other party thereto, and is in full force and effect, except as
may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar Laws
affecting creditors’ rights generally and by general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at Law). Except as, individually or in
the aggregate, have not had and would not reasonably be expected to have a Company Material Adverse
Effect, the Company and each Company Subsidiary has performed all obligations required to be
performed by it prior to the date hereof under each Company Material Contract and, to the knowledge
of the Company, each other party thereto has performed all obligations required to be performed by
it under such Company Material Contract prior to the date hereof. Neither the Company nor any
Company Subsidiary has received notice of any violation or default under any Company Material
Contract, except for violations or defaults that would not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect.
Section 4.13 Litigation. Except as, individually or in the aggregate, has not had and
would not reasonably be expected to have a Company Material Adverse Effect, as of the date of this
Agreement, (a) there is no suit, arbitration, inquiry, claim, action or proceeding pending or, to
the knowledge of the Company, threatened by or before any Governmental Authority, nor, to the
knowledge of the Company, is there any investigation pending by any Governmental Authority, in each
case, against the Company or any Company Subsidiary, and (b) neither the Company nor any Company
Subsidiary, nor any of the Company’s or any Company Subsidiary’s respective property, is subject to
any outstanding judgment, order, writ, injunction or decree of any Governmental Authority.
Section 4.14 Environmental Matters.
(a) Except as, individually or in the aggregate, has not had and would not reasonably be
expected to have a Company Material Adverse Effect:
(i) The Company and each Company Subsidiary are in compliance with applicable
Environmental Laws, have applied for all Environmental Permits necessary to conduct their
current operations and are in compliance with their respective Environmental Permits.
(ii) Neither the Company nor any Company Subsidiary has received any written notice,
demand, letter or claim alleging that the Company or any such Company Subsidiary is in
violation of, or liable under, any Environmental Law or that any judicial, administrative or
compliance order has been issued against the Company or any Company Subsidiary which remains
unresolved. There is no litigation, investigation, request for information or other
proceeding pending, or, to the knowledge of the Company, threatened against the Company and
any Company Subsidiary under any applicable Environmental Law.
37
(iii) Neither the Company nor any Company Subsidiary has entered into or agreed to any
consent decree or order or is subject to any judgment, decree or judicial, administrative or
compliance order relating to compliance with Environmental Laws, Environmental Permits or
the investigation, sampling, monitoring, treatment, remediation, removal or cleanup of
Hazardous Materials and no investigation, litigation or other proceeding is pending or, to
the knowledge of the Company, threatened against the Company or any Company Subsidiary under
any applicable Environmental Law.
(iv) Neither the Company nor any Company Subsidiary has assumed, by contract or
operation of Law, any liability under any Environmental Law or relating to any Hazardous
Materials, or is an indemnitor in connection with any threatened or asserted claim by any
third-party indemnitee for any liability under any Environmental Law or relating to any
Hazardous Materials.
(v) Neither the Company nor any Company Subsidiary has caused, and to the knowledge of
the Company, no Third Party has caused any release of a Hazardous Material that would be
required to be investigated or remediated by the Company or any Company Subsidiary under any
Environmental Law.
(b) This Section 4.14 contains the exclusive representations and warranties of the
Company with respect to environmental matters.
Section 4.15 Intellectual Property.
(a) Section 4.15(a) of the Company Disclosure Letter sets forth a correct and complete
list of all material Intellectual Property registrations and applications for registration owned by
the Company.
(b) Except as, individually or in the aggregate, has not had and would not reasonably be
expected to have a Company Material Adverse Effect, (i) the Company and the Company Subsidiaries
own or are licensed or otherwise possess valid rights to use all Intellectual
Property necessary to conduct the business of the Company and the Company Subsidiaries as it
is currently conducted, (ii) the conduct of the business of the Company and the Company
Subsidiaries as it is currently conducted does not infringe, misappropriate or otherwise violate
the Intellectual Property rights of any Third Party, (iii) there are no pending or, to the
knowledge of the Company, threatened claims with respect to any of the Intellectual Property rights
owned by the Company or any Company Subsidiary, and (iv) to the knowledge of the Company, no Third
Party is currently infringing or misappropriating Intellectual Property owned by the Company or any
Company Subsidiary. The Company and the Company Subsidiaries are taking all actions that they
reasonably believe are necessary to maintain and protect each material item of Intellectual
Property that they own.
38
(c) This Section 4.15 contains the exclusive representations and warranties of the
Company with respect to intellectual property matters.
Section 4.16 Properties.
(a) Section 4.16(a) of the Company Disclosure Letter sets forth a list of the common
name of each facility and real property owned or leased, including ground leased, by the Company or
any Company Subsidiary as lessee or sublessee, as of the date of this Agreement (all such real
property interests, together with all buildings, structures and other improvements and fixtures
located on or under such real property and all easements, rights and other appurtenances to such
real property, are individually referred to herein as a “Company Property” and collectively
referred to herein as the “Company Properties”). Except as set forth in Section
4.16(a) of the Company Disclosure Letter, there are no real properties that the Company or any
Company Subsidiary is obligated to buy, lease or sublease at some future date.
(b) The Company or a Company Subsidiary owns good and valid fee simple title or leasehold
title (as applicable) to each of the Company Properties, in each case, free and clear of Liens,
except for Company Permitted Liens that have not had and would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect. For the purposes of this
Agreement, “Company Permitted Liens” shall mean any (i) Liens relating to any Indebtedness
incurred in the ordinary course of business, (ii) Liens that result from any statutory or other
Liens for Taxes or assessments that are not yet subject to penalty or the validity of which is
being contested in good faith by appropriate proceedings, (iii) any Company Material Contracts or
other service contracts, management agreements, leasing commission agreements, agreements or
obligations set forth in Section 4.16(l) of the Company Disclosure Letter, or Company
Leases or ground leases or air rights affecting any Company Property, (iv) Liens imposed or
promulgated by Law or any Governmental Authority, including zoning regulations, permits and
licenses, (v) Liens that are disclosed on the existing Company Title Insurance Policies made
available by or on behalf of the Company or any Company Subsidiary to Parent prior to the date
hereof, (vi) any cashiers’, landlords’, workers’, mechanics’, carriers’, workmen’s, repairmen’s and
materialmen’s liens and other similar Liens imposed by Law and incurred in the ordinary course of
business
consistent with past practice that are not yet subject to penalty or the validity of which is
being contested in good faith by appropriate proceedings, and (vii) any other Liens, limitations,
restrictions or title defects that do not materially impair the value of the Company Property or
the continued use and operation of the Company Property as currently used and operated.
Section 4.16(b) of the Company Disclosure Letter describes the material Company Permitted
Liens which are being contested in good faith by appropriate proceedings.
(c) The Company Properties (x) are supplied with utilities and other services as necessary to
permit their continued operation as they are now being operated, (y) are, to the knowledge of the
Company, in working order sufficient for their normal operation in the manner currently being
operated and without any material structural defects other than as may be disclosed in any physical
condition reports that have been made available to Parent, and (z) are,
39
to the knowledge of the
Company, adequate and suitable for the purposes for which they are presently being used.
(d) To the knowledge of the Company, each of the Company Properties has sufficient access to
and from publicly dedicated streets for its current use and operation, without any constraints that
interfere with the normal use, occupancy and operation thereof.
(e) Neither the Company nor any of the Company Subsidiaries has received (i) written notice
that any certificate, permit or license from any Governmental Authority having jurisdiction over
any of the Company Properties or any agreement, easement or other right of an unlimited duration
that is necessary to permit the lawful use and operation of the buildings and improvements on any
of the Company Properties or that is necessary to permit the lawful use and operation of all
utilities, parking areas, retention ponds, driveways, roads and other means of egress and ingress
to and from any of the Company Properties is not in full force and effect as of the date of this
Agreement, except for such failures to be in full force and effect that, individually or in the
aggregate, would not reasonably be expected to have a Company Material Adverse Effect, or of any
pending written threat of modification or cancellation of any of same, that would reasonably be
expected to have a Company Material Adverse Effect, or (ii) written notice of any uncured violation
of any Laws affecting any of the Company Properties which, individually or in the aggregate, has
had or would reasonably be expected to have a Company Material Adverse Effect.
(f) No certificate, variance, permit or license from any Governmental Authority having
jurisdiction over any of the Company Properties or any agreement, easement or other right that is
necessary to permit the current use of the buildings and improvements on any of the Company
Properties or that is necessary to permit the current use of all parking areas, driveways, roads
and other means of egress and ingress to and from any of the Company Properties has failed to be
obtained or is not in full force and effect, and neither the Company nor any Company Subsidiary has
received written notice of any outstanding threat of modification or cancellation of any such
certificate, variance, permit or license, except for each of the foregoing as, individually or in
the aggregate, have not had and would not reasonably be expected to have a Company Material Adverse
Effect.
(g) Neither the Company nor any Company Subsidiary has received any written notice to the
effect that (i) any condemnation or rezoning proceedings are pending or threatened with respect to
any of the Company Properties, or (ii) any zoning regulation or ordinance (including with respect
to parking), Board of Fire Underwriters rules, building, fire, health or other Law has been
violated (and remains in violation) for any Company Property, except for each of the foregoing as,
individually or in the aggregate, has not had and would not reasonably be expected to have a
Company Material Adverse Effect.
(h) Except for discrepancies, errors or omissions that, individually or in the aggregate, have
not had and would not reasonably be expected to have a Company Material
40
Adverse Effect, the rent
rolls for each of the Company Properties that constitute medical office buildings operated by or on
behalf of the Company or any Company Subsidiaries (“Company MOBs”), dated as of December
31, 2010, which rent rolls have previously been made available by or on behalf of the Company or
any Company Subsidiary to Parent, and the schedules with respect to the Company Properties subject
to triple-net leases, which schedules have previously been made available to Parent, correctly (i)
reference each lease or sublease that was in effect as of December 31, 2010 and to which the
Company or the Company Subsidiaries are parties as lessors or sublessors with respect to each of
the applicable Company Properties (all leases or subleases (including any triple-net leases),
together with all amendments, modifications, supplements, renewals and extensions related thereto,
the “Company Leases”), and (ii) identify the rent currently payable and security deposit
amounts currently held under the Company Leases.
(i) True and complete in all material respects copies of (i) all ground leases affecting the
interest of the Company or any Company Subsidiary in the Company Properties, (ii) all Company
Leases with the Company’s top fifteen (15) tenants, based on rental payments to the Company (or the
Company’s pro rata share of such rental payments in the case of non-wholly-owned Company
Subsidiaries), with respect to Company Properties subject to triple-net leases, and (iii) all
Company Leases for Company MOBs that relate to in excess of ten thousand (10,000) square feet of
net rentable area (the “Material Company Leases”), in each case in effect as of the date
hereof, together with all amendments, modifications, supplements, renewals and extensions related
thereto, have been made available to Parent. Except as set forth on Section 4.16(i) of the
Company Disclosure Letter or as has not had and would not reasonably be expected to have a Company
Material Adverse Effect, (1) neither the Company nor any Company Subsidiary is and, to the
knowledge of the Company, no other party is in breach or violation of, or default under, any
Material Company Lease, (2) no event has occurred which would result in a breach or violation of,
or a default under, any Material Company Lease by the Company or any Company Subsidiary, or, to the
knowledge of the Company, any other party thereto (in each case, with or without notice or lapse of
time or both) and no tenant under a Material Company Lease is in monetary default under such
Material Company Lease, (3) no tenant under a Company Lease is the beneficiary or has the right to
become a beneficiary of a loan or forbearance from the Company or any Company Subsidiary in excess
of $5,000,000 in the aggregate, (4) neither the Company nor any Company Subsidiary is in receipt of
any rent under any Company Lease paid more than thirty
(30) days before such rent is due and payable, and (5) each Material Company Lease is valid,
binding and enforceable in accordance with its terms and is in full force and effect with respect
to the Company or a Company Subsidiary and, to the knowledge of the Company, with respect to the
other parties thereto, except as may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar Laws affecting creditors’ rights generally and by general principles of
equity (regardless of whether enforceability is considered in a proceeding in equity or at Law).
(j) To the knowledge of the Company, except as set forth on Section 4.16(j) of the
Company Disclosure Letter, there are no Tax abatements or exemptions specifically affecting the
Company Properties, and the Company and the Company Subsidiaries have not received any written
notice of (and the Company and the Company Subsidiaries do not
41
have any knowledge of) any proposed
increase in the assessed valuation of any of the Company Properties or of any proposed public
improvement assessments that will result in the Taxes or assessments payable in the next tax period
increasing by an amount material to the Company and the Company Subsidiaries, considered as a
whole.
(k) Except as set forth in Section 4.16(k) of the Company Disclosure Letter or as has
not had and would not reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect, as of the date of this Agreement, no purchase option has been exercised
under any Company Lease for which the purchase has not closed prior to the date of this Agreement.
(l) Except for Company Permitted Liens or as set forth in Section 4.16(l) of the
Company Disclosure Letter, (i) there are no unexpired option to purchase agreements, rights of
first refusal or first offer or any other rights to purchase or otherwise acquire any Company
Property or any portion thereof that would materially adversely affect the Company’s, or the
Company Subsidiary’s, ownership, ground lease or right to use a Company Property subject to a
Material Company Lease, and (ii) there are no other outstanding rights or agreements to enter into
any contract for sale, ground lease or letter of intent to sell or ground lease any Company
Property or any portion thereof that is owned by any Company Subsidiary, which, in each case, is in
favor of any party other than the Company or a Company Subsidiary (a “Company Third
Party”).
(m) Except as set forth in Section 4.16(m) of the Company Disclosure Letter or
pursuant to a Company Lease or any ground lease affecting any Company Property, neither the Company
nor any Company Subsidiary is a party to any agreement pursuant to which the Company or any Company
Subsidiary manages or manages the development of any real property for any Company Third Party.
(n) A copy of each Company Title Insurance Policy in the possession of the Company has been
made available to Parent. No written claim has been made against any Company Title Insurance
Policy, which individually or in the aggregate, has had or would be reasonably expected to have a
Company Material Adverse Effect.
(o) Section 4.16(o) of the Company Disclosure Letter lists (i) to the knowledge of the
Company, each of the Company Properties which are under development as of the date hereof, and
describes the status of such development as of the date hereof, and (ii) to the knowledge of the
Company, all real properties under contract or currently proposed for acquisition, development or
commencement of construction by the Company or a Company Subsidiary pursuant to binding agreements,
as of the date hereof.
(p) The Company and the Company Subsidiaries have good and valid title to, or a valid and
enforceable leasehold interest in, or other right to use, all personal property
42
owned, used or held
for use by them as of the date of this Agreement (other than property owned by tenants and used or
held in connection with the applicable tenancy), except as, individually or in the aggregate, has
not had and would not reasonably be expected to have a Company Material Adverse Effect. None of
the Company’s or any of the Company Subsidiaries’ ownership of or leasehold interest in any such
personal property is subject to any Liens, except for Company Permitted Liens and Liens that have
not had and would not reasonably be expected to have a Company Material Adverse Effect.
(q) Section 4.16(q) of the Company Disclosure Letter lists the parties currently
providing third-party property management services to the Company or a Company Subsidiary and the
number of facilities currently managed by each such party.
Section 4.17 Taxes.
(a) The Company and each Company Subsidiary has filed with the appropriate Governmental
Authority all Tax Returns required to be filed, taking into account any extensions of time within
which to file such Tax Returns, and all such Tax Returns were complete and correct, subject in each
case to such exceptions as, individually or in the aggregate, has not had and would not reasonably
be expected to have a Company Material Adverse Effect. The Company and each Company Subsidiary has
duly paid (or there has been paid on their behalf), or made adequate provisions for, all material
Taxes required to be paid by them.
(b) The Company (i) for all taxable years commencing with the Company’s taxable year ended
December 31, 1985 through December 31, 2010, has been subject to taxation as a real estate
investment trust within the meaning of Section 856 of the Code (a “REIT”) and has satisfied
all requirements to qualify as a REIT for such years; (ii) has operated since January 1, 2011 to
the date hereof in a manner consistent with the requirements for qualification and taxation as a
REIT; (iii) intends to continue to operate in such a manner as to qualify as a REIT for its taxable
year that will end with the Merger; and (iv) has not taken or omitted to take any action that could
reasonably be expected to result in a challenge by the IRS or any other Governmental Authority to
its status as a REIT, and no such challenge is pending or threatened in writing. No Company
Subsidiary is a corporation for United States federal income tax purposes, other than a corporation
that qualifies as a
“qualified REIT subsidiary” within the meaning of Section 856(i)(2) of the Code, as a “taxable
REIT subsidiary” within the meaning of Section 856(l) of the Code, or as a REIT.
(c) (i) There are no audits, investigations by any Governmental Authority or other proceedings
pending with regard to any material Taxes or Tax Returns of the Company or any Company Subsidiary;
(ii) no deficiency for Taxes of the Company or any Company Subsidiary has been claimed, proposed or
assessed in writing or, to the knowledge of the Company, threatened, by any Governmental Authority,
which deficiency has not yet been settled, except for such deficiencies which are being contested
in good faith or with respect to which the failure to pay, individually or in the aggregate, has
not had and would not reasonably
43
be expected to have a Company Material Adverse Effect; (iii)
neither the Company nor any Company Subsidiary has waived any statute of limitations with respect
to Taxes or agreed to any extension of time with respect to any Tax assessment or deficiency for
any open tax year; and (iv) neither the Company nor any of the Company Subsidiaries has entered
into any “closing agreement” as described in Section 7121 of the Code (or any corresponding or
similar provision of state, local or foreign income Tax Law).
(d) Each Company Subsidiary that is a partnership, joint venture, or limited liability company
and which has not elected to be a “taxable REIT subsidiary” has been since its formation treated
for United States federal income tax purposes as a partnership or disregarded entity, as the case
may be, and not as a corporation or an association taxable as a corporation.
(e) Neither the Company nor any Company Subsidiary holds any asset the disposition of which
would be subject to (or to rules similar to) Section 1374 of the Code.
(f) Since its inception, (i) the Company and the Company Subsidiaries have not incurred any
liability for material Taxes under Section 860(c) or 4981 of the Code which have not been
previously paid, and (ii) neither the Company nor any Company Subsidiary has incurred any material
liability for Taxes other than (x) in the ordinary course of business or consistent with past
practice, or (y) transfer or similar Taxes arising in connection with sales of property.
(g) The Company and the Company Subsidiaries have complied, in all material respects, with all
applicable Laws, rules and regulations relating to the payment and withholding of Taxes (including
withholding of Taxes pursuant to Sections 1441, 1442, 1445, 1446 and 3402 of the Code or similar
provisions under any foreign Laws) and have duly and timely withheld and have paid over to the
appropriate taxing authorities all material amounts required to be so withheld and paid over on or
prior to the due date thereof under all applicable Laws.
(h) The Company Tax Protection Agreements (as hereinafter defined) listed in Section
4.17(h) of the Company Disclosure Letter are the only such agreements in force at the date of
this Agreement, and, as of the date of this Agreement, no person has raised in writing, or to the
knowledge of the Company threatened to raise, a material claim against the Company or any Company
Subsidiary for any breach of any Company Tax Protection Agreements. As used herein, “Company
Tax Protection Agreements” means any written agreement to which the Company or any Company
Subsidiary is a party pursuant to which: (i) any liability to holders of Class A Units relating
to Taxes may arise, whether or not as a result of the consummation of the transactions contemplated
by this Agreement; and/or (ii) in connection with the deferral of income Taxes of a holder of Class
A Units, the Company or the Company Subsidiaries have agreed to (A) maintain a minimum level of
debt or continue a particular debt,
44
(B) retain or not dispose of assets for a period of time that
has not since expired, (C) make or refrain from making Tax elections, and/or (D) only dispose of
assets in a particular manner.
(i) There are no Tax Liens upon any property or assets of the Company or any Company
Subsidiary except Liens for Taxes not yet due and payable or that are being contested in good faith
by appropriate proceedings and for which adequate reserves have been established.
(j) Neither the Company nor any Company Subsidiary has requested, has received or is subject
to any written ruling of a Governmental Authority or has entered into any written agreement with a
Governmental Authority with respect to any Taxes.
(k) There are no Tax allocation or sharing agreements or similar arrangements with respect to
or involving the Company or any Company Subsidiary, and after the Closing Date neither the Company
nor any Company Subsidiary shall be bound by any such Tax allocation agreements or similar
arrangements or have any liability thereunder for amounts due in respect of periods prior to the
Closing Date.
(l) Neither the Company nor any Company Subsidiary (A) has been a member of an affiliated
group filing a consolidated federal income Tax Return (other than a group the common parent of
which was the Company) or (B) has any liability for the Taxes of any Person (other than the Company
or any Company Subsidiary) under Treasury Regulation Section 1.1502-6 (or any similar provision of
state, local, or foreign law), as a transferee or successor, by contract, or otherwise.
(m) Neither the Company nor any Company Subsidiary has participated in any “listed
transaction” within the meaning of Treasury Regulation Section 1.6011-4(b)(2).
(n) As of the date of this Agreement, the Company is not aware of any fact or circumstance
that could reasonably be expected to prevent the Merger from qualifying as a reorganization within
the meaning of Section 368(a) of the Code.
(o) Neither the Company nor any of the Company Subsidiaries has constituted either a
“distributing corporation” or a “controlled corporation” (within the meaning of Section
355(a)(1)(A) of the Code) in a distribution of stock qualifying for tax-free treatment under
Section 355 of the Code (A) in the two years prior to the date of this Agreement or (B) in a
distribution which could otherwise constitute part of a “plan” or “series of related transactions”
(within the meaning of Section 355(e) of the Code) in conjunction with transactions contemplated by
this Agreement.
45
(p) The amount of the Company’s liabilities does not exceed the aggregate basis of the
Company’s assets, as determined for United States federal income Tax purposes.
Section 4.18 Insurance. The Company has made available to Parent copies of all material
insurance policies and all material fidelity bonds or other insurance service contracts in the
Company’s possession providing coverage for all material Company Properties (the “Company
Insurance Policies”). Except for those matters that have not had and would not reasonably be
expected to have a Company Material Adverse Effect, there is no claim for coverage by the Company
or any Company Subsidiary pending under any of the Company Insurance Policies that has been denied
or disputed by the insurer. Except for those matters that have not had and would not reasonably be
expected to have a Company Material Adverse Effect, all premiums payable under all Company
Insurance Policies have been paid, and the Company and the Company Subsidiaries have otherwise
complied in all material respects with the terms and conditions of all the Company Insurance
Policies. To the knowledge of the Company, such Company Insurance Policies are valid and
enforceable in accordance with their terms and are in full force and effect. No written notice of
cancellation or termination has been received by the Company or any Company Subsidiary with respect
to any such policy which has not been replaced on substantially similar terms prior to the date of
such cancellation.
Section 4.19 Opinion of Financial Advisor. The Company has received the opinion of X.X.
Xxxxxx Securities LLC (“X.X. Xxxxxx”) that, as of the date of such opinion and subject to
the assumptions and limitations set forth therein, the Exchange Ratio is fair from a financial
point of view to the holders of shares of Company Common Stock.
Section 4.20 Takeover Statutes. Assuming the accuracy of the representations and
warranties set forth in Section 5.24, the Company Board has taken all action necessary to
render inapplicable to the Merger the restrictions on business combinations contained in Subtitle 6
of Title 3 of the MGCL and in Article V, Section 2 of the Company Charter. The restrictions on
control share acquisitions contained in Subtitle 7 of Title 3 of the MGCL are not applicable to the
Merger. No other “business combination,” “control share acquisition,” “fair price,”
“moratorium” or other takeover or anti-takeover statute or similar federal or state Law
(collectively, “Takeover Statutes”) are applicable to this Agreement, the Merger or the
other transactions contemplated by this Agreement.
Section 4.21 Vote Required. The affirmative vote of the holders of not less than
two-thirds (2/3) of all outstanding shares of Company Common Stock entitled to vote thereon (the
“Company Stockholder Approval”) is the only vote of the holders of any class or series of
shares of capital stock of the Company necessary to adopt this Agreement and approve the Merger and
the other transactions contemplated hereby.
Section 4.22 Brokers. No broker, finder or investment banker (other than X.X. Xxxxxx) is
entitled to any brokerage, finder’s or other fee or commission in connection with the Merger based
upon arrangements made by or on behalf of the Company or any Company Subsidiary.
46
Section 4.23 Investment Company Act. Neither the Company nor any Company Subsidiary is
required to be registered as an investment company under the Investment Company Act.
Section 4.24 Affiliate Transactions. Except as set forth in the Company SEC Filings made
through and including the date of this Agreement or as permitted by this Agreement, from January 1,
2010 through the date of this Agreement there have been no transactions, agreements, arrangements
or understandings between the Company or any Company Subsidiary, on the one hand, and any
Affiliates (other than Company Subsidiaries) of the Company or other Persons, on the other hand,
that would be required to be disclosed under Item 404 of Regulation S-K promulgated by the SEC.
Section 4.25 No Other Representations or Warranties. Except for the representations and
warranties contained in Article V, the Company acknowledges that neither Parent nor any
other Person or entity on behalf of Parent has made, and the Company has not relied upon, any
representation or warranty, whether express or implied, with respect to Parent or any of the Parent
Subsidiaries or their respective businesses, affairs, assets, liabilities, financial condition,
results of operations, future operating or financial results, estimates, projections, forecasts,
plans or prospects (including the reasonableness of the assumptions underlying such estimates,
projections, forecasts, plans or prospects) or with respect to the accuracy or completeness of any
other information provided or made available to the Company by or on behalf of Parent.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF PARENT AND MERGER SUB
OF PARENT AND MERGER SUB
Except (a) as set forth in the disclosure letter that has been prepared by Parent and
delivered by Parent to the Company in connection with the execution and delivery of this
Agreement (the “Parent Disclosure Letter”) (it being agreed that disclosure of any
item in any Section of the Parent Disclosure Letter with respect to any Section or subsection of
Article V of this Agreement shall be deemed disclosed with respect to any other Section or
subsection of Article V of this Agreement to the extent such relationship is reasonably
apparent, provided that nothing in the Parent Disclosure Letter is intended to broaden the
scope of any representation or warranty of Parent or Merger Sub made herein), or (b) as disclosed
in Parent SEC Filings, publicly available, filed with, or furnished to, as applicable, the SEC on
or after January 1, 2010 and prior to the date of this Agreement (excluding any risk factor
disclosures contained in such documents under the heading “Risk Factors” and any disclosure of
risks or other matters included in any “forward-looking statements” disclaimer or other statements
that are cautionary, predictive or forward-looking in nature), Parent and Merger Sub hereby jointly
and severally represent and warrant to the Company that:
47
Section 5.1 Organization and Qualification; Subsidiaries.
(a) Parent is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has the requisite organizational power and authority and any
necessary governmental authorization to own, lease and, to the extent applicable, operate its
properties and to carry on its business as it is now being conducted. Parent is duly qualified or
licensed to do business, and is in good standing, in each jurisdiction where the character of the
properties owned, operated or leased by it or the nature of its business makes such qualification,
licensing or good standing necessary, except for such failures to be so qualified, licensed or in
good standing that, individually or in the aggregate, have not had and would not reasonably be
expected to have a Parent Material Adverse Effect.
(b) Merger Sub is a limited liability company duly organized, validly existing and in good
standing under the laws of the State of Delaware and has the requisite organizational power and
authority and any necessary governmental authorization to own, lease and, to the extent applicable,
operate its properties and to carry on its business as it is now being conducted. Merger Sub is
duly qualified or licensed to do business, and is in good standing, in each jurisdiction where the
character of the properties owned, operated or leased by it or the nature of its business makes
such qualification, licensing or good standing necessary, except for such failures to be so
qualified, licensed or in good standing that, individually or in the aggregate, have not had and
would not reasonably be expected to have a Parent Material Adverse Effect.
(c) Each Parent Subsidiary (other than Merger Sub) is duly organized, validly existing and in
good standing under the Laws of the jurisdiction of its incorporation or organization, as the case
may be, and has the requisite organizational power and authority and any necessary governmental
authorization to own, lease and, to the extent applicable, operate its properties and to carry on
its business as it is now being conducted, except for such failures to be so organized, in good
standing or have certain power and authority that, individually or in the aggregate, have not had
and would not reasonably be expected to have a Parent Material Adverse Effect. Each Parent
Subsidiary is duly qualified or licensed to do business, and is in good
standing, in each jurisdiction where the character of the properties owned, operated or leased
by it or the nature of its business makes such qualification, licensing or good standing necessary,
except for such failures to be so qualified, licensed or in good standing that, individually or in
the aggregate, have not had and would not reasonably be expected to have a Parent Material Adverse
Effect.
(d) None of Parent, Merger Sub or any Parent Subsidiary directly or indirectly owns any
interest or investment (whether equity or debt) in any person (other than in the Parent
Subsidiaries and investments in short-term investment securities).
Section 5.2 Organizational Documents. Parent has made available to the Company complete
and correct copies of (i) Parent’s Amended and Restated Certificate of Incorporation, as amended
(the “Parent Charter”) and Fourth Amended and Restated Bylaws (the “Parent
Bylaws”), (ii) Merger Sub’s certificate of formation and limited liability company
48
agreement,
and (iii) the organizational documents of each of Parent’s “significant subsidiaries” (as such term
is defined in Rule 1-02 of Regulation S-X), each as in effect on the date hereof.
Section 5.3 Capital Structure.
(a) As of the date of this Agreement, the authorized capital stock of Parent consists of
300,000,000 shares of Parent Common Stock and 10,000,000 shares of preferred stock, par value $1.00
per share (the “Parent Preferred Stock” and, together with the Parent Common Stock, the
“Parent Stock”). At the close of business on February 24, 2011, (i) 162,920,669 shares of
Parent Common Stock were issued and outstanding, (ii) 50,966 shares of Parent Common Stock were
held by Parent in its treasury, (iii) no shares of Parent Preferred Stock were issued and
outstanding, (iv) 24,172,074 shares of Parent Common Stock were reserved for issuance under
Parent’s Distribution Reinvestment and Stock Purchase Plan, 5,257,637 shares of Parent Common Stock
were reserved for future issuance or grant under the Parent Benefit Plans, 1,987,878 shares of
Parent Common Stock were reserved for issuance upon exercise of outstanding options, and 71,848
shares of Parent Common Stock were reserved for conversion or settlement of outstanding stock units
under the Parent Benefit Plans, (v) 1,819,582 shares of Parent Common Stock were reserved for
issuance upon conversion of Parent’s convertible senior notes due 2011, and (vi) 24,958,543 shares
of Parent Common Stock were reserved for issuance pursuant to the Atria Agreement. All issued and
outstanding shares of the capital stock of Parent are duly authorized, validly issued, fully paid
and non-assessable, and all shares of Parent Common Stock to be issued as the Merger Consideration
or as Stock Award Payments, when so issued in accordance with the terms of this Agreement, will be
duly authorized, validly issued, fully paid and non-assessable. No class of capital stock is
entitled to preemptive rights. Except as disclosed in Section 5.3(a) of Parent Disclosure
Letter, there are no outstanding bonds, debentures, notes or other indebtedness of Parent having
the right to vote (or convertible into, or exchangeable for, securities having the right to vote)
on any matter on which holders of shares of Parent Common Stock may vote.
(b) At the close of business on February 24, 2011, all of the Merger Sub Interests were owned
by Parent. All of the Merger Sub Interests are duly authorized and validly issued, and are not
entitled to preemptive rights. There are no outstanding bonds, debentures, notes or other
indebtedness of Merger Sub having the right to vote (or convertible into, or exchangeable for,
securities having the right to vote) on any matter on which holders of Merger Sub Interests may
vote.
(c) All of the outstanding shares of capital stock of each of the Parent Subsidiaries that is
a corporation are duly authorized, validly issued, fully paid and nonassessable. All equity
interests in each of the Parent Subsidiaries that is a partnership or limited liability company are
duly authorized and validly issued. All shares of capital stock of (or other ownership interests
in) each of the Parent Subsidiaries which may be issued upon exercise of outstanding options or
exchange rights are duly authorized and, upon issuance will be validly issued, fully paid and
nonassessable.
49
(d) Except as set forth in this Section 5.3, as of the date of this Agreement, there
are no securities, options, warrants, calls, rights, commitments, agreements, rights of first
refusal, arrangements or undertakings of any kind to which Parent, Merger Sub or any other Parent
Subsidiary is a party or by which any of them is bound, obligating Parent, Merger Sub or any other
Parent Subsidiary to issue, deliver or sell or create, or cause to be issued, delivered or sold or
created, additional shares of Parent Stock or Merger Sub Interests or other equity securities or
phantom stock or other contractual rights the value of which is determined in whole or in part by
the value of any equity security of Parent, Merger Sub or any of the other Parent Subsidiaries or
obligating Parent, Merger Sub or any other Parent Subsidiary to issue, grant, extend or enter into
any such security, option, warrant, call, right, commitment, agreement, right of first refusal,
arrangement or undertaking. As of the date of this Agreement, there are no outstanding contractual
obligations of Parent, Merger Sub or any other Parent Subsidiary to repurchase, redeem or otherwise
acquire any shares of Parent Stock, or other equity securities or interests of Parent, Merger Sub
or any other Parent Subsidiary (other than in satisfaction of withholding Tax obligations pursuant
to certain awards outstanding under the Parent Plans). Neither Parent, Merger Sub nor any other
Parent Subsidiary is a party to or, to the knowledge of Parent, bound by any agreements or
understandings concerning the voting (including voting trusts and proxies) of any Merger Sub
Interests or capital stock of Parent, or equity interests in any of the other Parent Subsidiaries.
(e) All dividends or distributions on the shares of Parent Stock and any material dividends or
distributions on any securities of any Parent Subsidiary which have been authorized or declared
prior to the date hereof have been paid in full (except to the extent such dividends have been
publicly announced and are not yet due and payable).
Section 5.4 Authority.
(a) Each of Parent and Merger Sub has the requisite organizational power and authority to
execute and deliver this Agreement, to perform its obligations hereunder and, subject to receipt of
the Parent Stockholder Approval, to consummate the transactions contemplated by this Agreement.
The execution and delivery of this Agreement by each of Parent and Merger Sub and the consummation
by each of Parent and Merger Sub of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action, and no other corporate or limited liability company
proceedings on the part of Parent or Merger Sub, as applicable, are necessary to authorize this
Agreement or the Merger or to consummate the transactions contemplated hereby, subject, with
respect to the issuance of Parent Common Stock in connection with the Merger and the amendment of
the Parent Charter to increase the authorized number of shares of Parent Common Stock (the
“Charter Amendment”), to receipt of the Parent Stockholder Approval. The Parent Board, at
a duly held meeting, has (i) directed that the issuance of Parent Common Stock in connection with
the Merger and the Charter Amendment be submitted for consideration by the stockholders of Parent
at the Parent Stockholder Meeting, and (ii) resolved to recommend that the stockholders of Parent
vote in favor of approval of the issuance of Parent Common Stock in connection with the
50
Merger and
the Charter Amendment (the “Parent Recommendation”) and to include such recommendation in
the Joint Proxy Statement, subject to Section 6.3(d).
(b) This Agreement has been duly executed and delivered by each of Parent and Merger Sub and,
assuming due authorization, execution and delivery by the Company, constitutes a legally valid and
binding obligation of each of Parent and Merger Sub, enforceable against Parent and Merger Sub in
accordance with its terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar Laws affecting creditors’ rights generally
and by general principles of equity (regardless of whether enforceability is considered in a
proceeding in equity or at law).
Section 5.5 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by each of Parent and Merger Sub does not,
and the performance of this Agreement and the consummation of the Merger, the Charter Amendment and
the other transactions contemplated hereby by each of Parent and Merger Sub will not, (i) assuming
receipt of the Parent Stockholder Approval, conflict with or violate any provision of the Parent
Charter or Parent Bylaws, Merger Sub’s charter or bylaws or any equivalent organizational or
governing documents of any other Parent Subsidiary, (ii) assuming that all consents, approvals,
authorizations and permits described in Section 5.5(b) have been obtained, all filings and
notifications described in Section 5.5(b) have been made and any waiting periods thereunder
have terminated or expired, conflict with or violate any Law applicable to Parent, Merger Sub or
any other Parent Subsidiary or by which any property or asset of Parent, Merger Sub or any other
Parent Subsidiary is bound, or (iii) require any consent or approval under, result in any breach of
or any loss of any benefit or
material increase in any cost or obligation of Parent or any Parent Subsidiary under, or
constitute a default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any right of termination, acceleration or cancellation (with or
without notice or the lapse of time or both) of, or give rise to any right of purchase, first offer
or forced sale under or result in the creation of a Lien on any property or asset of Parent, Merger
Sub or any other Parent Subsidiary pursuant to, any note, bond, debt instrument, indenture,
contract, agreement, ground lease, license, permit or other legally binding obligation to which
Parent, Merger Sub or any other Parent Subsidiary is a party, except, as to clauses (ii) and (iii),
respectively, for any such conflicts, violations, breaches, defaults or other occurrences which,
individually or in the aggregate, have not had and would not reasonably be expected to have a
Parent Material Adverse Effect.
(b) The execution and delivery of this Agreement by each of Parent and Merger Sub does not,
and the performance of this Agreement by each of Parent and Merger Sub will not, require any
consent, approval, authorization or permit of, or filing with or notification to, any Governmental
Authority, except (i) the filing with the SEC of (A) the Joint Proxy Statement and the Form S-4 and
the declaration of effectiveness of the Form S-4, and (B) such reports under, and other compliance
with, the Exchange Act (and the rules and regulations promulgated thereunder) and the Securities
Act (and the rules and regulations promulgated thereunder) as may
51
be required in connection with
this Agreement and the transactions contemplated hereby, (ii) as may be required under the rules
and regulations of the NYSE, (iii) the filing of the Articles of Merger and the acceptance for
record by SDAT of the Articles of Merger pursuant to the MGCL, (iv) the filing of the Certificate
of Merger and the acceptance for record by the Delaware Secretary of the Certificate of Merger
pursuant to the DLLCA, (v) the filing of the Charter Amendment with the Delaware Secretary, (vi)
such filings and approvals as may be required by any applicable state securities or “blue sky”
Laws, (vii) such filings as may be required in connection with state and local transfer Taxes, and
(viii) where failure to obtain such consents, approvals, authorizations or permits, or to make such
filings or notifications, individually or in the aggregate, has not had and would not reasonably be
expected to have a Parent Material Adverse Effect.
Section 5.6 Permits; Compliance With Law.
(a) Except for the authorizations, licenses, permits, certificates, approvals, variances,
exemptions, orders, franchises, certifications and clearances that are the subject of Section
5.14 or Section 5.16, which are addressed solely in those Sections, Parent, Merger Sub
and each other Parent Subsidiary is in possession of all authorizations, licenses, permits,
certificates, approvals, variances, exemptions, orders, franchises, certifications and clearances
of any Governmental Authority and accreditation and certification agencies, bodies or other
organizations, including building permits and certificates of occupancy, necessary for Parent,
Merger Sub and each other Parent Subsidiary to own, lease and, to the extent applicable, operate
its properties or to carry on its respective business substantially as it is being conducted as of
the date hereof (the “Parent Permits”), and all such Parent Permits are valid and in full
force and effect, except where the failure to be in
possession of, or the failure to be valid or in full force and effect of, any of the Parent
Permits, individually or in the aggregate, has not had and would not reasonably be expected to have
a Parent Material Adverse Effect. All applications required to have been filed for the renewal of
Parent Permits have been duly filed on a timely basis with the appropriate Governmental Authority,
and all other filings required to have been made with respect to such Parent Permits have been duly
made on a timely basis with the appropriate Governmental Authority, except in each case for
failures to file which, individually or in the aggregate, have not had and would not reasonably be
expected to have a Parent Material Adverse Effect. Neither Parent nor any Parent Subsidiary has
received any claim or notice nor has any knowledge indicating that Parent or any Parent Subsidiary
is currently not in compliance with the terms of any such Parent Permits, except where the failure
to be in compliance with the terms of any such Parent Permits, individually or in the aggregate,
have not had and would not reasonably be expected to have a Parent Material Adverse Effect.
(b) None of Parent, Merger Sub or any other Parent Subsidiary is or has been in conflict with,
or in default or violation of (i) any Law applicable to Parent, Merger Sub or any other Parent
Subsidiary or by which any property or asset of Parent, Merger Sub or any other Parent Subsidiary
is bound (except for Laws addressed in Section 5.10, Section 5.11, Section
5.14, Section 5.15 or Section 5.17), or (ii) any Parent Permits (except for
Parent Permits addressed in Section 5.14 or Section 5.16), except in each case for
any such conflicts, defaults or
52
violations that, individually or in the aggregate, have not had and
would not reasonably be expected to have a Parent Material Adverse Effect.
Section 5.7 SEC Filings; Financial Statements.
(a) Parent has filed with, or furnished (on a publicly available basis) to, the SEC all forms,
reports, schedules, statements and documents required to be filed or furnished by it under the
Securities Act or the Exchange Act, as the case may be, including any amendments or supplements
thereto, from and after January 1, 2009 (collectively, the “Parent SEC Filings”). Each
Parent SEC Filing, as amended or supplemented, if applicable, (i) as of its date, or, if amended or
supplemented, as of the date of the most recent amendment or supplement thereto, complied in all
material respects with the requirements of the Securities Act or the Exchange Act, as the case may
be, and the applicable rules and regulations of the SEC thereunder, and (ii) did not, at the time
it was filed (or became effective in the case of registration statements), or, if amended or
supplemented, as of the date of the most recent amendment or supplement thereto, contain any untrue
statement of a material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements made therein, in the light of the circumstances under
which they were made, not misleading. As of the date of this Agreement, neither Merger Sub nor any
other Parent Subsidiary is separately subject to the periodic reporting requirements of the
Exchange Act.
(b) Each of Parent’s consolidated financial statements contained or incorporated by reference
in the Parent SEC Filings (as amended, supplemented or restated, if applicable), including the
related notes and schedules, was prepared (except as indicated in the
notes thereto) in accordance with GAAP applied on a consistent basis throughout the periods
indicated, and each such consolidated financial statement presented fairly, in all material
respects, the consolidated financial position, results of operations, stockholders’ equity and cash
flows of Parent and its consolidated subsidiaries as of the respective dates thereof and for the
respective periods indicated therein (subject, in the case of unaudited quarterly financial
statements, to normal year-end adjustments).
(c) The records, systems, controls, data and information of Parent and the Parent Subsidiaries
that are used in the system of internal accounting controls described in the following sentence are
recorded, stored, maintained and operated under means that are under the exclusive ownership and
direct control of Parent or the Parent Subsidiaries or accountants, except for any non-exclusive
ownership and non-direct control that would not reasonably be expected to have a materially adverse
effect on the system of internal accounting controls. Parent and the Parent Subsidiaries have
devised and maintain a system of internal accounting controls sufficient to provide reasonable
assurances regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with GAAP, including that: (1) transactions are
executed only in accordance with
53
management’s authorization; (2) transactions are recorded as
necessary to permit preparation of the financial statements of Parent and the Parent Subsidiaries
and to maintain accountability for the assets of Parent and the Parent Subsidiaries; (3) access to
such assets is permitted only in accordance with management’s authorization; (4) the reporting of
such assets is compared with existing assets at regular intervals; and (5) accounts, notes and
other receivables and inventory are recorded accurately, and proper and adequate procedures are
implemented to effect the collection thereof on a current and timely basis. Parent’s principal
executive officer and its principal financial officer have disclosed to Parent’s auditors and the
audit committee of the Board of Directors of Parent (the “Parent Board”) (i) all
significant deficiencies and material weaknesses in the design or operation of internal controls
over financial reporting that are reasonably likely to adversely affect Parent’s ability to record,
process, summarize and report financial data, and (ii) any fraud, whether or not material, that
involves management or other employees who have a significant role in Parent’s internal controls,
and Parent has made available to the Company copies of any material written materials relating to
the foregoing. Parent has established and maintains disclosure controls and procedures (as such
term is defined in Rule 13a-15 promulgated under the Exchange Act) designed to ensure that material
information relating to Parent required to be included in reports filed under the Exchange Act,
including its consolidated subsidiaries, is made known to Parent’s principal executive officer and
its principal financial officer by others within those entities, particularly during the periods in
which the periodic reports required under the Exchange Act are being prepared, and, to the
knowledge of Parent, such disclosure controls and procedures are effective in timely alerting
Parent’s principal executive officer and its principal financial officer to material information
required to be included in Parent’s periodic reports required under the Exchange Act. Since the
enactment of the Xxxxxxxx-Xxxxx Act, none of Parent, Merger Sub or any other Parent Subsidiary has
made any prohibited loans to any director or executive officer of Parent (as defined in Rule 3b-7
promulgated under the Exchange Act).
(d) None of Parent or its consolidated subsidiaries has any liabilities or obligations of any
nature (whether accrued, absolute, contingent or otherwise), except for liabilities or obligations
(i) expressly contemplated by or under this Agreement, including without limitation Section
6.2 hereof, (ii) incurred in the ordinary course of business consistent with past practice
since the most recent balance sheet set forth in the Parent SEC Filings made through and including
the date of this Agreement, (iii) described in any section of the Parent Disclosure Letter or (iv)
that, individually or in the aggregate, have not had and would not reasonably be expected to have a
Parent Material Adverse Effect.
(e) To the knowledge of Parent, none of the Parent SEC Filings is the subject of ongoing SEC
review and Parent has not received any comments from the SEC with respect to any of the Parent SEC
Filings since January 1, 2009 which remains unresolved, nor has it received any inquiry or
information request from the SEC as to any matters affecting Parent which has not been adequately
addressed. Parent has made available to the Company true and complete copies of all written
comment letters from the staff of the SEC received since January 1, 2010 through the date of this
Agreement relating to the Parent SEC Filings and all written responses of Parent thereto through
the date of this Agreement. None of the Parent SEC Filings is the subject of any confidential
treatment request by Parent.
54
Section 5.8 Disclosure Documents.
(a) None of the information supplied or to be supplied by or on behalf of Parent, Merger Sub
or any other Parent Subsidiary for inclusion or incorporation by reference in (i) the Form S-4
will, at the time such document is filed with the SEC, at any time such document is amended or
supplemented or at the time such document is declared effective by the SEC, contain any untrue
statement of a material fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, or (ii) the Joint Proxy Statement will, at
the date it is first mailed to the stockholders of the Company and of Parent, at the time of the
Company Stockholder Meeting and the Parent Stockholder Meeting, at the time the Form S-4 is
declared effective by the SEC or at the Effective Time, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were made, not misleading. All
documents that Parent is responsible for filing with the SEC in connection with the transactions
contemplated herein, to the extent relating to Parent or any Parent Subsidiary or other information
supplied by or on behalf of Parent or any Parent Subsidiary for inclusion therein, will comply as
to form, in all material respects, with the provisions of the Securities Act or Exchange Act, as
applicable and the rules and regulations of the SEC thereunder and each such document required to
be filed with any Governmental Authority (other than the SEC) will comply in all material respects
with the provisions of any applicable Law as to the information required to be contained therein.
(b) The representations and warranties contained in this Section 5.8 will not apply to
statements or omissions included in the Form S-4 or the Joint Proxy Statement to the extent based
upon information supplied to Parent by or on behalf of the Company.
Section 5.9 Absence of Certain Changes or Events. Since December 31, 2010, except as
contemplated by this Agreement, (a) Parent, Merger Sub and each other Parent Subsidiary has
conducted its business in the ordinary course consistent with past practice, (b) except as set
forth on Section 6.2(b) of the Parent Disclosure Letter, none of Parent, Merger Sub or any
other Parent Subsidiary has taken any action that it would not be permitted to take after the date
of this Agreement without the prior written consent of the Company pursuant to Section
6.2(b)(i), Section 6.2(b)(iii), Section 6.2(b)(vi) or Section
6.2(b)(x), or agreed to do any of the foregoing, and (c) there has not been any Parent Material
Adverse Effect or any effect, event, development or circumstance that, individually or in the
aggregate with all other effects, events, developments and changes, would reasonably be expected to
result in a Parent Material Adverse Effect.
Section 5.10 Certain ERISA Matters. None of Parent, Merger Sub or any other Parent
Subsidiary has any liability for any prohibited transaction or accumulated funding deficiency
(within the meaning of Section 412 of the Code) or any complete or partial withdrawal liability
with respect to any pension, profit sharing or other plan which is subject to ERISA, to which
Parent, Merger Sub or any other Parent Subsidiary makes or ever has made a contribution and in
which any employee of Parent, Merger Sub or any other Parent Subsidiary is or has ever been a
participant, which in each case has had or would reasonably be expected to have, individually or in
the aggregate, a Parent Material Adverse Effect. With respect to such plans, Parent, Merger Sub and
each other Parent Subsidiary is in compliance in all respects with
55
all applicable provisions of
ERISA, other than as has not had and would not reasonably be expected to have, individually or in
the aggregate, a Parent Material Adverse Effect.
Section 5.11 Absence of Labor Dispute. No labor dispute, strike, walkout or other labor
disturbance by the employees of Parent, Merger Sub or any other Parent Subsidiary or Affiliate
exists or, to the knowledge of the Parent, is imminent.
Section 5.12 Material Contracts. All Parent Material Contracts have been filed as exhibits
to the Parent SEC Filings made through and including the date of this Agreement. Each Parent
Material Contract is in full force and effect and is valid, binding and enforceable against Parent
and/or any Parent Subsidiary party thereto, and, to the knowledge of Parent, each other party
thereto in accordance with its terms, except for such failures to be in such full force and effect
or to be valid, binding and enforceable as are not reasonably likely to have, individually or in
the aggregate, a Parent Material Adverse Effect. None of Parent or any Parent Subsidiary, nor, to
the knowledge of Parent, any other party thereto, is in material breach or violation of, or default
under, any Parent Material Contract, and no event has occurred that with notice or lapse of time or
both would constitute a violation, breach or default under any Parent Material Contract, except
where in each case such breach, violation or default is not reasonably likely to have, individually
or in the aggregate, a Parent Material Adverse Effect. None of Parent or any Parent Subsidiary has
received any written notice of an event of default pursuant to the terms of any Parent Material
Contract.
Section 5.13 Litigation. Except as, individually or in the aggregate, has not had and
would not reasonably be expected to have a Parent Material Adverse Effect, as of the date of this
Agreement, (a) there is no suit, arbitration, inquiry, claim, action or proceeding pending or, to
the knowledge of Parent, threatened by or before any Governmental Authority, nor, to the
knowledge of Parent, is there any investigation pending by any Governmental Authority, in each
case, against Parent, Merger Sub or any other Parent Subsidiary, and (b) none of Parent, Merger Sub
or any other Parent Subsidiary, nor any of Parent or any Parent Subsidiary’s respective property,
is subject to any outstanding judgment, order, writ, injunction or decree of any Governmental
Authority.
Section 5.14 Environmental Matters.
(a) Except as, individually or in the aggregate, has not had and would not reasonably be
expected to have a Parent Material Adverse Effect:
(i) Parent and each Parent Subsidiary are in compliance with applicable Environmental
Laws, have applied for all Environmental Permits necessary to conduct their current
operations and are in compliance with their respective Environmental Permits.
(ii) Neither Parent nor any Parent Subsidiary has received any written notice, demand,
letter or claim alleging that Parent or any such Parent Subsidiary is in violation of, or
liable under, any Environmental Law or that any judicial,
56
administrative or compliance order
has been issued against Parent or any Parent Subsidiary which remains unresolved. There is
no litigation, investigation, request for information or other proceeding pending, or, to
the knowledge of Parent, threatened against Parent and any Parent Subsidiary under any
applicable Environmental Law.
(iii) Neither Parent nor any Parent Subsidiary has entered into or agreed to any
consent decree or order or is subject to any judgment, decree or judicial, administrative or
compliance order relating to compliance with Environmental Laws, Environmental Permits or
the investigation, sampling, monitoring, treatment, remediation, removal or cleanup of
Hazardous Materials and no investigation, litigation or other proceeding is pending or, to
the knowledge of Parent, threatened against Parent or any Parent Subsidiary under any
applicable Environmental Law.
(iv) Neither Parent nor any Parent Subsidiary has assumed, by contract or operation of
Law, any liability under any Environmental Law or relating to any Hazardous Materials, or is
an indemnitor in connection with any threatened or asserted claim by any third-party
indemnitee for any liability under any Environmental Law or relating to any Hazardous
Materials.
(v) Neither Parent nor any Parent Subsidiary has caused, and to the knowledge of
Parent, no Third Party has caused any release of a Hazardous Material that would be required
to be investigated or remediated by Parent or any Parent Subsidiary under Environmental Law.
(b) This Section 5.14 contains the exclusive representations and warranties of Parent
and Merger Sub with respect to environmental matters.
Section 5.15 Intellectual Property.
(a) Except as, individually or in the aggregate, has not had and would not reasonably be
expected to have a Parent Material Adverse Effect, (i) Parent, Merger Sub and the other Parent
Subsidiaries own or are licensed or otherwise possess valid rights to use all Intellectual Property
necessary to conduct the business of Parent, Merger Sub and the other Parent Subsidiaries as it is
currently conducted, (ii) the conduct of the business of Parent, Merger Sub and the other Parent
Subsidiaries as it is currently conducted does not infringe, misappropriate or otherwise violate
the Intellectual Property rights of any Third Party, (iii) there are no pending or, to the
knowledge of Parent, threatened claims with respect to any of the Intellectual Property rights
owned by Parent, Merger Sub or any other Parent Subsidiary, and (iv) to the knowledge of Parent, no
Third Party is currently infringing or misappropriating Intellectual Property owned by Parent,
Merger Sub or any other Parent Subsidiary. Parent, Merger Sub and the other Parent Subsidiaries
are taking all actions that they reasonably believe are necessary to maintain and protect each
material item of Intellectual Property that they own.
57
(b) This Section 5.15 contains the exclusive representations and warranties of Parent
and Merger Sub with respect to intellectual property matters.
Section 5.16 Properties.
(a) Parent or a Parent Subsidiary owns good and valid fee simple title or leasehold title (as
applicable) to each of the real properties reflected as an asset on the most recent balance sheet
of Parent included in the Parent SEC Documents in which Parent holds an equity interest of more
than twenty percent (20%) (each a “Parent Property” and collectively the “Parent
Properties”), in each case, free and clear of Liens, except for Parent Permitted Liens that
have not had and would not reasonably be expected to have, individually or in the aggregate, a
Parent Material Adverse Effect. For the purposes of this Agreement, “Parent Permitted
Liens” shall mean any (i) Liens relating to any Indebtedness incurred in the ordinary course of
business, (ii) Liens that result from any statutory or other Liens for Taxes or assessments that
are not yet subject to penalty or the validity of which is being contested in good faith by
appropriate proceedings, (iii) any Parent Material Contracts or other service contracts, management
agreements, leasing commissions, agreements set forth in Section 5.16(j) of the Parent
Disclosure Letter, Parent Leases or ground leases or air rights affecting any Parent Property, (iv)
Liens imposed or promulgated by Law or any Governmental Authority, including zoning regulations,
permits and licenses, (v) Liens that are disclosed on existing title policies, (vi) any cashiers’,
landlords’, workers’, mechanics’, carriers’, workmen’s, repairmen’s and materialmen’s liens and
other similar Liens imposed by Law and incurred in the ordinary course of business consistent with
past practice that are not yet subject to penalty or the
validity of which is being contested in good faith by appropriate proceedings, and (vii) any
other Liens, limitations, restrictions or title defects that do not materially impair the value of
the Parent Property or the continued use and operation of the Parent Property as currently used and
operated.
(b) The Parent Properties (x) are supplied with utilities and other services as necessary to
permit their continued operation as they are now being operated, (y) are, to the knowledge of
Parent, in working order sufficient for their normal operation in the manner currently being
operated and without any material structural defects other than as may be disclosed in any physical
condition reports that have been made available to the Company, and (z) are, to the knowledge of
Parent, adequate and suitable for the purposes for which they are presently being used.
(c) To the knowledge of Parent, each of the Parent Properties has sufficient access to and
from publicly dedicated streets for its current use and operation, without any constraints that
interfere with the normal use, occupancy and operation thereof.
(d) None of Parent, Merger Sub or any of the other Parent Subsidiaries has received (i)
written notice that any certificate, permit or license from any Governmental Authority having
jurisdiction over any of the Parent Properties or any agreement, easement or other right of an
unlimited duration that is necessary to permit the lawful use and operation of the
58
buildings and
improvements on any of the Parent Properties or that is necessary to permit the lawful use and
operation of all utilities, parking areas, retention ponds, driveways, roads and other means of
egress and ingress to and from any of the Parent Properties is not in full force and effect as of
the date of this Agreement, except for such failures to be in full force and effect that,
individually or in the aggregate, would not reasonably be expected to have a Parent Material
Adverse Effect, or of any pending written threat of modification or cancellation of any of same,
that would reasonably be expected to have a Parent Material Adverse Effect, or (ii) written notice
of any uncured violation of any Laws affecting any of the Parent Properties which, individually or
in the aggregate, has had or would reasonably be expected to have a Parent Material Adverse Effect.
(e) No certificate, variance, permit or license from any Governmental Authority having
jurisdiction over any of the Parent Properties or any agreement, easement or other right that is
necessary to permit the current use of the buildings and improvements on any of the Parent
Properties or that is necessary to permit the current use of all parking areas, driveways, roads
and other means of egress and ingress to and from any of the Parent Properties has failed to be
obtained or is not in full force and effect, and none of Parent, Merger Sub or any other Parent
Subsidiary has received written notice of any outstanding threat of modification or cancellation of
any such certificate, variance, permit or license, except for each of the foregoing as,
individually or in the aggregate, have not had and would not reasonably be expected to have a
Parent Material Adverse Effect.
(f) None of Parent, Merger Sub or any other Parent Subsidiary has received any written notice
to the effect that (i) any condemnation or rezoning proceedings are pending or threatened with
respect to any of the Parent Properties, or (ii) any zoning regulation or ordinance (including with
respect to parking), Board of Fire Underwriters rules, building, fire, health or other Law has been
violated (and remains in violation) for any Parent Property, except for each of the foregoing as,
individually or in the aggregate, has not had and would not reasonably be expected to have a Parent
Material Adverse Effect.
(g) True and complete in all material respects copies of all ground leases affecting the
interest of Parent or any Parent Subsidiary in the Parent Properties and all leases and subleases
to which Parent or the other Parent Subsidiaries are parties that are required to be filed as
exhibits to the Parent SEC Filings pursuant to Item 601(b)(10) of Regulation S-K promulgated by the
SEC (the “Material Parent Leases”) in effect as of the date hereof, together with all
amendments, modifications, supplements, renewals and extensions related thereto, have been made
available to the Company. Except as has not had and would not reasonably be expected to have a
Parent Material Adverse Effect, (1) none of Parent, Merger Sub or any other Parent Subsidiary is
and, to the knowledge of Parent, no other party is in breach or violation of, or default under, any
Material Parent Lease, (2) no event has occurred which would result in a breach or violation of, or
a default under, any Material Parent Lease by Parent, Merger Sub or any other Parent Subsidiary,
or, to the knowledge of Parent, any other party thereto (in each case, with or without notice or
lapse of time or both) and no tenant under a Material Parent Lease is in monetary default under
such Material Parent Lease, (3) no tenant under a Material Parent Lease
59
is the beneficiary or has
the right to become a beneficiary of a loan or forbearance from the Parent, Merger Sub or any other
Parent Subsidiary in excess of $5,000,000 in the aggregate, (4) none of Parent, Merger Sub or any
other Parent Subsidiary is in receipt of any rent under any Parent Lease paid more than 30 days
before such rent is due and payable, and (5) to the knowledge of Parent, each Material Parent Lease
is valid, binding and enforceable in accordance with its terms and is in full force and effect with
respect to Parent, Merger Sub or any other Parent Subsidiary and with respect to the other parties
thereto, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar Laws affecting creditors’ rights generally and by general principles of equity (regardless
of whether enforceability is considered in a proceeding in equity or at Law).
(h) Except as set forth on Section 5.16(h) of the Parent Disclosure Letter, there are
no Tax abatements or exemptions specifically affecting Parent Properties, and Parent and the Parent
Subsidiaries have not received any written notice of (and Parent and the Parent Subsidiaries do not
have any knowledge of) any proposed increase in the assessed valuation of any of the Parent
Properties or of any proposed public improvement assessments that will result in the Taxes or
assessments payable in the next tax period increasing, except in each case for any such Taxes or
assessment that have not had and would not reasonably be expected to have, individually or in the
aggregate, a Parent Material Adverse Effect.
(i) Except as set forth in Section 5.16(i) of the Parent Disclosure Letter or as has
not had and would not reasonably be expected to have, individually or in the aggregate,
a Parent Material Adverse Effect, as of the date of this Agreement, no purchase option has
been exercised under any Parent Lease for which the purchase has not closed prior to the date of
this Agreement.
(j) Except for Parent Permitted Liens, as set forth in Section 5.16(j) of the Parent
Disclosure Letter, or as would not reasonably be expected to have, individually or in the
aggregate, a Parent Material Adverse Effect, (i) there are no unexpired option to purchase
agreements, rights of first refusal or any other rights to purchase or otherwise acquire any Parent
Property or any portion thereof that would materially adversely affect Parent’s, or the Parent
Subsidiary’s, ownership, ground lease or right to use a Parent Property subject to a Material
Parent Lease, and (ii) there are no other outstanding rights or agreements to enter into any
contract for sale, ground lease or letter of intent to sell or ground lease any Parent Property or
any portion thereof that is owned by any Parent Subsidiary, which, in each case, is in favor of any
party other than Parent or a Parent Subsidiary (a “Parent Third Party”).
(k) No written claim has been made against any Parent Title Insurance Policy, which
individually or in the aggregate, has had or would be reasonably expected to have a Parent Material
Adverse Effect.
(l) Parent, Merger Sub and the other Parent Subsidiaries have good and valid title to, or a
valid and enforceable leasehold interest in, or other right to use, all personal
60
property owned,
used or held for use by them as of the date of this Agreement (other than property owned by tenants
and used or held in connection with the applicable tenancy), except as, individually or in the
aggregate, has not had and would not reasonably be expected to have a Parent Material Adverse
Effect. None of Parent’s, Merger Sub’s or any other Parent Subsidiaries’ ownership of or leasehold
interest in any such personal property is subject to any Liens, except for Parent Permitted Liens
and Liens that have not had and would not reasonably be expected to have a Parent Material Adverse
Effect.
Section 5.17 Taxes.
(a) Parent, Merger Sub and each other Parent Subsidiary has filed with the appropriate
Governmental Authority all Tax Returns required to be filed, taking into account any extensions of
time within which to file such Tax Returns, and all such Tax Returns were complete and correct,
subject in each case to such exceptions as, individually or in the aggregate, has not had and would
not reasonably be expected to have a Parent Material Adverse Effect. Parent and each Parent
Subsidiary has duly paid (or there has been paid on their behalf), or made adequate provisions for,
all material Taxes required to be paid by them.
(b) Parent (i) for all taxable years commencing with Parent’s taxable year ended December 31,
1999 through December 31, 2010, has been subject to taxation as a
REIT and has satisfied all requirements to qualify as a REIT for such years; (ii) has operated
since January 1, 2011 to the date hereof in a manner consistent with the requirements for
qualification and taxation as a REIT; (iii) intends to continue to operate in such a manner as to
qualify as a REIT for its taxable year ending December 31, 2011; and (iv) has not taken or omitted
to take any action that could reasonably be expected to result in a challenge by the IRS or any
other Governmental Authority to its status as a REIT, and no such challenge is pending or
threatened in writing. No Parent Subsidiary is a corporation for United States federal income tax
purposes, other than a corporation that qualifies as a “qualified REIT subsidiary” within the
meaning of Section 856(i)(2) of the Code, or as a “taxable REIT subsidiary” within the meaning of
Section 856(l) of the Code.
(c) (i) There are no audits, investigations by any Governmental Authority or other proceedings
pending with regard to any material Taxes or Tax Returns of Parent, Merger Sub or any other Parent
Subsidiary; (ii) no deficiency for Taxes of Parent, Merger Sub or any other Parent Subsidiary has
been claimed, proposed or assessed in writing or, to the knowledge of Parent, threatened, by any
Governmental Authority, which deficiency has not yet been settled, except for such deficiencies
which are being contested in good faith or with respect to which the failure to pay, individually
or in the aggregate, has not had and would not reasonably be expected to have a Parent Material
Adverse Effect; (iii) none of Parent, Merger Sub or any other Parent Subsidiary has waived any
statute of limitations with respect to Taxes or agreed to any extension of time with respect to any
Tax assessment or deficiency for any open tax year; and (iv) none of Parent, Merger Sub or any of
the other Parent Subsidiaries has entered into any “closing agreement” as described in Section 7121
of the Code (or any corresponding or similar provision of state, local or foreign income Tax Law).
61
(d) Each Parent Subsidiary that is a partnership, joint venture, or limited liability company
and which has not elected to be a “taxable REIT subsidiary” has been since its formation treated
for United States federal income tax purposes as a partnership or disregarded entity, as the case
may be, and not as a corporation or an association taxable as a corporation.
(e) None of Parent, Merger Sub or any other Parent Subsidiary holds any asset the disposition
of which would be subject to (or to rules similar to) Section 1374 of the Code.
(f) Since its inception, (i) Parent, Merger Sub and the other Parent Subsidiaries have not
incurred any liability for material Taxes under Section 860(c) or 4981 of the Code which have not
been previously paid, and (ii) none of Parent, Merger Sub or any other Parent Subsidiary has
incurred any material liability for Taxes other than (x) in the ordinary course of business or
consistent with past practice, or (y) transfer or similar Taxes arising in connection with sales of
property.
(g) Parent, Merger Sub and the other Parent Subsidiaries have complied, in all material
respects, with all applicable Laws, rules and regulations relating to the payment
and withholding of Taxes (including withholding of Taxes pursuant to Sections 1441, 1442,
1445, 1446 and 3402 of the Code or similar provisions under any foreign Laws) and have duly and
timely withheld and have paid over to the appropriate taxing authorities all material amounts
required to be so withheld and paid over on or prior to the due date thereof under all applicable
Laws.
(h) There are no Parent Tax Protection Agreements (as hereinafter defined) in force at the
date of this Agreement, and, as of the date of this Agreement, no person has raised in writing, or
to the knowledge of Parent threatened to raise, a material claim against Parent, Merger Sub or any
other Parent Subsidiary for any breach of any Parent Tax Protection Agreements. As used herein,
“Parent Tax Protection Agreements” means any written agreement to which Parent, Merger Sub
or any other Parent Subsidiary is a party pursuant to which: (i) any liability to holders of
limited partnership interests in a Parent Subsidiary Partnership relating to Taxes may arise,
whether or not as a result of the consummation of the transactions contemplated by this Agreement;
and/or (ii) in connection with the deferral of income Taxes of a holder of limited partnership
interests in a Parent Subsidiary Partnership, Parent, Merger Sub or the other Parent Subsidiaries
have agreed to (A) maintain a minimum level of debt or continue a particular debt, (B) retain or
not dispose of assets for a period of time that has not since expired, (C) make or refrain from
making Tax elections, and/or (D) only dispose of assets in a particular manner. As used herein,
“Parent Subsidiary Partnership” means a Parent Subsidiary that is a partnership for United
States federal income tax purposes.
(i) There are no Tax Liens upon any property or assets of Parent, Merger Sub or any other
Parent Subsidiary except Liens for Taxes not yet due and payable or
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that are being contested in
good faith by appropriate proceedings and for which adequate reserves have been established.
(j) Neither Parent nor any Parent Subsidiary has requested, has received or is subject to any
written ruling of a Governmental Authority or has entered into any written agreement with a
Governmental Authority with respect to any Taxes.
(k) There are no Tax allocation or sharing agreements or similar arrangements with respect to
or involving Parent or any Parent Subsidiary, and after the Closing Date neither Parent nor any
Parent Subsidiary shall be bound by any such Tax allocation agreements or similar arrangements or
have any liability thereunder for amounts due in respect of periods prior to the Closing Date.
(l) Neither Parent nor any Parent Subsidiary (A) has been a member of an affiliated group
filing a consolidated federal income Tax Return (other than a group the common parent of which was
Parent) or (B) has any liability for the Taxes of any Person (other than Parent or any Parent
Subsidiary) under Treasury Regulation Section 1.1502-6 (or any
similar provision of state, local, or foreign law), as a transferee or successor, by contract,
or otherwise.
(m) Neither Parent nor any Parent Subsidiary has participated in any “listed transaction”
within the meaning of Treasury Regulation Section 1.6011-4(b)(2).
(n) As of the date of this Agreement, Parent is not aware of any fact or circumstance that
could reasonably be expected to prevent the Merger from qualifying as a reorganization within the
meaning of Section 368(a) of the Code.
(o) Neither Parent nor any of the Parent Subsidiaries has constituted either a “distributing
corporation” or a “controlled corporation” (within the meaning of Section 355(a)(1)(A) of the Code)
in a distribution of stock qualifying for tax-free treatment under Section 355 of the Code (A) in
the two years prior to the date of this Agreement or (B) in a distribution which could otherwise
constitute part of a “plan” or “series of related transactions” (within the meaning of Section
355(e) of the Code) in conjunction with transactions contemplated by this Agreement.
Section 5.18 Insurance. Except for those matters that have not had and would not
reasonably be expected to have a Parent Material Adverse Effect, there is no claim for coverage by
Parent, Merger Sub or any other Parent Subsidiary pending under the material insurance policies and
the material fidelity bonds or other insurance service contracts in Parent’s possession providing
coverage for all material Parent Properties (the “Parent Insurance Policies”) that has been
denied or disputed by the insurer. Except for those matters that have not had and would not
reasonably be expected to have a Parent Material Adverse Effect, all premiums
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payable under all
Parent Insurance Policies have been paid, and Parent, Merger Sub and the other Parent Subsidiaries
have otherwise complied in all material respects with the terms and conditions of all the Parent
Insurance Policies. To the knowledge of Parent, such Parent Insurance Policies are valid and
enforceable in accordance with their terms and are in full force and effect and no written notice
of cancellation or termination has been received by the Parent or any Parent Subsidiary with
respect to any such policy which has not been replaced on substantially similar terms prior to the
date of such cancellation.
Section 5.19 Vote Required. The affirmative vote of the holders of not less than a
majority in voting power of the outstanding shares of Parent Common Stock to approve the Charter
Amendment and the issuance of Parent Common Stock in connection with the Merger (the “Parent
Stockholder Approval”) is the only vote of the holders of any class or series of shares of
capital stock of Parent or Merger Sub necessary to adopt this Agreement and approve the Merger and
the other transactions contemplated hereby, including the issuance of Parent Common Stock in
connection with the Merger and the Charter Amendment.
Section 5.20 Brokers. No broker, finder or investment banker (other than Centerview
Partners LLC) is entitled to any brokerage, finder’s or other fee or commission in
connection with the Merger based upon arrangements made by or on behalf of Parent, Merger Sub or
any other Parent Subsidiary.
Section 5.21 Investment Company Act. None of Parent, Merger Sub or any other Parent
Subsidiary is required to be registered as an investment company under the Investment Company Act.
Section 5.22 Sufficient Funds. Parent has available, and Parent will provide Merger Sub at
the Effective Time, sufficient cash or lines of credit available to pay the Aggregate Cash
Consideration payable hereunder, any and all other amounts required to be paid in connection with
the consummation of the transactions contemplated by this Agreement, including the Merger, and any
related fees and expenses.
Section 5.23 Ownership of Merger Sub; No Prior Activities.
(a) Merger Sub was formed solely for the purpose of engaging in the transactions contemplated
by this Agreement. All of the interests of Merger Sub are owned directly or indirectly by Parent.
(b) Except for the obligations or liabilities incurred in connection with its organization and
the transactions contemplated by this Agreement, Merger Sub has not, and will not have prior to the
Effective Time, incurred, directly or indirectly, through any subsidiary or Affiliate, any
obligations or liabilities or engaged in any business activities of any type or kind whatsoever or
entered into any agreements or arrangements with any Person.
Section 5.24 Ownership of Company Common Stock. None of Parent, Merger Sub or any other
Parent Subsidiary is, nor at any time during the last two years has been, an
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“interested
stockholder” of the Company as defined in Section 3-601 of the MGCL or a “Related Person” under
Article V, Section 2 of the Company Charter.
Section 5.25 Affiliate Transactions. Except as set forth in the Parent SEC Filings made
through and including the date of this Agreement or as permitted by this Agreement, from January 1,
2010 through the date of this Agreement there have been no transactions, agreements, arrangements
or understandings between Parent or any Parent Subsidiary, on the one hand, and any Affiliates
(other than Parent Subsidiaries) of Parent or other Persons, on the other hand, that would be
required to be disclosed under Item 404 of Regulation S-K promulgated by the SEC.
Section 5.26 No Other Representations or Warranties. Except for the representations and
warranties contained in Article IV, each of Parent and Merger Sub acknowledge that neither
the Company nor any other Person or entity on behalf of the Company has made, and neither Parent
nor Merger Sub has relied upon, any representation or warranty, whether express or implied, with
respect to the Company or any of the Company Subsidiaries or their respective businesses, affairs,
assets, liabilities, financial condition, results of operations, future operating or financial
results, estimates, projections, forecasts, plans or prospects
(including the reasonableness of the assumptions underlying such estimates, projections, forecasts,
plans or prospects) or with respect to the accuracy or completeness of any other information
provided or made available to Parent or Merger Sub by or on behalf of the Company.
ARTICLE VI
COVENANTS AND AGREEMENTS
Section 6.1 Conduct of Business by the Company.
(a) The Company covenants and agrees that, between the date of this Agreement and the earlier
to occur of the Effective Time and the date, if any, on which this Agreement is terminated pursuant
to Section 8.1 (the “Interim Period”), except to the extent required by Law, as may
be agreed in writing by Parent (which consent shall not be unreasonably withheld, delayed or
conditioned), as may be expressly required or permitted pursuant to this Agreement, or as set forth
in Section 6.1(a) of the Company Disclosure Letter, the Company shall, and shall cause each
of the Company Subsidiaries to (i) conduct its business in the ordinary course and in a manner
consistent with past practice in all material respects, and (ii) use its reasonable best efforts to
maintain its material assets and properties in their current condition (normal wear and tear and
damage caused by casualty or by any reason outside of the Company’s or the Company Subsidiaries’
control excepted), preserve intact in all material respects its current business organization,
goodwill, ongoing businesses and relationships with third parties, keep available the services of
its present officers and key employees, and maintain the status of the Company as a REIT.
(b) Without limiting the foregoing, the Company covenants and agrees that, during the Interim
Period, except to the extent required by Law, as may be agreed in writing
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by Parent (which consent
shall not be unreasonably withheld, delayed or conditioned), as may be expressly required or
permitted pursuant to this Agreement, or as set forth in Section 6.1(b) of the Company
Disclosure Letter, the Company shall not, and shall not cause or permit any Company Subsidiary to,
do any of the following:
(i) amend or propose to amend the Company Charter or Company Bylaws (or such
equivalent organizational or governing documents of any Company Subsidiary);
(ii) split, combine, reclassify or subdivide any shares of stock or other
equity securities or ownership interests of the Company or any Company Subsidiary;
(iii) declare, set aside or pay any dividend on or make any other distributions
(whether in cash, stock, property or otherwise) with respect to
shares of capital stock of the Company or any Company Subsidiary or other
equity securities or ownership interests in the Company or any Company Subsidiary,
except for (A) the declaration and payment of distributions pursuant to Section
6.12, (B) the declaration and payment by the Company of regular quarterly
dividends at a rate not to exceed $0.48 per share of Company Common Stock (each a
“Company Quarterly Dividend”), (C) the declaration and payment of regular
distributions that are required to be made in respect of Partnership Units of
NHP/PMB, (D) the declaration and payment of dividends or distributions by any
directly or indirectly wholly owned Company Subsidiary, and (E) distributions by any
Company Subsidiary that is not wholly owned, directly or indirectly, by the Company,
in accordance with the requirements of the organizational documents of such Company
Subsidiary. Notwithstanding the foregoing and subject to the provisions of
Section 6.12, the Company and any Company Subsidiary shall be permitted to
make distributions, including under Sections 858 or 860 of the Code, reasonably
necessary for the Company to maintain its status as a REIT under the Code and avoid
or reduce the imposition of any corporate level tax or excise Tax under the Code;
(iv) redeem, repurchase or otherwise acquire, directly or indirectly, any
shares of its capital stock or other equity interests of the Company or a Company
Subsidiary, other than (A) the redemption or exchange of Class A Units for cash or
shares of Company Common Stock pursuant to and in accordance with the provisions of
the NHP/PMB Partnership Agreement, (B) the acquisition by the Company of shares of
Company Common Stock in connection with the surrender of shares of Company Common
Stock by holders of Company Options in order to pay the exercise price of the
Company Option and Taxes withheld in connection with the exercise of Company
Options, (C) the withholding of shares of Company Common Stock to satisfy
withholding Tax obligations with respect to awards granted pursuant to the Company
Plans, and (D)
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the acquisition by the Company in the ordinary course of business
consistent with past practice in connection with terminated employees of Company
Options and Company Restricted Stock Units in connection with the forfeiture of such
awards pursuant to the terms of the Company Plans and in any event at a price per
share not in excess of the fair market value of such award;
(v) except for transactions among the Company and one or more wholly owned
Company Subsidiaries or among one or more wholly owned Company Subsidiaries, or as
otherwise contemplated in Section 6.1(b)(vi), issue, sell, pledge, dispose,
encumber or grant any shares of the Company’s or any of the Company Subsidiaries’
capital stock, or any options, warrants, convertible securities or other rights of
any kind to acquire any shares of the Company’s or any of the Company Subsidiaries’
capital stock or other equity interests; provided, however, that
NHP/PMB may issue Class A Units pursuant to existing agreements, and the Company may
issue shares of Company Common
Stock (A) upon the vesting of any Company Restricted Stock, the exercise of any
Company Option, or payment of any Company Restricted Stock Unit outstanding as of
the date of this Agreement or as may be granted after the date of this Agreement
under Section 6.1(b)(vi), (B) pursuant to the Company Benefit Plans to the
extent required under the terms of such Company Benefit Plans as in effect as of the
date of this Agreement, and (C) in exchange for Class A Units, pursuant to and in
accordance with the provisions of the NHP/PMB Partnership Agreement;
(vi) grant, confer, award, except as may be specifically required under a
Company Employment Agreement executed prior to the date of this Agreement or a
Company Benefit Plan and which, in each case, is described on Section
6.1(b)(vi) of the Company Disclosure Letter, or modify the terms of any options,
convertible securities, restricted stock units, restricted stock, performance
shares, equity-based compensation or other rights to acquire, or denominated in, any
of the Company’s or any of the Company Subsidiaries’ capital stock or take any
action not otherwise contemplated by this Agreement to cause to be exercisable any
otherwise unexercisable option under any existing stock plan of the Company or any
Company Subsidiary (except (i) as explicitly required by the terms of any
unexercisable options or other equity awards outstanding on the date of this
Agreement, and (ii) customary grants made to newly hired employees or with respect
to promotions, in each case in the ordinary course of business consistent with past
practice);
(vii) acquire or agree to acquire (including by merger, consolidation or
acquisition of stock or assets) any real property, corporation, partnership, limited
liability company, other business organization or any division or material amount of
assets thereof, except (A) acquisitions by the Company or any wholly owned Company
Subsidiary of or from an existing wholly owned Company Subsidiary, (B) the
consummation of acquisitions pursuant to existing
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agreements to which the Company or
any Company Subsidiary is a party; (C) the acquisitions described on Section
6.1(b)(vii) of the Company Disclosure Letter; or (D) acquisitions not exceeding
$10,000,000 individually or $100,000,000 in the aggregate;
(viii) sell, pledge, lease, dispose of or encumber any property or assets,
except (A) as listed on Section 6.1(b)(viii) of the Company Disclosure
Letter, or (B) pursuant to an obligation arising under any agreement referenced in
Section 4.16(l) of the Company Disclosure Letter;
(ix) incur, create or assume any Indebtedness for borrowed money or issue or
amend the terms of any debt securities or assume, guarantee or endorse, or otherwise
become responsible for the Indebtedness of any other person or entity (other than a
wholly owned Company Subsidiary), except (A) Indebtedness incurred under the
Company’s existing revolving credit
facility, (B) Indebtedness incurred to refinance or refund any existing
Indebtedness or Indebtedness permitted under this Agreement, and (C) Indebtedness
incurred in order to finance the acquisitions set forth in Section
6.1(b)(ix) of the Company Disclosure Letter, in the amounts set forth therein
and in an amount not exceeding the aggregate purchase price of such acquisitions and
related transaction costs;
(x) make any loans, advances or capital contributions to, or investments in,
any other Person (including to any of its officers, directors, employees,
Affiliates, agents or consultants), or make any change in its existing borrowing or
lending arrangements for or on behalf of any of such Persons, whether pursuant to a
Company Benefit Plan or otherwise, other than (A) by the Company or a wholly owned
Company Subsidiary to the Company or a wholly owned Company Subsidiary, and
(B) loans or advances required to be made under any of the Company Leases or ground
leases affecting the Company Properties;
(xi) enter into, renew, modify, amend or terminate, or waive, release,
compromise or assign any rights or claims under, any Company Material Contract or
Company Lease except (A) such as would not have an adverse economic impact on the
Company in excess of an aggregate of $500,000 per year in the case of recurring
payment obligations or $5,000,000 in the aggregate in the case of any non-recurring
payment obligations and would not otherwise impose or renew any material restriction
on the Company or terminate, waive, release, compromise or assign any material right
or claim, and (B) as set forth on Section 6.1(b)(xi) of the Company
Disclosure Letter; provided, however, that the Company may modify,
amend or terminate any property management agreement pursuant to which the Company
is the recipient of property management services, as a result of any default of the
other party or parties thereto;
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(xii) waive, release, assign any material rights or claims or make any payment,
direct or indirect, of any other liability of the Company or any Company Subsidiary,
in an amount in excess of $5,000,000, before the same comes due in accordance with
its terms, other than in the ordinary course of business and consistent with past
practice;
(xiii) settle or compromise (A) any legal action, suit or arbitration
proceeding, in each case made or pending against the Company or any of the Company
Subsidiaries, including relating to Taxes, other than settlements providing solely
for the payment of money damages where the amount paid (after the application of any
insurance proceeds actually received or appropriate credits are applied from
self-insurance reserves, if any) in settlement or compromise does not exceed the
thresholds set forth on Section 6.1(b)(xiii) of the Company Disclosure
Letter and that (x) do not require any material actions or impose any
material restrictions on the business or operations of the Company and the
Company Subsidiaries, (y) provide for the complete release of the Company and the
Company Subsidiaries of all claims and (z) do not provide for any admission of
liability by the Company or any Company Subsidiaries and (B) any legal action, suit
or proceeding involving any present, former or purported holder or group of holders
of the Company Common Stock other than in accordance with Section 6.7;
(xiv) except as required pursuant to existing written Company Employment
Agreements or Company Benefit Plans in effect as of the date hereof, or as otherwise
required by Law, (A) hire or terminate any officer or director of the Company or any
Company Subsidiary or promote or appoint any Person to a position of officer or
director of the Company or any Company Subsidiary; (B) increase the compensation,
perquisites or other benefits payable or to become payable to any current or former
employees, directors or officers of the Company or any Company Subsidiary, (C) grant
any severance or termination pay to, or enter into any severance agreement with, any
employee, director or officer of the Company or any Company Subsidiary, (D) enter
into any Company Employment Agreement or other employment, change of control,
severance or retention agreement with any current or former employee, officer or
director of the Company or any Company Subsidiary, or (E) accelerate the vesting or
payment of the compensation payable or the benefits provided to or to become payable
or provided to any current or former employees, directors or officers of the Company
or any Company Subsidiary, or (F) establish, adopt, enter into or amend any employee
benefit plan, Company Benefit Plan, Company Employment Agreement, collective
bargaining agreement, plan, trust, fund, policy or arrangement with, or for the
benefit of, any current or former directors, officers or employees or any of their
beneficiaries;
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(xv) make any material change to its methods of accounting in effect at
September 30, 2010, except as required by a change in GAAP (or any interpretation
thereof) or in applicable Law;
(xvi) enter into any new line of business material to the Company and the
Company Subsidiaries, taken as a whole;
(xvii) fail to duly and timely file all material reports and other material
documents required to be filed with all Governmental Authorities and other
authorities (including the New York Stock Exchange), subject to extensions permitted
by Law;
(xviii) make, change or rescind any election relating to Taxes, change a
material method of Tax accounting, amend any material Tax Return, settle or
compromise any material federal, state, local or foreign income
Tax liability, audit, claim or assessment, enter into any material closing
agreement related to Taxes, or knowingly surrender any right to claim any material,
except in each case (A) unless required by Law or (B) necessary or appropriate (x)
to preserve the Company’s qualification as a REIT under the Code or (y) to qualify
or preserve the status of any Company Subsidiary as a disregarded entity or
partnership for United States federal income tax purposes or as a qualified REIT
subsidiary or a taxable REIT subsidiary or a REIT under the applicable provisions of
Section 856 of the Code, as the case may be;
(xix) take any action that could, or fail to take any action, the failure of
which could, reasonably be expected to cause (A) the Company to fail to qualify as a
REIT or (B) any Company Subsidiary to cease to be treated as any of (1) a
partnership or disregarded entity for federal income tax purposes or (2) a qualified
REIT subsidiary, a taxable REIT subsidiary or a REIT under the applicable provisions
of Section 856 of the Code, as the case may be;
(xx) take any action that could, or fail to take any action, the failure of
which could, reasonably be expected to prevent the Merger from qualifying as a
reorganization within the meaning of Section 368(a) of the Code;
(xxi) adopt a plan of merger, complete or partial liquidation or resolutions
providing for or authorizing such merger, liquidation or a dissolution,
consolidation, recapitalization or bankruptcy reorganization, except (A) by a
Company Subsidiary in connection with any acquisitions permitted pursuant to
Section 6.1(b)(vii) in a manner that would not reasonably be expected to be
adverse to the Company or to prevent or impair the ability of the Company to
consummate the Merger or (B) for the merger, dissolution and liquidation of
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Company Subsidiaries in the ordinary course of business consistent with past practice,
which, individually or in the aggregate, would not reasonably be expected to be
material to the Company;
(xxii) permit any material insurance policy to terminate or lapse without
replacing such policy with comparable coverage or amend or cancel any material
insurance policy;
(xxiii) initiate or consent to any material zoning reclassification of any real
property or any other material change to any approved site plan, special use permit,
planned development approval or other land use entitlement affecting any Company
Property;
(xxiv) take, or agree to commit to take, any action that would reasonably be
expected to result in any of the conditions to the Merger set forth in Article
VII not being satisfied; or
(xxv) authorize, or enter into any contract, agreement, commitment or
arrangement to do any of the foregoing.
(c) Notwithstanding anything to the contrary set forth in this Agreement, nothing in this
Agreement shall prohibit the Company from taking any action, at any time or from time to time, that
in the reasonable judgment of the Company Board, upon advice of counsel to the Company, is
reasonably necessary for the Company to maintain its qualification as a REIT under the Code for any
period or portion thereof ending on or prior to the Effective Time, including without limitation,
making dividend or distribution payments to stockholders of the Company in accordance with this
Agreement.
Section 6.2 Conduct of Business by Parent.
(a) Parent covenants and agrees that, during the Interim Period, except to the extent required
by Law, as may be agreed in writing by the Company (which consent shall not be unreasonably
withheld, delayed or conditioned), as may be expressly required or permitted pursuant to this
Agreement, or as set forth in Section 6.2(a) of the Parent Disclosure Letter, Parent shall,
and shall cause each of the Parent Subsidiaries to, (i) conduct its business in the ordinary course
and in a manner consistent with past practice in all material respects, and (ii) use its reasonable
best efforts to maintain its material assets and properties in their current condition (normal wear
and tear and damage caused by casualty or by any reason outside of Parent’s or the Parent
Subsidiaries’ control excepted), preserve intact in all material respects its current business
organization, goodwill, ongoing businesses and relationships with third parties, keep available the
services of its present officers and key employees, and maintain the status of Parent as a REIT.
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(b) Without limiting the foregoing, Parent covenants and agrees that, during the Interim
Period, except to the extent required by Law, as may be agreed in writing by the Company (which
consent shall not be unreasonably withheld, delayed or conditioned), as may be expressly required
or permitted pursuant to this Agreement, or as set forth in Section 6.2(b) of the Parent
Disclosure Letter, Parent shall not, and shall not cause or permit any of the Parent Subsidiaries
to, do any of the following:
(i) except for the Charter Amendment, amend or propose to amend the Parent
Charter or Parent Bylaws (or such equivalent organizational or governing documents
of any Parent Subsidiary material to Parent and the Parent Subsidiaries, considered
as a whole, if such amendment would be adverse to Parent or the Company);
(ii) split, combine, reclassify or subdivide any shares of stock or other
equity securities or ownership interests of Parent, Merger Sub or any other Parent
Subsidiary;
(iii) declare, set aside or pay any dividend on or make any other distributions
(whether in cash, stock, property or otherwise) with respect to shares of capital
stock of Parent or other equity securities or ownership interests in Parent, except
for (A) the declaration and payment of distributions pursuant to Section
6.12, (B) the declaration and payment by Parent of regular quarterly dividends
at a rate not to exceed $0.575 per share of Parent Common Stock (each a “Parent
Quarterly Dividend”), (C) the declaration and payment of dividends or
distributions made to Parent by any wholly owned Parent Subsidiary and (D) the
declaration and payment of dividends or distributions made by any Parent Subsidiary
that is a joint venture. Notwithstanding the foregoing and subject to the
provisions of Section 6.12, the Parent and any Parent Subsidiary shall be
permitted to make distributions, including under Sections 858 or 860 of the Code,
reasonably necessary for the Parent to maintain its status as a REIT under the Code
and avoid or reduce the imposition of any corporate level tax or excise Tax under
the Code;
(iv) except for transactions among Parent and one or more wholly owned Parent
Subsidiaries or among one or more wholly owned Parent Subsidiaries, or as otherwise
contemplated in Section 6.2(b)(iv) or in connection with the payment of the
Aggregate Merger Consideration, issue, sell, pledge, dispose, encumber or grant any
shares of its or the Parent Subsidiaries’ capital stock, or any options, warrants,
convertible securities or other rights of any kind to acquire any shares of Parent’s
or any of the Parent Subsidiaries’ capital stock or other equity interests;
provided, however, that Parent may issue shares of Parent Common
Stock (A) pursuant to the Parent Benefit Plans to the extent required under the
terms of such Parent Benefit Plans as in effect as of the date of this Agreement,
(B) in order to finance acquisitions permitted pursuant to Section
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6.2(b)(vi), provided that the aggregate net proceeds from the shares of
Parent Common Stock issued pursuant to this Section 6.2(b)(iv)(B) shall be
no greater than the aggregate amount paid (including expenses incurred) by Parent or
any Parent Subsidiary in connection with the acquisitions made pursuant to
Section 6.2(b)(vi), and (C) otherwise in the ordinary course and in a manner
consistent with past practice;
(v) grant, confer or award, except in the ordinary course of business
consistent with past practice and except as may be required under agreements
executed prior to the date of this Agreement described on Section 6.2(b)(v)
or under any existing Parent Benefit Plan, options, convertible securities,
restricted stock units, restricted stock, performance shares, equity-based
compensation or other rights to acquire, or denominated in, any of Parent’s or any
of the Parent Subsidiaries’ capital stock or take any action not otherwise
contemplated by this Agreement to cause to be exercisable any otherwise
unexercisable option under any existing stock plan of Parent or any Parent
Subsidiary (except as otherwise provided by the terms of any unexercisable options
or other equity awards outstanding on the date of this Agreement or otherwise
permitted to be granted under clause (A), (B) or (C) below), other than (A) grants
to be made in accordance with Parent’s customary schedule or as otherwise approved
by Parent’s Compensation Committee, (B) customary grants made to newly hired
employees or with respect to promotions or Parent’s equity compensation review
process, in each of the above case in the ordinary course of business consistent
with past practice, or (C) in connection with this Merger or any other acquisition
by Parent or any Parent Subsidiary with a Third Party permitted by this Agreement;
(vi) acquire or agree to acquire (including by merger, consolidation or
acquisition of stock or assets), any real property, corporation, partnership,
limited liability company, other business organization or any division or material
amount of assets thereof that would, or would reasonably be expected to, prevent or
materially impair the ability of Parent or Merger Sub to consummate the Merger
before the Outside Date;
(vii) adopt a plan of merger, complete or partial liquidation or resolutions
providing for or authorizing such merger, liquidation or a dissolution,
consolidation, recapitalization or bankruptcy reorganization, except (A) by a Parent
Subsidiary in connection with any acquisitions permitted pursuant to Section
6.2(b)(vi) in a manner that would not reasonably be expected to be adverse to
Parent or to prevent or impair the ability of Parent to consummate the Merger or (B)
for the merger, dissolution and liquidation of Parent Subsidiaries in the ordinary
course of business consistent with past practice, which, individually or in the
aggregate, would not reasonably be expected to be material to Parent;
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(viii) fail to duly and timely file all material reports and other material
documents required to be filed with all Governmental Authorities and other
authorities (including the New York Stock Exchange), subject to extensions permitted
by Law;
(ix) take any action that could, or fail to take any action, the failure of
which could, reasonably be expected to cause (A) Parent to fail to qualify as a REIT
or (B) any Parent Subsidiary to cease to be treated as any of (1) a partnership or
disregarded entity for federal income tax purposes or (2) a qualified REIT
subsidiary, a taxable REIT subsidiary or a REIT under the applicable provisions of
Section 856 of the Code, as the case may be;
(x) take any action that could, or fail to take any action, the failure of
which could, reasonably be expected to prevent the Merger from qualifying as a
reorganization within the meaning of Section 368(a) of the Code;
(xi) take, or agree to commit to take, any action that would reasonably be
expected to result in any of the conditions to the Merger set forth in Article
VII not being satisfied; or
(xii) authorize, or enter into any contract, agreement, commitment or
arrangement to do any of the foregoing.
(c) Notwithstanding anything to the contrary set forth in this Agreement, nothing in this
Agreement shall prohibit Parent from taking any action, at any time or from time to time, that in
the reasonable judgment of the Parent Board, upon advice of counsel to Parent, is reasonably
necessary for Parent to continue to maintain its qualification as a REIT under the Code for any
period or portion thereof ending on or prior to the Effective Time, including without limitation,
making dividend or distribution payments to stockholders of Parent in accordance with this
Agreement.
Section 6.3 Preparation of Form S-4 and Joint Proxy Statement; Stockholder Meetings.
(a) As promptly as reasonably practicable following the date of this Agreement, (i) the
Company and Parent shall jointly prepare and cause to be filed with the SEC the Joint Proxy
Statement, and (ii) the Company and Parent shall prepare, and Parent shall cause to be filed with
the SEC, the Form S-4, which will include the Joint Proxy Statement as a prospectus. Each of the
Company and Parent shall use its reasonable best efforts to have the Form S-4 declared effective
under the Securities Act as promptly as practicable after such filing and keep the Form S-4
effective for so long as necessary to complete the Merger. Each of the Company and Parent shall
furnish all information concerning itself, its Affiliates and the holders
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of its capital stock to
the other and provide such other assistance as may be reasonably requested in connection with the
preparation, filing and distribution of the Form S-4 and Joint Proxy Statement. The Form S-4 and
Joint Proxy Statement shall include all information reasonably requested by such other party to be
included therein. Each of the Company and Parent shall promptly notify the other upon the receipt
of any comments from the SEC or any request from the SEC for amendments or supplements to the Form
S-4 or Joint Proxy Statement, and shall provide the other with copies of all correspondence between
it and its Representatives, on one hand, and the SEC, on the other hand. Each of the Company and
Parent shall use its reasonable best efforts to respond as promptly as practicable to any comments
from the SEC with respect to the Joint Proxy Statement, and Parent shall use its reasonable best
efforts to respond as promptly as practicable to any comment from the SEC with respect to the Form
S-4. Notwithstanding the foregoing, prior to filing the Form S-4 (or any amendment or supplement
thereto) or mailing the Joint Proxy Statement (or any amendment or supplement thereto) or
responding to any comments of the SEC with respect thereto, each of the Company and Parent (i)
shall provide the
other an opportunity to review and comment on such document or response (including the
proposed final version of such document or response) and (ii) shall include in such document or
response all comments reasonably proposed by the other. Parent shall advise the Company, promptly
after it receives notice thereof, of the time of effectiveness of the Form S-4, the issuance of any
stop order relating thereto or the suspension of the qualification of the Parent Common Stock
issuable in connection with the Merger for offering or sale in any jurisdiction, and Parent shall
use its reasonable best efforts to have any such stop order or suspension lifted, reversed or
otherwise terminated. Parent shall also take any other action (other than qualifying to do
business in any jurisdiction in which it is not now so qualified) required to be taken under the
Securities Act, the Exchange Act, any applicable foreign or state securities or “blue sky” Laws and
the rules and regulations thereunder in connection with the issuance of Parent Common Stock in the
Merger and the Charter Amendment, and the Company shall furnish all information concerning the
Company and the holders of its capital stock as may be reasonably requested in connection with any
such actions.
(b) If, at any time prior to the Effective Time, any information relating to the Company or
Parent, or any of their respective Affiliates, should be discovered by the Company or Parent which,
in the reasonable judgment of the Company or Parent, should be set forth in an amendment of, or a
supplement to, any of the Form S-4 or the Joint Proxy Statement, so that any of such documents
would not include any misstatement of a material fact or omit to state any material fact necessary
to make the statements therein, in light of the circumstances under which they were made, not
misleading, the party which discovers such information shall promptly notify the other parties
hereto, and the Company and Parent shall cooperate in the prompt filing with the SEC of any
necessary amendment of, or supplement to, the Joint Proxy Statement or the Form S-4 and, to the
extent required by Law, in disseminating the information contained in such amendment or supplement
to stockholders of the Company and the stockholders of Parent. Nothing in this Section
6.3(b) shall limit the obligations of any party under Section 6.3(a). For purposes of
Section 4.8, Section 5.8 and this Section 6.3, any information concerning
or related to the Company, its Affiliates or the Company Stockholder Meeting will be deemed to have
been provided by the Company, and any information concerning or related to Parent, its Affiliates
or the Parent Stockholder Meeting will be deemed to have been provided by Parent.
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(c) As promptly as reasonably practicable following the date of this Agreement, the Company
shall, in accordance with applicable Law and the Company Charter and Company Bylaws, establish a
record date for, duly call, give notice of, convene and hold the Company Stockholder Meeting. The
Company shall use its reasonable best efforts to cause the Joint Proxy Statement to be mailed to
the stockholders of the Company and to hold the Company Stockholder Meeting as soon as reasonably
practicable after the Form S-4 is declared effective under the Securities Act. The Company shall,
through the Company Board, recommend to its stockholders that they give the Company Stockholder
Approval, include such recommendation in the Joint Proxy Statement and solicit and use its
reasonable best efforts to obtain the Company Stockholder Approval, except to the extent that the
Company Board shall have made an Adverse Recommendation Change as permitted by Section
6.5(c). Nothing contained in this Agreement shall be deemed to relieve the Company of its
obligation to submit the Merger to its stockholders
for a vote on the approval thereof. The Company agrees that, unless this Agreement shall have
been terminated in accordance with Section 8.1, its obligations to hold the Company
Stockholder Meeting pursuant to this Section 6.3(c) shall not be affected by the
commencement, public proposal, public disclosure or communication to the Company of any Company
Acquisition Proposal or by any Adverse Recommendation Change.
(d) As promptly as reasonably practicable following the date of this Agreement, Parent shall,
in accordance with applicable Law and the Parent Charter and Parent Bylaws, establish a record date
for, duly call, give notice of, convene and hold the Parent Stockholder Meeting. Parent shall use
its reasonable best efforts to cause the Joint Proxy Statement to be mailed to the stockholders of
Parent and to hold the Parent Stockholder Meeting as soon as reasonably practicable after the Form
S-4 is declared effective under the Securities Act. Parent shall, through the Parent Board,
recommend to its stockholders that they give the Parent Stockholder Approval, include such
recommendation in the Joint Proxy Statement, and solicit and use its reasonable best efforts to
obtain the Parent Stockholder Approval.
(e) The Company and Parent will use their respective reasonable best efforts to hold the
Company Stockholder Meeting and the Parent Stockholder Meeting on the same date and as soon as
practicable after the date of this Agreement.
Section 6.4 Access to Information; Confidentiality.
(a) During the Interim Period, to the extent permitted by applicable Law and contracts, and
subject to the reasonable restrictions imposed from time to time upon advice of counsel, each of
the Company and Parent shall, and shall cause each of the Parent Subsidiaries and the Company
Subsidiaries, respectively, to, afford to the other party and to the Representatives of such other
party reasonable access during normal business hours and upon reasonable advance notice to all of
their respective properties, offices, books, contracts, commitments, personnel and records and,
during such period, each of the Company and Parent shall, and shall cause each of the Company
Subsidiaries and the Parent Subsidiaries, respectively, to, furnish reasonably promptly to the
other party (i) a copy of each report, schedule, registration statement and other document filed by
it during such period pursuant to the requirements of
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federal or state securities Laws, and (ii)
all other information (financial or otherwise) concerning its business, properties and personnel as
such other party may reasonably request. Subject to the terms of the Company Leases, Parent, at
its own expense, shall have the right to such reasonable access during normal business hours and
upon reasonable advance notice in order to prepare or cause to be prepared surveys, inspections,
engineering studies, environmental assessments and other tests, examination or studies with respect
to the Company Property that Parent deems to be reasonably necessary, so long as such access does
not unduly interfere with the Company’s ordinary conduct of business; provided, that Parent
indemnify the Company for any losses, costs or damages caused by such access. Notwithstanding the
foregoing, neither the Company nor Parent shall be required by this Section 6.4 to provide
the other party or the Representatives of such other party with access to or to disclose
information (x) that is subject to the terms of a confidentiality agreement with a third party
entered into prior to the date of this Agreement or
entered into after the date of this Agreement in the ordinary course of business consistent
with past practice (provided, however, that the withholding party shall use its
reasonable best efforts to obtain the required consent of such third party to such access or
disclosure), (y) the disclosure of which would violate any Law or fiduciary duty (provided,
however, that the withholding party shall use its reasonable best efforts to make
appropriate substitute arrangements to permit reasonable disclosure not in violation of any Law or
fiduciary duty) or (z) that is subject to any attorney-client privilege (provided,
however, that the withholding party shall use its reasonable best efforts to allow for such
access or disclosure to the maximum extent that does not result in a loss of attorney-client
privilege). (b) Each of the Company and Parent will hold, and will cause its Representatives and
Affiliates to hold, any nonpublic information, including any information exchanged pursuant to this
Section 6.4, in confidence to the extent required by and in accordance with, and will
otherwise comply with, the terms of the Confidentiality Agreements. (c) Each of the Company and
Parent agree to give prompt written notice to the other upon becoming aware of the occurrence or
impending occurrence of any event or circumstance relating to it or any of the Company Subsidiaries
or the Parent Subsidiaries, respectively, which (i) could reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect or a Parent Material Adverse
Effect, as the case may be, or (ii) if unremedied by the Effective Time, would cause or constitute
a material breach of any of its representations, warranties, or covenants contained herein, and to
use its reasonable best efforts to prevent or promptly to remedy the same; provided,
however, that no such notification shall affect the representations and warranties of any
party or relieve any party of any breach of any such representation or warranty or affect the
remedies available to the party receiving notice hereunder.
Section 6.5 Company Acquisition Proposals.
(a) Subject to the other provisions of this Section 6.5, during the Interim Period,
the Company shall not, and shall cause each of the Company Subsidiaries, and its and their officers
and directors, managers or equivalent not to, and shall use its reasonable best efforts to cause
any other Representatives of the Company or the Company Subsidiaries not to, directly or indirectly
through another Person, (i) solicit, initiate, knowingly encourage or knowingly facilitate any
inquiry, discussion, offer or request that constitutes, or could reasonably be expected to lead to,
a Company Acquisition Proposal (provided that for purposes of this Section 6.5(a), the
references in the definition of Company Acquisition Proposal to “twenty percent (20%)” shall be
deemed to be five percent (5%)) (an “Inquiry”), (ii) engage in any
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discussions or
negotiations regarding, or furnish to any Third Party any non-public information in connection
with, or otherwise cooperate in any way with, or knowingly facilitate in any way any effort by, any
Third Party in connection with, any Company Acquisition Proposal or Inquiry, (iii) approve or
recommend a Company Acquisition Proposal, or enter into any letter of intent, memorandum of
understanding, agreement in principle, acquisition agreement, merger agreement, share purchase
agreement, asset purchase agreement, share exchange agreement, option agreement or other similar
definitive agreement (other than an
Acceptable Confidentiality Agreement entered into in accordance with this Section 6.5)
providing for or relating to a Company Acquisition Proposal (an “Alternative Acquisition
Agreement”), or (iv) propose or agree to do any of the foregoing.
(b) Notwithstanding anything to the contrary in this Section 6.5(b), at any time prior
to obtaining the Company Stockholder Approval, the Company may, in response to an unsolicited bona
fide written Company Acquisition Proposal by a Third Party made after the date of this Agreement
(that did not result from a breach of this Section 6.5) (i) furnish non-public information
to such Third Party (and such Third Party’s Representatives) making a Company Acquisition Proposal
(provided, however, that (A) prior to so furnishing such information, the Company
receives from the Third Party an executed Acceptable Confidentiality Agreement, and (B) any
non-public information concerning the Company or the Company Subsidiaries that is provided to such
Third Party shall, to the extent not previously provided to Parent or Merger Sub, be provided to
Parent or Merger Sub prior to or simultaneously with providing it to such Third Party), and (ii)
engage in discussions or negotiations with such Third Party (and such Third Party’s
Representatives) with respect to the Company Acquisition Proposal if, in the case of each of
clauses (i) and (ii): (x) the Company Board determines in good faith, after consultation with its
financial and legal advisors, that such Company Acquisition Proposal constitutes, or could
reasonably be expected to lead to, a Superior Proposal, and (y) the Company Board determines in
good faith, after consultation with legal counsel, that failure to take such action would be
reasonably likely to be inconsistent with the directors’ duties under applicable Law; provided,
however, that in each of the foregoing clauses (i) and (ii), such Company Acquisition Proposal was
not solicited in violation of Section 6.5.
(c) The Company shall notify Parent promptly (but in no event later than 24 hours) after
receipt of any Company Acquisition Proposal or any request for nonpublic information relating to
the Company or any Company Subsidiary by any Third Party, or any Inquiry from any Person seeking to
have discussions or negotiations with the Company relating to a possible Company Acquisition
Proposal. Such notice shall be made orally and confirmed in writing, and shall indicate the
identity of the Third Party making the Company Acquisition Proposal or Inquiry and the material
terms and conditions of any Inquiries, proposals or offers (including a copy thereof if in writing
and any related documentation or correspondence). The Company shall also promptly, and in any
event within 24 hours, notify Parent, orally and in writing, if it enters into discussions or
negotiations concerning any Company Acquisition Proposal or provides nonpublic information or data
to any person in accordance with this Section 6.5(c) and keep the other party informed of
the status and terms of any such proposals, offers, discussions or negotiations on a current basis,
including by providing a copy of all material documentation or correspondence relating thereto.
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(d) Except as permitted by this Section 6.5(d), neither the Company Board nor any
committee thereof shall (i) withhold, withdraw, qualify or modify (or publicly propose to withhold,
withdraw, qualify or modify), in a manner adverse to Parent or Merger Sub, the Company
Recommendation, (ii) approve, adopt or recommend (or publicly propose to
approve, adopt or recommend) any Company Acquisition Proposal, (iii) fail to include the
Company Recommendation in the Joint Proxy Statement or any Schedule 14D-9, as applicable, (iv) fail
to publicly recommend against any Company Acquisition Proposal within ten (10) business days of the
request of Parent and reaffirm the Company Recommendation within ten (10) business days (any of the
actions described in clauses (i), (ii), (iii) and (iv) of this Section 6.5(d), an
“Adverse Recommendation Change”), or (v) approve, adopt, declare advisable or recommend (or
agree to, resolve or propose to approve, adopt, declare advisable or recommend), or cause or permit
the Company to enter into, any Alternative Acquisition Agreement (other than an Acceptable
Confidentiality Agreement entered into in accordance with this Section 6.5).
Notwithstanding anything to the contrary set forth in this Agreement, at any time prior to
obtaining the Company Stockholder Approval, the Company Board shall be permitted to effect an
Adverse Recommendation Change if the Company Board (x) has received a Company Acquisition Proposal
that, in the good faith determination of the Company Board, after consultation with its financial
and legal advisors, constitutes a Superior Proposal, after having complied with, and giving effect
to all of the adjustments which may be offered by Parent and Merger Sub pursuant to Section
6.5(e), and (y) determines in good faith, after consultation with its financial and legal
advisors, that failure to take such action would be inconsistent with the directors’ duties under
applicable Law.
(e) The Company Board shall not be entitled to effect an Adverse Recommendation Change as
permitted under Section 6.5(d) unless (i) the Company has provided a written notice (a
“Notice of Superior Proposal”) to Parent and Merger Sub that the Company intends to take
such action and describing the material terms and conditions of, and attaching a complete copy of,
the Superior Proposal that is the basis of such action (it being understood that such material
terms shall include the identity of the Third Party), (ii) during the three (3) Business Day period
following Parent’s and Merger Sub’s receipt of the Notice of Superior Proposal, the Company shall,
and shall cause its Representatives to, negotiate with Parent and Merger Sub in good faith (to the
extent Parent and Merger Sub desire to negotiate) to make such adjustments in the terms and
conditions of this Agreement so that such Superior Proposal ceases to constitute a Superior
Proposal, and (iii) following the end of the three (3) Business Day period, the Company Board shall
have determined in good faith, after consultation with its financial and legal advisors, taking
into account any changes to this Agreement proposed in writing by Parent and Merger Sub in response
to the Notice of Superior Proposal or otherwise, that the Superior Proposal giving rise to the
Notice of Superior Proposal continues to constitute a Superior Proposal. Any amendment to the
financial terms or any other material amendment of such Superior Proposal shall require a new
Notice of Superior Proposal, and the Company shall be required to comply again with the
requirements of this Section 6.5(e); provided, however, that references to
the three (3) Business Day period above shall then be deemed to be references to a two (2) Business
Day period.
(f) Nothing contained in this Section 6.5 or elsewhere in this Agreement shall
prohibit the Company or the Company Board, directly or indirectly through its Representatives, from
disclosing to the Company’s stockholders a position contemplated by
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Rule 14e-2(a) and Rule 14d-9
promulgated under the Exchange Act; provided, however, that any disclosure other than a “stop, look
and listen” or similar communication of the type contemplated by Rule 14d-9(f) promulgated under
the Exchange Act, an express rejection of any applicable
Company Acquisition Proposal or an express reaffirmation of the Company Recommendation to the
Company’s stockholders in favor of the Merger shall be deemed to be an Adverse Recommendation
Change.
(g) The Company shall, and shall cause each of the Company Subsidiaries (other than any
Company Subsidiary in which the Company directly or indirectly owns 25% or less of the outstanding
equity interests) and its and their officers and directors, managers or equivalent, and shall use
its reasonable best efforts to cause any other Representatives of the Company or the Company
Subsidiaries to (i) immediately cease any existing discussions, negotiations or communications with
any Person conducted heretofore with respect to any Company Acquisition Proposal and (ii) take such
action as is necessary to enforce any confidentiality or “standstill” provisions or provisions of
similar effect to which the Company or any of the Company Subsidiaries is a party or of which the
Company or any of the Company Subsidiaries is a beneficiary. The Company shall use all reasonable
efforts to cause all Third Parties who have been furnished confidential information regarding the
Company in connection with the solicitation of or discussions regarding a Company Acquisition
Proposal within the six (6) months prior to the date of this Agreement to promptly return or
destroy such information (to the extent that the Company is entitled to have such information
returned or destroyed).
(h) For purposes of this Agreement:
(i) “Company Acquisition Proposal” shall mean any proposal or offer for
(or expression by a Third Party that it is considering or may engage in), whether in
one transaction or a series of related transactions, (i) any merger, consolidation,
share exchange, business combination or similar transaction involving the Company or
any of the Company Subsidiaries, (ii) any sale, lease, exchange, mortgage, pledge,
license, transfer or other disposition, directly or indirectly, by merger,
consolidation, sale of equity interests, share exchange, joint venture, business
combination or otherwise, of any assets of the Company or any Company Subsidiary
representing twenty percent (20%) or more of the consolidated assets of the Company
and the Company Subsidiaries, taken as a whole as determined on a book-value basis,
(iii) any issue, sale or other disposition of (including by way of merger,
consolidation, joint venture, business combination, share exchange or any similar
transaction) securities (or options, rights or warrants to purchase, or securities
convertible into, such securities) representing twenty percent (20%) or more of the
voting power of the Company, (iv) any tender offer or exchange offer in which any
Person or “group” (as such term is defined in Rule 13d-3 promulgated under the
Exchange Act) shall seek to acquire beneficial ownership (as such term is defined in
Rule 13d-3 promulgated under the Exchange Act), or the right to acquire beneficial
ownership, of twenty percent (20%) or more of the outstanding shares of any class of
voting securities
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of the Company, (v) any recapitalization, restructuring,
liquidation, dissolution or other similar type of transaction with respect to the
Company in which a Third
Party shall acquire beneficial ownership of twenty percent (20%) or more of the
outstanding shares of any class of voting securities of the Company or (vi) any
transaction which is similar in form, substance or purpose to any of the foregoing
transactions; provided, however, that the term “Company Acquisition
Proposal” shall not include (x) the Merger or the other transactions contemplated by
this Agreement or (y) any proposal or offer relating to any existing purchase
option, right of first offer, right of first refusal or buy/sell provision contained
in any agreement to which the Company or any Company Subsidiary is a party.
(ii) “Superior Proposal” shall mean a bona fide written Company
Acquisition Proposal (except that, for purposes of this definition, the references
in the definition of “Company Acquisition Proposal” to “twenty percent (20%)” shall
be replaced by “fifty percent (50%)”) made by a Third Party on terms that the
Company Board determines in good faith, after consultation with the Company’s
financial and legal advisors, taking into account all financial, legal, regulatory
and any other aspects of the transaction described in such proposal, including the
identity of the Person making such proposal, as well as any changes to the financial
terms of this Agreement proposed by Parent and Merger Sub in response to such
proposal or otherwise, to be more favorable to the Company and the Company’s
stockholders (solely in their capacity as such) from a financial point of view than
the transactions contemplated by this Agreement.
Section 6.6 Appropriate Action; Consents; Filings.
(a) Upon the terms and subject to the conditions set forth in this Agreement (including
Section 6.5), each of the Company and Parent shall (and shall cause the Company
Subsidiaries and the Parent Subsidiaries, respectively, to) use its reasonable best efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and
cooperate with the other party in doing, all things necessary, proper or advisable under applicable
Law or pursuant to any contract or agreement to consummate and make effective, as promptly as
practicable, the Merger and the other transactions contemplated by this Agreement, including (i)
the taking of all actions necessary to cause the conditions to Closing set forth in Article
VII to be satisfied, (ii) the obtaining of all necessary actions or nonactions, waivers,
consents and approvals from Governmental Authorities or other Persons necessary in connection with
the consummation of the Merger and the other transactions contemplated by this Agreement and the
making of all necessary registrations and filings (including filings with Governmental Authorities,
if any) and the taking of all reasonable steps as may be necessary to obtain an approval or waiver
from, or to avoid an action or proceeding by, any Governmental Authority or other Persons necessary
in connection with the consummation of the Merger and the other transactions contemplated by this
Agreement, (iii) the defending of any lawsuits or other legal proceedings, whether judicial or
administrative, challenging this Agreement or the consummation of the Merger or the other
transactions contemplated by this Agreement,
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including seeking to have any stay or temporary
restraining order entered by any court or other
Governmental Authority vacated or reversed, the avoidance of each and every impediment under
any antitrust, merger control, competition or trade regulation Law that may be asserted by any
Governmental Authority with respect to the Merger so as to enable the Closing to occur as soon as
reasonably possible, and (iv) the execution and delivery of any additional instruments necessary to
consummate the Merger and the other transactions contemplated by this Agreement and to fully carry
out the purposes of this Agreement.
(b) In connection with and without limiting the foregoing, each of Parent and the Company
shall give (or shall cause the Parent Subsidiaries or the Company Subsidiaries, respectively, to
give) any notices to Third Parties, and Parent shall use, and cause each of its Affiliates to use,
its reasonable best efforts, and the Company shall use its reasonable best efforts to cooperate
with Parent in its efforts, to obtain any Third Party consents not covered by Section
6.6(a) that are necessary, proper or advisable to consummate the Merger; provided,
however, that Parent shall promptly reimburse the Company for any expenses and costs
incurred in connection with the Company’s or its Affiliates’ obligations under this Section
6.6(b). Each of the parties hereto will furnish to the other such necessary information and
reasonable assistance as the other may request in connection with the preparation of any required
governmental filings or submissions and will cooperate in responding to any inquiry from a
Governmental Authority, including immediately informing the other party of such inquiry, consulting
in advance before making any presentations or submissions to a Governmental Authority, and
supplying each other with copies of all material correspondence, filings or communications between
either party and any Governmental Authority with respect to this Agreement. To the extent
practicable, and permitted by a Governmental Authority, each party hereto shall permit
representatives of the other party to participate in meetings (whether by telephone or in person)
with such Governmental Authority. Notwithstanding the foregoing, obtaining any approval or consent
from any third party pursuant to this Section 6.6(b) shall not be considered a condition to
the obligations of Parent and Merger Sub to consummate the Merger.
(c) Notwithstanding anything to the contrary in this Agreement, in connection with obtaining
any approval or consent from any Person (other than any Governmental Authority) with respect to the
Merger, without the prior written consent of Parent, none of the Company, any of the Company
Subsidiaries or any of the Company’s or Company Subsidiary’s Representatives, shall pay or commit
to pay to such Person whose approval or consent is being solicited any cash or other consideration,
make any accommodation or commitment or incur any liability or other obligation to such Person.
The Company shall cooperate with Parent and the Purchaser with respect to accommodations that may
be requested or appropriate to obtain such consents.
Section 6.7 Notification of Certain Matters; Transaction Litigation.
(a) The Company shall give prompt notice to Parent, and Parent shall give prompt notice to the
Company, of any notice or other communication received by such
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party from any Governmental
Authority in connection with this Agreement, the Merger or the
other transactions contemplated by this Agreement, or from any Person alleging that the
consent of such Person is or may be required in connection with the Merger or the other
transactions contemplated by this Agreement.
(b) The Company shall give prompt notice to Parent, and Parent shall give prompt notice to the
Company, if (i) any representation or warranty made by it contained in this Agreement becomes
untrue or inaccurate such that the applicable closing conditions would reasonably expected to be
incapable of being satisfied by the Outside Date or (ii) it fails to comply with or satisfy in any
material respect any covenant, condition or agreement to be complied with or satisfied by it under
this Agreement; provided, however, that no such notification shall affect the
representations, warranties, covenants or agreements of the parties or the conditions to the
obligations of the parties under this Agreement.
(c) The Company shall give prompt notice to Parent, and Parent shall give prompt notice to the
Company, of any actions, suits, claims, investigations or proceedings commenced or, to such party’s
knowledge, threatened against, relating to or involving such party or any of the Company
Subsidiaries or the Parent Subsidiaries, respectively, which relate to this Agreement, the Merger
or the other transactions contemplated by this Agreement. The Company shall give Parent the
opportunity to reasonably participate in the defense and settlement of any stockholder litigation
against the Company and/or its directors relating to this Agreement and the transactions
contemplated hereby, and no such settlement shall be agreed to without Parent’s prior written
consent (which consent shall not be unreasonably withheld, conditioned or delayed), unless such
settlement involves only the payment of money and the amount of such settlement shall be fully
covered by insurance proceeds. Parent shall give the Company the opportunity to reasonably
participate in the defense and settlement of any stockholder litigation against Parent and/or its
directors relating to this Agreement and the transactions contemplated hereby, and no such
settlement shall be agreed to without the Company’s prior written consent (which consent shall not
be unreasonably withheld, conditioned or delayed), unless such settlement involves only the payment
of money and the amount of such settlement shall be fully covered by insurance proceeds.
Section 6.8 Public Announcements. The Company, Parent and Merger Sub shall, to the extent
reasonably practicable, consult with each other before issuing any press release or otherwise
making any public statements or filings with respect to this Agreement or any of the transactions
contemplated hereby, and none of the parties shall issue any such press release or make any such
public filing prior to obtaining the other parties’ consent (which consent shall not be
unreasonably withheld, conditioned or delayed); provided, however, that a party
may, without obtaining the other parties’ consent, issue such press release or make such public
statement or filing as may be required by Law, Order or the applicable rules of any stock exchange
or the applicable provisions of any listing agreement of any party hereto. If for any reason it is
not practicable to consult with the other party before making any public statement with respect to
this Agreement or any of the transactions contemplated hereby, then the party making such statement
shall not make a statement that is inconsistent with public statements or filings to which the
other party had previously consented.
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Section 6.9 Directors’ and Officers’ Indemnification and Insurance.
(a) Parent and Merger Sub agree that all rights to exculpation and indemnification for acts or
omissions occurring at or prior to the Effective Time, whether asserted or claimed prior to, at or
after the Effective Time (including any matters arising in connection with the transactions
contemplated by this Agreement), now existing in favor of the current or former directors,
officers, partners, members, trustees or employees, as the case may be, of the Company or the
Company Subsidiaries as provided in the Company Charter or the Company Bylaws or each of the
Company Subsidiaries’ respective articles or certificates of incorporation or bylaws (or comparable
organizational or governing documents) or in any agreement shall survive the Merger and shall
continue in full force and effect in accordance with their terms. Parent and the Surviving Entity
shall (and Parent shall cause the Surviving Entity to) (i) indemnify, defend and hold harmless, and
advance expenses to, Indemnitees with respect to all acts or omissions by them in their capacities
as such at any time prior to the Effective Time, to the fullest extent required by: (x) the Company
Charter or Company Bylaws, or the articles or certificates of incorporation or bylaws (or
comparable organizational or governing documents) of any of the Company Subsidiaries, in each case,
as in effect on the date of this Agreement, (y) any indemnification agreement of the Company or the
Company Subsidiaries or other applicable contract as in effect on the date of this Agreement and
listed in the Company Disclosure Letter, or (z) applicable Law, and (ii) not amend, repeal or
otherwise modify any such provisions referenced in subsections (i)(x) and (y) above in any manner
that would adversely affect the rights thereunder of any Indemnitees.
(b) Without limiting the provisions of Section 6.9(a), during the period commencing as
of the Effective Time and ending on the sixth (6th) anniversary of the Effective Time, Parent and
the Surviving Entity shall (and Parent shall cause the Surviving Entity to): (i) indemnify and hold
harmless each Indemnitee against and from any costs or expenses (including attorneys’ fees),
judgments, fines, losses, claims, damages, liabilities and amounts paid in settlement in connection
with any claim, action, suit, proceeding or investigation, whether civil, criminal, administrative
or investigative, to the extent such claim, action, suit, proceeding or investigation arises out of
or pertains to (x) any action or omission or alleged action or omission in such Indemnitee’s
capacity as a director, officer, partner, member, trustee or employee of the Company or any of the
Company Subsidiaries, or (y) this Agreement and any of the transactions contemplated hereby,
including the Merger; and (ii) pay in advance of the final disposition of any such claim, action,
suit, proceeding or investigation the expenses (including attorneys’ fees) of any Indemnitee upon
receipt of an undertaking by or on behalf of such Indemnitee to repay such amount if it shall
ultimately be determined that such Indemnitee is not entitled to be indemnified. Notwithstanding
anything to the contrary contained in this Section 6.9(b) or elsewhere in this Agreement,
neither Parent nor the Surviving Entity shall (and Parent shall cause the Surviving Entity not to)
settle or compromise or consent to the entry of any judgment or otherwise seek termination with
respect to any claim, action, suit, proceeding or investigation for which indemnification may be
sought under this Section 6.9(b) unless such settlement, compromise, consent or termination
includes an unconditional release of all Indemnitees from all liability arising out of such claim,
action, suit, proceeding or investigation, and does not include an admission of fault or wrongdoing
by any Indemnitee. Notwithstanding anything to the
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contrary set forth in this Agreement, Parent or the Surviving Entity (i) shall not be liable
for any settlement effected without their prior written consent and (ii) shall not have any
obligation hereunder to any Indemnitee to the extent that a court of competent jurisdiction shall
determine in a final and non-appealable order that such indemnification is prohibited by applicable
Law, in which case the Indemnitee shall promptly refund to Parent or the Surviving Entity the
amount of all such expenses theretofore advanced pursuant hereto.
(c) Prior to the Effective Time, the Company shall or, if the Company is unable to, Parent
shall cause the Surviving Entity as of the Effective Time to, obtain and fully pay the premium for
the non-cancellable extension of the directors’ and officers’ liability coverage of the Company’s
existing directors’ and officers’ insurance policies and the Company’s existing fiduciary liability
insurance policies (collectively, the “D&O Insurance”), in each case, for a claims
reporting or discovery period of at least six (6) years from and after the Effective Time with
respect to any claim related to any period or time at or prior to the Effective Time from an
insurance carrier with the same or better credit rating as the Company’s current insurance carrier
with respect to D&O Insurance with terms, conditions, retentions and limits of liability that are
no less favorable than the coverage provided under the Company’s existing policies and with policy
limits no less than the limits on the Company’s existing policies as long as the annual premium
does not exceed 110% of the annual premium under the Company’s existing policies. If the Company
or the Surviving Entity for any reason fails to obtain such “tail” insurance policies as of the
Effective Time, (i) the Surviving Entity shall continue to maintain in effect, for a period of at
least six (6) years from and after the Effective Time, the D&O Insurance in place as of the date
hereof with the Company’s current insurance carrier or with an insurance carrier with the same or
better credit rating as the Company’s current insurance carrier with respect to D&O Insurance with
terms, conditions, retentions and limits of liability that are no less favorable than the coverage
provided under the Company’s existing policies as of the date hereof, or (ii) Parent shall provide,
or shall cause the Surviving Entity to provide, for a period of not less than six (6) years after
the Effective Time, the Indemnitees who are insured under the Company’s D&O Insurance with
comparable D&O Insurance that provides coverage for events occurring at or prior to the Effective
Time from an insurance carrier with the same or better credit rating as the Company’s current
insurance carrier, that is no less favorable than the existing policy of the Company (which may be
provided under Parent’s D&O Insurance policy) or, if substantially equivalent insurance coverage is
unavailable, the best available coverage; provided, however, that Parent and the
Surviving Entity shall not be required to pay an annual premium for the D&O Insurance in excess of
300% of the annual premium currently paid by the Company for such insurance; and provided,
further, that if the annual premiums of such insurance coverage exceed such amount, Parent
or the Surviving Entity shall be obligated to obtain a policy with the greatest coverage available,
with respect to matters occurring prior to the Effective Time, for a cost not exceeding such
amount.
(d) The Indemnitees to whom this Section 6.9 applies shall be third party
beneficiaries of this Section 6.9. The provisions of this Section 6.9 are intended
to be for the benefit of each Indemnitee and his or her successors, heirs, executors, trustees,
fiduciaries, administrators or representatives. Parent shall pay all reasonable expenses,
including attorney’s
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fees, that may be incurred by any Indemnitee in successfully enforcing the indemnity and other
obligations provided in this Section 6.9.
(e) The rights of each Indemnitee under this Section 6.9 shall be in addition to any
rights such person or any employee of the Company or any Company Subsidiary may have under the
Company Charter, the Company Bylaws or the certificate of incorporation or bylaws (or equivalent
organizational or governing documents) of any of the Company Subsidiaries, or the Surviving Entity
or any of its subsidiaries, or under any applicable Law or under any agreement of any Indemnitee or
any employee with the Company or any of the Company Subsidiaries listed in Section
4.12(a)(iv) the Company Disclosure Letter.
(f) Notwithstanding anything contained in Section 9.1 or Section 9.7 to the
contrary, this Section 6.9 shall survive the consummation of the Merger indefinitely and
shall be binding, jointly and severally, on all successors and assigns of Parent, the Surviving
Entity and its subsidiaries, and shall be enforceable by the Indemnitees and their successors,
heirs or representatives. In the event that Parent or the Surviving Entity or any of its
successors or assigns consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger, or transfers or
conveys all or a majority of its properties and assets to any Person, then, and in each such case,
proper provision shall be made so that the successors and assigns of Parent or the Surviving
Entity, as applicable, shall succeed to the obligations set forth in this Section 6.9. The
parties acknowledge and agree that Parent guarantees the payment and performance of the Surviving
Entity’s obligations pursuant to this Section 6.9.
Section 6.10 Employee Benefit Matters.
(a) During the one (1)-year period commencing at the Effective Time, Parent shall, or shall
cause the Surviving Entity to, provide to employees and former employees of the Company and any of
the Company Subsidiaries (“Company Employees”) (i) a base salary or wage rate at least
equal to the Company Employees’ base salary or wage rate in effect as of immediately prior to the
Effective Time and (ii) employee benefits (other than any incentive compensation, equity-based
compensation, defined benefit pension benefits and retiree medical benefits) that are, in the
aggregate, no less favorable than the employee benefits (other than any incentive compensation,
equity-based compensation, defined benefit pension benefits and retiree medical benefits) provided
to similarly situated employees of Parent and its Subsidiaries under the Parent Benefit Plans.
(b) Parent shall provide, or shall cause the Surviving Entity to provide, to each Company
Employee who is a participant in a Company Severance Pay Plan immediately prior to the Effective
Time and whose employment with the Surviving Entity, Company Subsidiaries and its Affiliates is
involuntarily terminated in a severance-qualifying manner during the one (1)-year period following
the Effective Time, severance benefits that are no less favorable, in the aggregate, than the
severance benefits, if any, that would have been provided to
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such Company Employee pursuant to the terms of a Company Severance Pay Plan upon such an
involuntary severance-qualifying termination of employment immediately prior to the Effective Time;
provided that no such severance benefits shall be provided to any Company Employee who is a party
to a Company Employment Agreement that otherwise provides for severance benefits.
(c) For purposes of eligibility and vesting, benefit accrual and determination of level of
benefits under the compensation and benefit plans, programs agreements and arrangements of Parent,
the Company, the Parent Subsidiaries, the Company Subsidiaries, the Surviving Entity and any of its
subsidiaries or any respective Affiliate thereof providing benefits to any Company Employees after
the Closing, and in which such Company Employees did not participate prior to the Effective Time
(the “New Plans”), including for purposes of accrual of vacation and other paid time off
and severance benefits under New Plans (but excluding any New Plan that is established after the
Closing that does not recognize service prior to its adoption), each Company Employee shall be
credited with his or her years of service with the Company, the Company Subsidiaries and their
respective Affiliates (and any additional service with any predecessor employer) before the
Closing, to the same extent as such Company Employee was entitled, before the Closing, to credit
for such service under any similar Company Benefit Plan, except where such credit would result in a
duplication of benefits. In addition, and without limiting the generality of the foregoing: (i)
each Company Employee shall be immediately eligible to participate, without any waiting time, in
any and all New Plans to the extent coverage under such New Plan replaces coverage under a
comparable Company Benefit Plan in which such Company Employee participated immediately before such
replacement; and (ii) for purposes of each New Plan providing medical, dental, pharmaceutical
and/or vision benefits to any Company Employee, Parent shall cause all pre-existing condition
exclusions and actively-at-work requirements of such New Plan to be waived for such employee and
his or her covered dependents except to the extent such pre-existing conditions and
actively-at-work requirements would apply under the analogous Company Benefit Plan, and Parent
shall use reasonable efforts to cause any eligible expenses incurred by such Company employee and
his or her covered dependents under a Company Benefit Plan during the portion of the plan year
prior to the Effective Time to be taken into account under such New Plan for purposes of satisfying
all deductible, co-insurance, co-payment and maximum out-of-pocket requirements applicable to such
employee and his or her covered dependents for the applicable plan year as if such amounts had been
paid in accordance with such New Plan.
(d) For the avoidance of doubt and notwithstanding anything to the contrary herein or in any
Company Benefit Plan, for purposes of any Company Benefit Plan listed in Section 6.10 of
the Company Disclosure Letter, the Closing shall be deemed to constitute a “change in control” or
“change of control.”
(e) Nothing contained herein shall be construed as requiring, and the Company shall take no
action that would have the effect of requiring, Parent or the Surviving Entity to continue any
specific employee benefit plans or to continue the employment of any
specific person. The provisions of this Section 6.10 are solely for the benefit of the
parties to this
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Agreement, and no current or former director, officer, employee or independent
contractor or any other person shall be a third-party beneficiary of this Section 6.10, and
nothing herein shall be construed as an amendment to any Plan or other compensation or benefit plan
or arrangement for any purpose.
Section 6.11 Certain Tax Matters. Each of Parent and the Company shall use their
reasonable best efforts to cause the Merger to qualify as a reorganization within the meaning of
Section 368(a) of the Code, including by executing and delivering the officers’ certificates
referred to therein. None of Parent or the Company shall take any action, or fail to take any
action, that could reasonably be expected to cause the Merger to fail to qualify as a
reorganization within the meaning of Section 368(a) of the Code.
Section 6.12 Dividends.
(a) Each of Parent and the Company shall declare a dividend to their respective stockholders,
the record and payment date for which shall be the close of business on the last Business Day prior
to the Effective Time. The per share dividend amount payable by the Company shall be an amount
equal to (i) the Company’s most recent quarterly dividend, multiplied by the number of days elapsed
since the last dividend record date through and including the day prior to the day on which the
Effective Time occurs, and divided by the actual number of days in the calendar quarter in which
such dividend is declared, plus (ii) if necessary to enable the Company to make aggregate dividend
distributions during its final taxable period equal to the Minimum Distribution Dividend, an
additional amount (the “Additional Dividend Amount”) necessary so that the aggregate
dividend payable is equal to the Minimum Distribution Dividend. The per share dividend amount
payable by Parent shall be an amount equal to (i) Parent’s most recent quarterly dividend,
multiplied by the number of days elapsed since the last dividend record date through and including
the day prior to the day on which the Effective Time occurs, and divided by the actual number of
days in the calendar quarter in which such dividend is declared, plus (ii) the Additional Dividend
Amount, if any, divided by the Exchange Ratio. If the Company determines it is necessary to
declare the Additional Dividend Amount, the Company shall notify Parent of such determination at
least ten days prior to the Company Stockholder Meeting.
(b) In the event that a distribution with respect to the shares of Company Common Stock
permitted under the terms of this Agreement (including pursuant to Section 6.1(b)(iii) and
Section 6.12(a) above) has (i) a record date prior to the Effective Time and (ii) has not
been paid as of the Effective Time, the holders of shares of Company Common Stock shall be entitled
to receive such distribution from the Company at the time such shares are exchanged pursuant to
Article III of this Agreement.
Section 6.13 Merger Sub. Parent shall take all actions necessary to (a) cause Merger Sub
to perform its obligations under this Agreement and to consummate the Merger on the terms and
conditions set forth in this Agreement, and (b) ensure that, prior to the Effective
Time, Merger Sub shall not conduct any business or make any investments other than as specifically
contemplated by this Agreement, or incur or guarantee any indebtedness.
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Section 6.14 Section 16 Matters. Assuming that the Company delivers to Parent, in a timely
fashion prior to the Effective Time, all requisite information necessary for Parent and Merger Sub
to take the actions contemplated by this Section 6.14, the Company, Parent and Merger Sub
each shall take all such steps as may be necessary or appropriate to ensure that (a) any
dispositions of Company Common Stock (including derivative securities related to such stock)
resulting from the Merger and the other transactions contemplated by this Agreement by each
individual who is subject to the reporting requirements of Section 16(a) of the Exchange Act with
respect to the Company immediately prior to the Effective Time are exempt under Rule 16b-3
promulgated under the Exchange Act, and (b) any acquisitions of Parent Common Stock (including
derivative securities related to such stock) resulting from the Merger and the other transactions
contemplated by this Agreement by each individual who may become subject to the reporting
requirements of Section 16(a) of the Exchange Act with respect to Parent are exempt under Rule
16b-3 promulgated under the Exchange Act.
Section 6.15 Stock Exchange Listing. Parent shall use its reasonable best efforts to cause
the shares of Parent Common Stock to be issued in the Merger to be approved for listing on the
NYSE, subject to official notice of issuance, prior to the Effective Time.
Section 6.16 Voting of Shares. Parent shall vote all shares of Company Common Stock
beneficially owned by it or any of the Parent Subsidiaries as of the record date for the Company
Stockholder Meeting in favor of adoption of this Agreement and approval of the Merger. The Company
shall vote all shares of Parent Common Stock beneficially owned by it or any of the Company
Subsidiaries as of the record date for the Parent Stockholder Meeting in favor of adoption of this
Agreement, approval of the Merger, issuance of shares of Parent Common Stock in connection
therewith and the Charter Amendment.
Section 6.17 Parent Board of Directors. Parent shall take all necessary action to cause,
as of the Effective Time, the persons described in Section 6.17 of the Company Disclosure
Letter to be added to the Parent Board.
ARTICLE VII
CONDITIONS
Section 7.1 Conditions to the Obligations of Each Party. The respective obligations of
each party to effect the Merger and to consummate the other transactions contemplated by this
Agreement shall be subject to the satisfaction or (to the extent permitted by Law) waiver by each
of the parties, at or prior to the Effective Time, of the following conditions:
(a) Stockholder Approvals. Each of the Company Stockholder Approval and the Parent
Stockholder Approval shall have been obtained.
(b) No Restraints. No Governmental Authority in the United States shall have enacted,
issued, promulgated, enforced or entered any Law or Order (whether temporary, preliminary or
permanent) which is then in effect and has the effect of making the
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Merger illegal or otherwise
restricting, preventing or prohibiting consummation of the Merger or otherwise restraining,
enjoining, preventing, prohibiting or making illegal the acquisition of some or all of the shares
of Company Common Stock by Parent.
(c) Form S-4. The Form S-4 shall have become effective under the Securities Act, and
no stop order suspending the effectiveness of the Form S-4 shall have been issued and no
proceedings for that purpose shall have been initiated or be threatened by the SEC that has not
been withdrawn.
(d) Listing. The shares of Parent Common Stock to be issued in the Merger shall have
been authorized for listing on the NYSE, subject to official notice of issuance.
Section 7.2 Conditions to the Obligations of Parent and Merger Sub. The respective
obligations of Parent and Merger Sub to effect the Merger and to consummate the other transactions
contemplated by this Agreement are subject to the satisfaction or (to the extent permitted by Law)
waiver by Parent, at or prior to the Effective Time, of the following additional conditions:
(a) Representations and Warranties. (i) The representations and warranties set forth
in Section 4.1(a) (Organization and Qualification; Subsidiaries), Section 4.3(a)
(Capital Structure) (except for the first two sentences), Section 4.4 (Authority),
Section 4.19 (Opinion of Financial Advisor), Section 4.20 (Takeover Statute),
Section 4.21 (Vote Required), Section 4.22 (Brokers) and Section 4.23
(Investment Company Act) shall be true and correct in all material respects as of the date of this
Agreement and as of the Effective Time, as though made as of the Effective Time, (ii) the
representations and warranties set forth in the first two sentences of Section 4.3(a)
(Capital Structure) shall be true and correct in all but de minimis respects as of the date of this
Agreement and as of the Effective Time, as though made as of the Effective Time, and (iii) each of
the other representations and warranties of the Company contained in this Agreement shall be true
and correct as of the date of this Agreement and as of the Effective Time, as though made as of the
Effective Time, except (x) in each case, representations and warranties that are made as of a
specific date shall be true and correct only on and as of such date, and (y) in the case of clause
(iii) where the failure of such representations or warranties to be true and correct (without
giving effect to any materiality or “Company Material Adverse Effect” qualifications set forth
therein) does not have, and would not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect.
(b) Agreements and Covenants. The Company shall have performed or complied in all
material respects with all agreements and covenants required by this Agreement to be performed or
complied with by it on or prior to the Closing Date.
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(c) Officer’s Certificate. The Company shall have delivered to Parent a certificate,
dated the date of the Closing and signed by its chief executive officer or another senior officer
on behalf of the Company, certifying to the effect that the conditions set forth in Section
7.2(a) and Section 7.2(b) have been satisfied.
(d) Absence of Material Adverse Effect. Since the date of this Agreement, there shall
not have been any event, change or occurrence that, individually or in the aggregate, has had or
would reasonably be expected to have a Company Material Adverse Effect.
(e) REIT Opinion. Parent shall have received a written opinion of Skadden, Arps,
Slate, Xxxxxxx & Xxxx LLP, dated as of the Closing Date and in form and substance reasonably
satisfactory to Parent, to the effect that, commencing with the Company’s taxable year that ended
on December 31, 1999, the Company was organized in conformity with the requirements for
qualification as a REIT under the Code and its actual method of operation has enabled the Company
to meet, through the Closing Date, the requirements for qualification and taxation as a REIT under
the Code, which opinion will be subject to customary exceptions, assumptions and qualifications and
based on customary representations contained in an officer’s certificate executed by the Company.
(f) Section 368 Opinion. Parent shall have received the written opinion of its
counsel, Wachtell, Lipton, Xxxxx & Xxxx, dated as of the Closing Date and in form and substance
reasonably satisfactory to Parent, to the effect that, on the basis of facts, representations and
assumptions set forth in such opinion, the Merger will qualify as a reorganization within the
meaning of Section 368(a) of the Code. In rendering such opinion, counsel may require and rely upon
customary representations contained in certificates of officers of Parent, the Company and Merger
Sub, reasonably satisfactory in form and substance to it.
Section 7.3 Conditions to the Obligations of the Company. The obligations of the Company
to effect the Merger and to consummate the other transactions contemplated by this Agreement are
subject to the satisfaction or (to the extent permitted by Law) waiver by the Company, at or prior
to the Effective Time, of the following additional conditions:
(a) Representations and Warranties. (i) The representations and warranties set forth
in Section 5.1(a) and (b) (Organization and Qualification; Subsidiaries),
Section 5.3(a) (Capital Structure) (except the first two sentences), Section 5.4
(Authority), Section 5.19 (Vote Required), Section 5.20 (Brokers) and Section
5.21 (Investment Company Act) shall be true and correct in all material respects as of the date
of this Agreement and as of the Effective Time, as though made as of the Effective Time, (ii) the
representations and warranties set forth in the first two sentences of Section 5.3(a)
(Capital Structure) shall be true and correct in all but de minimis respects as of the date of this
Agreement and as of the Effective Time, as though made as of the Effective Time, and (iii) each of
the other representations and warranties of Parent and Merger Sub contained in this Agreement shall
be true and correct as of the date of this Agreement and as of the Effective Time, as though made
as of the Effective Time, except (x) in each case, representations and warranties that are made as
of a specific date shall be
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true and correct only on and as of such date, and (y) in the case of clause (iii) where the
failure of such representations or warranties to be true and correct (without giving effect to any
materiality or “Parent Material Adverse Effect” qualifications set forth therein) does not have,
and would not reasonably be expected to have, individually or in the aggregate, a Parent Material
Adverse Effect.
(b) Agreements and Covenants. Parent and Merger Sub shall have performed or complied
in all material respects with all agreements and covenants required by this Agreement to be
performed or complied with by them on or prior to the Closing Date.
(c) Officer’s Certificate. Parent shall have delivered to the Company a certificate,
dated the date of the Closing and signed by its chief executive officer or another senior officer
on behalf of Parent, certifying to the effect that the conditions set forth in Section
7.3(a) and Section 7.3(b) have been satisfied.
(d) Absence of Material Adverse Effect. Since the date of this Agreement, there shall
not have been any event, change or occurrence that, individually or in the aggregate, has had or
would reasonably be expected to have a Parent Material Adverse Effect.
(e) REIT Opinion. The Company shall have received a written opinion of Xxxxxxx Xxxx &
Xxxxxxxxx LLP, or other counsel reasonably acceptable to the Company, dated as of the Closing Date
and in form and substance reasonably satisfactory to the Company, to the effect that, commencing
with Parent’s taxable year that ended on December 31, 1999, Parent was organized in
conformity with the requirements for qualification as a REIT under the Code, and its actual method
of operation has enabled, and its proposed method of operation will enable, Parent to meet the
requirements for qualification and taxation as a REIT under the Code, which opinion will be subject
to customary exceptions, assumptions and qualifications and based on customary representations
contained in an officer’s certificate executed by Parent.
(f) Section 368 Opinion. The Company shall have received a written opinion of its
counsel, Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, dated as of the Closing Date and in form and
substance reasonably satisfactory to the Company, to the effect that, on the basis of facts,
representations and assumptions set forth in such opinion, the Merger will qualify as a
reorganization within the meaning of Section 368(a) of the Code. In rendering such opinion, counsel
may require and rely upon customary representations contained in certificates of officers of
Parent, the Company and Merger Sub, reasonably satisfactory in form and substance to it.
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ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
Section 8.1 Termination. This Agreement may be terminated at any time prior to the
Effective Time, whether before or after receipt of the Company Stockholder Approval or the Parent
Stockholder Approval (except as otherwise expressly noted), as follows:
(a) by mutual written agreement of each of Parent and the Company; or
(b) by either Parent or the Company, if:
(i) the Effective Time shall not have occurred on or before October 31, 2011
(the “Outside Date”); provided, however, that the right to
terminate this Agreement pursuant to this Section 8.1(b)(i) shall not be
available to any party if the failure of such party (and in the case of Parent,
including the failure of Merger Sub) to perform any of its obligations under this
Agreement has been a principal cause of, or resulted in, the failure of the Merger
to be consummated on or before such date; or
(ii) any Governmental Authority of competent jurisdiction shall have issued an
Order or taken any other action permanently restraining, enjoining or otherwise
prohibiting the transactions contemplated by this Agreement, and such Order or other
action shall have become final and non-appealable; provided,
however, that the right to terminate this Agreement under this Section
8.1(b)(ii) shall not be available to a party if the issuance of such final,
non-appealable Order was primarily due to the failure of such party (and in the case
of Parent, including the failure of Merger Sub) to perform any of its obligations
under this Agreement; or
(iii) the Company Stockholder Approval shall not have been obtained at a duly
held Company Stockholder Meeting or at any adjournment or postponement thereof at
which this Agreement and the transactions contemplated hereby have been voted upon,
provided that the right to terminate this Agreement under this Section
8.1(b)(iii) shall not be available to the Company if the failure to obtain such
Company Stockholder Approval was primarily due to the Company’s failure to perform
any of its obligations under this Agreement; or
(iv) the Parent Stockholder Approval shall not have been obtained at a duly
held Parent Stockholder Meeting or at any adjournment or
postponement thereof at which this Agreement and the transactions contemplated
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hereby have been voted upon, provided that the right to terminate this Agreement
under this Section 8.1(b)(iv) shall not be available to Parent if the
failure to obtain such Parent Stockholder Approval was primarily due to Parent’s
failure to perform any of its obligations under this Agreement; or
(c) by the Company, if Parent or Merger Sub shall have breached or failed to perform in any
material respect any of its representations, warranties, covenants or other agreements set forth in
this Agreement, which breach or failure to perform (x) would, or would reasonably be expected to,
result in a failure of a condition set forth in Section 7.3(a) or Section 7.3(b)
and (y) cannot be cured on or before the Outside Date or, if curable, is not cured by Parent within
twenty (20) days of receipt by Parent of written notice of such breach or failure; provided that
the Company shall not have the right to terminate this Agreement pursuant to this Section
8.1(c) if the Company is then in breach of any of its respective representations, warranties,
covenants or agreements set forth in this Agreement such that the conditions set forth in either
Section 7.2(a) or Section 7.2(b) would not be satisfied; or
(d) by Parent, if:
(i) the Company shall have breached or failed to perform in any material
respect any of its representations, warranties, covenants or other agreements set
forth in this Agreement, which breach or failure to perform (x) would, or would
reasonably be expected to, result in a failure of a condition set forth in
Section 7.2(a) or Section 7.2(b) and (y) cannot be cured on or
before the Outside Date or, if curable, is not cured by the Company within twenty
(20) days of receipt by the Company of written notice of such breach or failure;
provided that Parent shall not have the right to terminate this Agreement pursuant
to this Section 8.1(d)(i) if Parent or Merger Sub are then in breach of any
of their respective representations, warranties, covenants or agreements set forth
in this Agreement such that the conditions set forth in either Section
7.3(a) or Section 7.3(b) would not be satisfied, or
(ii) (x) the Company Board shall have made an Adverse Recommendation Change,
(y) the Company shall have materially or willfully breached any of its obligations
under Section 6.3 and Section 6.5 or (z) the Company enters into an
Alternative Acquisition Agreement (other than an Acceptable Confidentiality
Agreement entered into in accordance with Section 6.5), provided that the
right to terminate under Section 8.1(d)(ii)(x) and (y) shall not be available after
the receipt of the Company Stockholder Approval.
Section 8.2 Effect of Termination. In the event that this Agreement is terminated and the
Merger and the other transactions contemplated by this Agreement are abandoned pursuant to
Section 8.1, written notice thereof shall be given to the other party or parties,
specifying the provisions hereof pursuant to which such termination is made and
describing the basis therefor in reasonable detail, and this Agreement shall forthwith become null
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and void and of no further force or effect whatsoever without liability on the part of any party
hereto (or any of the Company Subsidiaries, Parent Subsidiaries or any of the Company’s or Parent’s
respective Representatives), and all rights and obligations of any party hereto shall cease;
provided, however, that, notwithstanding anything in the foregoing to the contrary
(a) no such termination shall relieve any party hereto of any liability or damages resulting from
or arising out of any willful or intentional breach of this Agreement; and (b) the Confidentiality
Agreements, this Section 8.2, Section 8.3, Section 8.6, Article IX
and the definitions of all defined terms appearing in such sections shall survive any termination
of this Agreement pursuant to Section 8.1. If this Agreement is terminated as provided
herein, all filings, applications and other submissions made pursuant to this Agreement, to the
extent practicable, shall be withdrawn from the agency or other person to which they were made.
Section 8.3 Termination Fee.
(a) If, but only if, the Agreement is terminated:
(i) by either the Company or Parent pursuant to Section 8.1(b)(i) or
Section 8.1(b)(iii) or by Parent pursuant to Section 8.1(d)(i) and
(A) in the case of a termination pursuant to Section 8.1(b)(i), the Parent
Stockholder Approval shall have been obtained and the Company Stockholder Approval
shall not have been obtained prior to such termination, and (B) the Company (x)
receives or has received a Company Acquisition Proposal after the date of this
Agreement, which proposal has been publicly announced and (y) within twelve (12)
months of the termination of this Agreement, consummates a transaction regarding, or
executes a definitive agreement which is later consummated with respect to, a
Company Acquisition Proposal, then the Company shall pay, or cause to be paid, to
Parent a fee equal to $175,000,000 (the “Termination Fee”) plus, if not
previously paid pursuant to the proviso below, the Expense Amount, by wire transfer
of same day funds to an account designated by Parent, not later than the
consummation of such transaction arising from such Company Acquisition Proposal;
provided, however, that for purposes of this Section
8.3(a)(i), the references to “twenty percent (20%)” in the definition of Company
Acquisition Proposal shall be deemed to be references to “fifty percent (50%)”; and
provided, further, that in the event that the Agreement is
terminated by either the Company or Parent pursuant to Section 8.1(b)(iii),
the Company shall pay, or cause to be paid, to Parent the Expense Amount (by wire
transfer to an account designated by Parent) within two (2) Business Days of such
termination rather than when the Termination Fee becomes payable to Parent (if
ever); or
(ii) by either the Company or Parent pursuant to Section 8.1(b)(i) or
Section 8.1(b)(iv) or by the Company pursuant to Section 8.1(c) and
(A) in the case of a termination pursuant to Section 8.1(b)(i), the Company
Stockholder Approval shall have been obtained and the Parent Stockholder
Approval shall not have been obtained prior to such termination, and (B) Parent (x)
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receives or has received a bona fide Parent Acquisition Proposal, which proposal has
been publicly announced and (y) within twelve (12) months of the termination of this
Agreement, consummates a transaction regarding, or executes a definitive agreement
which is later consummated with respect to, a Parent Acquisition Proposal, then
Parent shall pay, or cause to be paid, to the Company the Termination Fee plus, if
not previously paid pursuant to the proviso below, the Expense Amount, by wire
transfer of same day funds to an account designated by the Company, not later than
the consummation of such transaction arising from such Parent Acquisition Proposal;
provided, however, that in the event that the Agreement is
terminated by either the Company or Parent pursuant to Section 8.1(b)(iv),
Parent shall pay, or cause to be paid, to the Company the Expense Amount (by wire
transfer to an account designated by the Company) within two (2) Business Days of
such termination rather than when the Termination Fee becomes payable to the Company
(if ever); or
(iii) by Parent pursuant to Section 8.1(d)(ii), then the Company shall
pay, or cause to be paid, to Parent the Termination Fee together with the Expense
Amount, by wire transfer of same day funds to an account designated by Parent,
within two (2) Business Days of such termination.
(b) Notwithstanding anything to the contrary set forth in this Agreement, the parties agree
that:
(i) under no circumstances shall the Company or Parent be required to pay the
Termination Fee earlier than one (1) full Business Day after receipt of appropriate
wire transfer instructions from the party entitled to payment; and
(ii) under no circumstances shall the Company or Parent be required to pay the
Termination Fee on more than one occasion.
(c) Each of the parties hereto acknowledges that (i) the agreements contained in this
Section 8.3 are an integral part of the transactions contemplated by this Agreement, (ii)
the Termination Fee is not a penalty, but is liquidated damages, in a reasonable amount that will
compensate the Company or Parent, as the case may be, in the circumstances in which such fee is
payable for the efforts and resources expended and opportunities foregone while negotiating this
Agreement and in reliance on this Agreement and on the expectation of the consummation of the
transactions contemplated hereby, which amount would otherwise be impossible to calculate with
precision, and (iii) without these agreements, the parties would not enter into this Agreement;
accordingly, if the Company or Parent, as the case may be, fails to timely pay any amount due
pursuant to this Section 8.3 and, in order to obtain such payment,
either the Company or Parent, as the case may be, commences a suit that results in a judgment
against the other party for the payment of any amount set forth in this Section 8.3, such
paying
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party shall pay the other party its costs and Expenses in connection with such suit,
together with interest on such amount at the annual rate of ten percent (10%) for the period from
the date such payment was required to be made through the date such payment was actually received,
or such lesser rate as is the maximum permitted by applicable Law.
(d) (i) If one party to this Agreement (the “Termination Fee Payor”) is required to
pay another party to this Agreement (the “Termination Fee Payee”) a Termination Payment,
such Termination Payment shall be paid into escrow on the date such payment is required to be paid
by the Termination Fee Payor pursuant to this Agreement by wire transfer of immediately available
funds to an escrow account designated in accordance with this Section 8.3(d). In the event
that the Termination Fee Payor is obligated to pay the Termination Fee Payee the Termination
Payment, the amount payable to the Termination Fee Payee in any tax year of the Termination Fee
Payee shall not exceed the lesser of (i) the Termination Payment of the Termination Fee Payee, and
(ii) the sum of (A) the maximum amount that can be paid to the Termination Fee Payee without
causing the Termination Fee Payee to fail to meet the requirements of Section 856(c)(2) and (3) of
the Code for the relevant tax year, determined as if the payment of such amount did not constitute
income described in Sections 856(c)(2) or 856(c)(3) of the Code (“Qualifying Income”), as
determined by the Termination Fee Payee’s independent accountants, plus (B) in the event the
Termination Fee Payee receives either (x) a letter from the Termination Fee Payee’s counsel
indicating that the Termination Fee Payee has received a ruling from the IRS as described below in
this Section 8.3(d) or (y) an opinion from the Termination Fee Payee’s outside counsel as
described below in this Section 8.3(d), an amount equal to the excess of the Termination
Payment less the amount payable under clause (A) above.
(ii) To secure the Termination Fee Payor’s obligation to pay these amounts, the
Termination Fee Payor shall deposit into escrow an amount in cash equal to the
Termination Payment with an escrow agent selected by the Termination Fee Payor on
such terms (subject to this Section 8.3(d)) as shall be mutually agreed upon
by the Termination Fee Payor, the Termination Fee Payee and the escrow agent. The
payment or deposit into escrow of the Termination Payment pursuant to this
Section 8.3(d) shall be made at the time the Termination Fee Payor is
obligated to pay the Termination Fee Payee such amount pursuant to Section
8.3 by wire transfer. The escrow agreement shall provide that the Termination
Payment in escrow or any portion thereof shall not be released to the Termination
Fee Payee unless the escrow agent receives any one or combination of the following:
(i) a letter from the Termination Fee Payee’s independent accountants indicating the
maximum amount that can be paid by the escrow agent to the Termination Fee Payee
without causing the Termination Fee Payee to fail to meet the requirements of
Sections 856(c)(2) and (3) of the Code determined as if the payment of such amount
did not constitute Qualifying Income, in which case the escrow agent shall release
such amount to the
Termination Fee Payee, or (ii) a letter from the Termination Fee Payee’s
counsel indicating that (A) the Termination Fee Payee received a ruling from the IRS
holding that the receipt by the Termination Fee Payee of the Termination Payment
97
would either constitute Qualifying Income or would be excluded from gross income
within the meaning of Sections 856(c)(2) and (3) of the Code or (B) the Termination
Fee Payee’s outside counsel has rendered a legal opinion to the effect that the
receipt by the Termination Fee Payee of the Termination Payment would either
constitute Qualifying Income or would be excluded from gross income within the
meaning of Sections 856(c)(2) and (3) of the Code, in which case the escrow agent
shall release the remainder of the Termination Payment to the Termination Fee Payee.
The Termination Fee Payor agrees to amend this Section 8.3(d) at the
reasonable request of the Termination Fee Payee in order to (i) maximize the portion
of the Termination Payment that may be distributed to the Termination Fee Payee
hereunder without causing the Termination Fee Payee to fail to meet the requirements
of Sections 856(c)(2) and (3) of the Code, (ii) improve the Termination Fee Payee’s
chances of securing a favorable ruling described in this Section 8.3(d) or
(iii) assist the Termination Fee Payee in obtaining a favorable legal opinion from
its outside counsel as described in this Section 8.3(d). Any amount of the
Termination Payment that remains unpaid as of the end of a taxable year shall be
paid as soon as possible during the following taxable year, subject to the foregoing
limitations of this Section 8.3(d), provided that the obligation of the
Termination Fee Payor to pay the unpaid portion of the Termination Payment shall
terminate on the December 31 following the date which is four years from the date of
this Agreement.
(e) For purposes of this Agreement: “Parent Acquisition Proposal” shall have the same
meaning as “Company Acquisition Proposal with the word “Parent” replacing the words “the Company
and/or any of the Company Subsidiaries” mutatis mutandis; provided, however, that
for purposes of the definition of Parent Acquisition Proposal, (i) the reference to “twenty percent
(20%)” in the definition of Company Acquisition Proposal shall be deemed to be reference to “fifty
percent (50%)” and (ii) transactions in which Parent is the acquiring party shall not be included.
Section 8.4 Amendment. Subject to compliance with applicable Law, this Agreement may be
amended by mutual agreement of the parties hereto by action taken or authorized by their respective
boards of directors (or similar governing body or entity) at any time before or after receipt of
the Company Stockholder Approval or the Parent Stockholder Approval and prior to the Effective
Time; provided, however, that after the Company Stockholder Approval or the Parent
Stockholder Approval has been obtained, there shall not be (a) any amendment of this Agreement that
changes the amount or the form of the consideration to be delivered under this Agreement to the
holders of Company Common Stock, or which by applicable Law or in accordance with the rules of any
stock exchange requires the further approval of the stockholders of the Company or Parent without
such further approval of such stockholders, or (b) any amendment or change not permitted under
applicable Law. This Agreement may not be amended except by an instrument in writing signed by
each of the parties hereto.
Section 8.5 Waiver. At any time prior to the Effective Time, subject to applicable Law,
any party hereto may (a) extend the time for the performance of any obligation
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or other act of any
other party hereto, (b) waive any inaccuracy in the representations and warranties of the other
party contained herein or in any document delivered pursuant hereto, and (c) subject to the proviso
of Section 8.4, waive compliance with any agreement or condition contained herein. Any
agreement on the part of a party hereto to any such extension or waiver shall be valid only if set
forth in an instrument in writing signed by the party or parties to be bound thereby.
Notwithstanding the foregoing, no failure or delay by the Company, Parent or Merger Sub in
exercising any right hereunder shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise of any other right hereunder.
Section 8.6 Fees and Expenses. Except as otherwise provided in this Agreement, all
Expenses incurred in connection with this Agreement and the transactions contemplated by this
Agreement shall be paid by the party incurring such expenses, whether or not the transactions
contemplated by this Agreement are consummated; provided, however, that the Company
and Parent shall share equally all Expenses related to the printing and filing of the Form S-4 and
the printing, filing and distribution of the Joint Proxy Statement, other than attorneys’ and
accountants’ fees.
ARTICLE IX
GENERAL PROVISIONS
Section 9.1 Non-Survival of Representations and Warranties. None of the representations or
warranties in this Agreement or any certificate or other writing delivered pursuant to this
Agreement, including any rights arising out of any breach of such representations or warranties,
shall survive the Effective Time.
Section 9.2 Notices. Any notice, request, claim, demand and other communications hereunder
shall be sufficient if in writing and sent (i) by facsimile transmission (providing confirmation of
transmission) or e-mail of a pdf attachment (provided that any notice received by facsimile or
e-mail transmission or otherwise at the addressee’s location on any Business Day after 5:00 p.m.
(Pacific time) shall be deemed to have been received at 9:00 a.m. (Pacific time) on the next
Business Day), or (ii) by reliable overnight delivery service (with proof of service), hand
delivery or certified or registered mail (return receipt requested and first-class postage
prepaid), addressed as follows (or at such other address for a party as shall be specified in a
notice given in accordance with this Section 9.2):
if to Parent or Merger Sub:
Ventas, Inc.
00000 Xxxxxx Xxxx Xxxxx,
Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attention: T. Xxxxxxx Xxxxx, Esq.
00000 Xxxxxx Xxxx Xxxxx,
Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attention: T. Xxxxxxx Xxxxx, Esq.
99
with a copy (which shall not constitute notice) to:
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxxx Xxxxxxx, Esq.
Xxxxxx X. Xxxxxxx, Esq.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxxx Xxxxxxx, Esq.
Xxxxxx X. Xxxxxxx, Esq.
if to the Company:
Nationwide Health Properties, Inc.
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxx
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxx
with a copy (which shall not constitute notice) to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxxx X. XxXxxxxx, Esq.
Xxxxxxxx X. Xxxxxxxx, Esq.
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxxx X. XxXxxxxx, Esq.
Xxxxxxxx X. Xxxxxxxx, Esq.
Section 9.3 Interpretation; Certain Definitions. The parties hereto have participated
jointly in the negotiation and drafting of this Agreement. Consequently, in the event an ambiguity
or question of intent or interpretation arises, this Agreement shall be construed as if drafted
jointly by the parties hereto, and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any provision of this Agreement. When a
reference is made in this Agreement to an Article, Section, Appendix or Exhibit, such reference
shall be to an Article or Section of, or an Appendix or Exhibit to, this Agreement, unless
otherwise indicated. The table of contents and headings for this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of this Agreement.
Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be
deemed to be followed by the words “without limitation.” The words “hereof,” “herein” and
“hereunder” and words of similar import when used in this Agreement shall refer to this Agreement
as a whole and not to any particular provision of this Agreement. All terms defined in this
Agreement shall have the defined meanings when used in any certificate or other instrument made or
delivered pursuant hereto unless otherwise defined therein. The definitions contained in this
Agreement are applicable to the singular as well as the plural forms of such terms and to the
masculine as well as to the feminine and neuter genders of such term. Any Law defined or referred
to herein or in any agreement or instrument that is referred to herein means
100
such Law as from time
to time amended, modified or supplemented, including (in the case of statutes) by succession of
comparable successor Laws. References to a person are also to its successors and permitted
assigns. All references to “dollars” or “$” refer to currency of the United States of America.
Section 9.4 Severability. If any term or other provision of this Agreement is invalid,
illegal or incapable of being enforced under any present or future Law, or public policy, (a) such
term or other provision shall be fully separable, (b) this Agreement shall be construed and
enforced as if such invalid, illegal or unenforceable provision had never comprised a part hereof,
and (c) all other conditions and provisions of this Agreement shall remain in full force and effect
and shall not be affected by the illegal, invalid or unenforceable term or other provision or by
its severance herefrom so long as the economic or legal substance of the transactions contemplated
by this Agreement is not affected in any manner materially adverse to any party. Upon such
determination that any term or other provision is invalid, illegal or incapable of being enforced,
the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in a mutually acceptable manner in order that
transactions contemplated by this Agreement be consummated as originally contemplated to the
fullest extent possible.
Section 9.5 Assignment; Delegation. Neither this Agreement nor any rights, interests or
obligations hereunder shall be assigned or delegated, in whole or in part, by any of the parties
hereto (whether by operation of Law or otherwise) without the prior written consent of the other
parties hereto (except to the Surviving Entity).
Section 9.6 Entire Agreement. This Agreement (including the exhibits, annexes and
appendices hereto) constitutes, together with the Confidentiality Agreement, the entire agreement
between the parties with respect to the subject matter hereof and thereof and supersedes all prior
agreements and understandings, both written and oral, among the parties, or any of them, with
respect to the subject matter hereof and thereof.
Section 9.7 No Third-Party Beneficiaries. This Agreement is not intended to and shall not
confer any rights or remedies upon any person other than the parties hereto and their respective
successors and permitted assigns, except for the provisions of Section 6.9. The
representations and warranties in this Agreement are the product of negotiations among the parties
hereto and are for the sole benefit of the parties hereto. Any inaccuracies in such
representations and warranties are subject to waiver by the parties hereto in accordance with
Section 8.5 without notice or liability to any other person. The representations and
warranties in
this Agreement may represent an allocation among the parties hereto of risks associated with
particular matters regardless of the knowledge of any of the parties hereto. Accordingly, persons
other than the parties hereto may not rely upon the representations and warranties in this
Agreement as characterizations of actual facts or circumstances as of the date of this Agreement or
as of any other date.
Section 9.8 Specific Performance. The parties hereto agree that irreparable damage, for
which monetary damages (even if available) would not be an adequate remedy, would occur in the
event that the parties hereto do not perform the provisions of this Agreement (including failing to
take such actions as are required of it hereunder to consummate the Merger
101
and the other
transactions contemplated by this Agreement) in accordance with its specified terms or otherwise
breach such provisions. Accordingly, the parties acknowledge and agree that the parties shall be
entitled to an injunction, specific performance and other equitable relief to prevent breaches of
this Agreement and to enforce specifically the terms and provisions hereof, in addition to any
other remedy to which they are entitled at Law or in equity. Each of the parties agrees that it
will not oppose the granting of an injunction, specific performance and other equitable relief on
the basis that any other party has an adequate remedy at Law or that any award of specific
performance is not an appropriate remedy for any reason at Law or in equity. Any party seeking an
injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the
terms and provisions of this Agreement shall not be required to provide any bond or other security
in connection with any such order or injunction.
Section 9.9 Counterparts. This Agreement may be executed in one or more counterparts, and
by the different parties hereto in separate counterparts, each of which when executed shall be
deemed to be an original but all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this Agreement by facsimile
transmission or by e-mail of a pdf attachment shall be effective as delivery of a manually executed
counterpart of this Agreement.
Section 9.10 Governing Law. This Agreement and all actions, proceedings or counterclaims
(whether based on contract, tort or otherwise) directly or indirectly arising out of or relating to
this Agreement or the actions of Parent, Merger Sub or the Company in the negotiation,
administration, performance and enforcement thereof, shall be governed by, and construed in
accordance with, the laws of the State of Maryland, without giving effect to any choice or conflict
of Laws provision or rule (whether of the State of Maryland or any other jurisdiction) that would
cause the application of the Laws of any jurisdiction other than the State of Maryland.
Section 9.11 Consent to Jurisdiction.
(a) Each of the parties hereto hereby irrevocably submits to the exclusive jurisdiction of the
courts of the State of Maryland and to the jurisdiction of the United States District Court for the
State of Maryland, for the purpose of any action, proceeding or counterclaim (whether based on
contract, tort or otherwise) directly or indirectly arising out of or relating to this Agreement or
the actions of the parties hereto in the negotiation, administration,
performance and enforcement thereof, and each of the parties hereto hereby irrevocably agrees
that all claims in respect to such action or proceeding may be heard and determined exclusively in
any Maryland state or federal court.
(b) Each of the parties hereto (i) irrevocably consents to the service of the summons and
complaint and any other process in any other action or proceeding relating to the transactions
contemplated by this Agreement, on behalf of itself or its property, by personal delivery of copies
of such process to such party and nothing in this Section 9.11 shall affect the right of
any party to serve legal process in any other manner permitted by Law, (ii) consents to submit
itself to the personal jurisdiction of any United States federal court located in the State of
102
Maryland or any Maryland state court in the event any dispute arises out of this Agreement or the
transactions contemplated by this Agreement, (iii) agrees that it will not attempt to deny or
defeat such personal jurisdiction by motion or other request for leave from any such court and
(iv) agrees that it will not bring any action relating to this Agreement or the transactions
contemplated by this Agreement in any court other than any United States federal court located in
the State of Maryland or any Maryland state court. Each of Parent, Merger Sub and the Company
agrees that a final judgment in any action or proceeding shall be conclusive and may be enforced in
other jurisdictions by suit on the judgment or in any other manner provided by Law.
Section 9.12 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO ACKNOWLEDGES AND AGREES THAT
ANY CONTROVERSY WHICH MAY ARISE OUT OF OR RELATING TO THIS AGREEMENT IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT SUCH PARTY MAY
HAVE TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT
OR OTHERWISE) DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY, OR THE ACTIONS OF THE PARTIES HERETO IN THE NEGOTIATION,
ADMINISTRATION, PERFORMANCE AND ENFORCEMENT THEREOF. EACH OF THE PARTIES HERETO CERTIFIES AND
ACKNOWLEDGES THAT (A) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO
ENFORCE THE FOREGOING WAIVER, (B) EACH SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS
OF THIS WAIVER, (C) EACH SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (D) EACH SUCH PARTY HAS BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS
IN THIS SECTION 9.12.
[Remainder of page intentionally left blank; signature page follows.]
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IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused this Agreement to be
executed as of the date first written above by their respective officers thereunto duly authorized.
VENTAS, INC. |
||||
By: | /s/ Xxxxx X. Xxxxxx | |||
Name: | Xxxxx X. Xxxxxx | |||
Title: | Chairman and Chief Executive Officer | |||
NEEDLES ACQUISITION LLC By: Ventas, Inc., its sole member |
||||
By: | /s/ Xxxxx X. Xxxxxx | |||
Name: | Xxxxx X. Xxxxxx | |||
Title: | Chairman and Chief Executive Officer | |||
NATIONWIDE HEALTH PROPERTIES, INC. |
||||
By: | /s/ Xxxxxxx X. Xxxxxxxx | |||
Name: | Xxxxxxx X. Xxxxxxxx | |||
Title: | Chairman of the Board of Directors and President and Chief Executive Officer | |||