Exhibit 1.2
EXECUTION COPY
INVESTMENT AGREEMENT
between
BROOKDALE SENIOR LIVING INC.
and
RIC COINVESTMENT FUND LP
Dated as of
May 12, 2006
TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS
ARTICLE II
PURCHASE AND SALE OF SHARES
Section 2.1 Notice of Commitment Amount.......................................6
Section 2.2 Issuance and Sale.................................................6
Section 2.3 The Purchase Price................................................6
Section 2.4 Repurchase Option.................................................6
Section 2.5 Commitment Fee....................................................6
ARTICLE III
THE CLOSING
Section 3.1 The Closing.......................................................7
Section 3.2 Deliveries........................................................7
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 4.1 Organization; Subsidiaries........................................8
Section 4.2 Due Authorization.................................................8
Section 4.3 Capitalization....................................................9
Section 4.4 SEC Reports......................................................10
Section 4.5 Financial Statements.............................................10
Section 4.6 Litigation.......................................................11
Section 4.7 Consents and Approvals...........................................11
Section 4.8 Compliance with Laws.............................................12
Section 4.9 Financial Advisory, Legal and Other Fees.........................12
Section 4.10 Board of Directors..............................................12
Section 4.11 Information Statement...........................................13
Section 4.12 Taxes ..........................................................13
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE INVESTOR
Section 5.1 Investment.......................................................13
Section 5.2 Rule 144.........................................................14
Section 5.3 Organization; Etc................................................14
Section 5.4 Authority........................................................14
Section 5.5 Non-Contravention................................................14
Section 5.6 Consents and Approvals...........................................15
Section 5.7 Brokers and Finders..............................................15
Section 5.8 Sufficient Funds.................................................15
Section 5.9 Information Supplied.............................................15
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE INVESTOR
Section 5.1 Investment.......................................................13
Section 5.2 Rule 144.........................................................14
Section 5.3 Organization; Etc................................................14
Section 5.4 Authority........................................................14
Section 5.5 Non-Contravention................................................14
Section 5.6 Consents and Approvals...........................................15
Section 5.7 Brokers and Finders..............................................15
Section 5.8 Sufficient Funds.................................................15
Section 5.9 Information Supplied.............................................15
ARTICLE VI
COVENANTS
Section 6.1 Conduct of the Business Pending the Closing......................16
Section 6.2 Information Statement............................................17
Section 6.3 Listing Obligation...............................................17
Section 6.4 Cooperation......................................................18
Section 6.5 Notification of Certain Matters..................................18
Section 6.6 Consent; Approvals...............................................18
Section 6.7 Further Assurances...............................................18
Section 6.8 Use of Proceeds..................................................18
Section 6.9 Waiver of Piggyback Registration Rights For Registration
on Form S-1................................................19
Section 6.10 Venture Capital Operating Company Rights........................19
ARTICLE VII
CONDITIONS PRECEDENT
Section 7.1 Conditions to Obligations of the Investor and the Company........19
Section 7.2 Conditions to Obligations of the Investor........................19
Section 7.3 Conditions to Obligations of the Company.........................20
ARTICLE VIII
TERMINATION
Section 8.1 Termination......................................................21
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ARTICLE IX
INDEMNIFICATION
Section 9.1 Survival of Representations and Warranties.......................22
Section 9.2 Indemnification..................................................22
Section 9.3 Procedure for Indemnification....................................24
Section 9.4 Sole Remedy......................................................25
ARTICLE X
MISCELLANEOUS
Section 10.1 Governing Law..................................................26
Section 10.2 Jurisdiction; Forum; Service of Process; Waiver of Jury
Trial....................................................26
Section 10.3 Successors and Assigns.........................................26
Section 10.4 Fees and Expenses..............................................26
Section 10.5 Entire Agreement; Amendment....................................27
Section 10.6 Notices........................................................27
Section 10.7 Delays or Omissions............................................28
Section 10.8 Counterparts...................................................28
Section 10.9 Severability...................................................29
Section 10.10 Titles and Subtitles...........................................29
Section 10.11 No Public Announcement.........................................29
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THIS INVESTMENT AGREEMENT is made and entered into as of May 12,
2006 (the "Agreement"), between Brookdale Senior Living Inc., a Delaware
corporation (the "Company") and RIC Coinvestment Fund LP, a Delaware limited
partnership (the "Investor"). Capitalized terms used in this Agreement but not
otherwise defined herein shall have the meanings ascribed to such terms in
Article I. References herein to sections shall be to sections of this Agreement,
and references herein to this Agreement shall include each of the Exhibits and
Schedules attached hereto.
WHEREAS, the Company has entered into an Agreement and Plan of
Merger, dated the date hereof, by and among the Company, Beta Merger Sub
Corporation, a Delaware corporation and a direct wholly owned subsidiary of the
Company ("Merger Sub"), and American Retirement Corporation, a Tennessee
corporation ("ARC") (the "Merger Agreement"), whereby Merger Sub shall be merged
with and into ARC (collectively, the "Transaction");
WHEREAS, in connection with the Transaction, the Investor desires to
subscribe for and purchase, and the Company desires to sell to the Investor,
upon the terms and subject to the conditions set forth herein, shares of the
Company's common stock, par value $0.01 per share (the "Common Stock");
WHEREAS, at the Closing, the Investor and the Company desire to
enter into an option agreement, the form of which is attached hereto as Exhibit
A (the "Option Agreement"), pursuant to which the Company shall have the right
and option (but not the obligation) to purchase a portion of the shares of the
Company's Common Stock issued to the Investor pursuant to this Agreement;
WHEREAS, the Company has obtained the Written Consent of
Stockholders In Lieu of a Special Meeting attached hereto as Exhibit B for the
issuance of the Shares (as defined below) (the "Stockholder Approval"); and
WHEREAS, at the Closing, the Investor and the Company desire to
enter into an agreement pursuant to which the Investor will be bound by the
provisions of the Stockholders Agreement dated as of November 28, 2005, by and
among the Company, FIT-ALT Investor LLC, Fortress Brookdale Acquisition LLC,
Fortress Investment Trust II and Health Partners (the "Stockholders Agreement"),
pursuant to which the Investor shall have certain rights regarding the
registration under the Securities Act of the Common Stock purchased by the
Investor pursuant to this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants,
agreements, representations and warranties contained herein, and for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto, intending to be legally bound, hereby agree as
follows:
ARTICLE I
DEFINITIONS
-----------
As used herein, the following terms shall have the meanings set
forth below:
Affiliate shall have the meaning ascribed to such term in Rule 12b-2
promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). Affiliates of the Investor shall be deemed to include limited partners,
general partners and members (including the managing member) in, and other
direct or indirect owners or managers of the Investor, together with entities
owned, controlled or managed by any or all of such Persons.
Claim has the meaning ascribed to it in Section 9.3(a).
Closing has the meaning ascribed to it in Section 3.1.
Closing Date means the date on which the Closing occurs.
Code means the Internal Revenue Code of 1986, as amended.
Commitment Amount means up to $1,300,000,000; provided, however,
that such amount may be reduced by the Company on or before the Closing Date
("Offering Reduction"), but in no event shall the Commitment Amount be less than
$650,000,000.
Commitment Amount Notice has the meaning ascribed to it in Section
2.1.
Consents has the meaning ascribed to it in Section 6.6.
Common Stock has the meaning ascribed to it in the second whereas
clause above.
Company Add-On Offering Reduction means an Offering Reduction
through the use by the Company of an amount equal to the net proceeds received
by the Company pursuant to any public or private offering of equity securities
of the Company that is consummated on or before the Closing Date.
Encumbrance means, with respect to any Person, any mortgage, pledge,
charge, claim, option, proxy, voting trust, security interest or other
encumbrance, or any interest or title of any vendor, lessor, lender or other
secured party to or of such Person under any conditional sale or other title
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retention agreement or capital lease, upon or with respect to any property or
asset of such Person (including in the case of stock, stockholder agreements,
voting trust agreements and all similar arrangements).
Exchange Act has the meaning ascribed to it in the definition of
Affiliate.
Facilities means the senior living facilities owned, leased or
managed by the Company.
GAAP has the meaning ascribed to it in Section 4.5.
Governmental Entity means any supernational, national, foreign,
federal, state or local judicial, legislative, executive, administrative or
regulatory body or authority.
HSR Act has the meaning ascribed to it in Section 4.7.
Indemnified Person has the meaning ascribed to it in Section 9.2(b).
Indemnifying Party has the meaning ascribed to it in Section 9.3(a).
Indemnitee has the meaning ascribed to it in Section 9.3(a).
Information Statement has the meaning ascribed to it in Section 6.2.
Investor Indemnified Person has the meaning ascribed to it in
Section 9.2(a).
Investor Representative means Xxxxxx X. Xxxxxxx.
Knowledge of a party hereto means the actual knowledge of any
executive officer after due inquiry.
Laws means all foreign, federal, state, and local laws, statutes,
ordinances, rules, regulations, orders, judgments, decrees and bodies of law.
Licenses has the meaning ascribed to it in Section 4.8.
Lien means with respect to any asset or right, any mortgage, deed
of trust, lien (statutory or other), pledge, hypothecation, assignment,
claim, charge, security interest, conditional sale agreement, title,
exception, or Encumbrance, option, right of first offer or refusal, easement,
servitude, voting or transfer
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restriction, or any other right of another to or adverse claim or any
kind in respect of such asset or right.
Litigation has the meaning ascribed to it in Section 4.5(a).
Losses means each and all of the following items: claims, losses,
liabilities, obligations, payments, damages (actual or punitive), charges,
judgments, fines, penalties, amounts paid in settlement, costs and expenses
(including, without limitation, interest which may be imposed in connection
therewith, costs and expenses of investigation, actions, suits, proceedings,
demands, assessments and fees, expenses and disbursements of counsel,
consultants and other experts).
Material Adverse Effect means any event which has had, has or would
reasonably be expected to have a material adverse effect on the financial
condition, results of operations or business of the Company and its
Subsidiaries, taken as a whole, other than (i) as a result of changes in general
economic or industry conditions or changes in applicable Laws, rules or
regulations or (ii) as a result of changes arising out of the announcement of
the transactions contemplated by this Agreement.
Merger Agreement has the meaning ascribed thereto in the second
whereas clause above.
NYSE has the meaning ascribed to it in Section 4.2.
Offering Reduction has the meaning ascribed thereto in the
definition of Commitment Amount.
Option Agreement has the meaning ascribed to thereto in the third
whereas clause above.
Option Per Share Price means $38.07.
Per Share Price means $36.93.
Person means any individual, firm, corporation, limited liability
company, partnership, company, trust or other entity, and shall include any
successor (by merger or otherwise) of such entity.
Preferred Stock has the meaning ascribed to it in Section 4.3(a).
Proceeding has the meaning ascribed to it in Section 10.2.
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Purchase Price means the Per Share Price multiplied by the aggregate
number of Shares purchased by the Investor pursuant to this Agreement.
Repurchase Amount means the difference between the Commitment Amount
set forth in the Commitment Amount Notice and $650,000,000.
Repurchase Option has the meaning ascribed to it in Section 2.4.
Repurchase Shares means that number of shares of Common Stock equal
to the quotient of the Repurchase Amount divided by the Option Per Share Price,
such number to be rounded upwards to the nearest whole number.
SEC means the United States Securities and Exchange Commission and
any successor Governmental Entity.
SEC Reports has the meaning ascribed to it in Section 4.4.
Securities Act means the Securities Act of 1933, as amended, or any
successor federal statute, and the rules and regulations of the SEC thereunder,
all as the same shall be in effect at the time. Reference to a particular
section of the Securities Act shall include reference to the comparable section,
if any, of such successor federal statute.
Selected Courts has the meaning ascribed to it in Section 10.2(a).
Shares means that number of shares of Common Stock equal to the
quotient of the Commitment Amount divided by the Per Share Price, such number to
be rounded upwards to the nearest whole number.
Stockholders Agreement has the meaning ascribed thereto in the fifth
whereas clause above.
Stockholder Approval has the meaning ascribed to it in the fourth
whereas clause above.
Subsidiary means as to any Person, each corporation, partnership or
other entity of which shares of capital stock or other equity interests having
ordinary voting power (other than capital stock or other equity interests having
such power only by reason of the happening of a contingency) to elect a majority
of the board of directors or other managers of such corporation, partnership or
other entity are at the time owned, directly or indirectly, or the management of
which is otherwise controlled, directly or indirectly, or both, by such Person.
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Transaction has the meaning ascribed to it in the second whereas
clause above.
Transaction Agreement means the Merger Agreement and any ancillary
documents.
ARTICLE II
PURCHASE AND SALE OF SHARES
---------------------------
Section 2.1 Notice of Commitment Amount. The Company shall
deliver to the Investor a notice setting forth the Commitment Amount at least 10
business days prior to the Closing (the "Commitment Amount Notice"); provided,
however, that, the Company shall be entitled until the Closing Date to amend the
Commitment Amount Notice to reduce the Commitment Amount.
Section 2.2 Issuance and Sale. Upon the terms and conditions set
forth herein, at the Closing, the Company shall issue and sell, free and clear
of any Liens, to the Investor and the Investor shall purchase from the Company
the Shares. Notwithstanding anything to the foregoing set forth herein, the
Investor shall have the right to assign its right to purchase Shares to one or
more of its Affiliates but any such assignment shall not relieve such Investor
of its obligations hereunder.
Section 2.3 The Purchase Price.The Investor shall pay to the
Company, by wire transfer of immediately available funds, the Purchase Price in
consideration for the Shares purchased by the Investor pursuant to this
Agreement.
Section 2.4 Repurchase Option. Upon the terms and conditions set
forth herein, at the Closing, the Investor and the Company shall enter into
the Option Agreement, pursuant to which the Investor shall issue to the
Company a one time right and option (but not the obligation) to purchase for
cash (the "Repurchase Option") from the Investor the Repurchase Shares, at a
price per share equal to the Option Per Share Price; provided, however, the
Company shall not be entitled to a Repurchase Option and no Option Agreement
shall be executed at the Closing, if a Company Add-On Offering Reduction
occurs prior to the Closing. Such Repurchase Option shall be available for a
period commencing on the Closing Date and concluding one day following the
six month anniversary of the Closing Date.
Section 2.5 Commitment Fee. In the event the Company receives a
Termination Fee (as such term is defined in the Merger Agreement) pursuant to
Section 8.02 of the Merger Agreement, the Company shall, as soon as
reasonably practicable, pay to the Investor or its assignees, by wire
transfer of immediately available funds, a commitment fee equal to 50% of the
Termination Fee received by
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the Company pursuant to the terms of the Merger Agreement. The Company in
good faith will pursue its rights to receive the Termination Fee under
the terms of the Merger Agreement.
ARTICLE III
THE CLOSING
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Section 3.1 The Closing. Subject to the satisfaction or waiver of
the conditions contained in Article VII, the closing (the "Closing") of the
purchase and sale of the Shares and the issuance of the Repurchase Option will
take place at the office of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, 4 Times
Square, New York, New York at the same time as the closing of the Transaction.
Section 3.2 Deliveries(a) . Subject to the satisfaction or waiver of
each of the conditions hereof, at the Closing, the Company shall deliver to the
Investor against payment of the Purchase Price: (i) one certificate representing
the Shares registered in the name of the Investor; (ii) each of the
certificates, instruments and agreements required to be delivered by the Company
pursuant to Article VII; (iii) the executed Option Agreement; (iv) the executed
agreement pursuant to which the Company shall be bound by the provisions of the
Stockholders Agreement; and (v) such other documents as the Investor may
reasonably request in connection with the Closing.
(b) Subject to the satisfaction or waiver of each of the conditions
hereof, at the Closing, the Investor shall deliver to the Company: (i) payment
of the Purchase Price, by wire transfer of immediately available funds to an
account or accounts designated by the Company prior to the Closing; (ii) the
certificates, instruments and agreements required to be delivered by the
Investor pursuant to Article VII; (iii) the executed Option Agreement; (iv) the
executed agreement pursuant to which the Investor shall be a Stockholder (as
defined in the Stockholders Agreement) and bound by the provisions of and
entitled to the registration rights of, the Stockholders Agreement; and (v) such
other documents as the Company may reasonably request in connection with the
Closing.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
---------------------------------------------
The Company hereby represents and warrants to the Investor that all
of the statements contained in this Article IV are true and correct as of the
date hereof and the Closing Date.
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Section 4.1 Organization; Subsidiaries.
(a) The Company is a corporation duly organized, validly existing
and in good standing under the Laws of the State of Delaware and has the
requisite corporate power and corporate authority to carry on its business as it
is now being conducted or presently proposed to be conducted. To the Company's
Knowledge, the Company is duly qualified and licensed as a foreign corporation
to do business and is in good standing (and has paid all relevant franchise or
analogous taxes) in each jurisdiction where the character of its assets owned or
held under lease or the nature of its business makes such qualification
necessary, except where the failure to be so qualified or licensed, individually
or in the aggregate, has not had and would not reasonably be expected to have a
Material Adverse Effect.
(b) The Company owns, either directly or indirectly through one or
more of its Subsidiaries, all of the capital stock or other equity interests of
its Subsidiaries free and clear of all Liens, except those Liens pursuant to the
credit and other loan agreements existing as of the date hereof. There are no
outstanding subscription rights, options, warrants, convertible or exchangeable
securities or other rights of any character whatsoever relating to issued or
unissued capital stock or other equity interests of any Subsidiary, or any
commitments of any character whatsoever relating to issued or unissued capital
stock or other equity interests of any Subsidiary or pursuant to which any
Subsidiary is or may become bound to issue or grant additional shares of its
capital stock or other equity interests or related subscription rights, options,
warrants, convertible or exchangeable securities or other rights, or to grant
preemptive rights.
(c) Each Subsidiary is a corporation, limited liability company,
partnership, business association or other Person duly organized, validly
existing and in good standing (in jurisdictions where such concept is
recognized) under the Laws of the jurisdiction of its organization and has the
requisite corporate power and authority to carry on its business as it is now
being conducted. To the Company's Knowledge, each Subsidiary of the Company is
duly qualified and licensed as a foreign corporation or other business entity to
do business and is in good standing (and has paid all relevant franchise or
analogous taxes) in each jurisdiction where the character of its assets owned or
held under lease or the nature of its business makes such qualification
necessary, except where the failure of one or more Subsidiaries to be so
qualified or licensed, individually or in the aggregate, has not had and would
not be reasonably expected to have a Material Adverse Effect.
Section 4.2 Due Authorization.
(a) The Company has all corporate right, power and authority to
enter into this Agreement and the Merger Agreement and to consummate the
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transactions contemplated hereby and thereby. The (a) execution and delivery by
the Company of this Agreement, (b) issuance, sale and delivery of the Shares by
the Company and (c) compliance by the Company with each of the provisions of
this Agreement (i) are within the corporate power and authority of the Company
and (ii) have been duly authorized by all requisite corporate action of the
Company. This Agreement has been duly and validly executed and delivered by the
Company, and (assuming this Agreement constitutes a valid and binding obligation
of the Investor) this Agreement constitutes a legal, valid and binding agreement
of the Company, enforceable against the Company in accordance with its terms,
except as such enforcement is limited by bankruptcy, insolvency, reorganization,
moratorium and other similar Laws affecting the enforcement of creditors' rights
generally and limitations imposed by general principles of equity.
(b) The Shares have been duly authorized by the Company and, when
issued, sold and delivered in accordance with this Agreement, the Shares will be
validly issued, fully paid and nonassessable, free and clear of all Liens, and
the issuance thereof will not be subject to any preemptive rights, right of
first refusal or similar right. At the Closing, no further approval or authority
of the stockholders or the Board of Directors under the Delaware General
Corporation Law (the "DGCL"), the rules of the New York Stock Exchange (the
"NYSE") or the consent of any other party will be required for the issuance of
the Shares, other than the approval of the NYSE of the listing of such shares of
Common Stock on the NYSE. No preemptive rights or other rights to subscribe for
or purchase securities exist with respect to the issuance and sale of the
Shares.
Section 4.3 Capitalization.
(a) The authorized capital stock of the Company consists of (i)
200,000,000 shares of Common Stock and (ii) 50,000,000 shares of preferred
stock, par value $.01 per share ("Preferred Stock"). As of the date hereof,
there are 65,006,833 shares of Common Stock and no shares of Preferred Stock
issued and outstanding. All of the issued and outstanding shares of Common
Stock have been duly authorized and are validly issued, fully paid and
nonassessable and not subject to preemptive or other similar rights of the
stockholders of the Company.
(b) Except as set forth in this Agreement or as described in the
SEC Reports filed prior to the date hereof, there are no outstanding
subscription rights, options, warrants, convertible or exchangeable
securities or other rights of any character whatsoever to which the Company
is a party relating to issued or unissued capital stock of the Company, or
any commitments of any character whatsoever relating to issued or unissued
capital stock of the Company or pursuant to which the Company or any of the
Subsidiaries are or may become bound to issue or grant additional shares of
their capital stock or related subscription rights, options,
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warrants, convertible or exchangeable securities or other rights,
or to grant preemptive rights. Except as set forth in the SEC Reports filed
prior to the date hereof and except as contemplated by this Agreement,
including Section 6.1, (a) the Company has not agreed to register any
securities under the Securities Act or under any state securities law or
granted registration rights to any Person and (b) there are no voting trusts,
stockholders agreements, proxies or other commitments or understandings in
effect to which the Company is a party with respect to the voting or transfer
of any of the outstanding shares of Common Stock.
Section 4.4 SEC Reports. The Company has filed all annual
reports, quarterly reports, proxy statements and other reports required to be
filed by it with the SEC under the Exchange Act since November 21, 2005
(together with the Company's final prospectus filed with the SEC pursuant to
Rule 424 of the Securities Act on November 23, 2005, the "SEC Reports"). Each
SEC Report was, on the date of its filing or as subsequently amended prior to
the date hereof, in compliance in all material respects with the requirements
of its respective report form and applicable Laws and did not, on the date of
filing or as subsequently amended, contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
Section 4.5 Financial Statements. The consolidated financial
statements of the Company (including any related schedules and/or notes)
included in the SEC Reports, as subsequently amended prior to the date hereof,
comply in all material respects with applicable accounting requirements and
with the published rules and regulations of the SEC with respect thereto, and
have been prepared in accordance with United States generally accepted
accounting principles ("GAAP") consistently followed throughout the periods
involved (except as may be indicated in the notes thereto) and fairly present
in accordance with GAAP the consolidated financial condition, results of
operations, cash flows and changes in stockholders' equity of the Company and
the Subsidiaries as of the respective dates thereof and for the respective
periods then ended (in each case subject, as to interim statements, to the
absence of footnotes and as permitted by Form 10-Q and subject to changes
resulting from year-end adjustments). Except as disclosed in the SEC Reports
filed prior to the date hereof, neither the Company nor any Subsidiary has any
liability or obligation (whether accrued, absolute, contingent, unliquidated
or otherwise, whether known or unknown, whether due or to become due and
regardless of when asserted), except for (i) liabilities and obligations
reflected or disclosed in the audited consolidated balance sheet of the
Company and its Subsidiaries as of December 31, 2005, or the unaudited
consolidated balance sheet of the Company and its Subsidiaries as of March 31,
2006, or the footnotes thereto, (ii) liabilities and obligations incurred in
the ordinary course of business since March 31, 2006, or (iii)
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liabilities and obligations which, individually or in the aggregate, have not
had and would not reasonably be expected to have or result in a Material
Adverse Effect.
Section 4.6 Litigation.
(a) Except as disclosed in the SEC Reports filed prior to the date
hereof, there is no claim, action, suit, investigation or proceeding of any kind
or nature whatsoever ("Litigation") pending or, to the Knowledge of the Company,
threatened against the Company or any of the Subsidiaries or involving any of
their respective properties or assets by or before any court, arbitrator or
other Governmental Entity that (x) in any manner challenges or seeks to prevent,
enjoin, alter or delay the transactions contemplated by this Agreement or (y) if
resolved adversely to the Company or a Subsidiary would have or would reasonably
be expected to have a Material Adverse Effect. Except as disclosed in such SEC
Reports, there is no judgment, decree, injunction, rule, or order of any court,
governmental department, commission, agency, instrumentality or arbitrator
outstanding against the Company or any of the Subsidiaries which has or would
reasonably be expected to have a Material Adverse Effect.
(b) To the Knowledge of the Company, neither the Company nor any of
the Subsidiaries is in default under or in breach of any order, judgment or
decree of any court, arbitrator or other Governmental Entity, and neither the
Company nor any of the Subsidiaries is a party or subject to any order, judgment
or decree of any court, arbitrator or other Governmental Entity, except where
such default, breach, order, judgment or decree has not had or would not
reasonably be expected to have a Material Adverse Effect.
Section 4.7 Consents and Approvals. The execution, delivery or
performance by the Company of this Agreement and the consummation of the
transactions contemplated hereby, do not and will not (i) conflict with, or
result in a breach or a violation of, any provision of the certificate of
incorporation or by-laws or other organizational documents of the Company or any
of its Subsidiaries, (ii) constitute, with or without notice or the passage of
time or both, a breach, violation or default, create an Encumbrance, or give
rise to any right of termination, modification, cancellation, prepayment,
suspension, limitation, revocation or acceleration, under (A) any applicable Law
or (B) any provision of any agreement or other instrument to which the Company
or any of the Subsidiaries is a party or pursuant to which any of them or any of
their assets or properties is subject, except where such breach, violation or
default, creation of an Encumbrance, or right of termination, modification,
cancellation, prepayment, suspension, limitation, revocation or acceleration,
individually or in the aggregate, has not had and would not reasonably be
expected to have a Material Adverse Effect or (iii) except for (A) the approval
of the NYSE of the listing of the Shares on the NYSE, (B) the filing
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with the SEC of the Information Statement relating thereto, (C) any required
filing under any foreign governmental and regulatory filings (including the
premerger notification and report form under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), notices and approvals
required to be made or obtained as contemplated by Section 6.6, and (D) any
filings, consents, approvals or authorizations of, notifications to, or
exemptions or waivers by any Governmental Entity or any other Person which are
not, individually or in the aggregate, material to the consummation of the
transactions contemplated hereby, require any consent, approval or
authorization of, notification to, filing with, or exemption or waiver by, any
Governmental Entity or any other Person on the part of the Company or any of
its Subsidiaries.
Section 4.8 Compliance with Laws. Except as disclosed in the SEC
Reports filed prior to the date hereof, the Company and the Subsidiaries are in
compliance with all Laws in all respects, and neither the Company nor any
Subsidiary has received any notice of any alleged violation of Law, except where
a failure to comply or alleged violation of Law has not had or would not
reasonably be expected to have a Material Adverse Effect. To the Knowledge of
the Company, the Company holds all material licenses, franchise permits,
consents, registrations, certificates, and other governmental or regulatory
permits, authorizations or approvals required for the operation of the business
as presently conducted and for the ownership, lease or operation of the
Company's and its Subsidiaries' Facilities (collectively, "Licenses"). To the
Knowledge of the Company, all of such Licenses are valid and in effect, the
Company and the Subsidiaries have duly performed and are in compliance with all
of their obligations under such Licenses and no investigation or review by any
governmental or regulatory body or authority is pending or threatened, except
where a failure with respect thereto has not had or would not reasonably be
expected to have a Material Adverse Effect.
Section 4.9 Financial Advisory, Legal and Other Fees.. No agent,
broker, accounting firm, investment bank, other financial advisor, commercial
bank, other financial institution, law firm, public relations firm or any other
Person other than Bear, Xxxxxxx & Co., Inc. and Xxxxxxx, Xxxxx & Co. is or will
be entitled to any fee, commission, expense or other amount from the Company or
any of the Subsidiaries in connection with any of the transactions contemplated
by this Agreement.
Section 4.10 Board of Directors. The Board of Directors of the
Company, after accepting the recommendation of a Special Committee of the Board
of Directors, has determined that the issuance of the Shares, this Agreement and
the transactions contemplated hereby, are advisable and in the best interests of
the Company and its stockholders.
12
Section 4.11 Information Statement. The Information Statement will
not, at the date it is first mailed to the Company's stockholders, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading. The
Information Statement will comply as to form in all material respects with the
requirements of the Securities Act and the Exchange Act and the rules and
regulations thereunder, except that no representation or warranty is made by the
Company with respect to information or statements specifically supplied by or on
behalf of any of the Investor for inclusion or incorporation by reference in the
Information Statement.
Section 4.12 Taxes. The Company and its subsidiaries have filed all
necessary federal, state and foreign income and franchise tax returns and have
paid all taxes required to be paid by any of them and, if due and payable, any
related or similar assessment, fine or penalty levied against any of them,
except, in all cases, for any such amounts that the Company is contesting in
good faith and except in any case in which the failure to so file or pay would
not in the aggregate cause a Material Adverse Effect. The Company has made, to
the extent required by GAAP, adequate charges, accruals and reserves in the
applicable financial statements referred to in Section 4.5 in respect of all
federal, state and foreign income and franchise taxes for all periods as to
which the tax liability of the Company or any of its subsidiaries has not been
finally determined.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE INVESTOR
----------------------------------------------
The Investor hereby represents and warrants to the Company that all
of the statements contained in this Article V are true and correct as of the
date hereof and the Closing Date.
Section 5.1 Investment.
(a) The Investor is acquiring the Shares for investment for its
own account, and not with a view to any resale or distribution thereof in
violation of the Securities Act.
(b) The Investor's financial condition and investments are such
that it is in a position to hold the Shares for an indefinite period, bear the
economic risks of the investment and withstand the complete loss of the
investment. The Investor has extensive knowledge and experience in financial
and business matters and has the capability to evaluate the merits and risks
of such Shares. The Investor qualifies as (i) an "accredited investor" as such
term is defined in Section 2(a)(15) of the
13
Securities Act and Regulation D promulgated thereunder or (ii) a "qualified
institutional buyer" as defined in Rule 144A under the Securities Act.
Section 5.2 Rule 144. The Investor acknowledges that the Shares
must be held indefinitely unless subsequently registered under the Securities
Act and any applicable state securities laws or unless exemptions from such
registrations are available. The Investor is aware of and familiar with the
provisions of Rule 144 promulgated under the Securities Act that permit
limited resale of securities purchased in a private placement subject to the
satisfaction of certain conditions.
Section 5.3 Organization; Etc. The Investor is duly organized and
validly existing and in good standing under the Laws of the jurisdiction of
its organization.
Section 5.4 Authority.
(a) The Investor has all right, power and authority to execute and
deliver this Agreement, to consummate the transactions contemplated hereby and
thereby and to comply with the terms, conditions and provisions hereof and
thereof.
(b) The (i) execution, delivery and performance by the Investor of
this Agreement, (ii) compliance by the Investor with each of the provisions of
this Agreement and (iii) consummation of the transactions contemplated hereby
and thereby (A) are within the power and authority of the Investor, (B) have
been duly authorized and approved by the requisite actions of the Investor and
(C) do not require any further authorization or consent of the Investor or, if
applicable, its beneficial owners. This Agreement has been duly and validly
executed and delivered by the Investor, and (assuming this Agreement constitutes
a valid and binding obligation of the Company) this Agreement constitutes a
legal, valid and binding agreement of the Investor, enforceable against the
Investor in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar Laws from time to time affecting the enforcement of creditors'
rights generally and limitations imposed by general principles of equity.
Section 5.5 Non-Contravention. The execution, delivery and
performance by the Investor of this Agreement and the consummation of the
transactions contemplated hereby, will not (a) conflict with or result in a
breach of any of the terms and provisions of, or constitute a default (or an
event which with notice or lapse of time, or both, would constitute a
default) under, or result in the creation or imposition of any Lien, charge
or Encumbrance upon any property or assets of the Investor pursuant to any
agreement, instrument, franchise, license or permit to which the Investor is
a party or by which any of its properties or assets may
14
be bound or (b) violate or conflict with any Law of any Governmental Entity
applicable to the Investor or any of its properties or assets, other than such
breaches, defaults or violations that are not reasonably expected to impair
the ability of the Investor to consummate the transactions contemplated by
this Agreement. The execution, delivery and performance by the Investor of
this Agreement and the consummation of the transactions contemplated hereby,
do not and will not violate or conflict with any provision of the
organizational documents of the Investor, as currently in effect.
Section 5.6 Consents and Approvals. No consent, approval,
authorization, order, registration, filing, qualification, license or permit of
or with any Governmental Entity applicable to the Investor or of or with any
third party is required for the execution, delivery and performance of this
Agreement and to consummate the transactions contemplated hereby.
Section 5.7 Brokers and Finders. No agent, broker, investment
banker, financial advisor or other firm or person engaged by or on behalf of the
Investor is or will be entitled to any broker's or finder's fee or any other
commission or similar fee in connection with any of the transactions
contemplated by this Agreement.
Section 5.8 Sufficient Funds. The Investor has available, or has
obtained commitments for, sufficient funds to acquire the Shares to be purchased
pursuant to this Agreement.
Section 5.9 Information Supplied. None of the information supplied
or to be supplied by or on behalf of the Investor in writing specifically for
inclusion or incorporation by reference in the Information Statement will, at
the date it is first mailed to the Company's stockholders, 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 under which they are made, not misleading.
15
ARTICLE VI
COVENANTS
---------
Section 6.1 Conduct of the Business Pending the Closing. The Company
covenants and agrees that, during the period from the date of this Agreement and
continuing until the earlier of the termination of this Agreement or the Closing
unless the Investor otherwise consents in writing (which consent shall not be
unreasonably withheld, conditioned or delayed) the Company shall, and shall
cause each of its Subsidiaries to, (i) conduct its business only in the ordinary
course and consistent with past practice; (ii) use commercially reasonable best
efforts to preserve and maintain its assets and properties and its relationships
with its customers, suppliers, advertisers, distributors, agents, officers and
employees and other persons with which it has significant business
relationships; (iii) use its commercially reasonable best efforts to maintain
all of the material assets it owns or uses in the ordinary course of business
consistent with past practice; (iv) use its commercially reasonable best efforts
to preserve the goodwill and ongoing operations of its business; (v) maintain
its books and records in the usual, regular and ordinary manner, on a basis
consistent with past practice; and (vi) comply in all material respects with
applicable Laws. Notwithstanding the forgoing and except as expressly
contemplated by this Agreement or the Transaction Agreements or as consented to
by the Investor in writing (which consent shall not be unreasonably withheld,
conditioned or delayed), during the period from the date of this Agreement
through and including the Closing Date, the Company shall not, and shall not
permit any of its Subsidiaries to:
(a) (i) split, combine or reclassify any of its capital stock or
issue or authorize the issuance of any other securities in respect of, in lieu
of or in substitution for shares of its capital stock, or (ii) purchase, redeem
or otherwise acquire any capital stock in the Company or any of the Subsidiaries
or any other securities thereof or any rights, warrants or options to acquire
any such shares or other securities, except in the ordinary course of business
pursuant to the Company's employee benefit plans;
(b) take any action that is reasonably likely to result in (i) any
of the representations and warranties set forth in Article IV becoming false or
inaccurate in any material respect as of, or at any time prior to, the Closing
Date or (ii) any of the conditions to the obligations of the Investor set forth
in Section 7.2 not being satisfied;
(c) amend the charter, bylaws or other comparable organizational
documents of the Company in a manner likely to adversely affect the Investor; or
16
(d) agree to take any of the foregoing actions.
Notwithstanding anything to the contrary contained in this
Agreement, the Company shall not be prevented from, or obligated to obtain the
consent of the Investor prior to, (i) issuing shares of its capital stock or
entering into agreements with respect thereto, including with respect to
registration rights, or (ii) engaging in any merger, acquisition or business
combination transaction.
Section 6.2 Information Statement. As promptly as practicable
following the date of this Agreement, the Company shall prepare a form of
information statement to be mailed to the stockholders of the Company relating
to the Stockholder Approval (the "Information Statement") (provided that the
Investor shall have the right to consent to any descriptions of or references to
the Investor or any of their Affiliates, which consent shall not be unreasonably
withheld, conditioned or delayed) and use its commercially reasonable best
efforts (x) (1) to respond as promptly as practicable to any comments made by
the SEC with respect to the Information Statement and (2) to promptly supply the
Investor with copies of all correspondence between the Company or any of its
representatives, on the one hand, and the SEC or its staff, on the other hand,
with respect to the Information Statement, and (y) to cause the Information
Statement to be mailed to its stockholders at the earliest practicable date
following the clearance of the Information Statement by the SEC.
Section 6.3 Listing Obligation. Prior to the Closing, the Company
will take all reasonable steps necessary, and pay all reasonable fees required,
to list the Shares on the NYSE, to the extent required by the NYSE. Following
the initial listing of the Shares, the Company will use its commercially
reasonable best efforts to maintain the listing of the Common Stock for so long
as the Investor owns any Shares.
17
Section 6.4 Cooperation. The Investor, on the one hand, and the
Company, on the other, agrees to use its commercially reasonable best efforts to
cause, or not to impede, to the extent that such party has control or influence
over such matters, satisfaction of the conditions, set forth in Sections 7.2 and
7.3, to the other party's obligation to consummate the transactions contemplated
by this Agreement.
Section 6.5 Notification of Certain Matters. From the date hereof
through the Closing, the Investor, on the one hand, and the Company, on the
other shall give prompt notice to such other party of the occurrence, or failure
to occur, of any event the occurrence or failure of which caused any of the
Company's or the Investor's representations or warranties contained in this
Agreement to be untrue or inaccurate in any material respect; provided, however,
that no such notification shall be deemed for any purpose under this Agreement
to permit the Company or the Investor to alter or amend the representations and
warranties contained herein.
Section 6.6 Consent; Approvals. The Company shall use its
commercially reasonable efforts to obtain, as promptly as practicable, all
consents, waivers, exemptions, approvals, authorizations or orders
(collectively, "Consents") (including, without limitation (i) all Consents
required to avoid any breach, violation, default, encumbrance or right of
termination, modification, cancellation, prepayment, suspension, limitation,
revocation or acceleration of any material agreement or instrument to which the
Company is a party or its properties or assets are bound, and (ii) all approvals
of Governmental Entities, required in connection with the consummation of the
transactions contemplated by this Agreement as promptly as practicable
(including the premerger notification and report form under the HSR Act), except
where the failure to obtain such Consents, individually or in the aggregate, has
not had and would not be reasonably expected to have a Material Adverse Effect.
Section 6.7 Further Assurances. From time to time after the date of
this Agreement, the parties hereto shall execute, acknowledge and deliver to the
other parties such other instruments, documents, and certificates and will take
such other actions as the other parties may reasonably request in order to
consummate the transactions contemplated by this Agreement.
Section 6.8 Use of Proceeds. The Company shall apply the proceeds
from the sale of the Shares to the payments required to be made by the Company
pursuant to the Transaction Agreements and associated costs and expenses.
18
Section 6.9 Waiver of Piggyback Registration Rights For Registration
on Form S-1. In the event the Company files a registration statement on Form S-1
prior to the six month anniversary of the execution of this Agreement, the
Investor hereby covenants and agrees to irrevocably and unconditionally waive
all piggyback registration rights and other rights provided pursuant to Section
5.2 of the Stockholders Agreement in connection with such registration statement
including, without limitation, the right to receive any notices from the Company
pursuant to Section 6.4 of the Stockholders Agreement. Nothing in this Section
6.9 shall be deemed to be a waiver of any of the Investor's other rights under
the Stockholders Agreement, including the right of the Investor to demand
registration pursuant to Section 5.1 or 5.3 of the Stockholders Agreement.
Section 6.10 Venture Capital Operating Company Rights. In the
event the Investor were to transfer some or all of its equity investment in the
Company to an entity that intends to qualify as a "venture capital operating
company," the Company hereby agrees to enter into a letter substantially in the
form attached hereto as Exhibit C prior to, or simultaneously with, such
transfer.
ARTICLE VII
CONDITIONS PRECEDENT
--------------------
Section 7.1 Conditions to Obligations of the Investor and the
Company. The respective obligations of the Investor and the Company to
consummate the transactions contemplated hereby shall be subject to the
satisfaction or waiver at or prior to the Closing of each of the following
conditions:
(a) Laws. No Laws shall be in effect which prohibit the consummation
of the transactions contemplated hereby.
(b) Consummation of Transaction. The Closing shall be consummated
simultaneously with the closing of the Transaction.
Section 7.2 Conditions to Obligations of the Investor. The
obligation of the Investor to consummate the transactions contemplated hereby
shall be subject to the satisfaction at or prior to the Closing of each of the
following conditions:
(a) Representations and Warranties. All of the representations and
warranties of the Company set forth in this Agreement shall be true and
correct in all material respects, in each case as of the date of this
Agreement and as of the Closing
19
Date, as if made at and as of such time, except to the extent
expressly made as of an earlier date, in which case as of such date.
(b) Performance of Obligations. The Company shall have performed,
satisfied and complied with, in all material respects, all covenants and
agreements set forth in this Agreement required to be performed by it under
this Agreement at or prior to the Closing.
(c) Officer's Certificate. The Company shall have delivered to the
Investor a certificate signed by its president, dated the Closing Date, in form
and substance reasonably satisfactory to the Investor, to the effect that the
conditions set forth in Sections 7.2(a) have been satisfied.
(d) Receipts of Consents. The Company shall have obtained the
Consents contemplated by Section 6.6, if any, and a copy of each such consent
or evidence thereof reasonably satisfactory to the Investor shall have been
provided to the Investor at or prior to the Closing, unless the failure to
obtain such Consents, when taken together with other events, developments or
circumstances, has had or would reasonably be expected to have a Material
Adverse Effect.
(e) Stockholders Agreement. On the Closing Date, the Investor
shall have received the agreement pursuant to which the Investor shall be
bound by the provisions of the Stockholders Agreement, executed by the
Company, and such agreement shall be in full force and effect.
Section 7.3 Conditions to Obligations of the Company. The
obligation of the Company to consummate the transactions with the Investor
contemplated hereby shall be subject to the satisfaction at or prior to the
Closing of each of the following conditions:
(a) Representations and Warranties. All of the representations and
warranties of the Investor set forth in this Agreement shall be true and correct
in all material respects, in each case as of the date of this Agreement and as
of the Closing Date, as if made at and as of such time, except to the extent
expressly made as of an earlier date, in which case as of such date.
(b) Performance of Obligations. The Investor shall have performed,
satisfied and complied with, in all material respects, all covenants and
agreements set forth in this Agreement required to be performed by it under
this Agreement at or prior to the Closing.
(c) Investor Certificate. The Investor shall have delivered to the
Company a certificate signed by an authorized signatory thereof, dated the
20
Closing Date, in form and substance reasonably satisfactory to the Company, to
the effect that the conditions set forth in Sections 7.3(a) and 7.3(b) have
been satisfied.
(d) Stockholders Agreement. On the Closing Date, the Company shall
have received the agreement pursuant to which the Investor shall be bound by
the provisions of the Stockholders Agreement, executed by the Investor, and
such agreement shall be in full force and effect.
ARTICLE VIII
TERMINATION
-----------
Section 8.1 Termination. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior to the
Closing Date notwithstanding the fact that any requisite authorization and
approval of the transactions contemplated hereby shall have been received and no
party hereto shall have any liability to any other party hereto (provided that
any such termination shall not (i) relieve any party from liability for a breach
of any provision hereof prior to such termination or (ii) terminate the parties'
respective obligations under Article IX or Section 10.04); provided, however,
that in the event this Agreement is terminated in accordance with this Section
8.1, no Investor Indemnified Person may seek indemnification from the Company
pursuant to Article IX hereof other than for the reasonable out-of-pocket fees,
costs or expenses incurred by the Investor Indemnified Person in connection with
the Transactions):
(a) by the Investor or the Company if the Merger Agreement is
terminated in accordance with its terms;
(b) by the Investor or the Company if there shall be any Law that
makes consummation of the purchase of the Shares hereunder illegal or otherwise
prohibited or if any court of competent jurisdiction or governmental authority
shall have issued an order, decree, ruling or taken any other action
restraining, enjoining or otherwise prohibiting the purchase of the Shares
hereunder and such order, decree, ruling or other action shall have become final
and non-appealable;
(c) by the Investor or the Company if the Closing shall not have
occurred on or before the nine month anniversary of the date of the Merger
Agreement.
(d) by the Company if the Investor shall have breached in any
respect any of its representations, warranties, covenants or other agreements
contained in this Agreement that would give rise to the failure of a condition
set forth in Article VII; or
21
(e) by the Investor if the Company shall have breached in any
respect any of its representations, warranties, covenants or other agreements
contained in this Agreement that would give rise to the failure of a condition
set forth in Article VII.
ARTICLE IX
INDEMNIFICATION
---------------
Section 9.1 Survival of Representations and Warranties. The
representations and warranties of the parties hereto contained in this Agreement
shall expire twelve months after the Closing Date, except that the
representations and warranties set forth in Sections 4.1(a), 4.2, 4.3, 5.1, 5.2,
5.3 and 5.4 shall survive until 6 months after the expiration of the applicable
statute of limitations (including any extensions thereof). After the expiration
of such periods, any claim by a party hereto based upon any such representation
or warranty shall be of no further force and effect, except to the extent a
party has asserted a claim in accordance with this Article IX for breach of any
such representation or warranty prior to the expiration of such period, in which
event any representation or warranty to which such claim relates shall survive
with respect to such claim until such claim is resolved as provided in this
Article IX. The covenants and agreements of the parties hereto contained in this
Agreement shall survive the Closing until performed in accordance with their
terms.
Section 9.2 Indemnification.
(a) The Company shall indemnify, defend and hold harmless the
Investor, its Affiliates, and their respective officers, directors, partners,
members, employees, agents, representatives, successors and assigns (each an
"Investor Indemnified Person") from and against all Losses incurred or suffered
by an Investor Indemnified Person arising from, relating to or as a result of
(i) the breach of any of the representations or warranties made by the Company
in this Agreement or in any certificate furnished by the Company to the Investor
pursuant to this Agreement (which breach shall be determined without regard to
any materiality or Material Adverse Effect qualifications contained in the
representation and warranty giving rise to such claim for indemnity), (ii) the
breach of any covenant, obligation or agreement made by the Company in this
Agreement or (iii) any actual or threatened Litigation against the Investor
Indemnified Person by any Person (other than an Investor Indemnified Person) in
connection with (A) the transactions contemplated hereby, (B) the negotiation,
execution, delivery and performance of this Agreement or (C) any actions taken
by any Investor Indemnified Person pursuant hereto or thereto or in connection
with the transactions contemplated hereby (whether or not the transactions
contemplated hereby are consummated); provided, however, that the
22
Company shall not have any obligation to indemnify a particular Investor
Indemnified Person pursuant to this Section 9.2(a)(iii) to the extent such
suit, action, claim or proceeding arises from a breach of this Agreement by
the Investor or Investor Indemnified Person or a failure of any representation
or warranty of the Investor set forth in Article V hereof to be true and
correct and such breach or failure of a representation or warranty to be true
and correct results in any condition contained in Sections 7.1 or 7.3 hereof
being incapable of being satisfied prior to the Closing.
(b) The Investor shall indemnify, defend and hold harmless the
Company, its Affiliates, and their respective officers, directors, partners,
members, employees, agents, representatives, successors and assigns (each an
"Indemnified Person") from and against all Losses incurred or suffered by an
Indemnified Person arising from, relating to, or as a result of (i) the breach
of any of the representations or warranties made by the Investor in this
Agreement or any certificate furnished by the Investor to the Company pursuant
to this Agreement or (ii) the breach of any covenant, obligation or agreement
made by the Investor in this Agreement.
(c) No claim may be made against the Company for indemnification
with respect to breaches of representations and warranties pursuant to Section
9.2(a)(i) above with respect to any Losses unless the aggregate amount of Losses
incurred by the Investor Indemnified Persons thereunder exceeds $10,000,000, and
the Company shall then only be liable for the amount of such Losses which exceed
$10,000,000. The maximum amount recoverable under Section 9.2(a)(i) by the
Investor and the Investor Indemnified Persons, in the aggregate, shall not
exceed the Purchase Price. No claim may be made against the Investor for
indemnification with respect to breaches of representations and warranties
pursuant to Section 9.2(b)(i) above with respect to any Losses unless the
aggregate amount of Losses incurred by the Indemnified Persons thereunder
exceeds $10,000,000, and the Investor shall then only be liable for the amount
of such Losses which exceed $10,000,000. With respect to the Investor, the
maximum amount recoverable under Section 9.2(b)(i) by all Indemnified Persons
from the Investor shall be equal to the Purchase Price.
(d) In no case shall any payment be made in the case of an
indemnification claim under Section 9.2(a)(i) or 9.2(a)(ii) until a Loss
occurs. No Person shall have any liability to any Investor Indemnified Person
under Section 9.2(a)(i) for any breach of a representation or warranty to the
extent that a claim for indemnification is based upon facts of which the
Investor Indemnified Person had knowledge on or prior to the Closing Date,
unless such claim also relies upon a materially adverse occurrence or
development that occurs after the Closing Date. For purposes of this Section
9.2(d), (i) the Investor shall be deemed to have knowledge of a fact only if
any of the Persons set forth in the definition of "Investor
23
Representative" has knowledge of the particular fact and (ii) such individual
shall be deemed to have knowledge only to the extent of his or her actual
knowledge of such fact and only to the extent of his or her awareness that
such fact constitutes a breach of such representation or warranty.
Section 9.3 Procedure for Indemnification.
(a) If an Investor Indemnified Person or an Indemnified Person (such
Person being referred to as the "Indemnitee") shall receive notice or otherwise
learn of the assertion by a Person who is not a party to this Agreement of any
claim or of the commencement by any such Person of any action (a "Claim") with
respect to which the other party (the "Indemnifying Party") may be obligated to
provide indemnification, such Indemnitee shall give such Indemnifying Party
written notice thereof promptly after becoming aware of such Claim; provided,
that the failure of any Indemnitee to give notice as provided in this Section
9.3 shall not relieve the applicable Indemnifying Party of its obligations under
this Article IX, except to the extent that such Indemnifying Party is materially
prejudiced by such failure to give notice; provided, further, that the
applicable Indemnifying Party shall have no obligations under Section 9.2(a)(i)
or Section 9.2(b)(i), as applicable, unless such written notice is received by
the Indemnifying Party within the survival periods set forth in Section 9.1.
Such notice shall describe the Claim in reasonable detail, and shall indicate
the amount (estimated if necessary) of the Loss that has been or may be
sustained by or is claimed against such Indemnitee.
(b) An Indemnifying Party may elect to compromise, settle or
defend, at such Indemnifying Party's own expense and by such Indemnifying
Party's own counsel, any Claim; provided, however, that the Indemnifying Party
shall not compromise, settle or defend a Claim without the consent of the
Indemnitee (which consent shall not be unreasonably withheld, conditioned or
delayed). If an Indemnifying Party elects to compromise, settle or defend a
Claim, it shall, within 30 days of the receipt of notice from an Indemnitee
pursuant to Section 9.3(a) (or sooner, if the nature of such Claim so
requires), notify the applicable Indemnitee of its intent to do so, and such
Indemnitee shall cooperate in a commercially reasonable manner in the
compromise or settlement of, or defense against, such Claim. After notice from
an Indemnifying Party to an Indemnitee of its election to assume the defense
of a Claim, the Indemnitee shall have the right to participate in the defense
thereof, at its own expense, and such Indemnifying Party shall not be liable
to such Indemnitee under this Article IX for any legal or other expenses
subsequently incurred by such Indemnitee in connection with the defense
thereof (except expenses approved in advance by the Indemnitee); provided,
that such Indemnitee shall have the right to employ one separate counsel
reasonably satisfactory to the Indemnifying Party to represent such Indemnitee
if (i) in the reasonable judgment of the Indemnitee, there are legal defenses
available to such Indemnitee that are different
24
from or additional to those available to the Indemnifying Party, (ii)
the Indemnifying Party shall authorize in writing the Indemnitee to retain a
single, separate counsel at the Indemnifying Party's expense or (iii) the
defendants in any such Claim include both the Indemnifying Party and the
Indemnitee and, in such Indemnitee's reasonable judgment, a conflict of interest
between such Indemnitee and such Indemnifying Party exists in respect of such
Claim, and only in the events listed in clauses (i) through (iii) of this
paragraph (b) shall the reasonable fees and expenses of such separate counsel be
paid by such Indemnifying Party. If an Indemnifying Party elects not to
compromise, settle or defend against a Claim, or fails to notify an Indemnitee
of its election as provided in this Section 9.3 within 30 days of notice from
the Indemnitee pursuant to Section 9.3(a), such Indemnitee may compromise,
settle or defend such Claim at the expense of such Indemnifying Party.
(c) If an Indemnifying Party chooses to defend any claim, the
applicable Indemnitee shall make available to such Indemnifying Party any
personnel or any books, records or other documents within its control that are
reasonably necessary or appropriate for such defense.
(d) If the aggregate amount of any Loss shall, at any time
subsequent to payment pursuant to this Agreement, be reduced by recovery,
settlement or otherwise, the amount of such reduction, net of any expenses
incurred in connection therewith or additional Losses incurred, shall promptly
be repaid by the applicable Indemnitee to the applicable Indemnifying Party.
(e) In the event of payment by an Indemnifying Party to any
Indemnitee in connection with any Claim, such Indemnifying Party shall be
subrogated to and shall stand in the place of such Indemnitee as to any events
or circumstances in respect of which such Indemnitee may have any right or claim
relating to such Claim. Such Indemnitee shall cooperate with such Indemnifying
Party in a reasonable manner, and, at the cost and expense of such Indemnifying
Party, in prosecuting any subrogated right or claim.
Section 9.4 Sole Remedy. Except in the case of fraud, the rights to
indemnification provided for in this Article IX for a breach of representations
or warranties by the Investor (in the case of indemnification pursuant to
Section 9.2(b)(i)) or the Company (in the case of indemnification pursuant to
Section 9.2(a)(i)) shall constitute the sole post-closing remedy of the Company
and the Investor respectively, for such breach, and the Company and the Investor
shall have no other liability or damages to the other party resulting from any
such breach.
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ARTICLE X
MISCELLANEOUS
-------------
Section 10.1 Governing Law. This Agreement shall be governed by,
and construed in accordance with, the internal and substantive Laws of the State
of New York without giving effect to conflicts of law principles thereof.
Section 10.2 Jurisdiction; Forum; Service of Process; Waiver of
Jury Trial. With respect to any suit, action or proceeding ("Proceeding")
arising out of or relating to this Agreement, the Company and the Investor
hereby irrevocably:
(a) submits to the exclusive jurisdiction of the courts of the
United States of America located in the State of New York and the courts of the
State of New York (the "Selected Courts"), for any Proceeding arising out of or
relating to this Agreement and the transactions contemplated hereby (and agrees
not to commence any Litigation relating hereto except in such Selected Courts)
and waives any objection to venue being laid in the Selected Courts whether
based on the grounds of forum non conveniens or otherwise;
(b) consents to service of process in any Proceeding by the mailing
of copies thereof by registered or certified mail, postage prepaid, or by
recognized international express carrier or delivery service, to the Company or
the Investor at its address referred to in Section 10.6; provided, however, that
nothing herein shall affect the right of any party hereto to serve process in
any other manner permitted by Law; and
(c) waives, to the fullest extent permitted by Law, any right it
may have to a trial by jury in any Proceeding directly or indirectly arising
out of, under or in connection with this Agreement.
Section 10.3 Successors and Assigns. Except as otherwise provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors by operation of Law and permitted assigns of the parties
hereto. Except as permitted under Section 2.2, no assignment of this Agreement
may be made by any party at any time, whether or not by operation of Law,
without the other parties' prior written consent. Only the parties to this
Agreement or their permitted assigns shall have rights under this Agreement.
Section 10.4 Fees and Expenses. Except as otherwise provided
herein, all fees, costs or expenses shall be paid by the party incurring such
fees, costs or expenses. All legal fees and expenses of Skadden, Arps, Slate,
Xxxxxxx & Xxxx LLP will be paid by the Company.
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Section 10.5 Entire Agreement; Amendment. This Agreement
constitutes the full and entire understanding and agreement between the parties
with regard to the subjects hereof and supercedes all prior agreements relating
to the subject matter hereof. Except as expressly provided herein, neither this
Agreement nor any term hereof may be amended, waived, discharged or terminated
other than by a written instrument signed by the Company and by the Investor. No
waiver of any of the provisions of this Agreement shall be deemed to or shall
constitute a waiver of any other provision hereof (whether or not similar). No
delay on the part of any party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof.
Section 10.6 Notices. All notices, requests, consents and other
communications hereunder to any party shall be deemed to be sufficient if
contained in a written instrument delivered in person or sent by facsimile,
nationally recognized overnight courier or first class registered or certified
mail, return receipt requested, postage prepaid, addressed to such party at the
address set forth below or such other address as may hereafter be designated in
writing by such party to the other parties:
if to the Company to:
Brookdale Senior Living Inc.
000 Xxxxx Xxxxxx Xxxxxx,
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Facsimile: 000-000-0000
Attention: General Counsel
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
0 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Coco
if to Investor to:
1345 Avenue of the Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx
27
with a copy to:
1345 Avenue of the Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxx Xxxxxxx
and a copy to:
0000 Xxxxxx xx xxx Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxx
All such notices, requests, consents and other communications shall be deemed to
have been given or made if and when delivered personally or by overnight courier
to the parties at the above addresses or sent by electronic transmission, with
confirmation received, to the facsimile numbers specified above (or at such
other address or facsimile number for a party as shall be specified by like
notice). Any notice delivered by any party hereto to any other party hereto
shall also be delivered to each other party hereto simultaneously with delivery
to the first party receiving such notice.
Section 10.7 Delays or Omissions. Except as expressly provided
herein, no delay or omission to exercise any right, power or remedy accruing to
the Company or the Investor upon any breach or default of any party under this
Agreement, shall impair any such right, power or remedy of the Company or the
Investor nor shall it be construed to be a waiver of any such breach or default,
or an acquiescence therein, or of or in any similar breach or default thereafter
occurring; nor shall any waiver of any single breach or default be deemed a
waiver of any other breach or default theretofore or thereafter occurring. Any
waiver, permit, consent or approval of any kind or character on the part of the
Company or the Investor of any breach or default under this Agreement, or any
waiver on the part of any such party of any provisions or conditions of this
Agreement, must be in writing and shall be effective only to the extent
specifically set forth in such writing. All remedies, either under this
Agreement or by Law or otherwise afforded to the Company or the Investor shall
be cumulative and not alternative, except as set forth in Section 9.4.
Section 10.8 Counterparts. This Agreement may be executed in any
number of counterparts, each of which may be executed by only one of the parties
28
hereto, each of which shall be enforceable against the party actually executing
such counterpart, and all of which together shall constitute one instrument.
Section 10.9 Severability. In the event that any provision of this
Agreement becomes or is declared by a court of competent jurisdiction to be
illegal, unenforceable or void, this Agreement shall continue in full force and
effect without said provisions; provided that, no such severability shall be
effective if it materially changes the economic benefit of this Agreement to any
party.
Section 10.10 Titles and Subtitles. The titles and subtitles used
in this Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
Section 10.11 No Public Announcement(a) . None of the Company or
its Subsidiaries or the Investor or its Affiliates shall make any press
release, public announcement or filing with any Governmental Entity concerning
the transactions contemplated by this Agreement, except as and to the extent
that any such party shall be obligated to make any such disclosure by this
Agreement, by Law or the rules of any national securities exchange.
Signature pages follow
29
IN WITNESS WHEREOF, each of the undersigned has caused this Agreement
to be executed as of the date first above written.
BROOKDALE SENIOR LIVING INC.
By: /s/ Xxxx X. Xxxxxxx
---------------------------------------
Name: Xxxx X. Xxxxxxx
Title: Chief Executive Officer
RIC COINVESTMENT FUND LP
By: RIC Coinvestment GP LLC, its general partner
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: COO and Secretary
Brookdale Senior Living Inc. Investment Agreement Signature Page
