EXHIBIT 10.1
STOCK PURCHASE AGREEMENT
among
SENIOR HOUSING PROPERTIES TRUST
SNH/CSL PROPERTIES TRUST
CRESTLINE CAPITAL CORPORATION
and
CSL GROUP, INC.
Dated as of August 9, 2001
TABLE OF CONTENTS
PAGE
SECTION 1. DEFINITIONS AND INTERPRETATIONS........................................................................1
1.1. Certain Definitions....................................................................1
1.2. Interpretation.........................................................................9
SECTION 2. SALE AND PURCHASE OF STOCK............................................................................10
2.1. Sale and Purchase of Stock, Etc.......................................................10
2.2. Deposit...............................................................................10
2.3. Purchase Price Adjustments and Payment................................................10
2.4. The Closing...........................................................................11
2.5. Post Closing Distributions............................................................11
2.6. Option to Purchase Lexington, Lafayette and Boynton Beach.............................12
SECTION 3. REPRESENTATIONS AND WARRANTIES OF CLJ AND CSL.........................................................12
3.1. Organization, Good Standing and Power of CLJ..........................................13
3.2. Organization; Qualification of CSL....................................................13
3.3. Subsidiaries and Affiliates...........................................................13
3.4. Capitalization of CSL.................................................................13
3.5. Authorization; Validity of Agreement; Corporate Action................................14
3.6. Consents and Approvals; No Violations.................................................14
3.7. Books and Records.....................................................................15
3.8. Financial Statements; No Undisclosed Liabilities......................................15
3.9. Absence of Certain Changes............................................................16
3.10. Litigation............................................................................16
3.11. Compliance with Laws and Permits......................................................16
3.12. Assets................................................................................17
3.13. Hazardous Materials...................................................................18
3.14. Contracts and Commitments.............................................................19
3.15. Employee Benefit Plans................................................................19
3.16. Employee Matters......................................................................19
3.17. Insurance.............................................................................19
3.18. Certain Payments......................................................................20
3.19. Taxes.................................................................................20
3.20. FF&E Reserves, Mortgage Reserves and Working Capital..................................23
3.21. Broker's or Finder's Fee..............................................................23
3.22. Supplements to Disclosure Schedule....................................................23
SECTION 4. REPRESENTATIONS AND WARRANTIES OF SNH AND ACQ. SUB....................................................24
4.1. Due Organization, Good Standing and Power.............................................24
4.2. Authorization and Validity of Agreement...............................................24
4.3. Consents and Approvals; No Violations.................................................24
4.4. Financial Statements..................................................................25
4.5. Bankruptcy............................................................................25
4.6. Litigation............................................................................25
4.7. Broker's or Finder's Fee..............................................................25
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TABLE OF CONTENTS
(continued)
PAGE
SECTION 5. ACCESS AND TRANSACTIONS PRIOR TO CLOSING DATE.........................................................25
5.1. Access to Information Concerning Properties and Records...............................25
5.2. Title Matters.........................................................................27
5.3. Survey Matters........................................................................27
5.4. Environmental and Engineering Reports.................................................28
5.5. Conduct of the Business of the Acquired Companies Pending the Closing Date............28
5.6. Conversion of Certain Acquired Companies..............................................30
5.7. Cooperation...........................................................................31
5.8. Dividends; Distributions..............................................................32
5.9. No Solicitation of Other Offers.......................................................32
5.10. Notification of Certain Matters.......................................................33
5.11. HSR Act Filing........................................................................33
5.12. Public Announcements..................................................................34
5.13. CLJ Stockholder Approval..............................................................34
SECTION 6. CONDITIONS............................................................................................34
6.1. Conditions to Each Party's Obligations................................................34
6.2. Conditions to Obligations of CLJ and CSL..............................................36
6.3. Conditions to Obligations of SNH and ACQ. SUB.........................................37
SECTION 7. NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATIONS; TAX MATTERS..................39
7.1. Survival of Representations, Warranties, etc..........................................39
7.2. CLJ's Agreement to Indemnify..........................................................39
7.3. SNH's Agreement to Indemnify..........................................................40
7.4. Third Party Claims....................................................................40
7.5. Purchase Price Adjustment.............................................................41
SECTION 8. TERMINATION...........................................................................................41
8.1. Termination...........................................................................41
8.2. Effect of Termination.................................................................43
SECTION 9. MISCELLANEOUS PROVISIONS..............................................................................44
9.1. Notices...............................................................................44
9.2. Schedules and Exhibits................................................................45
9.3. Computation of Time...................................................................45
9.4. Assignment: Successors in Interest....................................................45
9.5. No Third-Party Beneficiaries..........................................................45
9.6. Expenses..............................................................................46
9.7. Investigations........................................................................46
9.8. Number; Gender........................................................................46
9.9. Captions..............................................................................46
9.10. Amendments............................................................................47
9.11. Integration: Waiver...................................................................47
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TABLE OF CONTENTS
(continued)
PAGE
9.12. Governing Law.........................................................................47
9.13. Consent to Jurisdiction...............................................................47
9.14. Severability..........................................................................48
9.15. Counterparts..........................................................................48
9.16. SNH Limitation of Liability...........................................................48
9.17. ACQ. SUB Limitation of Liability......................................................48
9.18. CLJ Limitation of Liability...........................................................48
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT ("AGREEMENT") is made and entered into as
of August 9, 2001, among SENIOR HOUSING PROPERTIES TRUST ("SNH"), a Maryland
real estate investment trust, with its principal office located in Newton,
Massachusetts, SNH/CSL PROPERTIES TRUST ("ACQ. SUB"), a Maryland real estate
investment trust, with its principal office located in Newton, Massachusetts,
CRESTLINE CAPITAL CORPORATION ("CLJ"), a Maryland corporation, with its
principal office located in Bethesda, Maryland, and CSL GROUP, INC. ("CSL"), an
Indiana corporation, with its principal office located in Bethesda, Maryland.
RECITALS:
CLJ is the record and beneficial owner of all of the issued and
outstanding equity securities of CSL, CCC Boynton Beach, Inc., a Delaware
corporation ("CCC BOYNTON") and CCC Senior Living Corporation, a Delaware
corporation ("CCC SENIOR LIVING"). CLJ and certain of its subsidiaries are
engaged in the business of owning (or leasing) and operating the 32 senior
living communities listed in EXHIBIT A (collectively, the "COMMUNITIES"), which
Communities are managed by Marriott Senior Living Services, Inc. and its wholly
owned subsidiaries. SNH is the record and beneficial owner of all of the issued
and outstanding equity securities of ACQ. SUB.
On the terms and conditions set forth in this Agreement, CLJ desires to
sell and ACQ. SUB desires (i) to purchase and acquire the Communities by means
of acquiring all of the issued and outstanding equity securities of CSL, CCC
Boynton and CCC Senior Living, and (ii) to lease all of the Communities to an
entity to be designated by SNH ("TENANT").
In consideration of the foregoing, and the representations, warranties,
covenants and agreements set forth in this Agreement, the parties agree as
follows:
SECTION 1.
DEFINITIONS AND INTERPRETATIONS
1.1. CERTAIN DEFINITIONS.
For purposes of this Agreement, except as otherwise provided or unless
the context clearly requires otherwise, the terms set forth below shall have the
meanings set forth below:
(1) "Acquired Company": CSL, each CSL Subsidiary, CCC Boynton and CCC
Senior Living.
(2) "ACQ. SUB": SNH/CSL Properties Trust, a Maryland real estate
investment trust, which is 100% owned by SNH.
(3) "Affiliate": of any Person shall mean any Person directly or
indirectly controlling, controlled by, or under common control with, such
Person; provided that, for the
purposes of this definition, "control" (including with correlative meanings, the
terms "controlled by" and "under common control with"), as used with respect to
any Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities or partnership interests, by
contract or otherwise.
(4) "Agreement": this Stock Purchase Agreement as amended or otherwise
modified from time to time in accordance with its terms.
(5) "Alternative Proposal": as defined in SECTION 5.9(b).
(6) "Antitrust Division": as defined in SECTION 5.11.
(7) "Articles of Incorporation": the Articles of Incorporation of CSL,
as amended through the date hereof.
(8) "Asset": as defined in SECTION 3.12(a).
(9) "Bankers Trust Line": a general line of credit from Bankers Trust
to CLJ, which line of credit is secured by, INTER ALIA, the stock of CSL and
certain of its Subsidiaries and mortgages on certain of the Properties listed in
SECTION 1.1(65) of the Disclosure Schedule, and guaranteed by certain of the CSL
Subsidiaries.
(10) "Boynton Beach Mortgage Loan": the indebtedness secured by a Lien
on the property of Senior Living of Boynton Beach Limited Partnership, listed on
SECTION 1.1(10) to the Disclosure Schedule.
(11) "Business Day": a day, other than a Saturday or a Sunday, on which
banking institutions in the State of Maryland are required to be open.
(12) "By-laws": the By-laws of CSL, as amended through the date hereof.
(13) "Capital Leases": any capital lease of any of the Acquired
Companies listed on SECTION 1.1(13) to the Disclosure Schedule.
(14) "CCC Boynton": as defined in the Recitals.
(15) "CCC Boynton Stock": as defined in SECTION 2.1.
(16) "CCC Senior Living": as defined in the Recitals.
(17) "CCC Senior Living Stock": as defined in SECTION 2.1.
(18) "CLJ Woodlands Bonds": as defined in SECTION 3.12(a)(ix).
(19) "Closing": the closing which will take place as described in
SECTION 2.4.
(20) "Closing Date": the date on which the Closing occurs.
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(21) "Code": the Internal Revenue Code of 1986, as amended.
(22) "Communities": as defined in the Recitals.
(23) "Consent": any consent, registration, approval, authorization,
waiver or similar affirmation by or of, or filing with or notification to, a
Person pursuant to any Contract, Law, Order or Permit.
(24) "Consent Reduction Amount": in the case of (A) the failure to
obtain the Consent referred to in SECTION 6.1(c) with respect to CCC Boynton,
the sum of $150,000; (B) the failure to obtain the Consent referred to in
SECTION 6.1(c) relating to the Communities known as Lafayette at Country Place
and/or Lexington at Country Place, an amount equal to that determined by
multiplying the Purchase Price (less $150,000 but before any other adjustment),
by a fraction, the numerator of which is EBITDAR with respect to such Community
for the fiscal year ended December 28, 2001 less that portion of contributions
made to the FF&E Reserves attributable to that Community for the fiscal year
ended December 28, 2001 and the denominator of which is EBITDAR with respect to
all Communities for the fiscal year ended December 28, 2001 less the total
contributions made to the FF&E Reserves for all Communities for the fiscal year
ended December 28, 2001.
(25) "Contract": any written agreement, arrangement, commitment,
contract, indenture, instrument, lease, license or other obligation of any kind
or character, or other obligation that is binding on any Person or its capital
stock, properties or business.
(26) "CSL Stock": as defined in SECTION 2.1.
(27) "CSL Subsidiary": each Person which is a direct or indirect
Subsidiary of CSL and listed on SECTION 1.1(27) of the Disclosure Schedule.
(28) "Deposit": as defined in SECTION 2.2.
(29) "Disclosure Schedule": as defined in SECTION 3.
(30) "EBITDAR": earnings before interest, taxes, depreciation,
amortization and rent.
(31) "Environmental Claims": any and all administrative, regulatory or
judicial actions, suits, demands, demand letters, claims, liens, notices of
noncompliance or violation, investigations or proceedings under any
Environmental Law or any permit issued under any such Environmental Law
including without limitation (A) any and all claims by governmental or
regulatory authorities for enforcement, cleanup, removal, response, remedial or
other actions or damages pursuant to any applicable Environmental Law and (B)
any and all claims by any third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief resulting from
Hazardous Materials or arising from alleged injury or threat of injury to
health, safety or the environment.
(32) "Environmental Law": any federal, state, foreign or local statute,
law, rule, regulation, ordinance, guideline, policy, code or rule of common law
in effect and in each case as amended as of the date hereof and the Closing
Date, and any judicial or administrative
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interpretation thereof applicable to any Acquired Company or its operations or
property as of the date hereof and the Closing Date, including any judicial or
administrative order, consent decree or judgment, relating to the environment,
health, safety or Hazardous Materials, including the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C.ss. 9601
ET SEQ.; the Resource Conservation and Recovery Act, as amended, 42 U.S.C.ss.
6901 ET SEQ.; the Federal Water Pollution Control Act, as amended, 33 U.S.C.ss.
1251 ET SEQ.; the Toxic Substances Control Act, 15 U.S.C.ss. 2601 ET SEQ.; the
Clean Air Act, 42 U.S.C.ss. 7401 ET SEQ.; Occupational Safety and Health Act, 29
U.S.C. 651 ET SEQ.; Oil Pollution Act of 1990, 33 U.S.C.ss. 2701 ET SEQ.; the
Safe Drinking Water Act, 42 U.S.C.ss. 300f ET SEQ., and their state and local
counterparts and equivalents.
(33) "ERISA": as defined in SECTION 3.15.
(34) "ERISA Affiliate": as defined in SECTION 3.15.
(35) "Excess Life Care Amounts": any amounts paid after June 20, 1997
to any of the Acquired Companies for so-called "continuing care contracts"
(whether or not refundable).
(36) "FF&E Reserves": as defined in the Operating Agreements.
(37) "FTC": as defined in SECTION 5.11.
(38) "GAAP": generally accepted accounting principles as in effect from
time to time in the United States.
(39) "GMAC Fee": the fee due GMAC in an amount equal to 1% of the
outstanding principal balance, as of the Closing Date, of the GMAC Mortgage
Loans in connection with the assumption of the GMAC Mortgage Loans/change of
control.
(40) "GMAC Mortgage Loans": collectively, the Mortgage Loans listed as
items 1 through 5 on SECTION 1.1(62) of the Disclosure Schedule.
(41) "Governmental Entity": a court, arbitral tribunal, administrative
agency or commission or other governmental or other regulatory authority or
agency.
(42) "Ground Lease": the ground lease described in SECTION 1.1(42) of
the Disclosure Schedule.
(43) "Hazardous Materials": any (A) petroleum or petroleum products,
radioactive materials, asbestos in any form that is or could become friable,
urea formaldehyde foam insulation, transformers or other equipment that contain
dielectric fluid containing levels of polychlorinated biphenyls, and radon gas;
(B) chemicals, materials or substances defined as or included in the definition
of "hazardous substances," "hazardous wastes," "hazardous materials," "extremely
hazardous wastes," "extremely hazardous substances," "restricted hazardous
wastes," "toxic substances," "toxic pollutants," or words of similar import,
under any applicable Environmental Law; and (C) other chemical, material or
substance, exposure to which is prohibited, limited or regulated by any
Governmental Entity.
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(44) "HMC": Host Marriott Corporation, a Maryland corporation.
(45) "HPT": Hospitality Properties Trust, a Maryland real estate
investment trust.
(46) "HSR Act": as defined in SECTION 3.6.
(47) "Indemnified Party": as defined in SECTION 7.4(a).
(48) "Indemnifying Party": as defined in SECTION 7.4(a).
(49) "Interim Balance Sheet": defined in SECTION 3.8(a).
(50) "IRS": the United States Internal Revenue Service.
(51) "Knowledge": an individual will be deemed to have "Knowledge" of a
particular fact or other matter if without further inquiry such individual is
actually aware of such fact or other matter; and an entity (other than an
individual) will be deemed to have "Knowledge" of a particular fact or other
matter if any individual who is currently serving as a director, officer, a
manager whose title includes the term "director," partner, executor, or trustee
of such entity (or in any similar capacity) has Knowledge of such fact or other
matter. In no event will the Knowledge of MSLS or any "independent director" of
any CSL Subsidiary be imputed to CLJ, CSL or any of their respective officers,
other directors or agents.
(52) "Lakewood Loan Documents": as defined in SECTION 3.12(a)(xi).
(53) "Law": any federal, state, local or foreign law, statute,
ordinance, rule, regulation, order, judgment or decree, administrative or
judicial decision, and any other executive or legislative proclamation.
(54) "Lease": the master lease agreement (or collectively, the
individual leases) dated the Closing Date, to be entered into as of the Closing
Date by and between each Acquired Company which owns the Communities and Tenant,
such master lease agreement (or individual leases, as the case may be) to be in
form and substance satisfactory to SNH and ACQ. SUB on the one hand, and Tenant
on the other.
(55) "Lien": any interest in property, whether such interest is based
on common law, statute, court decision or contract and including, without
limitation, any mortgage, pledge, security interest, lease, encumbrance
(including any easement, exception, reservation or limitation, right of way or
the like), lien, purchase option, call or right, or charge of any kind
(including any agreement to give or permit any of the foregoing), any
conditional sale or other title retention agreement, any lease of property
(whether real, personal or mixed) which is required, in accordance with GAAP, to
be recorded by the lessee as the acquisition of an asset and the incurrence of a
liability, and the filing of any financing statement under the Uniform
Commercial Code or personal property security legislation of any jurisdiction.
(56) "Losses": as defined in SECTION 7.2(a).
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(57) "Marriott Agreements": collectively, the Operating Agreements, the
Noncompetition Agreement, the MI Indemnity Agreement, the Pooling Agreements and
the Transition Agreements.
(58) "Material Adverse Effect": any adverse change in the business,
assets, liabilities, financial condition or results of operations of the
Acquired Companies taken as a whole (provided, that a matter or matters taken
together shall be deemed to have a material adverse change in the business,
assets, liabilities, financial condition or results of operations only if such
matter or matters have resulted in or are reasonably likely to have or result in
an adverse impact of at least $10,000,000 of value or a $1,000,000 reduction in
net annual cash flow from the Properties, the termination of any Marriott
Agreement (other than the Noncompetition Agreement), or any material adverse
effect on the ability of CLJ or CSL to perform its respective obligations under
this Agreement or to consummate the transactions contemplated hereby). The term
"Material Adverse Effect" shall not include (i) any change, circumstance, event
or consummation of the transactions contemplated by the Agreement or (ii)
changes in general economic conditions or financial markets (including
fluctuations in the price of the shares of common stock of CLJ or conditions in
the business sectors in which the Acquired Companies operate not
disproportionally affecting the Acquired Companies).
(59) "MGCL": the Maryland General Corporation Law.
(60) "MI": Marriott International, Inc., a Delaware corporation.
(61) "MI Indemnity Agreement": the Indemnity Agreement among MSLS, MI,
HMC Senior Communities, Inc. (the predecessor in interest to CLJ) and HMC dated
as of June 21, 1997, as modified by a letter agreement dated June 21, 1997.
(62) "Mortgage Loans": any indebtedness for borrowed money or for the
deferred purchase price of property or services that is secured by a Lien on the
property or assets of any Acquired Company, listed on SECTION 1.1(62) to the
Disclosure Schedule, other than indebtedness secured by fixtures, furniture and
equipment and leases for the same that in either case are incurred or entered
into by MSLS in the ordinary course of business and in accordance with the terms
of the Operating Agreements. The term "Mortgage Loan" does not include
indebtedness under the Bankers Trust Line (provided that all indebtedness
thereunder is repaid at or prior to Closing) or the Boynton Beach Mortgage Loan.
(63) "Mortgage Reserves": any and all deposits, escrows and reserves
required by holders of Mortgage Loans or lessors under Capital Leases.
(64) "MSLS": Marriott Senior Living Services, Inc., a Delaware
corporation.
(65) "New Loan": means indebtedness in the principal amount of not less
than $150,000,000 nor more than $175,000,000 to be incurred after the date of
this Agreement, but prior to the Closing Date, by CSL and/or one or more of the
CSL Subsidiaries and secured by a mortgage(s) on one or more Properties listed
in SECTION 1.1(65) of the Disclosure Schedule, the proceeds of which shall be
paid as a dividend or otherwise distributed to CLJ in accordance with Section
5.8.
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(66) "Nomura Mortgage Loan": the Mortgage Loan listed as item 6 on
SECTION 1.1(62) of the Disclosure Schedule.
(67) "Noncompetition Agreement": the Amended and Restated
Noncompetition Agreement dated as of December 28, 1998 among HMC, CLJ, Forum
Group, Inc. (predecessor to CSL), MSLS and MI.
(68) "Operating Agreements": collectively, the Operating Agreements
between CSL, any CSL Subsidiary (and/or their respective Subsidiaries) or Senior
Living of Boynton Beach Limited Partnership, as owner and MSLS, as operator and
listed in SECTION 1.1(68) of the Disclosure Schedule.
(69) "Order": any administrative decision or award, decree, injunction,
judgment, order, quasi-judicial decision or award, ruling, or writ of any
federal, state, local or foreign or other Governmental Entity.
(70) "Organizational Documents": any of (a) the articles or certificate
of incorporation and the by-laws of a corporation or other equivalent
organizational documents; (b) the partnership agreement and any statement of
partnership of a general partnership; (c) the limited partnership agreement and
the certificate of limited partnership; (d) any charter, certificate or similar
document adopted or filed in connection with the creation, formation, or
organization of a Person; (e) the operating agreement of a limited liability
company; and (f) any amendment to any of the foregoing.
(71) "Party": SNH, ACQ. SUB, CSL or CLJ, and "Parties" shall mean each
of SNH, ACQ. SUB, CSL and CLJ.
(72) "Permit": any federal, state, local or foreign governmental
approval, authorization, certificate, license, permit or exemption to which any
Person is a party or that is or may be binding upon or inure to the benefit of
any Person or its securities, properties or business.
(73) "Permitted Liens": collectively (i) Liens securing the Mortgage
Loans, the New Loan and the Boynton Beach Mortgage Loan, (ii) Liens set forth in
SECTION 1.1(73) of the Disclosure Schedule, (iii) any Liens for Taxes not yet
due or delinquent; (iv) any statutory encumbrance arising in the ordinary course
of business by operation of law with respect to a liability that is not yet due
or delinquent; (v) any applicable zoning regulation or ordinance or other
governmental laws, ordinances and regulations, provided they do not prohibit or
impair in any material respect the use of a Property as a functioning senior
living community; (vi) any imperfection of title or similar non-monetary Lien
that, individually or in the aggregate with other such Liens, has not, and would
not be reasonably expected to, impair marketability and does not impair, in any
material respect, the use of a Property as a functioning senior living
community; (vii) any Lien created by MSLS which it is obliged to remove pursuant
to the terms of the Operating Agreements; and (viii) Liens on fixtures,
furniture and equipment securing indebtedness (including capitalized leases)
incurred or entered into by MSLS in the ordinary course of business and in
accordance with the terms of the Operating Agreements.
(74) "Person": any individual, corporation, limited liability company,
partnership, joint venture, trust, association, organization, Governmental
Entity or other entity.
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(75) "Pooling Agreements": collectively, the Pooling Agreements between
MSLS and HMC Senior Communities, Inc. (predecessor in interest to CLJ) listed in
SECTION 1.1(75) of the Disclosure Schedule.
(76) "Properties": all the real property and improvements owned or
leased, directly or indirectly, by any Acquired Company and described in
SECTION 3.12(A)(II) of the Disclosure Schedule and constituting one or more
of the Communities, each a "Property", together with related furnishings,
fixtures and equipment.
(77) "Prior Tax Matters Agreements": as defined in SECTION 3.19(a).
(78) "Purchase Price": $600,000,000, adjusted as provided in SECTION
2.3 and SECTION 6.1(C).
(79) "Subsidiary": with respect to any party, any corporation, limited
liability company, partnership, limited partnership, or other business
association or entity, at least a majority of the voting securities or economic
interests of which is directly or indirectly owned or controlled by such party
or by any one or more of its Subsidiaries.
(80) "Survey": as defined in SECTION 5.3.
(81) "Tax" or "Taxes": all taxes imposed by any federal, state, local
or foreign governmental authority, including, but not limited to, income, gross
receipts, excise, profits, AD VALOREM, net worth, value added, service, special
assessments, workers' compensation, utility, severance, production, excise,
stamp, occupation, premiums, windfall profits, real or personal property, sales,
gain, use, license, custom duty, unemployment, capital stock, transfer,
franchise, payroll, withholding, alternative minimum, social security, and
estimated taxes, and other taxes, fees or assessments of a similar nature, and
shall include interest, penalties or additions attributable thereto.
(82) "Tax Allocation Agreement": as defined in SECTION 6.1(f).
(83) "Tax Returns": all returns, reports, estimates, information
statements, declarations and other filings required or permitted to be filed
with any taxing authority related to Taxes.
(84) "Tenant": as defined in the Recitals.
(85) "Title Company": as defined in SECTION 5.2.
(86) "Title Commitments": as defined in SECTION 5.2.
(87) "Transfer Taxes": all Taxes imposed on or resulting from the sale
of the CSL Stock, the CCC Boynton Stock or the CCC Senior Living Stock or the
conversion of the Acquired Companies pursuant to SECTION 5.6 that are in the
nature of (i) real property transfer Taxes, including Taxes levied upon the
transfer of stock or other equity interests in an entity on account of such
entity's direct or indirect ownership of real estate, (ii) excise, sales, use,
valued added, registration stamp, recording, documentary, conveyancing, transfer
or (iii) similar Taxes,
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in each case including any deficiencies, interest, penalties, additions to Tax
or additional amounts, but in all cases excluding Taxes imposed on income.
(88) "Transition Agreements": the agreements listed in SECTION 1.1(88)
of the Disclosure Schedule.
(89) "Treasury Regulations": the Treasury Regulations promulgated under
the Code, including proposed and temporary regulations.
(90) "Unsecured Loans": any indebtedness for borrowed money or for the
deferred purchase price of property or services that is not secured by a Lien on
the property or assets of any Acquired Company, listed in SECTION 1.1(90) of the
Disclosure Schedule unless incurred or entered into on behalf of an Acquired
Company by MSLS in the ordinary course of business and in accordance with the
terms of the Operating Agreements. The term Unsecured Loans shall not include
intercompany loans between or among the Acquired Companies all of which shall be
discharged prior to Closing.
(91) "Working Capital": the working capital controlled by MSLS,
relating to operation of the Properties and required to be maintained pursuant
to the Operating Agreements.
1.2. INTERPRETATION.
(1) When a reference is made in this Agreement to a section or article,
such reference shall be to a section or article of this Agreement unless
otherwise clearly indicated to the contrary.
(2) Whenever the words "include", "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation."
(3) The words "hereof", "herein" and "herewith" and words of similar
import shall, unless otherwise stated, be construed to refer to this Agreement
as a whole and not to any particular provision of this Agreement, and article,
section, paragraph, exhibit and schedule references are to the articles,
sections, paragraphs, exhibits and schedules of this Agreement unless otherwise
specified.
(4) The plural of any defined term shall have a meaning correlative to
such defined term, and words denoting any gender shall include all genders.
Where a word or phrase is defined herein, each of its other grammatical forms
shall have a corresponding meaning.
(5) A reference to any party to this Agreement or any other agreement
or document shall include such party's successors and permitted assigns.
(6) A reference to any legislation or to any provision of any
legislation shall include any amendment, modification or re-enactment thereof,
any legislative provision substituted therefor and all regulations and statutory
instruments issued thereunder or pursuant thereto.
(7) The parties have participated jointly in the negotiation and
drafting of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this
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Agreement shall be construed as if drafted jointly by the parties, and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provision of this Agreement.
SECTION 2.
SALE AND PURCHASE OF STOCK
2.1. SALE AND PURCHASE OF STOCK, ETC.
At the Closing, in consideration of the Purchase Price to be paid by
SNH to CLJ, (i) CLJ shall sell to ACQ. SUB, and ACQ. SUB shall purchase from
CLJ, all of the issued and outstanding capital stock of CSL (the "CSL STOCK"),
CCC Boynton (the "CCC BOYNTON STOCK") and CCC Senior Living (the "CCC SENIOR
LIVING STOCK"), in each case free and clear of all Liens, and (ii) CLJ shall
assign to SNH or its designee the CLJ Woodland Bonds (unless terminated prior to
closing), the Lakewood Loan Documents, the Pooling Agreements, the MI Indemnity
Agreement, the Transition Agreements, all rights of CLJ under Section 7.16 of
the Stock Purchase Agreement dated as of June 17, 1997 between HMC and MSLS and
all rights of CLJ in respect of any expansion projects referenced in Section
7.14 of such Stock Purchase Agreement and (to the extent contemplated by the Tax
Allocation Agreement) the Prior Tax Matters Agreements, in each case free and
clear of all Liens. At Closing, CSL will own all the issued and outstanding
equity securities of each of the CSL Subsidiaries, free and clear of all Liens
other than those Liens listed on SECTION 2.1 of the Disclosure Schedule.
2.2. DEPOSIT.
On the date of this Agreement, SNH shall deposit $7,500,000 (the
"DEPOSIT") with American Title Company to be held pursuant to the terms of an
Escrow Agreement in the form of EXHIBIT B. Except as otherwise provided in
SECTION 8.2, on the Closing Date the Deposit will be paid to CLJ and applied to
and constitute a portion of the portion of the Purchase Price paid by wire
transfer.
2.3. PURCHASE PRICE ADJUSTMENTS AND PAYMENT.
(a) The Purchase Price shall be reduced by (a) the sum of
(A) the aggregate unpaid principal amount, together with accrued and
unpaid interest, of all Mortgage Loans, Capital Leases (unless the
Communities known as Lexington at Country Place and Lafayette at
Country Place are not acquired as a result of the failure to obtain
Consents), Unsecured Loans and the New Loan, in each case, as of the
Closing Date, (B) the amount by which the Acquired Companies (other
than CCC Boynton) have funded less than $4,707,092 of owner-funded
capital expenditures required under the Operating Agreements for fiscal
year 2001 (other than FF&E Reserves), as of the Closing Date, (C) any
deficiency in Mortgage Reserves or amounts due for real estate taxes,
insurance or other expenses separately accounted for by CLJ
attributable to such expenses (and not provided for under the Operating
Agreements) for any period(s) prior to the Closing Date, (D) an amount
equal to the Excess Life Care Amounts not recognized as income pursuant
to GAAP as of the Closing Date and (E) the remaining
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payments to which holders of the preferred depositary units
representing preferred limited partner interests in Forum Retirement
Partners, L.P., a Delaware limited partnership, are entitled but which
have not been paid to such holders as of the Closing Date, and shall be
increased by (b) the sum of (A) the amount of capital expenditures
required under the Operating Agreements for fiscal year 2002 (other
than FF&E Reserves) which the Acquired Companies (other than CCC
Boynton) have funded, provided SNH approved such additional capital
expenditures to the extent of any approval rights in the Operating
Agreements, in each case, as of the Closing Date, (B) all New Loan
costs, including the fees and expenses paid to the lenders by or for
the account of CLJ or the Acquired Companies prior to the Closing Date
in connection with the New Loan (with CLJ to notify SNH in writing,
upon receipt of invoices from the lenders or their counsel, of the
amount and the basis for such fees and expenses) but without
duplication for any amounts paid under SECTION 9.6, (C) without
duplication, all prepaid interest under the Mortgage Loans, the
Unsecured Loans and the Capital Leases, and all prepaid rent under the
Ground Leases, in each case to the extent attributable to the period
after the Closing Date, and that portion of the Mortgage Reserves
attributable to interest for the period after the Closing Date, and (D)
that portion of Mortgage Reserves and any other prepayments of or
deposits for real estate taxes, insurance or other expenses separately
accounted for by CLJ attributable to such expenses (and not provided
for under the Operating Agreements) for any period(s) after the Closing
Date. The Purchase Price will be subject to further adjustment as
provided in SECTION 6.1(c) and to the extent necessary to allocate
costs incurred by either Party in connection with the transaction to
comply with the provisions of SECTION 9.6.
(b) The Purchase Price (adjusted as provided in SECTION
2.3(a) and SECTION 6.1(c)) shall be paid as follows: $25,000,000 by
delivery on the Closing Date of SNH's promissory note in the form of
EXHIBIT C and the balance and all other amounts due at Closing shall be
paid by SNH on the Closing Date by wire transfer of immediately
available funds to CLJ to an account specified by CLJ to SNH at least
two (2) Business Days prior to the Closing Date.
2.4. THE CLOSING.
Subject to the terms and conditions of this Agreement, the Closing
shall take place at the offices of Sullivan & Worcester LLP, in Boston,
Massachusetts at 9:00 a.m. (local time), on January 31, 2002, or, if later, the
date on which all conditions set forth in SECTION 6 have been satisfied, but not
later than June 30, 2002, or at such other time, date or place as the Parties
may agree.
2.5. POST CLOSING DISTRIBUTIONS.
The owner's distribution under any Operating Agreement or Pooling
Agreement for the four week fiscal period in which the Closing Date occurs shall
be prorated between CLJ and SNH based on the number of days in such fiscal
period preceding the Closing Date (in the case of CLJ) or on or after the
Closing Date (in the case of SNH). If after the Closing Date, CSL or any CSL
Subsidiary shall receive any owner's distribution under any Operating Agreement
or Pooling Agreement for (i) the 2001 fiscal year, (ii) any four week fiscal
period in the 2002 fiscal
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year that precedes the Closing Date, or (iii) the four week fiscal period in
which the Closing Date occurs, SNH and ACQ. SUB shall cause such amount to be
remitted promptly to CLJ (or the applicable portion of such amount in the case
of clause (iii)). SNH and ACQ. SUB shall use commercially reasonable efforts to
enforce the provisions of the Operating Agreements and Pooling Agreements that
require the distributions described in this SECTION 2.5.
2.6. OPTION TO PURCHASE LEXINGTON, LAFAYETTE AND BOYNTON BEACH.
If, because of the failure to obtain the Consents referred to in
SECTION 6.1(c) with respect to the Communities known as Lafayette at Country
Place, Lexington at Country Place and/or Boynton Beach (the "APPLICABLE
CONSENTS"), such Community and the relevant CSL Subsidiary or CCC Boynton is
excluded from the transactions contemplated hereby, CLJ and CSL shall continue
to use commercially reasonable efforts to obtain the Applicable Consent, shall
cause the relevant CSL Subsidiary or CCC Boynton to comply with SECTION 5.5 and
hereby grant SNH an option to purchase all the issued and outstanding equity of
such CSL Subsidiary or CCC Boynton, or, at the election of SNH, all of the
assets of such CSL Subsidiary or CCC Boynton, for a price equal to the relevant
Consent Reduction Amount less the aggregate unpaid principal amount, together
with accrued and unpaid interest, of the related Capital Lease, and such
purchase shall be deemed to have been made with the benefit of the
representations, warranties and covenants contained in this Agreement; provided
that if SNH exercises such option before the Applicable Consents have been
obtained, SNH shall indemnify CLJ from any loss, cost or expense that CLJ incurs
to the extent attributable to the failure to obtain the Applicable Consents
before the exercise of such option, and SNH shall not be entitled to the benefit
of the representations and warranties to the extent pertaining to the Applicable
Consents. Such option shall expire on the eighteen month anniversary of the
Closing Date and may be exercised by written notice from SNH to CLJ given no
less than 60 days prior to the requested purchase date.
Subject to the prior receipt of the Applicable Consent for any excluded
Community and the relevant CSL Subsidiary or CCC Boynton Beach, CLJ may require
SNH or its designee to purchase all the issued and outstanding equity of such
CSL Subsidiary or CCC Boynton (or at the election of SNH, all of the assets of
such CSL Subsidiary or CCC Boynton), for a price equal to the relevant Consent
Reduction Amount less the aggregate unpaid principal amount, together with
accrued and unpaid interest, of the related Capital Lease, and such purchase
shall be deemed to have been made with the benefit of the representations,
warranties and covenants contained in this Agreement. CLJ's right to require
such purchase shall expire on the eighteen month anniversary of the Closing Date
and may be exercised by written notice from CLJ to SNH given no less than 60
days prior to the requested purchase date.
SECTION 3.
REPRESENTATIONS AND WARRANTIES OF CLJ AND CSL
Except as specifically set forth in the disclosure schedule prepared by
CLJ and CSL and delivered to SNH simultaneously with the execution hereof (the
"DISCLOSURE SCHEDULE"), CLJ and CSL jointly and severally represent and warrant
to SNH and ACQ. SUB that all of the statements contained in this SECTION 3 are
true as of the date of this Agreement (or, if made as of a specified date, as of
such date), and will be true as of the Closing Date as though made on the
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Closing Date. Each exception set forth in the Disclosure Schedule and each other
response to this Agreement set forth in the Disclosure Schedule is identified by
reference to, or has been grouped under a heading referring to, a specific
individual section of this Agreement and, except as otherwise specifically
stated with respect to such exception, relates only to such section.
3.1. ORGANIZATION, GOOD STANDING AND POWER OF CLJ.
CLJ is a corporation duly organized, validly existing and in good
standing under the laws of the State of Maryland and has all requisite corporate
power and authority to own, lease and operate its properties and to carry on its
business as now being conducted.
3.2. ORGANIZATION; QUALIFICATION OF CSL.
CSL (a) is a corporation duly organized, validly existing and in good
standing under the laws of its state of incorporation; (b) has full corporate
power and authority to carry on its business as it is now being conducted and to
own and lease the properties and assets it now owns and leases; and (c) is duly
qualified to do business as a foreign corporation and is in good standing in
every jurisdiction in which ownership of property or the conduct of its business
requires such qualification, except where the failure to do so would not,
individually or in the aggregate, have a Material Adverse Effect. CSL has
heretofore delivered to SNH complete and correct copies of the Articles of
Incorporation and By-laws of CSL as presently in effect.
3.3. SUBSIDIARIES AND AFFILIATES.
SECTION 3.3 of the Disclosure Schedule sets forth for each current CSL
Subsidiary, and for each of CCC Boynton and CCC Senior Living, its name, type of
entity, jurisdiction of incorporation or formation, capitalization, the names of
the record holders of its equity interests and the jurisdictions in which it is
qualified to do business. Except as set forth in SECTION 3.3 of the Disclosure
Schedule, CSL currently does not own, directly or indirectly, any capital stock
or other equity interests in any Person. Except as set forth in SECTION 3.3 of
the Disclosure Schedule, all the equity interests in each CSL Subsidiary are
owned directly or indirectly by CSL, free and clear of all Liens, and are
validly issued, fully paid and nonassessable, and there are no outstanding
options, rights or agreements of any kind relating to the issuance, sale or
transfer of any capital stock or other equity securities of any CSL Subsidiary.
All the capital stock of CCC Boynton and CCC Senior Living is owned directly by
CLJ, free and clear of all Liens, and is validly issued, fully paid and
nonassessable, and there are no outstanding options, rights or agreements of any
kind relating to the issuance, sale or transfer of any capital stock or other
equity securities of CCC Boynton or CCC Senior Living. Each of the CSL
Subsidiaries, CCC Boynton and CCC Senior Living is duly organized, validly
existing and in good standing under the laws of its state of organization, and
is duly qualified to do business and in good standing in every jurisdiction in
which ownership of property or the conduct of its business requires such
qualification, except where the failure to do so would not, individually or in
the aggregate, have a Material Adverse Effect.
3.4. CAPITALIZATION OF CSL.
The authorized capital stock of CSL consists of 100 shares of common
stock, no par value, of which 100 shares are issued and outstanding. All the
issued and outstanding capital
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stock of CSL has been duly authorized, validly issued, fully paid and
non-assessable, is owned beneficially and of record by CLJ, and, except for the
pledge of the CSL Stock securing obligations under the Bankers Trust Line, is
free and clear of any Liens. None of the outstanding capital stock of CSL has
been issued in violation of any federal or state securities Laws or any
preemptive right or rights to subscribe for or purchase its capital stock or
other securities. There is no indebtedness issued and outstanding having general
voting rights or debt convertible into capital stock or other securities of CSL
having such rights. Except as set forth above, (a) there is no capital stock or
other securities of CSL authorized, issued or outstanding; (b) there are no
securities outstanding which are convertible into or exercisable or exchangeable
for common stock or other securities of CSL; and (c) there are no outstanding
options, rights, Contracts, warrants, subscriptions, conversion rights or other
agreements or commitments of any character pursuant to which CSL may be required
to purchase, redeem, issue or sell any of its capital stock or other securities
of CSL or any CSL Subsidiary.
3.5. AUTHORIZATION; VALIDITY OF AGREEMENT; CORPORATE ACTION.
Subject to SECTION 3.6(B), each of CLJ and CSL has full power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. Subject to SECTION 3.6(B), the execution,
delivery and performance by each of CLJ and CSL of this Agreement and the
consummation by it of the transactions contemplated hereby have been duly
authorized by their respective Boards of Directors and no other action on the
part of CLJ or CSL is necessary to authorize the execution and delivery by CLJ
or CSL of this Agreement or the consummation by it of the transactions
contemplated hereby. Except as described in SECTION 3.6(b), no vote of, or
consent by, the holders of any capital stock issued by CLJ or CSL is necessary
to authorize the execution and delivery by CLJ or CSL of this Agreement or the
consummation by it of the transactions contemplated hereby. This Agreement has
been duly executed and delivered by each of CLJ and CSL and, assuming due and
valid authorization, execution and delivery hereof by SNH and ACQ. SUB, this
Agreement is a valid and binding obligation of each of CLJ and CSL enforceable
against each of CLJ and CSL in accordance with its terms, except (a) as limited
by applicable bankruptcy, insolvency, reorganization, moratorium, and other
similar laws of general application affecting enforcement of creditors' rights
generally and (b) the availability of the remedy of specific performance or
injunctive or other forms of equitable relief may be subject to equitable
defenses and would be subject to the discretion of the court before which any
proceeding therefor may be brought.
3.6. CONSENTS AND APPROVALS; NO VIOLATIONS.
Except for (a) the Consents as may be required under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
ACT"); (b) the approval of the sale of the CSL Stock by the holders of the
common stock of CLJ; (c) compliance with the requirements of each of the
Marriott Agreements (including, without limitation, Section 18 of the several
Operating Agreements and of Section 2 of the Noncompetition Agreement); (d) the
Consents listed in SECTION 6.1(c) of the Disclosure Schedule; and (e) Consents
required for healthcare Permits (including Medicare and Medicaid provider
agreements), none of the execution, delivery or performance of this Agreement by
CLJ or CSL, or the consummation by CLJ or CSL of any of the transactions
contemplated hereby, will (i) conflict with or result in any breach of any
provision of the Organizational Documents of CLJ or any Acquired Company, (ii)
require any
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Consent of any Governmental Entity, or (iii) violate any Contract, Law, Order or
Permit to which CLJ or any Acquired Company is a party or that is binding on or
affects any of their properties or assets, excluding, however, from the
foregoing clauses (ii) and (iii), such Consents, the failure of which to obtain
would not, and violations, breaches or defaults, the occurrence of which would
not, in either case individually or in the aggregate, have a Material Adverse
Effect. SNH and ACQ. SUB acknowledge that (A) the representation and warranty
set forth in this SECTION 3.6, insofar as pertaining to the conversion of
certain Acquired Companies pursuant to SECTION 5.6, is given only to the
Knowledge of CLJ and (B) no representation is given with respect to any Consents
required in connection with the Leases.
3.7. BOOKS AND RECORDS.
For the period from and after January 1, 1998: (i) the books of account
of the Acquired Companies are complete and correct in all material respects and
have been maintained in accordance with sound business practices; (ii) each
Acquired Company has made and kept books, records and accounts which, in
reasonable detail, accurately and fairly reflect its transactions and the
dispositions of its assets and to permit preparation of financial statements in
conformity with GAAP; (iii) the stock ledger (or equivalent partnership or
limited liability company records) of each of the Acquired Companies is complete
and correct; (iv) the minute books (or equivalent partnership or limited
liability company records) of each of the Acquired Companies contain accurate
and complete records in all material respects of all meetings held of, and
corporate (or equivalent) action taken by, the stockholders (partners or
members) and the Boards of Directors (general partners or managers) of the
respective companies; and (v) no meeting of any such stockholders (partners or
members) or Board of Directors (general partners or managers) has been held for
which minutes have not been prepared and are not contained in such minute books.
At the Closing, the Acquired Companies will have possession of their respective
books and records.
3.8. FINANCIAL STATEMENTS; NO UNDISCLOSED LIABILITIES.
(a) The unaudited balance sheet of each Acquired Company as
of June 15, 2001 (the "INTERIM BALANCE SHEET") and the related
statements of income of each Acquired Company for the fiscal period
then ended, complete and correct copies of which shall be furnished to
SNH on or before September 15, 2001, present fairly, in all material
respects, the financial condition and results of operations of such
Acquired Company as at such date and for such period, as the case may
be.
(b) The audited consolidated balance sheets of CSL and its
Subsidiaries as at January 1, 1999, December 31, 1999 and December 29,
2000, and the related consolidated statements of income and cash flows
for the fiscal years then ended, complete and correct copies of which
shall be furnished to SNH on or before September 15, 2001, present
fairly, in all material respects, the consolidated financial condition
and results of operations and cash flows of CSL and its Subsidiaries as
at such dates and for such fiscal years, as the case may be.
(c) Except (i) as and to the extent of the amounts
specifically reflected or reserved on the Interim Balance Sheet, (ii)
obligations under Contracts and other
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liabilities entered into in the ordinary course of business and
consistent with past practice and not in excess of current requirements
which are not required by GAAP to be reflected on the Interim Balance
Sheet, and (iii) liabilities and obligations incurred in the ordinary
course of business consistent with past practice since the date of the
Interim Balance Sheet, no Acquired Company has any liabilities or
obligations of any nature (whether absolute, accrued, contingent or
otherwise) that would be required to be reflected on a consolidated
balance sheet of the Acquired Company or in the notes thereto prepared
in accordance with GAAP.
(d) On the Closing Date, all real property owned or leased
by the Acquired Companies will continue to be owned or leased by the
Acquired Companies "AS IS and WHERE IS", but subject to no liabilities
(whether absolute, accrued, known, or unknown, contingent or otherwise
and whether due or to become due) other than (i) the Ground Lease,
Capital Leases, the Mortgage Loans, the Unsecured Loans, the Boynton
Beach Mortgage Loan and the New Loan, (ii) liabilities incurred by MSLS
in the ordinary course of business in accordance with the Operating
Agreements and (iii) those liabilities set forth on the appropriate
Title Commitment for the Property (provided that the exclusion provided
in this clause (iii) shall not limit the right of SNH to object to any
such liability nor limit any obligation of CLJ to cure any title
exception objected to by SNH under SECTION 5.2 or 5.3).
(e) The financial statements referred to in this SECTION
3.8 have been prepared in accordance with GAAP consistently applied
throughout the periods involved, except as set forth in the notes
thereto.
3.9. ABSENCE OF CERTAIN CHANGES.
Since June 15, 2001, (a) there has not occurred any event, change,
effect, fact, circumstance or other occurrence which has had, or which could
reasonably be expected to have, a Material Adverse Effect; (b) the business of
each Acquired Company has been conducted only in the ordinary course consistent
with past practice; and (c) no Acquired Company has engaged in any material
transaction or entered into any material agreement outside the ordinary course
of business.
3.10. LITIGATION.
Neither CLJ nor CSL has received written notice of and, to the
Knowledge of each of CLJ and CSL, no action or proceeding is pending or
threatened and no investigation looking toward such an action or proceeding has
begun, which (a) questions the validity of this Agreement or any action taken or
to be taken pursuant hereto; (b) will have a Material Adverse Effect; (c) result
in or subject any Acquired Company or any of the Properties to a material
liability; or (d) involves any material condemnation or eminent domain
proceedings against any of the Properties.
3.11. COMPLIANCE WITH LAWS AND PERMITS.
To the Knowledge of each of CLJ and CSL, (a) the Acquired Companies,
the Properties and the use and operation of the Properties do not violate any
material Laws including, without
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limitation, those relating to construction, occupancy, zoning, adequacy of
parking, environmental protection, occupational health and safety and fire
safety applicable thereto; and (b) except as set forth in SECTION 3.11 of the
Disclosure Schedule, there are presently in effect all material Permits
(including all healthcare licenses) necessary to operate the businesses of the
Acquired Companies and for the current use, occupancy and operation of the
Properties. Neither CLJ nor CSL has received written notice of any threatened
request, application, proceeding, plan, study or effort which would materially
adversely affect the present use or zoning of any of the Properties or which
would modify or realign any adjacent street or highway.
3.12. ASSETS.
(a) The assets being acquired, directly or indirectly, by
SNH and ACQ. SUB pursuant to SECTION 2.1 hereof (collectively, the
"ASSETS") consist of (1) the CSL Stock, the CCC Boynton Stock and the
CCC Senior Living Stock and (2) the following assets of the Acquired
Companies (including certain assets of CLJ that are to be sold,
transferred and assigned to SNH or its designee at Closing as
contemplated by SECTION 2.1):
(i) as to CSL, the equity securities of each of the
CSL Subsidiaries;
(ii) the real property owned or leased, directly or
indirectly by an Acquired Company and described in SECTION
3.12(a)(ii) of the Disclosure Schedule (which Section
identifies the Acquired Company that so owns or leases such
property);
(iii) the general partnership interest of CCC Boynton
in Senior Living of Boynton Beach Limited Partnership;
(iv) the interest of CCC Senior Living as the
independent member of CCFL Senior Living LLC, CCOP Senior
Living LLC, CCCP Senior Living LLC, CCSL Senior Living LLC
and CCDE Senior Living LLC;
(v) the rights and interests of the Acquired
Companies under the Marriott Agreements, the Ground Lease,
and the Capital Leases;
(vi) the FF&E Reserves and the Mortgage Reserves;
(vii) the Working Capital;
(viii) except as set forth in SECTION 3.12(b) of the
Disclosure Schedule with respect to any Property (and
except for any items subject to a lease entered into by
MSLS in the ordinary course of business and in accordance
with the Operating Agreements), all furniture, fixtures and
equipment and all supplies used in connection with such
Property;
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(ix) all the outstanding bonds issued in respect of
the Woodlands Community (unless terminated prior to
closing), $16,765,000 of which are held by Panther Holdings
Level I, L.P., a Delaware limited partnership and a CSL
Subsidiary and the remaining $15,450,000 of which are
currently held by CLJ (and will be assigned in accordance
with SECTION 2.1) (the "CLJ WOODLANDS BONDS") ;
(x) the rights and interests of the Acquired
Companies in respect of the agreements listed in SECTION
3.12(a)(x) of the Disclosure Schedule;
(xi) a promissory note in the original principal
amount of $3,166,451 dated December 31, 1997 made by Senior
Living of Lakewood, LLC, together with a Loan Agreement
dated December 31, 1997 and the Loan Documents, as defined
therein (collectively, the "LAKEWOOD LOAN DOCUMENTS") to
which the Parties agree to ascribe no value; and
(xii) the books and records of each Acquired Company
referenced in SECTION 3.7.
(b) Except (i) for Permitted Liens, and (ii) as disclosed
in SECTION 3.12(b) of the Disclosure Schedule and on the Title
Commitment for each Property (subject to the parenthetical in clause
(iii) of SECTION 3.8(d)), to the Knowledge of CLJ and CSL, at the
Closing CLJ and each Acquired Company will have good and marketable
title, free and clear of all Liens, to all of its Assets, other than
Assets that are leased or licensed by an Acquired Company, with respect
to which such Acquired Company has valid and enforceable leases or
licenses under which there exists no default, event of default or event
which, with notice or lapse of time or both, would constitute a
default, except for such defaults which have not had or are not
reasonably likely to have, either individually or in the aggregate, a
Material Adverse Effect.
3.13. HAZARDOUS MATERIALS.
Except as disclosed to SNH in writing or as described in any
environmental report identified in SECTION 3.13 of the Disclosure Schedule, true
and complete copies of which have been furnished to SNH, to the Knowledge of CLJ
and CSL, none of the Acquired Companies nor any tenant or other occupant or user
of any Property, or any portion thereof, has stored or disposed of (or engaged
in the business of storing or disposing of) or has released or caused the
release of any Hazardous Materials on any Property or any portion thereof, the
removal of which is required or the maintenance of which is regulated,
prohibited or penalized by any Environmental Law, and, to the Knowledge of CLJ
and CSL, except as disclosed to SNH in writing or as set forth in any
environmental report identified in SECTION 3.13 of the Disclosure Schedule, each
Property is free from any such Hazardous Materials, except any such materials
maintained in accordance with applicable Environmental Law.
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3.14. CONTRACTS AND COMMITMENTS.
Other than the Marriott Agreements, the Ground Lease, the Capital
Leases, the agreements evidencing or securing the Mortgage Loans, the Unsecured
Loans and the Boynton Beach Mortgage Loan (which agreements are listed on
SECTIONS 1.1(62), 1.1(90) and 1.1(10) to the Disclosure Schedule), the
agreements evidencing or securing the New Loan, the Prior Tax Matters
Agreements, matters shown on the Title Commitments, Medicare and Medicaid
provider agreements, and agreements entered into by MSLS, or by the Acquired
Companies at the direction of MSLS, in the ordinary course of business and in
accordance with the Operating Agreements for the Properties, and other than the
matters set forth in SECTION 3.14 of the Disclosure Schedule there are no
material Contracts affecting any of the Acquired Companies which will be binding
on the Acquired Companies subsequent to the Closing Date.
3.15. EMPLOYEE BENEFIT PLANS.
No Acquired Company sponsors, maintains or contributes or has
maintained or contributed to any: deferred compensation, incentive compensation,
stock purchase, stock option or other equity compensation plan, program,
agreement or arrangement; severance or termination pay, medical, surgical,
hospitalization, life insurance or other "welfare" plan, fund or program (within
the meaning of Section 3(1) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")); profit-sharing, stock bonus or other "pension"
plan, fund or program (within the meaning of Section 3(2) of ERISA); employment,
termination or severance agreement; Contract with any officer or director; or
any other employee benefit plan, fund, program, agreement or arrangement;
provided that the foregoing representation is given only as to the Knowledge of
CLJ and CSL insofar as relating to the period prior to June 21, 1997. No
Acquired Company nor any trade or business, whether or not incorporated, that
together with any Acquired Company would be deemed a "single employer" within
the meaning of Section 4001(b) of ERISA (an "ERISA AFFILIATE") has incurred any
liability under Title IV of ERISA that has not been satisfied in full, and no
condition exists that presents a material risk of any such liability being
incurred by an Acquired Company.
3.16. EMPLOYEE MATTERS.
Since June 20, 1997, no Acquired Company has had any employees.
3.17. INSURANCE.
Each Acquired Company has policies of insurance of the type and in
amounts customarily carried by Persons conducting businesses or owning assets
similar to those of the Acquired Companies. All such policies are in full force
and effect, all premiums due thereon have been paid and the Acquired Companies
are otherwise in compliance in all material respects with the terms and
provisions of such policies. Furthermore, except as would not, individually or
in the aggregate, have a Material Adverse Effect, to the Knowledge of CLJ and
CSL, (a) no Acquired Company has received any notice of cancellation or
non-renewal of any such policy or arrangement nor is the termination of any such
policies or arrangements threatened, (b) there is no claim pending under any of
such policies or arrangements as to which coverage has been questioned, denied
or disputed by the underwriters of such policies or arrangements, (c) no
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Acquired Company has received any written notice from any of its insurance
carriers that any insurance premiums will be increased in the future or that any
insurance coverage presently provided for will not be available to it in the
future on substantially the same terms as now in effect and (d) none of such
policies or arrangements provides for any retrospective premium adjustment,
experienced-based liability or loss sharing arrangement affecting any Acquired
Company.
3.18. CERTAIN PAYMENTS.
No Acquired Company, or director, officer or agent of any Acquired
Company or, to the Knowledge of CLJ and CSL, any other Person associated with or
acting for or on behalf of CLJ or CSL, has directly or indirectly (a) made any
contribution, gift, bribe, rebate, payoff, influence payment, kickback, or other
payment to any Person, private or public, regardless of form, whether in money,
property, or services (i) to obtain favorable treatment in securing business,
(ii) to obtain special concessions or for special concessions already obtained,
for or in respect of any Acquired Company, or (iii) in violation of any Law; or
(b) established or maintained any fund or asset that has not been recorded in
the books and records of the Acquired Companies; provided that the foregoing
representation is given only as to the Knowledge of CLJ and CSL insofar as
relating to the period prior to June 21, 1997. No representation is made under
this SECTION 3.18 as to any "independent director" of any CSL Subsidiary.
3.19. TAXES.
(a) With respect to periods ending after December 28, 1998,
all material Tax Returns required to be filed with respect to each of
the Acquired Companies have been timely filed and such Tax Returns are
complete and accurate in all material respects. All material Taxes
required to be paid by or on behalf of the Acquired Companies (other
than Taxes for which CLJ or the Acquired Companies are indemnified)
have been paid when due and payable or, to the extent of Taxes not yet
due and payable, required estimated Tax payments have been made in
respect thereof. With respect to periods ending after December 28,
1998, no request has been made for an extension of time within which to
file any Tax Return in respect of any of the Acquired Companies, which
Tax Return is due and has not yet been filed; to CLJ's Knowledge, none
of CLJ, its Subsidiaries, or any Acquired Company has after December
28, 1998 requested an extension of time within which to file any Tax
Return in respect of any of the Acquired Companies, which Tax Return is
due and has not yet been filed. After December 28, 1998, none of CLJ,
its Subsidiaries, or any Acquired Company has received written notice
from any governmental agency in a jurisdiction in which a particular
Acquired Company does not file a Tax Return stating that such Acquired
Company is or may be subject to taxation by that jurisdiction. There
are no Liens on any of the assets of any Acquired Company with respect
to Taxes, other than statutory liens for Taxes not yet due and payable.
The responsibility for filing Tax Returns and paying Taxes for CLJ and
its Subsidiaries for periods prior to December 29, 1998 (and certain
periods which straddle December 28, 1998) is addressed in a Tax Matters
Agreement, dated as of June 21, 1997, by and among MI, MSLS, HMC, HMC
Senior Communities, Inc., and Forum Group, Inc. (the predecessor of
CSL), and/or a Tax Sharing Agreement, dated as of December 28, 1998 by
and among HMC, Host Marriott L.P. and CLJ (collectively, the "PRIOR TAX
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MATTERS AGREEMENTS"). Each of CLJ and CSL, and to the Knowledge of CLJ
and CSL (except as disclosed on SECTION 3.19(a) of the Disclosure
Schedule) each other party thereto, has complied in all material
respects with each of the Prior Tax Matters Agreements, and each such
Prior Tax Matters Agreement is a valid and binding obligation of each
of the parties thereto enforceable in accordance with its terms. After
December 28, 1998, each of CLJ, its Subsidiaries, and the Acquired
Companies have taken all actions necessary to, and none of them have
failed to take any actions necessary to, preserve and enforce all
material rights which CLJ, its Subsidiaries, or the Acquired Companies
may have or may have had under each Prior Tax Matters Agreement,
including without limitation the rights to have parties other than CLJ,
its Subsidiaries, or the Acquired Companies bear responsibility for Tax
Returns and Taxes in respect of the Acquired Companies in respect of
Tax periods (including partial periods and straddle periods) covered by
the Prior Tax Matters Agreements. There is no claim pending or
threatened by any party to any Prior Tax Matters Agreement to the
effect (i) that any of CLJ, its Subsidiaries or the Acquired Companies
has failed to duly comply with the terms of such Prior Tax Matters
Agreement or (ii) that such party does not bear responsibility under
such Prior Tax Matters Agreement for Tax Returns or Taxes in respect of
the Acquired Companies for periods (including partial periods or
straddle periods) prior to December 29, 1998.
(b) With respect to periods ending after December 28, 1998,
except as disclosed on SECTION 3.19(b) of the Disclosure Schedule (i)
no deficiencies for any material Taxes have been proposed, assessed or
asserted in writing in respect of any Tax Returns filed by or on behalf
of any Acquired Company or claimed in writing to be due by any taxing
authority or otherwise that have not been settled and paid in full;
(ii) other than Tax Returns relating to sales and use Taxes and
personal property Taxes wherein the contested Taxes for all such Tax
Returns in the aggregate do not exceed $200,000, no Tax Return with
respect to any Acquired Company has been or is currently being audited
by the IRS or other taxing authority (whether foreign or domestic);
(iii) none of CLJ, CSL, or any Acquired Company has executed or filed
with the IRS or any other taxing authority (whether foreign or
domestic) any agreement, waiver, or other document extending, or having
the effect of extending, the period for assessment or collection of any
Taxes, which extension or waiver is still in effect, and except for the
Prior Tax Matters Agreements, no Acquired Company has entered into any
tax allocation or sharing agreement with any other entity; (iv) each of
CLJ and CSL has delivered to SNH correct and complete copies of all
examination reports, statements of deficiencies and similar documents
prepared by the IRS or any other taxing authority (whether foreign or
domestic) that was received by CLJ or any of its Subsidiaries and
involving any Acquired Company and a material amount of Taxes; (v) all
final adjustments made by the IRS with respect to any Tax Return
involving any Acquired Company have been reported to the relevant
state, local, or foreign taxing authorities to the extent required by
Law. Except under the Prior Tax Matters Agreements, (i) no requests for
ruling or determination letters filed by CLJ or any Acquired Company
are pending with any taxing authority, and (ii) no Acquired Company has
any liability to any Person with respect to Taxes paid, owed or to be
paid for periods of time during which any Acquired Company or any
predecessor thereof were members of a consolidated group other than the
consolidated group of which CLJ is the common parent. No Acquired
Company is bound by any
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currently effective private ruling, closing agreement, or similar
agreement with any Taxing Authority relating to Taxes.
(c) No Acquired Company has filed a consent pursuant to
Section 341(f) of the Code, or agreed to have Section 341(f)(2) of the
Code apply to any disposition of a subsection (f) asset (as such term
is defined in Section 341(f)(4) of the Code) owned by it. No Acquired
Company has a permanent establishment in any foreign country or
operates or conducts business through any branch in any foreign
country. No Acquired Company has agreed to or is required to make any
adjustment pursuant to Section 481(a) of the Code by reason of a change
in the accounting method initiated by CLJ or any Acquired Company, and
neither CLJ nor CSL has any Knowledge that the IRS has proposed any
such adjustment or change in accounting method.
(d) Each of CSL and CLJ is a "United States person" within
the meaning of Section 7701(a)(30) of the Code.
(e) No Acquired Company is or has been a "reporting
corporation" subject to the information reporting and record
maintenance requirements of Section 6038A of the Code and the Treasury
Regulations thereunder. No Acquired Company or predecessors by merger
or consolidation of any of them has within the past three (3) years
been a party to a transaction intended to qualify under Section 355 of
the Code or under so much of Section 356 of the Code as relates to
Section 355 of the Code.
(f) SNH has been provided access by CLJ and CSL to true and
complete copies of (i) relevant portions of income tax audit reports,
statements of deficiencies, closing or other agreements received by or
on behalf of CLJ or any Acquired Company relating to any material
amount of Taxes owed by any Acquired Company, and (ii) all material
federal, state, local and foreign income, franchise and value added Tax
Returns and sales, use and property Tax Returns, together with all
schedules and attachments thereto, for each Acquired Company for
periods ending after December 28, 1998.
(g) Except for those Acquired Companies listed in SECTION
3.19(g) of the Disclosure Schedule, each Acquired Company is (and
through the Closing will remain) for federal income tax purposes either
a partnership or a disregarded entity that is not separate from its
owner, in each case pursuant to Treasury Regulation Section 301.7701-3,
and to the extent allowed under applicable Law, each such Acquired
Company is (and through the Closing will remain) similarly classified
for state and local income tax purposes. No Acquired Company is
classified for federal income tax purposes as a publicly traded
partnership under Section 7704(b) of the Code.
(h) Neither CSL nor any Acquired Company owns 10% or more,
by vote or value, of the stock or securities of any one issuer, except
for stock or securities in an Acquired Company.
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3.20. FF&E RESERVES, MORTGAGE RESERVES AND WORKING CAPITAL.
(a) SECTION 3.20(a) of the Disclosure Schedule contains a
true, accurate and complete description of all property comprising the
FF&E Reserves as of June 15, 2001, and such FF&E Reserves have, to the
Knowledge of CLJ and CSL, been maintained in accordance with the
Operating Agreements.
(b) SECTION 3.20(b) of the Disclosure Schedule contains a
true, accurate and complete description of all property comprising the
Mortgage Reserves as of July 13, 2001, and such Mortgage Reserves have,
to the Knowledge of CLJ and CSL, been maintained in accordance with the
documents governing the Mortgage Loans and the Capital Leases.
(c) SECTION 3.20(c) of the Disclosure Schedule contains a
true, accurate and complete description of all Working Capital as of
July 13, 2001, and the Working Capital has, to the Knowledge of CLJ and
CSL, been maintained in accordance with the Operating Agreements.
3.21. BROKER'S OR FINDER'S FEE.
Except for Deutsche Banc Alex. Brown, no agent, broker, Person or firm
acting on behalf of CLJ or CSL is, or will be, entitled to any fee, commission
or broker's or finder's fees from CLJ or any Acquired Company, or from any
Person controlling, controlled by, or under common control with CLJ or any
Acquired Company, in connection with this Agreement or any of the transactions
contemplated hereby.
3.22. SUPPLEMENTS TO DISCLOSURE SCHEDULE.
From time to time prior to the Closing Date, CLJ will promptly
supplement or amend the Disclosure Schedule with respect to any matter arising
which, if existing or occurring at the date of this Agreement would have been
required to have been set forth in the Disclosure Schedule or which is necessary
to correct the information set forth therein which has been rendered inaccurate.
The delivery of any such supplement or amendment shall not in any way constitute
a waiver by SNH of any requirement that the representations and warranties of
CLJ and CSL be true and correct on the date of this Agreement and on the Closing
Date or of any of the conditions set forth in SECTION 6, provided that the
disclosure in any such supplement or amendment of any matter arising after the
date of this Agreement shall not form the basis of a claim for misrepresentation
or breach of a representation under SECTION 7.
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SECTION 4.
REPRESENTATIONS AND WARRANTIES OF SNH AND ACQ. SUB
SNH and ACQ. SUB each hereby represent and warrant to CLJ and CSL as
follows:
4.1. DUE ORGANIZATION, GOOD STANDING AND POWER.
SNH is a real estate investment trust duly organized, validly existing
and in good standing under the laws of the State of Maryland and has all
requisite power and authority to own, lease and operate its properties and to
carry on its business as now being conducted. ACQ. SUB is a Maryland real estate
investment trust, duly organized, validly existing and in good standing under
the laws of the State of Maryland and has all requisite power and authority to
own, lease and operate its properties and to carry on its business as now being
conducted.
4.2. AUTHORIZATION AND VALIDITY OF AGREEMENT.
Each of SNH and ACQ. SUB has full power and authority to execute and
deliver this Agreement, to perform its obligations hereunder and to consummate
the transactions contemplated hereby. The execution, delivery and performance of
this Agreement by each of SNH and ACQ. SUB, and the consummation by it of the
transactions contemplated hereby, have been duly authorized and approved by its
Board of Trustees. No other action on the part of SNH or ACQ. SUB is necessary
to authorize the execution, delivery and performance of this Agreement by SNH or
ACQ. SUB and the consummation of the transactions contemplated hereby. This
Agreement has been duly executed and delivered by SNH and ACQ. SUB and is a
valid and binding obligation of SNH and ACQ. SUB, enforceable against SNH and
ACQ. SUB in accordance with its terms, except that (a) such enforcement may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the enforcement of creditors' rights generally and
(b) the availability of the remedy of specific performance or injunctive or
other forms of equitable relief may be subject to equitable defenses and would
be subject to the discretion of the court before which any proceeding therefor
may be brought.
4.3. CONSENTS AND APPROVALS; NO VIOLATIONS.
Except for any filings required under the HSR Act, Consents required
for healthcare Permits, and Consents required in connection with the Lease, none
of the execution, delivery or performance of this Agreement by SNH or ACQ. SUB,
or the consummation by SNH or ACQ. SUB of any of the transactions contemplated
hereby will (i) conflict with or result in any breach of any provision of the
Organizational Documents of SNH or ACQ. SUB, (ii) require any Consent of any
Governmental Entity, or (iii) violate any Contract, Law, Order or Permit
applicable to SNH, ACQ. SUB or any of their properties or assets, excluding from
the foregoing clauses (ii) and (iii), such Consents, violations, breaches or
defaults which would not, individually or in the aggregate, have a material
adverse effect on SNH or ACQ. SUB.
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4.4. FINANCIAL STATEMENTS.
The audited consolidated balance sheets of SNH and its Subsidiaries as
at December 31, 2000, and the related consolidated statements of income and cash
flows for the fiscal year then ended, complete and correct copies of which have
been furnished to CLJ, present fairly, in all material respects, the
consolidated financial condition and results of operations and cash flows of SNH
and its Subsidiaries as at such date and for such fiscal year, as the case may
be.
4.5. BANKRUPTCY.
None of SNH, ACQ. SUB or their Subsidiaries are now, or have in the
past three years has been: a debtor in any bankruptcy or similar proceeding,
insolvent, made an assignment for the benefit of creditors, or the subject of a
receivership. None of SNH, ACQ. SUB or any of their Subsidiaries is
contemplating any of the foregoing or is aware of any credible threat by any
third party to file an involuntary bankruptcy petition against any of them.
4.6. LITIGATION.
Neither SNH nor ACQ. SUB has received written notice of and, to the
Knowledge of SNH and ACQ. SUB, no action or proceeding is pending or threatened
and no investigation looking toward such an action or proceeding has begun,
which (a) questions the validity of this Agreement or any action taken or to be
taken pursuant thereto; (b) will have a material adverse effect on SNH or ACQ.
SUB; or (c) result in or subject SNH or ACQ. SUB to a material liability.
4.7. BROKER'S OR FINDER'S FEE.
Except for UBS Warburg LLC, no agent, broker, Person or firm acting on
behalf of SNH or ACQ. SUB is, or will be, entitled to any fee, commission or
broker's or finder's fees from SNH or ACQ. SUB or from any Person controlling,
controlled by, or under common control with, SNH or ACQ. SUB in connection with
this Agreement or any of the transactions contemplated hereby.
SECTION 5.
ACCESS AND TRANSACTIONS PRIOR TO CLOSING DATE
5.1. ACCESS TO INFORMATION CONCERNING PROPERTIES AND RECORDS.
(a) Between the date of this Agreement and the Closing
Date, CLJ and CSL shall, and shall cause each Acquired Company to, upon
reasonable notice, afford SNH, and its counsel, accountants,
consultants, financing sources and other authorized representatives,
reasonable access, during normal business hours, to employees of CLJ
familiar with the business of the Acquired Companies and the
Properties, to perform due diligence investigations and to examine the
books of account and records of the Acquired Companies, including,
without limitation, all Contracts affecting the Properties, and make
copies thereof, at such reasonable times as SNH or its representatives
may request by notice to CLJ (which notice may be oral). No such
investigation shall affect the
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representations and warranties made by CLJ and CSL in this Agreement.
Each of CLJ and CSL agrees to cause its officers and the employees of
CLJ, in a manner consistent with the fulfillment of their ongoing
duties and obligations, to furnish such data and other information and
respond to such inquiries as SNH and its representatives shall from
time to time reasonably request.
(b) Between the date of this Agreement and the Closing
Date, SNH shall, upon reasonable notice, afford CLJ, and its counsel,
accountants, consultants, financing sources and other authorized
representatives, access to employees of SNH familiar with the business
of SNH and ACQ. SUB, to perform due diligence investigations and to
examine the books of account and records of SNH and ACQ. SUB, and make
copies thereof, at such reasonable times as CLJ or its representatives
may request by notice to SNH (which notice may be oral). No such
investigation shall affect the representations and warranties made by
SNH or ACQ. SUB in this Agreement. SNH agrees to cause its officers and
the employees of SNH and ACQ. SUB, in a manner consistent with the
fulfillment of their ongoing duties and obligations, to furnish such
data and other information and respond to such inquiries as CLJ and its
representatives shall from time to time reasonably request.
(c) Unless otherwise required by Law, SNH shall keep
confidential, and cause its counsel, accountants, consultants and other
authorized representatives to keep confidential, any nonpublic
information obtained pursuant to this SECTION 5.1; notwithstanding the
foregoing, however, SNH shall not be required to keep confidential
information that (i) is already in its possession (unless such
information has been received from CLJ pursuant to the Confidentiality
Agreement among CLJ, SNH, HPT and HRPT Properties Trust dated December
5, 2000, as amended by a letter dated July 31, 2001), or (ii) becomes
generally available to the public other than as a result of a
disclosure by SNH, HPT or HRPT Properties Trust, or (iii) becomes
available to SNH on a non-confidential basis from a source other than
an Acquired Company or CLJ (provided that SNH has no Knowledge that
such source obtained such information subject to confidentiality
restrictions).
(d) Unless otherwise required by Law, CLJ shall keep
confidential, and cause its counsel, accountants, consultants and other
authorized representatives to keep confidential, any nonpublic
information obtained pursuant to this SECTION 5.1; notwithstanding the
foregoing, however, CLJ shall not be required to keep confidential
information that (i) is already in its possession (unless such
information has been received from SNH pursuant to the Confidentiality
Agreement between CLJ and SNH dated February 20, 2001), or (ii) becomes
generally available to the public other than as a result of a
disclosure by CLJ or an Acquired Company, or (iii) becomes available to
CLJ on a non-confidential basis from a source other than SNH (provided
that CLJ has no Knowledge that such source obtained such information
subject to confidentiality restrictions).
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5.2. TITLE MATTERS.
Prior to the execution of this Agreement, SNH has ordered from American
Title Company (the "TITLE COMPANY") and directed the Title Company promptly to
deliver to SNH and CLJ a preliminary title commitment, having an effective date
after the date of this Agreement, for an ALTA extended owner's policy of title
insurance with respect to each of the Properties, together with complete and
legible copies of all instruments and documents referred to as exceptions to
title (collectively, the "TITLE COMMITMENTS").
On or before September 30, 2001 (which date shall be extended for an
additional period of fifteen days upon the written request of SNH, provided that
SNH is proceeding in good faith), SNH shall give CLJ notice of any title
exceptions (other than Permitted Liens) which adversely affect any of the
Properties in any material respect and as to which SNH reasonably objects, and
CLJ shall, within ten Business Days of its receipt of such notice, notify SNH
whether CLJ elects to take such action as may be required to cause such
exceptions to be removed from the Title Commitments. If CLJ elects to remove the
title exception objected to by SNH, such title exception shall be removed from
the Title Commitment at or prior to Closing. If CLJ elects not to remove the
title exception, SNH shall, within five Business Days of its receipt of notice
of CLJ's election not to remove the title exception, elect whether to terminate
this Agreement. If SNH does not so terminate this Agreement, the objected to
exception shall become a Permitted Lien.
5.3. SURVEY MATTERS.
Prior to the execution of this Agreement, SNH has arranged for the
preparation of an ALTA survey with respect to each of the Properties (the
"SURVEYS"), by a licensed surveyor in the jurisdiction in which each of the
Properties is located, which (i) contains an accurate legal description, (ii)
shows the exact location, dimension and description (including applicable
recording information) of all utilities, easements, encroachments and other
physical matters affecting such Property, the number of striped parking spaces
located thereon and all applicable building set-back lines, (iii) states whether
the applicable Property is located within a 100-year flood plain and (iv)
includes a certification in a form reasonably acceptable to SNH, addressed to
SNH, the Title Company and any other persons requested by SNH. SNH will deliver
a copy of each Survey promptly to CLJ.
On or before September 30, 2001 (which date shall be extended for an
additional period of fifteen days upon the written request of SNH, provided that
SNH is proceeding in good faith), SNH shall give CLJ notice of any matters shown
on the Surveys (other than Permitted Liens) which adversely affect any of the
Properties in any material respect and as to which SNH reasonably objects, and
CLJ shall, within ten Business Days of its receipt of such notice, notify SNH
whether CLJ elects to take such action as may be required to cause such matter
to be remedied. If CLJ elects to remedy the matter objected to by SNH, such
matter shall be remedied at or prior to Closing. If CLJ elects not to remedy
such matter, SNH shall, within five Business Days of its receipt of notice of
CLJ's election not to remedy the matter, elect whether to terminate this
Agreement. If SNH does not so terminate this Agreement, the objected to
exception shall become a Permitted Lien.
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5.4. ENVIRONMENTAL AND ENGINEERING REPORTS.
Prior to the date of this Agreement, CLJ has delivered to SNH, all
environmental audits, evaluations, assessments, studies or tests and engineering
reports (with respect to roofs, electric, mechanical and structural elements of
the Properties) in their possession. After the date hereof, SNH may arrange for
the preparation of additional environmental audits, evaluations, assessments,
studies or tests and engineering reports with respect to any of the Properties.
SNH will direct each firm preparing such audit or report to deliver a copy of
such audit or report promptly to CLJ.
On or before September 30, 2001 (which date shall be extended for an
additional period of fifteen days upon the written request of SNH, provided that
SNH is proceeding in good faith), SNH shall give CLJ notice of any matters shown
thereon which adversely affect any of the Properties in any material respect and
as to which SNH reasonably objects, and CLJ shall, within ten Business Days of
its receipt of such notice, notify SNH whether CLJ elects to take such action as
may be required to cause such matter to be remedied. If CLJ elects to remedy the
matter objected to by SNH, such matter shall be remedied at or prior to Closing,
or, if such matter cannot be completed by Closing, CLJ shall promptly begin such
remediation and diligently pursue completion through and, if necessary, after
Closing. If CLJ elects not to remedy such matter, SNH shall, within five
Business Days of its receipt of notice of CLJ's election not to remedy the
matter, elect whether to terminate this Agreement.
5.5. CONDUCT OF THE BUSINESS OF THE ACQUIRED COMPANIES PENDING THE
CLOSING DATE.
Except as specifically contemplated by this Agreement, or as set forth
in SECTION 5.5 of the Disclosure Schedule, or as required in connection with
obtaining the New Loan, and unless CLJ obtains SNH's prior written approval in
each instance, until the earlier of (i) the termination of this Agreement or
(ii) the Closing Date:
(1) CLJ shall and shall cause each Acquired Company to conduct its
operations only according to its ordinary and usual course of business
consistent with past practice and shall use all commercially reasonable efforts
to preserve intact their current business operations, maintain their material
Contracts, and maintain satisfactory relationships with lessors, lessees,
suppliers, customers, joint venture partners and others having business
relationships with them; and
(2) no Acquired Company shall:
(a) except as required by SECTION 5.6, make any change in
or amendment to its Organizational Documents other than amendments to
change the name of an Acquired Company or amendments or other changes
that are ministerial or immaterial to such Acquired Company;
(b) issue or sell, or authorize the issuance or sale of,
any shares of its capital stock or any other equity securities, or
issue or sell, or authorize the issuance or sale of, any securities
convertible into, or options, warrants or rights to purchase or
subscribe to, or enter into or create any Contract with respect to the
issuance or sale of, any shares of its capital stock or any other
equity securities, or make any other changes in its capital structure;
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(c) sell or pledge or agree to sell or pledge any stock or
other equity interest owned by it in any other Person;
(d) declare, pay or set aside any dividend or other
distribution or payment with respect to, or split, combine, redeem or
reclassify, or purchase or otherwise acquire, any shares of its capital
stock or its other securities; provided the Acquired Companies (i)
shall pay a dividend or other distribution to CLJ in an aggregate
amount equal to the proceeds (after reduction for expenses) of the New
Loan required by SECTION 5.8, (ii) may make distributions of net income
to CLJ and (iii) may upstream all cash in the CSL Subsidiaries and CCC
Boynton to CLJ;
(e) enter into any Contract which is reasonably expected to
involve payment or receipts by any Acquired Company in excess of
$100,000 during any twelve month period, or, in cases where the
Acquired Company is the party responsible for such payment, which is
not terminable without penalty upon 30 days notice, provided, however,
that nothing in this SECTION 5.5 shall be deemed to prohibit (i) MSLS
as agent for any Acquired Company from entering into any such Contract
on behalf of such Acquired Company to the extent contemplated by the
Operating Agreements or (ii) CSL or any CSL Subsidiary from purchasing
an interest rate cap or other hedge device in respect of the GMAC
Mortgage Loans out of monies held as part of the Mortgage Reserves for
such purpose, and the remaining balance of such part of the Mortgage
Reserves, if released, may be distributed or paid to CLJ;
(f) grant any options to purchase common stock or provide
for compensation or fringe benefits to any of its directors or
officers; enter into any employment, consulting or severance agreement
or arrangement with any Person;
(g) other than in the ordinary course of business and draws
taken under CLJ's corporate lines of credit, transfer, lease, license,
guarantee, sell, mortgage, pledge, dispose of, encumber or subject to
any Lien (except as contemplated by SECTION 5.7(b)) any of the
Properties or any other material assets or incur or modify any
indebtedness or other material liability; issue any debt securities or
assume, guarantee or endorse or otherwise as an accommodation become
responsible for the obligations of any Person; or make any loan or
other extension of credit;
(h) sell, assign, transfer, license or modify or amend any
rights to any intellectual property owned by or licensed to any
Acquired Company, except in the ordinary course of business consistent
with past practice;
(i) agree to the settlement of any material claim or
litigation, other than settlements agreed to by MSLS on behalf of any
Acquired Company to the extent contemplated by the Operating
Agreements;
(j) make or rescind any material Tax election or settle or
compromise any material Tax liability (except as permitted to MSLS in
the ordinary course of business and in accordance with the Operating
Agreements);
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(k) make any material change in its accounting principles,
practices or methods;
(l) (A) incur any indebtedness for borrowed money or
guarantee any such indebtedness of another Person (except as
contemplated by SECTION 5.7(b)) or (B) make any loans or advances to
any other Person, other than to CSL or any CSL Subsidiary; provided,
however, that CSL and its Subsidiaries may make draws under the Bankers
Trust Line, in any amount, provided that such draws are repaid at or
prior to Closing;
(m) pay, discharge or satisfy any liabilities other than
the payment, discharge or satisfaction of any liabilities in the
ordinary course of business if now due and payable and consistent with
past practice;
(n) delay or postpone the payment of accounts payable or
other liabilities, other than in the ordinary course of business
consistent with past practice;
(o) other than such actions as are permitted to be taken by
MSLS in the ordinary course of business and in accordance with the
Operating Agreements, take any action, engage in any transaction or
enter into any agreement which could reasonably be expected to cause
(A) any of the conditions in SECTION 6 not to be satisfied, or (B) a
Material Adverse Effect;
(p) other than in the ordinary course of business, and
except for such actions as may be taken by MSLS in the ordinary course
of business and in accordance with the Operating Agreements, modify,
amend or terminate any material Contract to which it is a party or
waive any of its material rights or claims; or
(q) agree, in writing or otherwise, to take any of the
foregoing actions.
5.6. CONVERSION OF CERTAIN ACQUIRED COMPANIES.
On or before the date the Acquired Companies make a distribution or pay
a dividend of the proceeds of the New Loan to CLJ, and subject to the receipt of
applicable Consents under the Mortgage Loans, the Unsecured Loans, the Capital
Leases and the Ground Leases and from partners of the relevant entities, each of
the Acquired Companies listed in SECTION 5.6 of the Disclosure Schedule shall be
reorganized as a business trust organized under the laws of the State of
Maryland so that each such Acquired Company (as reorganized) shall for United
States federal income and (to the extent allowed under applicable Law) state and
local income tax purposes be classified as a disregarded entity that is not
separate from its owner pursuant to Treasury Regulations Section 301.7701-3;
PROVIDED that if, after the date hereof, CLJ identifies a material state or
local tax liability that would be incurred by CLJ if an identified Acquired
Company were to be reorganized as a business trust organized under the laws of
the State of Maryland, such Acquired Company shall instead be reorganized as a
Delaware limited liability company that would be classified as a disregarded
entity that is not separate from its owner pursuant to Treasury Regulations
Section 301.7701-3 unless SNH shall agree to indemnify CLJ against such tax
liability. None of CLJ, CSL or any Acquired Company shall take or permit any
action to materially modify such tax classification.
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5.7. COOPERATION.
(a) Subject to the terms and conditions provided herein,
each of CLJ, CSL, ACQ. SUB and SNH shall, and CLJ shall cause each
Acquired Company to, cooperate and use their reasonable best efforts to
take, or cause to be taken, all appropriate action, and to make, or
cause to be made, all filings necessary, proper or advisable under
applicable Laws to consummate and make effective the transactions
contemplated by this Agreement, including, without limitation, all
their reasonable best efforts to obtain, prior to the Closing Date, all
Permits and Consents as are necessary for consummation of the
transactions contemplated by this Agreement.
(b) Each of CLJ and CSL shall, and CLJ shall cause each
Acquired Company to, and SNH shall, and shall cause ACQ. SUB to,
cooperate and use their reasonable best efforts to take, or cause to be
taken, all appropriate action, and to execute and deliver, or cause to
be executed and delivered all such instruments and documents necessary
or desirable in connection with the New Loan, on such business terms as
are reasonably acceptable to each of CLJ and SNH and evidenced by
instruments and documents which are substantially the same as those
evidencing the GMAC Mortgage Loans.
(c) Each of CLJ and CSL shall, and CLJ shall cause each
Acquired Company to conduct negotiations with MSLS relating to capital
expenditure budgets required by the Operating Agreements for each of
the Properties for fiscal year 2002, jointly with SNH and ACQ. SUB.
(d) SNH shall cooperate with CLJ in providing all necessary
information concerning SNH and its Subsidiaries (i) as required by
applicable Law including, without limitation, audited financial
statements for CLJ to distribute to its shareholders in connection with
seeking approval of the transactions contemplated by this Agreement and
in connection with other reports required to be filed by CLJ with the
Securities and Exchange Commission and (ii) to the extent required in
connection with obtaining any Consents (including Consents under the
Mortgage Loans, the Unsecured Loans, the Capital Leases and the Ground
Leases) required to consummate the transactions contemplated hereby and
to obtain the New Loan.
(e) CLJ and CSL shall and CLJ shall cause each Acquired
Company to cooperate with SNH in providing all necessary information
concerning CLJ and its Subsidiaries (i) as required by applicable Law,
including, without limitation, additional unaudited and audited
financial statements in connection with the distribution by SNH to its
shareholders of the equity of the Tenant and other reports required to
be filed by SNH with the Securities and Exchange Commission and (ii) to
the extent required in connection with obtaining any Consents
(including Consents under the Mortgage Loans, the Unsecured Loans, the
Capital Leases and the Ground Leases) required to consummate the
transactions contemplated hereby and to obtain the New Loan.
(f) If the Consent of HMC, as guarantor of the Unsecured
Loan in respect of the Leisure Park Community, identified as item 31 in
SECTION 3.12(a)(ii) of the
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Disclosure Schedule, pursuant to a Guaranty Agreement dated December 1,
1997 in favor of Marine Midland Bank, is required to permit the
transactions contemplated by this Agreement, SNH will agree to replace
HMC as the guarantor of such Unsecured Loan. If such replacement is not
permitted, CLJ will use commercially reasonable efforts to obtain the
Consent of HMC prior to Closing, if required. If SNH does not replace
HMC as the guarantor, SNH shall indemnify CLJ for the liability of CLJ
to HMC (if any) to reimburse HMC for payments made by HMC as guarantor.
(g) SNH agrees to replace CLJ as guarantor or indemnitor,
as the case may be under the several Guaranties of Recourse Obligations
and Environmental Indemnity Agreements (each dated July 3, 2000 or July
28, 2000) each executed by CLJ for the benefit of GMAC in respect of a
GMAC Mortgage Loan, subject to the Consent of GMAC. If such Consent is
not obtained by the Closing Date with respect to any such Guaranty of
Recourse Obligations or Environmental Indemnity Agreement, SNH agrees
to indemnify CLJ against any payment made or required to be made by it
as guarantor or indemnitor after the Closing Date in accordance with
the terms of such Guaranty of Recourse Obligations or Environmental
Indemnity Agreement.
5.8. DIVIDENDS; DISTRIBUTIONS.
The Acquired Companies will declare and pay dividends and/or make
distributions to CLJ in an aggregate amount equal to the proceeds (after
reduction for transaction expenses) of the New Loan not later than one Business
Day prior to the Closing Date. Such dividends or other distributions shall be
treated by the Parties as "distributions" to CLJ for federal income tax purposes
under Sections 301, 857(a)(2), and 857(d)(3) of the Code, and under Treasury
Regulations 1.1502-13 and 1.1502-33. Solely for federal income (and, to the
extent allowable under applicable Law, state and local) tax purposes, such
dividends or other distributions shall not be treated by the Parties as part of
the Purchase Price.
5.9. NO SOLICITATION OF OTHER OFFERS.
(a) Until this Agreement has been terminated in accordance
with SECTION 8 (and the payments, if any, required to be made by CLJ in
connection with such termination pursuant to SECTION 8.2 have been
made), none of CLJ, CSL, any of their respective Affiliates, nor any of
their respective officers (or other senior management employees),
directors, representatives, consultants, investment bankers, attorneys,
accountants and other agents (collectively, the "REPRESENTATIVES")
shall Knowingly (i) encourage, solicit, initiate or facilitate the
making of, or take any other action to facilitate any inquiries or the
making of any proposal that constitutes, or may reasonably be expected
to lead to, any Alternative Proposal, (ii) participate in any way in
discussions or negotiations with, or furnish or disclose any nonpublic
information to, any Person (other than SNH) in connection with any
Alternative Proposal, or (iii) enter into any agreement, letter of
intent or similar document contemplating or otherwise relating to any
Alternative Proposal; provided, however, that this SECTION 5.9(a) shall
not prohibit CLJ, CSL or the Representatives from: (i) complying with
all applicable laws, rules and regulations, including Rules 14d-9 and
14e-2 under the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT") or publicly disclosing the existence of an Alternative
Proposal to
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the extent required by applicable law, or (ii) furnishing non-public
information to, or entering into discussions or negotiations with, or
accepting an Alternative Proposal from, any person or entity in
connection with an unsolicited bona fide written proposal or proposals
from any person or entity relating to an Alternative Proposal if CLJ
determines in good faith based upon the advice of counsel that such
action is required in order for CLJ to comply with its fiduciary
obligations under the MGCL. If CLJ or CSL shall receive any offer to
purchase (or any request for non-public information concerning CSL's
assets in connection with a potential offer to purchase such assets),
which it determines it must respond to, it shall (i) inform SNH that an
offer or request has been received, and (ii) furnish to SNH the
identity of the offeror or Person making the request, and a description
of the material terms thereof.
(b) As used herein, "ALTERNATIVE PROPOSAL" shall mean (i)
any written proposal or offer from any Person relating to any direct or
indirect acquisition or purchase of a substantial amount of assets of
any Acquired Company or of any class of equity securities of any
Acquired Company (including any transaction in the nature of a
management acquisition or "going private" transaction involving the
Acquired Companies), (ii) any tender offer or exchange offer that, if
consummated, would result in any Person beneficially owning any shares
of equity securities of any Acquired Company, (iii) any merger,
consolidation, business combination, sale of substantially all the
assets, recapitalization, liquidation, dissolution or similar
transaction effecting the transfer of any Acquired Company or (iv) any
other transaction that relates to the Acquired Companies, the
consummation of which could reasonably be expected to impede, interfere
with, prevent or materially delay the purchase of the CSL Stock, the
CCC Boynton Stock or the CCC Senior Living Stock contemplated hereby or
any other transaction that relates to the Acquired Companies that could
reasonably be expected to dilute materially the benefits to SNH of the
transactions contemplated hereby; PROVIDED, HOWEVER, that no proposal
or offer or other transaction described in any of clauses (i) through
(iii) above that occurs after the eighteen month period referred to in
Section 2.6 and that involves one of the Communities or CSL
Subsidiaries or CCC Boynton that was excluded from the transaction in
accordance with SECTION 6.1(c) shall constitute an Alternative
Proposal.
5.10. NOTIFICATION OF CERTAIN MATTERS.
CLJ shall give prompt notice to SNH, and SNH shall give prompt notice
to CLJ, of the occurrence, or failure to occur, of any event, which occurrence
or failure to occur would be likely to cause any representation or warranty
contained in this Agreement to be untrue in any material respect at any time
from the date of this Agreement to the Closing. Each of CLJ and SNH shall give
prompt notice to the other party of any notice or other communication from any
third party alleging that the consent of such third party is or may be required
in connection with the transactions contemplated by this Agreement.
5.11. HSR ACT FILING.
SNH and CLJ shall, as promptly as practicable, file, or cause to be
filed, any required notification and report forms under the HSR Act with the
Federal Trade Commission (the
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"FTC") and the Antitrust Division of the United States Department of Justice
(the "ANTITRUST DIVISION") in connection with the transactions contemplated by
this Agreement, and will use all commercially reasonable efforts to respond as
promptly as practicable to all inquiries received from the FTC or the Antitrust
Division for additional information or documentation and to cause the waiting
periods under the HSR Act to terminate or expire at the earliest possible date.
SNH and CLJ will each furnish to the other such necessary information and
reasonable assistance as the other may reasonably request in connection with its
preparation of necessary filings or submissions to any governmental or
regulatory agency, including, without limitation, any filings necessary under
the provisions of the HSR Act.
5.12. PUBLIC ANNOUNCEMENTS.
CLJ and SNH shall consult with each other before issuing any press
release or otherwise making any public statements with respect to the
transactions contemplated by this Agreement and shall not issue any such press
release or make any such public statement prior to such consultation and review
by the other party of such release or statement or without the prior consent of
the other party, which consent shall not be unreasonably withheld or delayed;
provided, however, that a party may, without the prior consent of the other
party, issue such press release or make such public statement as may be required
by Law or any listing agreement with a national securities exchange or automated
quotation system which CLJ or SNH is a party to, if it has used all reasonable
efforts to consult with the other party and to obtain such party's consent but
has been unable to do so in a timely manner.
5.13. CLJ STOCKHOLDER APPROVAL.
CLJ shall submit this Agreement and the transactions contemplated by
this Agreement for the approval by its stockholders at a special meeting of
stockholders to be held not later than March 31, 2002 (provided that such date
may be postponed to not later than June 30, 2002 upon the written request of
CLJ, provided that CLJ is proceeding in good faith), and, subject to the
fiduciary duties of its Board of Directors, CLJ shall recommend approval of this
Agreement and the transactions contemplated by this Agreement and shall use its
reasonable business efforts to obtain stockholder approval.
SECTION 6.
CONDITIONS
6.1. CONDITIONS TO EACH PARTY'S OBLIGATIONS.
The respective obligations of each Party to consummate the transactions
contemplated hereby shall be subject to the fulfillment or waiver (subject to
applicable Law) at or prior to the Closing of each of the following conditions:
(a) APPROVAL OF SALE OF STOCK. The sale of the CSL Stock to
ACQ. SUB pursuant to this Agreement shall have been approved and
adopted by the requisite vote of or consent by the holders of common
stock of CLJ entitled to vote thereon in accordance with applicable Law
and CLJ's Organizational Documents.
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(b) HSR ACT. Any waiting period (and any extension thereof)
under the HSR Act applicable to the transactions contemplated hereby
shall have expired or been terminated and no action shall have been
instituted by the Antitrust Division or the FTC challenging or seeking
to enjoin the consummation of the transactions contemplated hereby,
which action shall have not been withdrawn or terminated.
(c) CONSENTS. All Consents (i) listed in SECTION 6.1(c) of
the Disclosure Schedule, (ii) that are required in connection with the
Lease, (iii) that pertain to the conversion of certain of the Acquired
Companies in accordance with Section 5.6, and (iv) relating to
healthcare Permits (including Medicare and Medicaid provider
agreements) shall have been obtained and shall (to the extent required)
contemplate and permit the Lease; provided if, using commercial
reasonable efforts, CLJ is unable to obtain one or more of the Consents
referenced on SECTION 6.1(c) of the Disclosure Schedule for CCC
Boynton, Lexington at Country Place or Lafayette at Country Place (A)
the Purchase Price shall be reduced by the relevant Consent Reduction
Amount, (B) the relevant CSL Subsidiary and Community shall be deleted
from the definitions of Communities, Properties, CSL Subsidiaries and
from the description of the Assets and (C) the Acquired Companies shall
be relieved from and indemnified against any liabilities of CCC Boynton
or CCC of Kentucky, Inc., as the case may be, on terms acceptable to
SNH, whereupon the conditions of obtaining those Consents (subject to
the provisions of SECTION 2.6) is deemed waived. To the extent
modifications to the Lease are reasonably required to obtain any
Consent required pursuant to this Agreement, so long as such
modifications do not (taking into account the plan of SNH to spin off
Tenant as a separate public company) affect the qualification of SNH or
any Subsidiary of SNH as a "real estate investment trust" or a
"qualified REIT subsidiary", as the case may be, under the Code, SNH
will not, and will cause Tenant not to, unreasonably decline to make
such modifications.
(d) INJUNCTION. No preliminary or permanent injunction,
judgment or other order shall have been issued by any federal, state or
foreign court or by any Governmental Entity and be in effect on the
Closing Date which prohibits, restrains, restricts or enjoins the
consummation of the transactions contemplated by this Agreement.
(e) STATUTES. No federal, state or foreign statute, law,
rule, regulation, executive order, judgment, decree or order of any
kind shall have been enacted, entered, promulgated or enforced by any
court or Governmental Entity which prohibits, restrains, restricts or
enjoins the consummation of the transactions contemplated by this
Agreement or has the effect of making the transactions contemplated by
this Agreement illegal.
(f) TAX ALLOCATION AGREEMENT. CLJ, CSL, the Acquired
Companies, ACQ. SUB and SNH shall have entered into a Tax Allocation
Agreement in the form of EXHIBIT D.
(g) MARRIOTT AGREEMENTS. The Marriott Agreements shall be
in full force and effect on the Closing Date (except for the
Noncompetition Agreement and the Transition Agreements, so long as such
agreements have been terminated without
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expense or liability to any of the Acquired Companies); MI, MSLS and
HMC, as the case may be, shall have given their Consent to the
assignment of the Operating Agreements to Tenant, the assignment of the
Pooling Agreements to CSL, the assignment of the MI Indemnity Agreement
to SNH and given such other Consents as are required in connection with
the transactions contemplated by this Agreement. CLJ and CSL, on the
one hand, and SNH, ACQ. SUB and Tenant, on the other, shall have fully
complied with all applicable provisions of the Marriott Agreements;
provided the Marriott Agreements shall have been amended to provide
that neither SNH nor any Subsidiary of SNH shall be subject to any
agreement not to compete or which would otherwise limit the conduct of
their businesses and further provided that if, in connection with any
Consent, MI, MSLS or HMC shall require any modification of or
supplement to any of the Marriott Agreements or shall impose any other
condition on their Consent, such modification, supplement or condition
shall be in form and substance acceptable to SNH.
6.2. CONDITIONS TO OBLIGATIONS OF CLJ AND CSL.
The obligations of CLJ and CSL to consummate the transactions
contemplated hereby shall be subject to the fulfillment (or waiver by CLJ and
CSL) at or prior to the Closing of each of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of SNH and ACQ. SUB set forth in this Agreement shall be
true and correct in all material respects as of the date of this
Agreement and as of the Closing Date, provided, however, that such
representations and warranties shall be deemed to be true and correct
unless the failure or failures of such representations and warranties
to be so true and correct, without regard to any materiality qualifiers
contained therein, individually or in the aggregate, results or could
reasonably be likely to result in a material adverse effect on the
ability of SNH or ACQ. SUB to consummate the transactions contemplated
by this Agreement.
(b) LEASE AMENDMENTS. The subleases (and the related pledge
agreements) between CLJ and HPT listed in SECTION 6.2(b) of the
Disclosure Schedule for the properties known as CYBM and RIBM hotels
shall have been amended as provided in EXHIBIT E; the costs and
expenses of HPT in connection therewith shall have been paid by SNH and
the costs and expenses of HMC in connection therewith shall have been
paid by CLJ.
(c) COVENANTS. SNH and ACQ. SUB shall have complied in all
material respects with their respective obligations under the terms of
this Agreement.
(d) CERTIFICATE. CLJ shall have received a certificate
signed by the president and chief financial officer of SNH certifying
to the fulfillment of the conditions set forth above in this SECTION
6.2.
(e) OPINION OF COUNSEL. CLJ shall have received an opinion
of Sullivan & Worcester LLP, counsel to SNH and ACQ. SUB, in form and
substance reasonably acceptable to CLJ.
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6.3. CONDITIONS TO OBLIGATIONS OF SNH AND ACQ. SUB.
The obligations of SNH and ACQ. SUB to consummate the transactions
contemplated hereby shall be subject to the fulfillment (or waiver by SNH) at or
prior to the Closing Date of each of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of CSL and CLJ set forth in this Agreement shall be true and
correct as of the date of this Agreement and as of the Closing Date,
provided, however, that such representations and warranties shall be
deemed to be true and correct unless the failure or failures of such
representations and warranties to be so true and correct, without
regard to any materiality qualifiers contained therein, individually or
in the aggregate, results or could reasonably be likely to result in a
Material Adverse Effect.
(b) COVENANTS. CLJ and CSL shall have complied in all
material respects with their obligations under the terms of this
Agreement.
(c) ESTOPPEL CERTIFICATES. SNH shall have received estoppel
certificates dated within sixty (60) days of the Closing Date executed
by (i) each lender holding a Mortgage Loan, the lessor under the Ground
Lease and each lessor under a Capital Lease, which shall specify the
principal and interest balance outstanding and/or future rent(s), the
amount of the Mortgage Reserves and other reserves held by such lender
or lessor, and the date of the most recent payment thereunder, the
prepayment premium (for the GMAC Mortgage Loans only), if any, and
shall confirm whether a notice of default has been sent to the
applicable borrower or lessee, and shall otherwise be in a form
reasonably acceptable to SNH; and (ii) MI and/or MSLS with respect to
each of the Operating Agreements, which shall specify the FF&E Reserves
balance as of the end of the 2001 fiscal year and amounts due for owner
funded capital expenditures for the 2001 fiscal year and the capital
expenditures budget (including separately, those expenditures expected
to be paid from the FF&E Reserve and those expected to be paid by
owners) for the 2002 fiscal year, and shall confirm whether a notice of
default has been sent to the applicable Acquired Company, and shall
otherwise be in a form reasonably acceptable to SNH.
(d) TITLE INSURANCE; ABSENCE OF LIENS. The Title Company
shall be prepared, subject only to payment of the applicable premiums,
to issue title insurance policies, or endorsements thereto, to the
Acquired Companies, insuring title to the Properties is vested in the
Acquired Companies, pursuant to ALTA title insurance policies in form
and substance reasonably satisfactory to SNH, subject only to the
Permitted Liens, or such other exceptions as may be approved by SNH. No
Liens shall exist on any Assets (including the CSL Stock, the CCC
Boynton Stock and the CCC Senior Living Stock), except for Permitted
Liens and Liens disclosed in SECTIONS 2.1 or 3.12(b) of the Disclosure
Schedule, and the CSL Subsidiaries that guarantied the Bankers Trust
Line shall have been released as guarantors thereunder.
(e) OPERATING AGREEMENTS. The Operating Agreements shall be
in full force and effect on the Closing Date, the FF&E Reserves shall
have been fully funded
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through the Closing Date as required by the Operating Agreements,
Working Capital shall have been maintained in a manner consistent with
past practice and shall be at customary levels on the Closing Date and
all amounts due MI/MSLS with respect to any of the Properties, whether
arising under the Operating Agreements or otherwise, shall have been
paid in full on the Closing Date.
(f) MORTGAGE RESERVES. The Mortgage Reserves shall have
been fully funded through the Closing Date as required by the Mortgage
Loans and the Capitalized Leases.
(g) CONVERSION OF CERTAIN ACQUIRED COMPANIES. Not later
than two Business Days prior to the Closing Date (and in any event
prior to the closing of the New Loan) each of the Acquired Companies
listed in SECTION 5.6 of the Disclosure Schedule shall have been
reorganized as a business trust organized under the laws of the State
of Maryland (or, subject to the proviso to the first sentence of
SECTION 5.6, a Delaware limited liability company) in accordance with
SECTION 5.6.
(h) CLOSING OF NEW LOAN. The New Loan shall have closed,
and New Loan proceeds of not less than $150,000,000 and not more than
$175,000,000 (before reduction for all transaction expenses associated
with the New Loan) shall have been disbursed to one or more of the
Acquired Companies, not later than two Business Days prior to the
Closing Date.
(i) DIVIDENDS; DISTRIBUTIONS. The Acquired Companies shall
have declared and paid dividends and/or made distributions to CLJ in an
aggregate amount equal to the proceeds (after reduction for all
transaction expenses associated with the New Loan) of the New Loan not
later than one Business Day prior to the Closing Date.
(j) PRIOR TAX MATTERS AGREEMENTS. MI, MSLS, HMC and Host
Marriott L.P., as the case may be, shall have consented to the
assignment by CLJ of certain of its rights under the Prior Tax Matters
Agreements to SNH pursuant to the Tax Allocation Agreement and shall
have confirmed the Prior Tax Matters Agreements are in force and
effect.
(k) WOODLANDS. The limited partnership interests in Panther
Holdings Level I, L. P., a Delaware limited partnership ("PANTHER
HOLDINGS") that are not owned by an Acquired Company on the date hereof
shall either have been acquired by an Acquired Company prior to the
Closing Date, or CLJ shall have entered into an agreement with SNH in
form reasonably acceptable to SNH pursuant to which CLJ shall agree to
indemnify SNH for 50% of the actual costs incurred by SNH or its
Affiliates after the Closing Date to purchase or redeem such limited
partnership interests in Panther Holdings; provided that CLJ's
obligation to pay such costs shall be limited to $250,000.
(l) GABLES. CLJ shall have either paid the Contingent
Purchase Price payable under Section 1.2.3 of the Agreement for
Purchase and Sale for the Community known as Gables of Winchester dated
as of December 10, 1997 on or prior to the Closing Date, or CLJ shall
have entered into an agreement with SNH in form reasonably
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acceptable to SNH pursuant to which CLJ shall agree to indemnify SNH
for any amounts payable or paid by SNH or its Affiliates after the
Closing Date pursuant to such provision.
(m) CERTAIN RESIGNATIONS. The existing officers, directors
and managers of each of the Acquired Companies shall have resigned
effective as of the Closing Date (provided that any "independent"
manager or director of any Acquired Company will only be required to
resign if s/he is replaced with another qualified "independent" manager
or director).
(n) CERTIFICATE. SNH shall have received a certificate
signed on behalf of CLJ and CSL by their respective chief executive
officers and chief financial officers certifying to the fulfillment of
the conditions set forth above in this SECTION 6.3.
(o) OPINION OF COUNSEL. SNH shall have received an opinion
of Arnold & Porter, counsel to CLJ, in form and substance reasonably
acceptable to SNH.
SECTION 7.
NATURE AND SURVIVAL OF REPRESENTATIONS
AND WARRANTIES; INDEMNIFICATIONS; TAX MATTERS
7.1. SURVIVAL OF REPRESENTATIONS, WARRANTIES, ETC.
All representations and warranties of the parties set forth in this
Agreement, and the rights of the parties to seek indemnification with respect
thereto, shall survive the Closing. Such representations and warranties, and the
rights of the parties to seek indemnification with respect thereto, shall
expire, except with respect to claims asserted prior to and pending at the time
of expiration, twelve (12) months following the Closing provided that the
representations and warranties contained in SECTIONS 3.1, 3.2, 3.3 and 3.4 shall
survive indefinitely (or if indefinite survival is not permitted by law, then
for the maximum period permitted by applicable law) and provided further that
the representations and warranties contained in SECTIONS 3.13 and 3.19 shall
survive until the expiration of the applicable statute of limitations (including
any waivers or extensions thereof). All such representations and warranties
shall be deemed to have been given and made on the date hereof and as of the
Closing Date.
7.2. CLJ'S AGREEMENT TO INDEMNIFY.
(a) Subject to SECTION 7.1, CLJ shall defend, indemnify and
hold harmless SNH, its Affiliates and their respective officers,
trustees, employees and agents (the "SNH INDEMNITEE"), from and against
and in respect of any and all losses, damages, liabilities,
deficiencies, taxes, costs and expenses including, without limitation,
interest, penalties, and reasonable attorney's fees and expenses
(collectively, "LOSSES"), asserted against, relating to, imposed upon
or incurred by the SNH Indemnitee resulting from, arising out of, or in
connection with: (i) any breach by CLJ or CSL of any of their
respective representations or warranties contained in this Agreement;
(ii) any breach by CLJ or CSL of any of their respective covenants,
agreements or obligations contained in
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this Agreement and (iii) any and all actions, suits, proceedings,
claims, demands, assessments and judgments incident to any of the
foregoing.
(b) Anything in this SECTION 7 to the contrary
notwithstanding: (i) no amounts of indemnity shall be payable as a
result of a claim, unless and until the SNH Indemnitee has suffered,
incurred, sustained or become subject to Losses with respect thereto in
excess of $500,000 in the aggregate, and (ii) the indemnification
obligations of CLJ in respect of the Losses indemnified against shall
not exceed the Purchase Price.
7.3. SNH'S AGREEMENT TO INDEMNIFY.
(a) Subject to SECTION 7.1, SNH shall defend, indemnify and
hold harmless CLJ, its Affiliates and their respective, officers,
directors, employees and agents (the "CLJ INDEMNITEE"), against and in
respect of any Losses resulting from: (i) any breach by SNH of any of
its representations or warranties contained in this Agreement; (ii) any
breach by SNH of any of its covenants, agreements or obligations
contained in this Agreement and (iii) any and all actions, suits,
proceedings, claims, demands, assessments and judgments incident to any
of the foregoing.
(b) Anything in this SECTION 7 to the contrary
notwithstanding, no amounts of indemnity shall be payable as a result
of a claim, unless and until the CLJ Indemnitee has suffered, incurred,
sustained or become subject to Losses with respect thereto in excess of
$500,000 in the aggregate.
7.4. THIRD PARTY CLAIMS.
(a) Promptly after the receipt by any party hereto of
notice of any claim, action, suit or proceeding of any third party
which is subject to indemnification hereunder, such party ("INDEMNIFIED
PARTY") shall give written notice of such claim to the party obligated
to provide indemnification hereunder ("INDEMNIFYING Party"), stating
the nature and basis of such claim and the amount thereof, to the
extent known. Failure of the Indemnified Party to give such notice
shall not relieve the Indemnifying Party from any liability which it
may have on account of its indemnification obligation or otherwise,
except to the extent that the Indemnifying Party is materially
prejudiced thereby.
(b) The Indemnifying Party shall be entitled to elect to
participate in the defense of and, if it so chooses, to assume the
defense of such claim, action, suit or proceeding with counsel selected
by the Indemnifying Party and reasonably satisfactory to the
Indemnified Party. Upon any such election by the Indemnifying Party to
assume the defense of such claim, action, suit or proceeding, the
Indemnifying Party shall not be liable for any legal or other expenses
subsequently incurred by the Indemnified Party in connection with the
defense thereof, PROVIDED, HOWEVER, that (i) if the Indemnified Party
shall have reasonably concluded that separate counsel is required
because a conflict of interest would otherwise exist, then the
Indemnified Party shall have the right to select separate counsel to
participate in the defense of such action on its behalf, at the expense
of the Indemnifying Party and (ii) the Indemnified Party may, at its
option and at its own expense, participate in such defense and employ
counsel separate from the counsel
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employed by the Indemnifying Party. The Indemnifying Party shall be
liable for the reasonable fees and expenses of counsel employed by the
Indemnified Party for any period in which the Indemnifying Party has
not assumed the defense thereof (other than during any period in which
the Indemnified Party failed to give the notice provided above). The
parties shall use commercially reasonable efforts to minimize Losses
from claims by third parties and shall act in good faith in responding
to, defending against, settling or otherwise dealing with such claims,
notwithstanding any dispute as to liability as between the parties
under this SECTION 7. The parties shall also cooperate in any such
defense, give each other full access to all non-privileged information
relevant thereto and make employees and other representatives available
on a mutually convenient basis to provide additional information and
explanation of any material provided hereunder. Whether or not the
Indemnifying Party shall have assumed the defense, the Indemnifying
Party shall not be obligated to indemnify the Indemnified Party
hereunder for any settlement entered into without the Indemnifying
Party's prior written consent, which consent shall not be unreasonably
withheld or delayed. Unless the sole relief is monetary damages which
are payable in full by the Indemnifying Party, the Indemnifying Party
shall not settle any claim without the prior written consent of the
Indemnified Party, which consent shall not be unreasonably withheld or
delayed.
7.5. PURCHASE PRICE ADJUSTMENT.
Any amount paid by CLJ on the one hand, or SNH on the other hand, to
the other pursuant to this SECTION 7 will be treated for federal income tax
purposes as an adjustment to the Purchase Price.
SECTION 8.
TERMINATION
8.1. TERMINATION.
This Agreement may be terminated at any time (subject to the provisions
of this SECTION 8.1) prior to the Closing Date:
(a) by mutual agreement of CLJ and SNH;
(b) by either SNH or CLJ, in writing, if for any reason
(other than a default by the noticing Party) the Closing has not
occurred by June 30, 2002, except that no Party shall have the right to
terminate under this SECTION 8.1(b) if the conditions precedent to such
Party's obligation to close have been or at Closing would be satisfied
or have been waived by such Party and such Party has nonetheless failed
or refused to close;
(c) by either SNH or CLJ in writing, if there shall be any
order, writ, injunction or decree of any court or governmental or
regulatory agency binding on SNH and/or CSL or CLJ, which prohibits or
restrains SNH and/or CSL or CLJ from consummating the transactions
contemplated by this Agreement, provided that SNH and CSL and CLJ shall
have used their commercially reasonable efforts to have any such
-41-
order, writ, injunction or decree lifted and the same shall not have
been lifted within 90 days after entry, by any such court or
governmental or regulatory agency;
(d) by CLJ in writing:
(i) if the conditions set forth in SECTIONS 6.1 and 6.2
shall not have been complied with or performed and such
noncompliance or nonperformance shall not have been cured
or eliminated (or by its nature cannot be cured or
eliminated) by SNH or otherwise by June 30, 2002;
(ii) if, by September 15, 2001, HPT shall not have
agreed, subject to the occurrence of the Closing, to
satisfy the condition contained in SECTION 6.2(b) pursuant
to an amendment acceptable to each of HPT and CLJ;
(iii) if SNH shall have (i) failed to perform in any
material respect its agreements contained in this Agreement
required to be performed by it on or prior to the Closing
Date or (ii) breached any of its representations or
warranties contained in this Agreement, provided that the
breach of such representations or warranties, without
regard to any materiality qualifiers contained therein,
individually or in the aggregate, results or could
reasonably be likely to result in a material adverse effect
on the ability of SNH or ACQ. SUB to consummate the
transactions contemplated by this Agreement;
(e) by SNH in writing:
(i) pursuant to SECTION 5.2, SECTION 5.3 or SECTION
5.4;
(ii) the conditions set forth in SECTIONS 6.1 and 6.3
shall not have been complied with or performed and such
noncompliance or nonperformance shall not have been cured
or eliminated (or by its nature cannot be cured or
eliminated) by CLJ or otherwise by June 30, 2002;
(iii) if CSL or CLJ shall have (i) failed to perform in
any material respect its agreements contained in this
Agreement required to be performed by it on or prior to the
Closing Date, or (ii) breached any of its representations
or warranties contained in this Agreement, provided that
the breach of such representations or warranties, without
regard to any materiality qualifiers contained therein,
individually or in the aggregate, results or could
reasonably be likely to result in a Material Adverse
Effect; or
(f) by either SNH or CLJ, in writing, (i) at any time
following the rejection of this transaction by CLJ's shareholders or
(ii) if CLJ accepts an Alternative Proposal.
-42-
8.2. EFFECT OF TERMINATION.
(a) If this Agreement is terminated by either SNH or CLJ
pursuant to SECTION 8.1, this Agreement shall become void and there
shall be no further obligation on the part of any of SNH, CSL or CLJ
(except for the provisions of SECTION 9.6 and as set forth in this
SECTION 8.2, which shall survive such termination).
(b) If this Agreement is terminated by either SNH or CLJ
pursuant to SECTION 8.1, except as provided in SECTION 8.2(g), the
Deposit shall be paid to SNH.
(c) If CLJ or SNH terminates this Agreement because, on or
prior to December 14, 2001, CLJ's shareholders have rejected this
transaction at a meeting of stockholders called to approve this
transaction, CLJ shall immediately pay to SNH $7,500,000 by wire
transfer of immediately available funds to an account designated by
SNH. If thereafter CSL or substantially all of the Assets are sold or
contracted for sale to a third party on or before August 9, 2003, then,
on the date of the closing of such sale, CLJ will pay SNH an additional
$7,500,000.
(d) If CLJ or SNH terminates this Agreement because, after
December 14, 2001, CLJ's shareholders have rejected this transaction at
a meeting of stockholders called to approve this transaction, CLJ shall
immediately pay to SNH $15,000,000 by wire transfer of immediately
available funds to an account designated by SNH.
(e) If CLJ or SNH terminates this Agreement because CLJ
accepts an Alternative Proposal, CLJ shall immediately pay SNH
$15,000,000 by wire transfer of immediately available funds to an
account designated by SNH.
(f) If SNH terminates this Agreement because any of the
conditions set forth in SECTIONS 6.1 or 6.3 shall not have been
complied with as a result of the willful acts or omissions of CLJ or an
Acquired Company, CLJ shall immediately pay SNH a fee of $15,000,000 by
wire transfer of immediately available funds to an account designated
by SNH.
(g) If CLJ terminates this Agreement because any of the
conditions set forth in SECTIONS 6.1 or 6.2 shall not have been
complied with as a result of the willful acts or omissions of SNH or if
SNH fails to close because it does not have sufficient funds to pay the
Purchase Price (other than as a result of the failure to obtain or
close the New Loan), the Deposit shall be paid to CLJ and SNH shall
immediately pay CLJ an amount by wire transfer of immediately available
funds to an account designated by CLJ which, together with the Deposit,
represents a fee of $15,000,000.
-43-
SECTION 9.
MISCELLANEOUS PROVISIONS
9.1. NOTICES.
Except where oral notice is specifically provided for herein, all
notices, communications and deliveries required or permitted by this Agreement
shall be made in writing signed by the Party making the same, shall specify the
Section of this Agreement pursuant to which it is given or being made, and shall
be deemed given or made (i) on the date delivered if delivered by telecopy or in
person, (ii) on the third Business Day after it is mailed if mailed by
registered or certified mail (return receipt requested) (with postage and other
fees prepaid), or (iii) on the day after it is delivered, prepaid, to an
overnight express delivery service that confirms to the sender delivery on such
day, as follows:
To SNH:
Senior Housing Properties Trust
400 Centre Street
Newton, Massachusetts 02458
Attn: David J. Hegarty, President and Chief Operating Officer
Telecopy No.: (617) 796-8349
with a copy to (which shall not constitute notice):
Sullivan & Worcester LLP
One Post Office Square
Boston, Massachusetts 02109
Attn: Richard Teller
Telecopy No.: (617) 338-2880
-44-
To CSL or CLJ:
c/o Crestline Capital Corporation
6600 Rockledge Drive, Suite 600
Bethesda, Maryland 20817
Attn: Tracy M. J. Colden, Senior Vice President and
General Counsel
Telecopy No.: (240) 694-2040
with a copy to (which shall not constitute notice):
c/o Crestline Capital Corporation
6600 Rockledge Drive, Suite 600
Bethesda, Maryland 20817
Attn: Larry K. Harvey, Senior Vice President and Treasurer
Telecopy No.: (240) 694-2286
or to such other representative or at such other address of a Party as such
Party may furnish to the other Party by notice similarly given.
9.2. SCHEDULES AND EXHIBITS.
The Schedules, Exhibits and all documents expressly referred to in this
Agreement, are incorporated into this Agreement and are made a part of this
Agreement as if set out in full.
9.3. COMPUTATION OF TIME.
Whenever the last day for the exercise of any privilege or the
discharge of any duty under this Agreement shall fall upon a day other than a
Business Day, the Party having such privilege or duty may exercise such
privilege or discharge such duty on the next succeeding day which is a regular
Business Day.
9.4. ASSIGNMENT: SUCCESSORS IN INTEREST.
No assignment or transfer by SNH, CSL or CLJ, of its rights and
obligations under this Agreement prior to the Closing shall be made except with
the prior written consent of the other Party. This Agreement shall be binding
upon and shall inure to the benefit of the Parties and their permitted
successors and assigns, and any reference to a Party shall also be a reference
to a permitted successor or assign.
9.5. NO THIRD-PARTY BENEFICIARIES.
With the exception of the Parties, there shall exist no right of any
person, including, without limitation, creditors of CSL or CLJ, to claim a
beneficial interest in this Agreement or any rights occurring by virtue of this
Agreement.
-45-
9.6. EXPENSES.
Except as otherwise provided below, CLJ (for itself and CSL) and SNH
(for itself and ACQ. SUB) shall each pay their own attorneys', accountants' and
other advisors' fees and costs, costs of internal personnel and filing fees
charged by a governmental authority with respect to filings made by such Party
in connection with the transactions contemplated by this Agreement. SNH shall
pay: (i) the GMAC Fee and all other fees and expenses incurred in connection
with the assumption or termination of the GMAC Mortgage Loans; (ii) all costs
for Permits relating to healthcare licensing of the Communities arising out of
the transactions contemplated by this Agreement (which shall not include costs
incurred in connection with such Permits not being in full force and effect as
of the date of this Agreement, which costs shall be paid by CLJ); (iii) all fees
and costs (including any Transfer Taxes) incurred in connection with the
conversion of any Subsidiaries pursuant to SECTION 5.6 or in connection with the
New Loan (without duplication for amounts by which the Purchase Price is
increased pursuant to SECTION 2.3(a)(b)(B)) or as required in connection with
the GMAC Mortgage Loans; (iv) the cost of any "Earnings and Profits" analysis;
and (v) any prepayment penalty or fee, or other fees and costs incurred in
connection with the prepayment of the Nomura Mortgage Loan. All other costs
associated with the transactions contemplated by this Agreement and not paid for
as provided above in this SECTION 9.6, including, without limitation, filing
fees paid in connection with filings under the HSR Act, Transfer Taxes, title
insurance premiums, costs of surveys and environmental reports, any fees or
costs paid to obtain the Consent of any Person (whether or not listed in SECTION
6.1(c) of the Disclosure Schedule), and the fees and costs incurred in
connection with preparing audited financial statements pursuant to SECTION
3.8(b) of this Agreement, shall be paid one-half by SNH and one-half by CLJ,
provided that fees paid to obtain the Consent of any Person (other than the GMAC
Fee) including without limitation, any fees paid or costs incurred in connection
with the matters set forth in SECTIONS 5.7(f) and 6.3(k), but excluding fees
paid by either SNH or CLJ and referred to in SECTION 6.2(b) shall not be
incurred by either Party (if included as a fee or cost to be paid under this
sentence) without the consent of the other, such consent not to be unreasonably
withheld.
9.7. INVESTIGATIONS.
The respective representations and warranties of CSL, CLJ and SNH
contained in this Agreement or in any Schedule, certificate, or other document
delivered by any Party prior to Closing shall not be deemed waived or otherwise
affected by any investigation made by a Party.
9.8. NUMBER; GENDER.
Whenever the context so requires, the singular number shall include the
plural and the plural shall include the singular, and the gender of any pronoun
shall include the other genders.
9.9. CAPTIONS.
The titles, captions and table of contents contained in this Agreement
are inserted in this Agreement only as a matter of convenience and for reference
and in no way define, limit, extend or describe the scope of this Agreement or
the intent of any provision of this Agreement. Unless otherwise specified to the
contrary, all references to Sections are references to Sections of this
-46-
Agreement and all references to Schedules and Exhibits are references to
Schedules and Exhibits to this Agreement.
9.10. AMENDMENTS.
To the extent permitted by Law, this Agreement may be amended by a
subsequent writing signed by all of the Parties upon the approval of the general
partner, board of directors or board of trustees, as the case may be, of each of
the Parties.
9.11. INTEGRATION: WAIVER.
This Agreement supersedes all negotiations, agreements and
understandings among the Parties with respect to the subject matter of this
Agreement (except (i) the, Confidentiality Agreement among CLJ, SNH, HPT and
HRPT Properties Trust dated December 5, 2000, as amended by a letter dated July
31, 2001 and (ii) by a Confidentiality Agreement dated as of February 20, 2001
between SNH and CLJ, each of which shall continue in full force and effect) and
constitutes the entire agreement among the Parties. The failure of any Party at
any time or times to require performance of any provisions of this Agreement
shall in no manner affect the right to enforce the same. No waiver by any Party
of any conditions, or of the breach of any term, provision, warranty,
representation, agreement or covenant contained in this Agreement, whether by
conduct or otherwise, in any one or more instances shall be deemed or construed
as a further or continuing waiver of any such condition or breach of any other
term, provision, warranty, representation, agreement or covenant contained in
this Agreement.
9.12. GOVERNING LAW.
This Agreement is to be construed and enforced in accordance with, and
the rights of the parties shall be governed by, the law of the State of Maryland
(without giving effect to any laws or rules relating to conflicts of laws that
would cause the application of the laws of any jurisdiction other than the State
of Maryland).
9.13. CONSENT TO JURISDICTION.
To the extent permitted by applicable Law, the Parties absolutely and
irrevocably consent and submit to the nonexclusive jurisdiction of the courts of
the State of Maryland and of any federal court located in said jurisdiction in
connection with any actions or proceedings brought against a Party by any other
Party arising out of or relating to the transactions contemplated by this
agreement and hereby irrevocably agrees that all claims in respect of any such
action or proceeding may be heard and determined in any such court. Each Party
hereby waives and agrees not to assert in any such action or proceeding, in each
case, to the fullest extent permitted by applicable Law, any claim that (a) it
is not personally subject to the jurisdiction of any such court, (b) it is
immune from any legal process (whether through service or notice, attachment
prior to judgment, attachment in aid of execution, execution or otherwise) with
respect to it or its property, or (c) any such suit, action or proceeding is
brought in an inconvenient forum in any such action or proceeding. To the
fullest extent permitted by applicable Law, each Party hereby absolutely and
irrevocably waives trial by jury.
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9.14. SEVERABILITY.
Any provision of this Agreement which is prohibited or unenforceable in
any jurisdiction will, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions of this Agreement, and any such prohibition or unenforceability in
any jurisdiction will not invalidate or render unenforceable such provision in
any other jurisdiction. To the extent permitted by Law, the Parties waive any
provision of law which renders any such provision prohibited or unenforceable in
any respect.
9.15. COUNTERPARTS.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original and all of which shall together be considered
one and the same agreement, and it shall not be necessary in making proof of
this Agreement or the terms of this Agreement to produce or account for more
than one of such counterparts.
9.16. SNH LIMITATION OF LIABILITY.
The Declaration of Trust of SNH, a copy of which is duly filed with the
Department of Assessments and Taxation of the State of Maryland, provides that
the name "Senior Housing Properties Trust" refers to the trustees under such
Declaration of Trust collectively as trustees, but not individually or
personally, and that no trustee, officer, shareholder, employee or agent of SNH
shall be held to any personal liability, jointly or severally, for any
obligation of, or claim against, SNH. All persons dealing with SNH in any way
shall look only to the assets of SNH for the payment of any sum or the
performance of any obligation.
9.17. ACQ. SUB LIMITATION OF LIABILITY.
The Declaration of Trust of ACQ. SUB, a copy of which is duly filed
with the Department of Assessments and Taxation of the State of Maryland,
provides that the name "SNH/CSL Properties Trust" refers to the trustees under
such Declaration of Trust collectively as trustees, but not individually or
personally, and that no trustee, officer, shareholder, employee or agent of ACQ.
SUB shall be held to any personal liability, jointly or severally, for any
obligation of, or claim against, ACQ. SUB. All persons dealing with ACQ. SUB in
any way shall look only to the assets of ACQ. SUB for the payment of any sum or
the performance of any obligation
9.18. CLJ LIMITATION OF LIABILITY.
No director, officer, shareholder, employee or agent of CLJ shall be
held to any personal liability, jointly or severally, for any obligation of, or
claim against, CLJ or its Subsidiaries hereunder. All persons dealing with CLJ
in any way shall look only to the assets of CLJ for the payment of any sum or
the performance of any obligation.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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EXECUTED under seal as of the date first above written.
SENIOR HOUSING PROPERTIES TRUST
By: /s/ David J. Hegarty
--------------------------------------------------
Name: David J. Hegarty
Title: President
SNH/CSL PROPERTIES TRUST
By: /s/ David J. Hegarty
--------------------------------------------------
Name: David J. Hegarty
Title: President
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CSL GROUP, INC.
By: /s/ James L. Francis
--------------------------------------------------
Name: James L. Francis
Title: President
CRESTLINE CAPITAL CORPORATION
By: /s/ Bruce D. Wardinski
--------------------------------------------------
Name: Bruce D. Wardinski
Title: Chief Executive Officer and President
-50-
EXHIBIT A
COMMUNITIES
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PROPERTY STATE
--------------------------------------------------------------------
1 Forum at Memorial Woods Texas
--------------------------------------------------------------------
2 Forum at Tucson Arizona
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3 Forum at Brookside Kentucky
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4 Forum at Overland Park Kansas
--------------------------------------------------------------------
5 Forum at Desert Harbor Arizona
--------------------------------------------------------------------
6 Forum at Park Lane Texas
--------------------------------------------------------------------
7 Forum at Deer Creek Florida
--------------------------------------------------------------------
8 Foulk Manor South Delaware
--------------------------------------------------------------------
9 Tiffany House Florida
--------------------------------------------------------------------
10 Fountainview Florida
--------------------------------------------------------------------
11 Coral Oaks Florida
--------------------------------------------------------------------
12 Springwood Court Florida
--------------------------------------------------------------------
13 Lafayette at Country Place Kentucky
--------------------------------------------------------------------
14 Lexington at Country Place Kentucky
--------------------------------------------------------------------
15 The Forum at Knightsbridge Ohio
--------------------------------------------------------------------
16 The Forum at Pueblo Norte Arizona
--------------------------------------------------------------------
17 The Forum at the Crossing Indiana
--------------------------------------------------------------------
18 Forwood Manor Delaware
--------------------------------------------------------------------
19 Remington Club I California
--------------------------------------------------------------------
20 Remington Club II California
--------------------------------------------------------------------
21 The Montebello on Academy New Mexico
--------------------------------------------------------------------
22 Foulk Manor North Delaware
--------------------------------------------------------------------
23 Millcroft Delaware
--------------------------------------------------------------------
24 Shipley Manor Delaware
--------------------------------------------------------------------
25 Park Summit at Coral Springs Florida
--------------------------------------------------------------------
26 The Montevista at Coronado Texas
--------------------------------------------------------------------
27 Myrtle Beach Manor South Carolina
--------------------------------------------------------------------
28 The Forum at Lincoln Heights Texas
--------------------------------------------------------------------
29 Leisure Park New Jersey
--------------------------------------------------------------------
30 The Gables at Winchester Massachusetts
--------------------------------------------------------------------
31 Forum at Woodlands Texas
--------------------------------------------------------------------
32 Boynton Beach Florida
--------------------------------------------------------------------
EXHIBIT B
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Escrow Agreement") is made as of August 9,
2001 by and among Senior Properties Housing Trust ("SNH"), Crestline Capital
Corporation ("CLJ"), and American Title Company (the "Escrow Agent").
R E C I T A L:
SNH and CLJ have entered into a Stock Purchase Agreement (the
"Agreement") dated as of August 9, 2001, an executed copy of which has been
provided to the Escrow Agent, pursuant to which, INTER ALIA, SNH/CLS Properties
Trust will acquire certain assets of CLJ on the terms and conditions set forth
in the Agreement.
Pursuant to the Agreement, SNH has agreed to deposit $7,500,000 into
escrow upon execution of this Escrow Agreement subject to the terms and
conditions set forth in the Agreement and in this Escrow Agreement.
NOW, THEREFORE, the parties agree as follows:
SECTION 1. DEFINED TERMS. Terms not otherwise defined herein shall have
the respective meanings prescribed therefor in the Agreement. The following
terms are defined in this Escrow Agreement:
"Bank" is Bank One, N.A..
"Escrow Fund" is defined in Section 3 of this Escrow Agreement.
SECTION 2. APPOINTMENT OF ESCROW AGENT. SNH and CLJ hereby appoint the
Escrow Agent as the escrow agent to hold the Escrow Fund in accordance with the
terms and conditions of this Escrow Agreement.
SECTION 3. DELIVERY AND RECEIPT OF FUNDS. Simultaneously with the
execution of this Escrow Agreement, SNH shall deliver to the Escrow Agent the
sum of $7,500,000 in immediately available funds by wire transfer. The Escrow
Agent shall open an escrow account in the name of the Escrow Agent at the Bank
and shall deposit into such account such immediately available funds. The amount
so deposited, including accrued interest thereon, is referred to as the "Escrow
Fund." Receipt of the Escrow Fund from SNH is hereby acknowledged by the Escrow
Agent.
SECTION 4. INVESTMENT OF ESCROW FUND. Until distributed and released in
accordance with the terms and conditions of this Escrow Agreement, the Escrow
Agent shall invest the Escrow Fund in a so-called "money market" deposit fund
with the Bank or in such other liquid, investment grade securities as may be
specified in writing by SNH and CLJ (CLJ's consent to
SNH's choice of investment shall not be unreasonably withheld). The parties must
furnish any form W-9 and any authorization to invest required by Bank.
SECTION 5. RELEASE OF ESCROW FUND.
(a) Upon receipt of joint written notice from SNH and CLJ,
Escrow Agent shall release all or such portion of the Escrow Fund as directed in
such notice.
(b) Upon receipt of written notice from SNH that the Agreement
has been terminated pursuant to Section 8.1 of the Agreement and not pursuant to
Section 8.2(f) of the Agreement, the Escrow Agent shall distribute and release
the Escrow Fund to SNH in accordance with wire transfer information contained in
the notice.
(c) Upon receipt of written notice from CLJ that the Agreement
has been terminated pursuant to Section 8.2(f) of the Agreement, the Escrow
Agent shall distribute and release the Escrow Fund to CLJ in accordance with
wire transfer information contained in the notice.
(d) Upon receipt of written notice from SNH directing Escrow
Agent to release all or a portion of the Escrow Fund to CLJ, Escrow Agent shall
release all or such portion of the Escrow Fund to CLJ as so directed.
Any notice given pursuant to this Section 5 shall contain a
certification by the sending party that a copy of such notice has been
concurrently sent to the other party. On the later of the second business day
(by 2:00 PM, Eastern Standard Time) after receipt of the notice from the sending
party or the date specified in the notice, provided that the Escrow Agent shall
not have received a contrary instruction (by 2:00 PM, Eastern Standard Time on
the later of the second business day after receipt of the notice from the
sending party or the date specified in the notice) from the other party, the
Escrow Agent shall deliver the Escrow Fund to the party so specified. If the
Escrow Agent has received such a contrary instruction, it shall release the
Escrow Fund only pursuant to a joint direction in writing of SNH and CLJ or
pursuant to the decision of a court of competent jurisdiction. Upon distribution
and release of the Escrow Fund, this Escrow Agreement shall be deemed terminated
and the Escrow Agent shall be released and discharged from all further
obligations hereunder.
SECTION 6. DUTIES OF ESCROW AGENT. The acceptance by the Escrow Agent
of its duties as such under this Escrow Agreement is subject to the following
terms and conditions, which SNH and CLJ hereby agree shall govern and control
with respect to the rights, duties, liabilities and immunities of the Escrow
Agent:
(a) The Escrow Agent acts hereunder as a depositary only, and
is not responsible or liable in any manner whatever for any investment made
pursuant to the provisions of Section 4 or any failure, refusal or inability of
the Bank to release or make payment pursuant to the Escrow Agent's direction of
said Escrow Fund, including by reason of insolvency or bankruptcy of the Bank.
-2-
(b) The Escrow Agent shall not be liable for acting upon any
written notice, request, waiver, consent, receipt or other instrument or
document which the Escrow Agent in good faith believes to be genuine and what it
purports to be.
(c) It is understood and agreed that the duties of the Escrow
Agent hereunder are purely ministerial in nature and that it shall not be liable
for any error of judgment, fact or law, or any act done or omitted to be done,
except for its own willful misconduct, breach of fiduciary duty, bad faith or
gross negligence or that of its officers, directors, employees and agents. The
Escrow Agent's determination as to whether an event or condition has occurred,
or been met or satisfied, or as to whether a provision of this Escrow Agreement
has been complied with, or as to whether sufficient evidence of the event or
condition or compliance with the provision has been furnished to it, shall not
subject the Escrow Agent to any claim, liability or obligation whatsoever, even
if it shall be found that such determination was improper and incorrect,
provided, only, that the Escrow Agent and its officers, directors, employees and
agents shall not have been guilty of willful misconduct, breach of fiduciary
duty, bad faith or gross negligence in making such determination.
(d) The Escrow Agent may consult with, and obtain advice from,
legal counsel including its own officers, employees and partners in the event of
any dispute or question as to the construction of any of the provisions hereof
or its duties hereunder, and it shall incur no liability and shall be fully
protected in acting in good faith in accordance with the opinion and
instructions of such counsel.
(e) In the event of any disagreement or lack of agreement
between SNH and CLJ of which the Escrow Agent has knowledge, resulting or which
might result in adverse claims or demands with respect to the Escrow Fund, the
Escrow Agent shall be entitled, in its sole discretion, to refuse to comply with
any claims or demands on it with respect thereto until such matter shall be
resolved, and in so refusing, the Escrow Agent may elect to make no delivery or
other disposition of the Escrow Fund, and in so doing the Escrow Agent shall not
be or become liable in any way to either SNH or CLJ for its failure or refusal
to comply with such claims or demands, and it shall be entitled to continue so
to refrain from acting, and so to refuse to act, until all such claims or
demands (i) shall have been finally determined by a court of competent
jurisdiction, or (ii) shall have been resolved by the agreement of SNH and CLJ
and the Escrow Agent shall have been notified thereof in writing.
(f) The Escrow Agent may resign at any time upon giving ten
(10) days' notice to SNH and CLJ and may appoint a successor escrow agent
hereunder so long as such successor shall accept and agree to be bound by the
terms of this Escrow Agreement and shall be acceptable to SNH and CLJ. It is
understood and agreed that the Escrow Agent's resignation shall not be effective
until a successor escrow agent agrees to be bound by the terms of this Escrow
Agreement.
SECTION 7. NO REPRESENTATIONS BY ESCROW AGENT. The Escrow Agent makes
no representation as to the validity, value, genuineness, negotiability or
collectibility of any security or other document or instrument held by or
delivered to or by it.
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SECTION 8. OBLIGATIONS OF ESCROW AGENT. The Escrow Agent shall be under
no obligation to institute or defend any actions, suits or legal proceedings in
connection herewith or take any other action likely to involve it in expense
unless first indemnified to its reasonable satisfaction.
SECTION 9. EXPENSES. The reasonable out-of-pocket expenses (including,
without limitation, reasonable legal fees and disbursements) incurred by the
Escrow Agent in the performance of its duties hereunder shall be reimbursed
one-half by CLJ and one-half by SNH. Such reimbursement for out-of-pocket
expenses shall be made by cash payment to the Escrow Agent from time to time
upon its written request. The Escrow Agent shall have no right or lien with
respect to the Escrow Fund for payment of such expenses. Except as otherwise
herein or in the Agreement provided, each party shall pay its own expenses
incident to the performance or enforcement of this Escrow Agreement, including
all fees and expenses of its counsel for all activities of such counsel
undertaken pursuant to this Escrow Agreement. All parties recognize that the
cost to enforce or defend by Escrow Agent could be significant since the venue
is Maryland and they agree to pay all costs that the Escrow Agent may so incur,
including reasonable attorney's fees.
SECTION 10. [Intentionally Omitted].
SECTION 11. ASSIGNMENT; SUCCESSORS AND ASSIGNS. This Escrow Agreement
shall not be assignable by SNH or CLJ without the prior written consent of the
other.
Nothing in this Escrow Agreement expressed or implied is intended to or
shall be construed to confer upon or create in any Person (other than the
parties hereto and their permitted successors and assigns) any rights or
remedies under or by reason of this Agreement, including without limitation any
rights to enforce this Escrow Agreement.
SECTION 12. SPECIFIC PERFORMANCE; OTHER RIGHTS AND REMEDIES. Each party
recognizes and agrees that the other party's remedy at law for any breach of the
provisions of this Escrow Agreement would be inadequate and agrees that for
breach of such provisions, such party shall, in addition to such other remedies
as may be available to it at law or in equity or as provided in this Escrow
Agreement, be entitled to injunctive relief and to enforce its rights by an
action for specific performance to the extent permitted by applicable law. Each
party hereby waives any requirement for security or the posting of any bond or
other surety in connection with any temporary or permanent award of injunctive,
mandatory or other equitable relief. Nothing herein contained shall be construed
as prohibiting either party from pursuing any other remedies available to it for
such breach or threatened breach, including without limitation the recovery of
damages.
SECTION 13 ENTIRE AGREEMENT. This Escrow Agreement constitutes the
entire agreement between the parties with respect to the subject matter hereof
and supersedes all prior agreements, arrangements, covenants, promises,
conditions, understandings, inducements, representations and negotiations,
expressed or implied, oral or written, between them as to such subject matter.
SECTION 14. WAIVERS; AMENDMENTS. Anything in this Escrow Agreement to
the contrary notwithstanding, amendments to and modifications of this Escrow
Agreement may be made, required consents and approvals may be granted,
compliance with any term, covenant,
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agreement, condition or other provision set forth herein may be omitted or
waived, either generally or in a particular instance and either retroactively or
prospectively with, but only with, the written consent of the party entitled to
the benefit thereof.
SECTION 15. NOTICES. All notices and other communications which by any
provision of this Escrow Agreement are required or permitted to be given shall
be given in writing and shall be (a) sent by nationally recognized overnight
courier service, (b) sent by facsimile confirmed by sending (by nationally
recognized overnight courier service) written confirmation at substantially the
same time, or (c) personally delivered to the receiving party. All such notices
and communications shall be mailed, sent or delivered as follows:
If to SNH, at:
Senior Housing Properties Trust
400 Centre Street
Newton, Massachusetts 02458
Attention: David J. Hegarty, President
Facsimile: 617-796-8349
with a copy to (which shall not constitute notice):
Sullivan & Worcester LLP
One Post Office Square
Boston, Massachusetts 02109
Attention: Richard Teller
Facsimile: 617-338-2880
If to CLJ, at:
c/o Crestline Capital Corporation.
6600 Rockledge Drive, Suite 600
Bethesda, Maryland 20817
Attn: Tracy M. J. Colden, Senior Vice President and General
Counsel
Facsimile: (240) 694-2040
with a copy to (which shall not constitute notice):
c/o Crestline Capital Corporation.
6600 Rockledge Drive, Suite 600
Bethesda, Maryland 20817
Attn: Larry K. Harvey, Senior Vice President and Treasurer
Facsimile: (240) 694-2286
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with a copy to (which shall not constitute notice):
American Title Company (escrow agent)
6029 Belt Line Road Suite 250
Dallas, Texas 75254
Attn: Carole Badgett, Senior Vice President
Facsimile (972) 789-8029
or to such other person(s) or facsimile number(s) or address(es) as the party to
receive any such communication or notice may have designated by written notice
to the other party.
SECTION 16. SEVERABILITY. If any provision of this Escrow Agreement
shall be held or deemed to be, or shall in fact be, invalid, inoperative,
illegal or unenforceable as applied to any particular case in any jurisdiction
or jurisdictions, or in all jurisdictions or in all cases, because of the
conflicting of any provision with any constitution or statute or rule of public
policy or for any other reason, such circumstance shall not have the effect of
rendering the provision or provisions in question invalid, inoperative, illegal
or unenforceable in any other jurisdiction or in any other case or circumstance
or of rendering any other provision or provisions herein contained invalid,
inoperative, illegal or unenforceable to the extent that such other provisions
are not themselves actually in conflict with such constitution, statute or rule
of public policy, but this Escrow Agreement shall be reformed and construed in
any such jurisdiction or case as if such invalid, inoperative, illegal or
unenforceable provision had never been contained herein and such provision
reformed so that it would be valid, operative and enforceable to the maximum
extent permitted in such jurisdiction or in such case.
SECTION 17. COUNTERPARTS. This Escrow Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument, binding upon all
the parties hereto. In pleading or proving any provision of this Escrow
Agreement, it shall not be necessary to produce more than one of such
counterparts.
SECTION 18. SECTION HEADINGS. The headings contained in this Escrow
Agreement are for reference purposes only and shall not in any way affect the
meaning or interpretation of this Escrow Agreement.
SECTION 19. GOVERNING LAW. This Escrow Agreement is to be construed and
enforced in accordance with, and the rights of the parties shall be governed by,
the laws of the State of Maryland (without giving effect to any laws or rules
relating to conflicts of laws that would cause the application of the laws of
any jurisdiction other than the State of Maryland).
SECTION 20. CONSENT TO JURISDICTION. To the extent permitted by
applicable law, the parties absolutely and irrevocably consent and submit to the
nonexclusive jurisdiction of the courts of the State of Maryland and of any
federal court located in said jurisdiction in connection with any actions or
proceedings brought against a party by any other party arising out of or
relating to this escrow agreement and hereby irrevocably agree that all claims
in respect of any such action or proceeding may be heard and determined in any
such court. Each party hereby waives and agrees not to assert in any such action
or proceeding, in each case, to the fullest
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extent permitted by applicable law, any claim that (a) it is not personally
subject to the jurisdiction of any such court, (b) it is immune from any legal
process (whether through service or notice, attachment prior to judgment,
attachment in aid of execution, execution or otherwise) with respect to it or
its property, or (c) any such suit, action or proceeding is brought in an
inconvenient forum in any such action or proceeding. To the fullest extent
permitted by applicable law, each party hereby absolutely and irrevocably waives
trial by jury.
SECTION 21. LIMITATION OF SNH LIABILITY. The Declaration of Trust of
SNH, a copy of which is duly filed with the Department of Assessments and
Taxation of the State of Maryland, provides that the name "Senior Housing
Properties Trust" refers to the trustees under such Declaration of Trust
collectively as trustees, but not individually or personally, and that no
trustee, officer, shareholder, employee or agent of SNH shall be held to any
personal liability, jointly or severally, for any obligation of, or claim
against, SNH. All persons dealing with SNH in any way shall look only to the
assets of SNH for the payment of any sum or the performance of any obligation.
SECTION 22. LIMITATION OF CLJ LIABILITY. No director, officer,
shareholder, employee or agent of CLJ shall be held to any personal liability,
jointly or severally, for any obligation of, or claim against, CLJ or its
Subsidiaries hereunder. All persons dealing with CLJ in any way shall look only
to the assets of CLJ for the payment of any sum or the performance of any
obligation.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as a sealed instrument as of the date first above written.
SENIOR HOUSING PROPERTIES TRUST
By:
-------------------------------------------------
CRESTLINE CAPITAL CORPORATION
By:
-------------------------------------------------
AMERICAN TITLE COMPANY, as Escrow Agent
By:
-------------------------------------------------
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EXHIBIT C
PROMISSORY NOTE
$25,000,000 [Closing Date]
FOR VALUE RECEIVED, the undersigned, Senior Housing Properties Trust, a
Maryland real estate investment trust ("SNH"), hereby promises to pay to the
order of Crestline Capital Corporation, a Maryland corporation ("CLJ"), on or
before the earlier of (i) January 31, 2004 and (ii) the date the indebtedness
under a Loan Agreement dated as of September 1, 1995 by and among FGI Financing
I Corporation, Forum Ohio HealthCare, Inc. and Nomura Asset Capital Corporation
is repaid in full (the "Maturity Date"), the principal amount of Twenty-Five
Million Dollars ($25,000,000) with interest (computed on the basis of a 360 day
year and twelve 30 day months) on the unpaid principal hereof outstanding from
time to time at the annual rate of 10% ("Interest").
In addition to all other rights contained in this promissory note (this
"Note"), if any Event of Default (as defined herein) occurs and as long as an
Event of Default continues, all obligations of SNH under this Note shall bear
interest at the annual rate of Interest plus 3% ("Default Rate"). The Default
Rate shall also apply from acceleration until the entire obligation or any
judgment thereon is paid in full.
Payments of principal of and interest on this Note shall be made to CLJ
at 6600 Rockledge Drive, Suite 600, Bethesda, Maryland 20817, or to such other
address as CLJ may direct by written notice to SNH. Payments of principal of and
interest on this Note shall be made in lawful money of the United States of
America.
This Note will rank not less than pari passu in priority of payment
with all other outstanding indebtedness for borrowed money of SNH, present or
future, except indebtedness for borrowed money which is preferred as a result of
being secured or as a matter of law.
1. PAYMENT.
1.1 PRINCIPAL AND INTEREST PAYMENT. Interest on this Note shall be
payable by SNH in arrears in equal installments of ninety days' Interest on the
last days of March, June, September and December each year. The principal of
this Note shall be paid by SNH in its entirety, together with any interest
accrued and unpaid thereon, on the Maturity Date.
1.2 PREPAYMENT. This Note may be prepaid in whole or in part at any
time and from time to time without premium or penalty.
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1.3 APPLICATION OF PAYMENTS. All payments received on this Note shall
be applied in the following order: first, to pay all costs of collection of the
holder; then, to pay all accrued and unpaid Interest; and lastly to reduce the
outstanding principal balance of the Note.
1.4 LATE CHARGE. If any payments are not timely made, SNH shall also
pay a late charge equal to 5% of each payment past due for 15 or more days.
1.5 CERTIFICATE OF BORROWER. If at the time of any payment of Interest
SNH does not have public stockholders, then together with such payment, SNH
shall provide a certificate from its chief financial officer which states that
no Event of Default (as defined below) has occurred.
2. DEFAULT.
2.1 EVENTS OF DEFAULT. If any of the following events (each an "Event
of Default") shall have occurred:
(a) SNH fails to pay any installment of Interest on this Note
when the same shall become due and payable which failure continues for
5 days after notice from CLJ or fails to pay the principal of this Note
when and as the same shall become due and payable;
(b) SNH defaults in the payment of interest on or the
principal of any indebtedness for borrowed money, the outstanding
principal amount of which exceeds $10,000,000, beyond any period of
grace provided with respect thereto;
(c) The dissolution of, termination of existence of,
appointment of a receiver for, assignment for the benefit of creditors
of, or commencement of any bankruptcy or insolvency proceeding by or
against SNH; or
(d) The sale of substantially all of the business or assets of
SNH or any merger or consolidation of SNH with or into another entity,
where the purchaser or surviving entity has a net worth, determined in
accordance with generally accepted accounting principles of less than
$50,000,000, without the prior written consent of CLJ;
then the unpaid balance of the principal of this Note, together with all
interest accrued thereon shall become immediately due and payable without
presentation, protest or notice of any kind.
2.2 WAIVER BY SNH. To the fullest extent permitted by applicable law,
SNH hereby absolutely and irrevocably waives presentment, demand, notice,
protest, and all other demands, notices and suretyship defenses generally, in
connection with the delivery, acceptance, performance, default or enforcement of
or under this Note.
2.3 COSTS AND EXPENSES OF COLLECTION. SNH covenants and agrees that if
default be made in any payment of principal of or interest on this Note, it will
pay to CLJ, such further amount as shall be sufficient to cover all costs and
expenses of collection, including reasonable attorneys' fees.
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3. MISCELLANEOUS PROVISIONS.
3.1 GOVERNING LAW. This Note is to be construed and enforced in
accordance with, and the rights of SNH and CLJ shall be governed by, the law of
the State of Maryland (without giving effect to any laws or rules relating to
conflicts of laws that would cause the application of the laws of any
jurisdiction other than the State of Maryland).
3.2 NOTICES. All notices, communications and deliveries required or
permitted by this Note shall be made in writing signed by the party making the
same, shall be effective upon receipt and shall be delivered by telecopy, by
hand, by registered or certified mail (return receipt requested) (with postage
and other fees prepaid) or by an overnight express delivery service, as follows:
To SNH:
Senior Housing Properties Trust
400 Centre Street
Newton, Massachusetts 02458
Attn: David J. Hegarty, President and Chief Operating Officer
Telecopy No.: (617) 796-8349
with a copy to (which shall not constitute notice):
Sullivan & Worcester LLP
One Post Office Square
Boston, Massachusetts 02109
Attn: Richard Teller
Telecopy No.: (617) 338-2880
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To CLJ:
c/o Crestline Capital Corporation
6600 Rockledge Drive, Suite 600
Bethesda, Maryland 20817
Attn: Tracy M. J. Colden, Senior Vice President and
General Counsel
Telecopy No.: (240) 694-2040
with a copy to (which shall not constitute notice):
c/o Crestline Capital Corporation
6600 Rockledge Drive, Suite 600
Bethesda, Maryland 20817
Attn: Larry K. Harvey, Senior Vice President and Treasurer
Telecopy No.: (240) 694-2286
or to such other representative or at such other address of a party as such
party may furnish to the other party by notice similarly given.
3.3 SNH LIMITATION OF LIABILITY. The Declaration of Trust of SNH, a
copy of which is duly filed with the Department of Assessments and Taxation of
the State of Maryland, provides that the name "Senior Housing Properties Trust"
refers to the trustees under such Declaration of Trust collectively as trustees,
but not individually or personally, and that no trustee, officer, shareholder,
employee or agent of SNH shall be held to any personal liability, jointly or
severally, for any obligation of, or claim against, SNH. All persons dealing
with SNH in any way shall look only to the assets of SNH for the payment of any
sum or the performance of any obligation.
EXECUTED under seal as of the date first above written.
SENIOR HOUSING PROPERTIES TRUST
By:
--------------------------------------------------
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EXHIBIT D
TAX ALLOCATION AGREEMENT
TAX ALLOCATION AGREEMENT, dated as of _________, 2001, among Crestline
Capital Corporation, a Maryland corporation, and any successor thereto ("CLJ"),
Senior Housing Properties Trust, a Maryland real estate investment trust
("SNH"), CSL Group, Inc., an Indiana corporation, and any successor thereto
("CSL"), and their respective direct and indirect subsidiaries and affiliates.
References herein to a "party" (or "parties") to this Agreement shall refer to
CLJ, SNH, CSL, and where appropriate and the context so requires, their direct
and indirect subsidiaries and affiliates. Any capitalized term not defined
herein has the meaning given to it in the Stock Purchase Agreement.
WHEREAS, CLJ and its subsidiaries, including CSL and its subsidiaries, have
joined in filing consolidated federal Tax Returns and certain consolidated,
combined or unitary state, local or foreign Tax Returns;
WHEREAS, Host Marriott Corporation, a Delaware corporation ("Host
Marriott"), pursuant to a Distribution Agreement dated as of December 28, 1998
(the "Distribution Agreement"), distributed approximately 93.6% of the
outstanding common stock in CLJ on a PRO RATA basis to its stockholders (the
"Distribution");
WHEREAS, in connection with the Distribution Agreement, Host Marriott and
CLJ entered into a Tax Sharing Agreement dated as of December 28, 1998 (the
"HM/CLJ Tax Sharing Agreement"), providing for allocations of and
indemnifications with respect to certain liabilities for Taxes of Host Marriott
and its subsidiaries and of CLJ and its subsidiaries;
WHEREAS, in Section 3.(e) of the HM/CLJ Tax Sharing Agreement, CLJ was
assigned certain rights arising under a Tax Matters Agreement dated as of June
21, 1997 among Host
Marriott, Marriott International, Inc. ("MII"), Marriott Senior Living Services,
Inc. ("Services"), HMC Senior Communities, Inc. and Forum Group, Inc. (the
"Forum/MI Tax Matters Agreement");
WHEREAS, SNH, CLJ and CSL have entered into that certain Stock Purchase
Agreement, dated as of August __, 2001 (the "Stock Purchase Agreement"),
pursuant to which SNH through an acquisition subsidiary will acquire 100% of the
capital stock of CSL and all of the outstanding equity securities of CCC Boynton
Beach, Inc. and of CCC Senior Living Corporation; and
WHEREAS, the parties hereto wish to provide for (i) allocations of, and
indemnifications against, certain liabilities for Taxes, including Income Taxes
and Other Taxes, (ii) the preparation and filing of Tax Returns on a basis
consistent with prior practice and the payment of Taxes with respect thereto,
and (iii) certain related matters;
NOW THEREFORE, in consideration of their mutual promises, the parties
hereby agree as follows:
1. DEFINITIONS.
When used herein the following terms shall have the following meanings:
"Acquired Companies" -- as defined in Section 1.1 of the Stock Purchase
Agreement.
"Affiliate" -- with respect to any corporation, partnership, limited
liability company, business trust or other entity (the "given entity"), (i) each
person, corporation, partnership, limited liability company, business trust or
other entity that directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with, the given entity,
provided that neither Host Marriott nor any subsidiary of Host Marriott shall be
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considered an Affiliate of any party hereto, (ii) each corporation, partnership,
limited liability company, business trust or other entity in which the given
entity owns, directly or indirectly, through one or more intermediaries, at
least 50% of the value of all outstanding equity interests, (iii) any
partnership or limited liability company in which the given entity is the sole
general partner or the sole managing member, or (iv) any successor of any of the
above. For purposes of this definition, "control" means the possession, directly
or indirectly, of (i) 50% or more of the voting power or value of outstanding
equity interests, or (ii) the power to direct or cause the direction of the
management of an entity, whether by contract or otherwise.
"Affiliated Group" -- an affiliated group of corporations within the
meaning of Code Section 1504(a) for the Taxable Period or, for purposes of any
state, local or foreign income tax matters, any consolidated, combined or
unitary group of corporations within the meaning of the corresponding provisions
of Tax law for the jurisdiction in question.
"CLJ" -- as defined in the preamble to this Agreement.
"CLJ Group" -- CLJ and each corporation that joins with CLJ in filing a
consolidated federal income tax return for CLJ's Taxable Period that includes
the Closing Date. For purposes of this Agreement, the CLJ Group shall exist from
the beginning of the day immediately after the Closing Date and shall exclude
any Acquired Company with respect to the period after the Closing Date.
"CLJ Member" -- a corporation that was immediately before the Transaction a
Pre-Closing Member and is a member of the CLJ Group at the beginning of the day
immediately after the Closing Date.
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"CLJ Party" -- CLJ, each CLJ Member, and each Affiliate of CLJ or of a CLJ
Member, where affiliation is determined after the Closing Date.
"Closing Date" -- the date on which the Transaction closes, as defined in
the Stock Purchase Agreement.
"Code" -- the Internal Revenue Code of 1986, as amended, or any successor
thereto, as in effect for the Taxable Year in question.
"Combined Jurisdiction" -- for any Taxable Period, any state, local or
foreign jurisdiction in which CLJ or a CLJ Affiliate (other than an Acquired
Company) is included in a consolidated, combined, unitary or similar return with
any Acquired Company for state, local or foreign Tax purposes.
"CSL" -- as defined in the preamble to this Agreement.
"Distribution" -- as defined in the preamble to this Agreement.
"Distribution Agreement" -- as defined in the preamble to this Agreement.
"Final Determination" -- (i) a decision, judgment, decree, or other order
by a court of competent jurisdiction, which has become final and unappealable;
(ii) a closing agreement or accepted offer in compromise under Code Sections
7121 or 7122, or comparable agreements under the laws of other jurisdictions;
(iii) any other final settlement with the IRS or other Taxing Authority; (iv)
the receipt of any refund; or (v) the expiration of an applicable statute of
limitations.
"Forum/MI Tax Matters Agreement" - as defined in the preamble to this
Agreement.
"Forum Tax Information" - as defined in the HM/CLJ Tax Sharing Agreement.
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"HM/CLJ Tax Sharing Agreement" - as defined in the preamble to this
Agreement.
"Host Marriott" - as defined in the preamble to this Agreement.
"Host Marriott Entity" or "Host Marriott Entities" - each or all of Host
Marriott and every Affiliate of Host Marriott immediately prior to the
Distribution.
"Host Marriott Taxes" - any Taxes imposed upon or with respect to any Host
Marriott Entity (including Taxes so imposed under the terms of the Forum/MI Tax
Matters Agreement) for any Pre-Closing Taxable Period ending before, on or
including the Distribution Date, excluding all Taxes allocable to CLJ or any of
its Affiliates (including the Acquired Companies) under the terms of the HM/CLJ
Tax Sharing Agreement.
"Host Marriott Tax Information" - any information relating or pertaining to
any Host Marriott Entity for any Pre-Closing Taxable Period ending before, on or
including the Distribution Date, but excluding (i) any such information in the
possession of CLJ, or in the possession of any Affiliate controlled by CLJ, or
in the possession of any of the Acquired Companies, on or before the Closing
Date, and (ii) any such information that is in, or may come into, the possession
of CLJ or any then Affiliate of CLJ at any time after the Closing Date.
"Host Marriott Tax Return(s)" - any Tax Returns required to be filed by or
with respect to any Host Marriott Entity for any Pre-Closing Taxable Period
ending before, on or including the Distribution Date, excluding all Tax Returns
which CLJ is responsible for preparing or filing under the terms of the HM/CLJ
Tax Sharing Agreement.
"Income Tax(es)" -- with respect to any entity, any and all Taxes based
upon or measured by net income, gross income, gross receipts or alternative
minimum taxable income, regardless of whether denominated an "income tax," a
"franchise tax," or otherwise, imposed by any
-5-
Taxing Authority, whether any such tax is imposed directly or through
withholding or otherwise, together with any interest thereon and any related
penalty, addition to tax or additional amount.
"Income Tax Attribute" - any deduction, loss, adjustment, or other tax item
or attribute, other than an Income Tax Credit, that can be used by a taxpayer to
reduce its taxable income for purposes of determining its Income Tax liability
(assuming for these purposes that the taxpayer has sufficient taxable income to
fully utilize the deduction, loss or other tax attribute).
"Income Tax Credit" - any credit, including without limitation any
investment tax credit, foreign tax credit, targeted jobs credit, research and
development credit, alternative minimum tax credit, or other credit, that can be
used by a taxpayer to reduce its Income Tax liability (assuming for these
purposes that the taxpayer has sufficient liability for Income Taxes to fully
utilize the credits).
"Information Return(s)" -- with respect to any entity, any and all reports,
returns, declarations or other filings (other than Tax Returns) required to be
supplied to any Tax Authority.
"IRS" -- the United States Internal Revenue Service.
"MII" - as defined in the preamble to this Agreement.
"Other Tax(es)" -- with respect to any entity, any license, business
privilege, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental (including under Code Section 59A), customs
duties, franchise, social security, unemployment, disability, real property,
personal property, intangibles, sales, use, transfer, registration, value added,
add-on minimum, or other tax of any kind whatsoever, whether any such tax is
imposed directly or through withholding or otherwise, together with any interest
thereon and any related
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penalty, addition to tax or additional amount, provided, however, that the term
"Other Tax(es)" shall not include Income Tax(es) and shall not include Transfer
Taxes the responsibility for which is allocated in Section 9.6 of the Stock
Purchase Agreement.
"Overdue Rate" -- a rate of interest per annum that equals the prime rate,
as reported in the Wall Street Journal for the period in which the Overdue Rate
is applicable, plus 2.00%.
"Post-Closing Straddle Period" -- with respect to any party's Straddle
Period, the period beginning on the day immediately after the Closing Date and
ending on the last day of the party's Taxable Year in which the Closing Date
occurs.
"Post-Closing Taxable Period" -- a party's Taxable Year that begins on or
after the day immediately after the Closing Date.
"Pre-Closing Affiliate" -- any Affiliate of any Pre-Closing Member, where
affiliation is determined for all periods before the Closing Date.
"Pre-Closing Group" -- CLJ and each corporation (including any Acquired
Company) that joins with CLJ in filing a consolidated federal income tax return
for CLJ's Taxable Period that includes the Closing Date. For purposes of this
Agreement, the Pre-Closing Group shall terminate at the close of business on the
Closing Date (except as otherwise provided in this Agreement).
"Pre-Closing Member" -- a corporation (including any Acquired Company) that
was a member of the Pre-Closing Group.
"Pre-Closing Straddle Period" -- with respect to any party's Straddle
Period, the period beginning on the first day of such Taxable Year and ending on
the close of business on the Closing Date.
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"Pre-Closing Taxable Period" -- a party's Taxable Year that ends at or
before the close of business on the Closing Date.
"Representative" -- with respect to any person or entity, any of such
person's or entity's directors, officers, employees, agents, consultants,
accountants, attorneys and other advisors.
"Services" - as defined in the preamble to this Agreement.
"SNH Party" -- SNH and any Affiliate of SNH, where affiliation is
determined after the Closing Date.
"Stock Purchase Agreement" -- as defined in the preamble to this Agreement.
"Straddle Period" -- any party's Taxable Year beginning before and ending
after the close of business on the Closing Date.
"Tax(es)" -- collectively, Income Tax(es) and Other Tax(es).
"Taxable Period" -- a party's Pre-Closing Taxable Period, Post-Closing
Taxable Period or Straddle Period.
"Taxable Year" -- a party's taxable year (which may be shorter than a full
calendar or fiscal year), year of assessment or similar period with respect to
which any Tax may be imposed.
"Tax Benefit(s)" -- (i) in the case of an Income Tax Attribute, the sum of
(a) the amount of the Income Tax Attribute multiplied by the sum of (x) if the
Income Tax Attribute relates to a federal income Tax Return, the highest federal
corporate Income Tax rate, and if the Income Tax Attribute does not relate to a
federal income Tax Return, zero, and (y) highest applicable state corporate
Income Tax rate, and (b) any interest received with respect to any related Tax
refund or otherwise credited to the party that used the Income Tax Attribute;
(ii) in the case of an
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Income Tax Credit, 100% of the amount of the Income Tax Credit, plus any
interest received with respect to any related Tax refund or otherwise credited
to the party that used the Income Tax Credit; and (iii) in the case of any Other
Tax, the amount by which the Tax liability of a corporation or other entity is
actually reduced for any Taxable Period, plus any interest received with respect
to any related Tax refund or otherwise credited to such corporation or entity.
"Taxing Authority" -- the IRS and any other domestic or foreign
governmental authority responsible for the administration of any Tax.
"Tax Practices" -- the most recently applied policies, procedures and
practices employed by CLJ or the Pre-Closing Group in the preparation and filing
of, and positions taken on, any Tax Returns of CLJ or any Pre-Closing Member or
Pre-Closing Affiliate for any Pre-Closing Taxable Period.
"Tax Return(s)" -- all returns, reports, estimates, information statements,
declarations and other filings relating to, or required to be filed with a
Taxing Authority in connection with, the payments or refund of any Tax for any
Taxable Period.
"Transaction" -- the transactions contemplated by the Stock Purchase
Agreement to occur at Closing.
"Transfer Taxes" -- as defined in Section 1.1 of the Stock Purchase
Agreement.
2. OBLIGATIONS, RESPONSIBILITIES AND RIGHTS OF CLJ, CSL AND SNH.
(a) Preparation and Filing of Tax Returns
(i) BY CLJ. Except for any Host Marriott Tax Return(s), CLJ shall
prepare and timely file (or cause to be prepared and timely
filed):
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(A) all Tax Returns and Information Returns of the Pre-Closing
Group, any Pre-Closing Member and any Pre-Closing Affiliate
that are required to be filed on or before the Closing Date;
(B) all Tax Returns and Information Returns of the Pre-Closing
Group, any Pre-Closing Member and any Pre-Closing Affiliate
for Pre-Closing Taxable Periods of the Acquired Companies
that are not required to be filed on or before the Closing
Date including, without limitation, CLJ's consolidated
federal Income Tax Return for its Taxable Year that includes
the Closing Date;
(C) except as provided in Section 2(a)(ii)(A), all Tax Returns
and Information Returns of the Pre-Closing Group, any
Pre-Closing Member and any Pre-Closing Affiliate for Taxable
Years of the Acquired Companies that include any Pre-Closing
Straddle Periods;
(D) except as provided in Section 2(a)(ii)(A), all state and
local Tax Returns and state and local Information Returns of
the Pre-Closing Group, any Pre-Closing Member and any
Pre-Closing Affiliate for Straddle Periods of the Acquired
Companies (for these purposes, the Pre-Closing Group shall
be deemed to exist for each such Straddle Period and, to the
extent not prohibited by applicable law, such state and
local Tax Returns and state and local Information Returns
shall be filed by treating each such Straddle Period as a
single Taxable Year);
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(E) except as provided in Section 2(a)(ii)(A), all Tax Returns
and Information Returns of CLJ, the CLJ Group, any CLJ
Member, and any then Affiliate of any CLJ Member for all of
their Straddle Periods and all of their Post-Closing Taxable
Periods; and
(F) all Tax Returns and Information Returns not otherwise
required to be filed by CLJ pursuant to paragraphs (A), (B),
(C), (D) or (E) of this Section 2(a)(i) or by SNH pursuant
to Section 2(a)(ii).
(ii) BY SNH. SNH shall prepare and timely file or shall cause to be
prepared and timely filed:
(A) all Tax Returns and Information Returns of the SNH Parties
for all Straddle Periods of the Acquired Companies except in
any case that a jurisdiction requires or permits the filing
of a Tax Return or Information Return for a Straddle Period
of the Acquired Company that includes both one or more SNH
Parties and one or more CLJ Parties, unless SNH has notified
CLJ at least ninety (90) days before the initial due date of
such return that SNH will file such Tax Return or
Information Return, which notification, in the case of a Tax
Return or Information Return the inclusion in which of any
CLJ Party is permitted but not required, shall specify
whether SNH will include any such CLJ Party in such return.
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(B) any federal Income Tax Return reporting income of any
Acquired Company for its Post-Closing Taxable Period
beginning on the first day immediately following the Closing
Date;
(C) all other Tax Returns and Information Returns for the SNH
Parties for any of their Post-Closing Taxable Periods
beginning on the first day immediately following the Closing
Date; and
(D) all Tax Returns and Information Returns of the SNH Parties
for any of their Post-Closing Taxable Periods (including
without limitation the Post-Closing Taxable Periods
described in Sections 2(a)(ii)(B) and (C), above).
(b) PROVISION OF FILING INFORMATION. With respect to any matter directly
related to any Acquired Company, or any Tax Return or Information
Return that is to be filed by any SNH Party or CLJ Party, each party
to this Agreement shall cooperate and assist the other party in
connection with the preparation and filing of all Tax Returns and
Information Returns that are required to be filed by a specified party
pursuant to Section 2(a), including providing the party required to
file such Tax Returns and Information Returns with (i) all necessary
filing information in a manner consistent with past Tax Practices
(whether or not a Tax Return or Information Return has previously been
filed with respect to any Acquired Company) and (ii) all other
information reasonably requested in connection with the preparation of
such Tax Returns and Information Returns by the party responsible for
preparing and filing such returns, in each case promptly after such
request (which shall be within fourteen (14) days after such request
or, if not
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within such fourteen-day period, as soon as possible thereafter using
all commercially reasonable efforts) and to the extent such
information is in the possession of the party from which it is
requested or can be obtained by the party for which it is requested
with commercially reasonable efforts by that party. CLJ and SNH agree
that (a) within 60 days after the Closing Date, CLJ shall provide SNH
with all records, schedules, data, work product and other information
then in the possession of CLJ (or any Affiliate of CLJ) that represent
work done as of such date relating to the preparation of consolidated
tax basis balance sheets for the Acquired Companies as of the Closing
Date, (b) from and after 60 days after the Closing Date, CLJ shall
provide SNH, within 14 days after SNH's request, any information in
the possession of CLJ or its Affiliates reasonably deemed necessary by
SNH (or SNH's Representative) to complete such consolidated tax basis
balance sheets, and (c) CLJ shall assist, and cooperate with, SNH (or
SNH's Representative) during the preparation of such consolidated tax
basis balance sheets. Notwithstanding anything in this Section 2(b) to
the contrary, CLJ shall not have any responsibility to provide to any
SNH Party any Host Marriott Tax Information or Forum Tax Information,
which information the SNH Parties shall seek directly from Host
Marriott to the extent provided for in the Host Marriott Tax Matters
Agreement (or from MII and Services pursuant to the Forum/MI Tax
Matters Agreement), provided, however, that at SNH's written request,
CLJ agrees to cooperate in good faith with the SNH Parties in their
efforts to obtain such Host Marriott Tax Information (or Forum Tax
Information) pursuant to the
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terms of the HM/CLJ Tax Sharing Agreement and/or the Forum/MI Tax
Matters Agreement.
(c) TAXABLE YEAR. SNH and CLJ agree that, for all Tax purposes, (i) for
the Pre-Closing Taxable Period of each Acquired Company that ends at
the close of business on the Closing Date and for any other
Pre-Closing Taxable Periods of each Acquired Company commencing after
the Distribution Date, each Acquired Company shall be included in the
consolidated federal Income Tax Return of the Pre-Closing Group for
the Taxable Year that includes such Pre-Closing Taxable Period,
subject to the "next day" rule set forth in Treas. Reg. Sec.
1.1502-76(b)(1)(ii)(B) (and, to the extent permitted by law and
Section 2(a) hereof, in all corresponding consolidated, combined or
unitary state or other Income Tax Returns of the Pre-Closing Group, to
the extent the Pre-Closing Group (or a portion of such group)
previously filed or elected to file such consolidated, combined or
unitary state or other Income Tax Returns) and (ii) each Acquired
Company shall either begin a new Taxable Year for purposes of such
federal income and, to the extent permitted by law, state or other
Taxes, on the day immediately after the Closing Date or, in any such
case, beginning on such day as such Acquired Company or its income
shall be included in a Tax Return of SNH. The parties further agree
that, to the extent permitted by applicable law, all federal, state or
other Tax Returns (including Income Tax Returns and Other Tax Returns)
and all Information Returns shall be filed consistently with this
position; provided, however, that with respect to any Acquired Company
that was taxed as a partnership for federal tax purposes, solely for
purposes of determining the
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Taxable Period to which the Acquired Company's items of income,
deduction, expense, loss, credit or other tax attributes are to be
allocated, any Acquired Company that owns an interest in such Acquired
Company shall be treated as selling or exchanging its entire interest
in such Acquired Company immediately before the Closing and acquiring
such interest at the beginning of the day immediately following the
Closing Date, under the principles set forth in Treas. Reg. Sec.
1.1502-76(b)(2)(vi).
(d) STRADDLE PERIOD TAXES.
(i) For purposes of this Agreement, pursuant to Sections 2(a)(ii)(B)
and 2(c), federal Income Taxes for SNH and any Acquired Company
will not be reported in any Straddle Period or allocated
pursuant to this Section 2(d).
(ii) For purposes of this Agreement, Taxes of an Acquired Company
(other than federal Income Taxes) for any Straddle Period of
an Acquired Company shall be allocated between the
Pre-Closing Straddle Period and Post-Closing Straddle Period
in the following manner: (A) state and local Income Taxes
shall be allocated between the Pre-Closing Straddle Period
and Post-Closing Straddle Period based on the actual
liability for Income Taxes of the Acquired Company after
closing the books of the Acquired Company at the close of
business on the Closing Date in a manner consistent with the
reporting of federal taxable income pursuant to Sections
2(a)(ii)(B) and 2(c), and further taking into account SNH's
status as a "real estate investment trust" under the Code
and the provisions of Section 856(i) of the Code, and other
federal or state and local provisions
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concerning the Tax status of any SNH Party; and (B) Other Taxes
shall be allocated between the Pre-Closing Straddle Period and
Post-Closing Straddle Period on the basis of the actual
transactions, events or activities (including, if applicable,
days elapsed) that give rise to or create liability for such
Other Taxes, and based on the periods with respect to which any
Other Taxes that are imposed for the privilege of doing business
may relate.
(iii) SNH shall pay to CLJ, within fourteen (14) days after receipt of
an executed Straddle Period Tax Return that has been prepared
and filed by or on behalf of CLJ pursuant to Section 2(a)(i),
the excess of (A) any amount allocated to any Acquired Company
for its Post-Closing Straddle Period (based on the amount of Tax
shown on such Tax Return, allocated as provided in Section
2(d)(ii)) plus any amount allocated to all SNH Parties that are
not Acquired Companies on such Tax Return over (B) the amount of
any estimated taxes previously paid by or on behalf of any SNH
Party after the Closing to the relevant Taxing Authority with
respect to such Tax with respect to the applicable Taxable
Period. CLJ shall pay to SNH, within fourteen (14) days after
receipt of an executed Straddle Period Tax Return that has been
prepared and filed by or on behalf of SNH pursuant to Section
2(a)(ii), the excess of (A) any amount allocated to any Acquired
Company for the Pre-Closing Straddle Period (based on the amount
of Tax shown on such Tax Return, allocated as provided in
Section 2(d)(ii)) plus any amount allocated to all CLJ Parties
on such Tax
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Return over (B) the amount of any estimated Taxes previously
paid by or on behalf of any Pre-Closing Member or Pre-Closing
Affiliate to the relevant Taxing Authority with respect to such
Tax with respect to the applicable Taxable Period.
(e) PAYMENT OF TAXES. CLJ shall pay (i) all Taxes (other than Host
Marriott Taxes) shown to be due and payable on all Tax Returns filed
by CLJ pursuant to Section 2(a)(i) hereof (except for any Taxes that
are allocable to an Acquired Company for its Post-Closing Straddle
Period under Section 2(d)(ii) or to an SNH Party that is not an
Acquired Company, which Taxes shall be paid by SNH or CSL in the
manner set forth in Section 2(d)(iii)), (ii) all Taxes (other than
Host Marriott Taxes) that shall thereafter become due and payable with
respect to all Tax Returns filed pursuant to Section 2(a)(i) for the
applicable Taxable Periods as a result of a Final Determination
(except for any Taxes that are allocable to an Acquired Company for
its Post-Closing Straddle Period under Section 2(d)(ii) or to an SNH
Party that is not an Acquired Company, which Taxes shall be paid by
SNH or CSL in the manner set forth in Section 2(d)(iii)), (iii) all
Taxes that are allocable to any Acquired Company for its Pre-Closing
Straddle Period under Section 2(d)(ii) in the manner set forth in
Section 2(d)(iii), and (iv) all Transfer Taxes for which CLJ is
responsible under Section 9.6 of the Stock Purchase Agreement. SNH or
CSL shall pay (i) all Taxes attributable to all Tax Returns filed by
SNH or CSL pursuant to Section 2(a)(ii) hereof (except for any Taxes
that are allocable to any Acquired Company for its Pre-Closing
Straddle Period under Section 2(d)(ii) or to any CLJ Party, which
Taxes shall be paid by CLJ in
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the manner set forth in Section 2(d)(iii)), including without
limitation (a) federal Income Taxes of the SNH Parties for the
Acquired Companies' Post-Closing Taxable Period beginning on the first
day immediately following the Closing Date as contemplated by Section
2(d)(i) and (b) all other Taxes of the SNH Parties for any of their
Post-Closing Taxable Periods beginning on the first day immediately
following the Closing Date, (ii) all Taxes that are allocable to any
Acquired Company for its Post-Closing Straddle Period under Sections
2(d)(ii) in the manner set forth in Section 2(d)(iii), and (iii) all
Transfer Taxes for which SNH is responsible under Section 9.6 of the
Stock Purchase Agreement.
(f) AMENDMENTS TO TAX RETURNS. No Tax Returns or Information Returns for
any Pre-Closing Taxable Period or Straddle Period of any Acquired
Company filed by CLJ or SNH may be amended without the consent of CLJ
and SNH, which in each case shall not be unreasonably withheld;
provided, however, that (i) SNH shall not be considered unreasonable
in withholding such consent if such amendment would result in an
increase in a Tax liability for which the SNH Parties have
responsibility under this Agreement or would cause a material risk
that SNH shall fail to qualify as a "real estate investment trust"
under the Code (unless CLJ agrees to pay the SNH Parties an amount
equal to the amount of such increase or to indemnify the SNH Parties
for such failure to qualify, in which case a failure to consent will
be considered unreasonable), (ii) CLJ shall not be considered
unreasonable in withholding such consent if such amendment would
result in an increase in a Tax liability for which CLJ has
responsibility under this Agreement (unless SNH or CSL agrees to pay
CLJ an amount equal to the amount
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of such increase, in which case a failure to consent will be
considered unreasonable), (iii) CLJ shall not be required to seek the
consent of SNH if such amendment would not result in any adjustment to
any Income Tax Attributes or Income Tax Credits, would not result in
any increase in the Tax liability of any SNH Party for each
Post-Closing Straddle Period and Post-Closing Taxable Period, and
would not create any material risk that SNH shall fail to qualify as a
"real estate investment trust" under the Code.
(g) REFUNDS OF TAXES.
(i) CLJ shall be entitled to (a) any refund of Taxes and any Tax
Benefits realized as a result of a Final Determination with
respect to all Tax Returns filed by (or caused to be prepared
and filed by) CLJ pursuant to Section 2(a)(i) (except that the
SNH Parties shall be entitled to any refund of, or Tax Benefit
related to, any Taxes that are allocable to any Acquired Company
for its Post-Closing Straddle Period under Section 2(d)(ii) or
to any SNH Party that is not an Acquired Company) and (b) any
refund of, and any Tax Benefit related to, any Taxes that are
allocable to an Acquired Company for its Pre-Closing Straddle
Period under Section 2(d)(ii). The SNH Parties shall be entitled
to (a) any refund of Taxes and any Tax Benefit realized as a
result of a Final Determination with respect to all Tax Returns
filed by (or caused to be prepared and filed by) any SNH Party
pursuant to Section 2(a)(ii) (except that CLJ shall be entitled
to any refund of, or Tax Benefit related to, any Taxes that are
allocable to an Acquired Company for its Pre-Closing Straddle
Period under Section 2(d)(ii) or to
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any CLJ Party) and (b) any refund of, and Tax Benefit related
to, any Taxes that are allocable to an Acquired Company for its
Post-Closing Straddle Period under Sections 2(d)(ii). Refunds
attributable to a Tax Return shall be allocated between the
Pre-Closing Straddle Period and Post-Closing Straddle Period and
among the parties to such Tax Return on a basis consistent with
the method used to allocate the Tax liability for such Tax
Return under this Agreement. Notwithstanding the above, if and
to the extent any refund of Taxes or other Tax Benefit for any
Pre-Closing Taxable Period is required to be paid to Host
Marriott pursuant to the HM/CLJ Tax Sharing Agreement or
otherwise, none of CLJ, SNH or CSL (nor any Affiliate of any of
them) shall be entitled to such refund of Tax or Tax Benefit.
(ii) If any CLJ Party receives a Tax refund or Tax Benefit to which
any SNH Party is entitled pursuant to this Agreement, CLJ shall
pay (in accordance with Section 4) the amount of such Tax refund
or Tax Benefit (including any interest received thereon) to SNH
within fourteen (14) days of the receipt thereof.
(iii) If any SNH Party receives a Tax refund or Tax Benefit to which
any CLJ Party is entitled pursuant to this Agreement, CSL or SNH
shall pay (in accordance with Section 4) the amount of such Tax
refund or Tax Benefit (including any interest received thereon)
to CLJ within fourteen (14) days of the receipt thereof.
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