Exhibit 2(a)
August 10, 1999
Mr. Michael French
President and Chief Executive Officer
Charter Behavioral Health Systems, LLC
1105 Sanctuary Parkway, Suite 400
Alpharetta, Georgia 30004
Mr. John C. Goff
President and Chief Executive Officer
Crescent Real Estate Equities Limited Partnership
777 Main Street, Suite 2100
Fort Worth, Texas 76102
Mr. Jeffrey L. Stevens
Executive Vice President and
Chief Operating Officer
Crescent Operating, Inc.
306 W. Seventh Street, Suite 1025
Fort Worth, Texas 76102
Re: LETTER AGREEMENT
Dear Messrs. French, Goff and Stevens:
The purpose of this letter (this "Letter Agreement") is to set forth the
terms of an agreement reached by and between Magellan Health Services, Inc.
("Magellan") and Charter Behavioral Health Systems, LLC ("CBHS"), and certain
related agreements of Crescent Real Estate Equities Limited Partnership ("CEI")
and Crescent Operating, Inc. ("COPI").
1. TRANSACTIONS. Magellan and CBHS agree, subject to the conditions set
forth in Addendum A and compliance with the other terms of this Letter
Agreement, that they will in good faith, and as soon as practicable, use
reasonable best efforts to prepare, negotiate and execute definitive agreements,
reflecting the terms in Addendum A, and other reasonable and customary
provisions which are consistent with the terms in Addendum A.
2. BINDING NATURE. This Letter Agreement is legally binding and creates
enforceable obligations of the parties hereto to the extent set forth herein,
subject only to the conditions set forth in Section IV of Addendum A and the
consummation of the transactions contemplated by paragraphs 4, 5 and 8.
Mr. Michael French
Mr. John C. Goff
Mr. Jeffrey L. Stevens
August 10, 1999
Page 2
3. EXPENSES; COSTS. Each of the parties shall be responsible for and bear
all of its own costs and expenses incurred in connection with the transactions
referred to in Addendum A.
4. INTERCOMPANY RECEIVABLES. Within one day following the execution of this
Letter Agreement, Magellan agrees to pay $4 million to CBHS in payment of
amounts owed to CBHS and referred to in Article III.a.3 of Addendum A.
Performance of the agreements contained in this paragraph 4 shall not be subject
to any conditions other than execution of this Letter Agreement by each of the
parties hereto and consummation of the transactions contemplated by paragraph 5.
5. LOAN TO MAGELLAN. Within one day following the execution of this Letter
Agreement, Crescent Real Estate Funding, L.P. ("Funding VII") shall lend $4
million to Charter Medical of East Valley, Inc. This loan shall be evidenced by
a note which shall (i) bear interest at 6% per annum, (ii) have a term ending on
the earlier of (i) 90 days after execution of the note or (ii) the date on which
Funding VII purchases the Arizona Property (as defined below) from Charter
Medical of East Valley, Inc., as evidenced by the recordation of the deed
conveying such Arizona Property, and (iii) be secured by a first priority lien
on the real property of the "Arizona Property" referred to in that certain
letter agreement, dated November 10, 1998, as the same may hereafter be amended,
among Magellan, Funding VII, CBHS and Charter Mesa Behavioral Health System,
LLC, and more fully described on SCHEDULE 6 to Addendum A. The obligations of
Charter Medical of East Valley, Inc. under such note shall be guaranteed by
Magellan pursuant to a separate guaranty, and Charter Mesa Behavioral Health
System, LLC will agree to subordinate its leasehold interest in the Arizona
Property to Funding VII's lien on the Arizona Property.
6. DEFERRAL OF RENT. In consideration of the agreements of Magellan
contained in paragraph 4 above, CEI agrees to cause Crescent Real Estate Funding
VII, L.P., upon execution of this Letter Agreement, to enter into that certain
Eleventh Amendment to Master Lease Agreement (in substantially the form attached
hereto as EXHIBIT A), which shall amend the Master Lease Agreement, dated as of
June 16, 1997, as amended, between Crescent Real Estate Funding VII, L.P. and
CBHS and its subsidiaries to provide that Crescent Real Estate Funding VII, L.P.
shall defer its right to receive rent due from CBHS on August 1, 1999 on the
terms set forth therein. Performance of the agreements contained in this
paragraph 6 shall not be subject to any conditions other than the execution of
this Letter Agreement by each of the parties hereto.
7. MUTUAL RELEASE. At the closing of the transactions contemplated by this
Letter Agreement and the addenda hereto, Magellan, CEI and COPI agree to
execute, and CEI agrees to cause Crescent Real Estate Funding VII, L.P to
execute, a Mutual Release in the form attached hereto as Addendum B.
8. RELEASE OF ESCROW. Within one day following execution of this Letter
Agreement, CBHS shall, and Magellan agrees that CBHS shall, release to COPI the
$2.5 million currently held in escrow pursuant to an Escrow Agreement dated
December 10, 1998, among COPI, CBHS and
Mr. Michael French
Mr. John C. Goff
Mr. Jeffrey L. Stevens
August 10, 1999
Page 3
NationsBank, N.A. Performance of the agreements contained in this paragraph 8
shall not be subject to any conditions other than the execution of this Letter
Agreement by each of the parties hereto.
9. CONSENT BY CEI AND COPI. Each of CEI and COPI hereby consents and agrees
that CBHS and Magellan may consummate the transactions contemplated by Addendum
A to this Letter Agreement.
10. PROVISIONS RELATING TO GOVERNING BOARD AND OFFICERS OF CBHS. Magellan
and COPI hereby agree that each will use reasonable efforts to cause its
respective representatives on the CBHS Governing Board to approve the
transactions and agreements contemplated by Addendum A to this Letter Agreement.
Subject to the standards and restrictions set forth in Section 8.8(d) of the
Amended and Restated Operating Agreement of CBHS, as amended, CBHS agrees to
indemnify each member of the Governing Board and each of its officers from any
and all claims, demands, actions, causes of action, rights, suits, agreements,
covenants, debts, damages, costs and liabilities (collectively, "Claims") of any
nature whatsoever, whether known or unknown, whether at law or in equity,
relating to or arising out of (i) approval of this Letter Agreement, the addenda
hereto, and the transactions and agreements contemplated hereby or thereby, and
(ii) any actions taken or omitted to be taken in connection with this Letter
Agreement, the addenda hereto, or the transactions and agreements contemplated
hereby or thereby.
11. GOVERNING LAW. This Letter Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware, without giving effect to
any conflict of law principles.
12. PUBLIC ANNOUNCEMENTS. No party shall issue or make a written press
release, public announcement or public filing relating to the transactions and
agreements contemplated by this Letter Agreement and the addenda hereto without
the prior approval of each of the other parties hereto, (i) except language
generally consistent with the quoted language set forth below in this paragraph
12, as such quoted language may subsequently be reasonably modified by any of
the parties, consistent with the meaning thereof, in connection with any press
release or other public filing of any of the parties hereto, and as such
language may subsequently be reasonably modified to reflect the closing of the
transactions contemplated by this Letter Agreement and the addenda hereto and as
such language may be reasonably supplemented with quotations from the executive
officers of the parties, consistent with the foregoing, that are supportive of
the transaction, or (ii) unless such press release, public filing or public
announcement is required to be issued or made pursuant to any applicable statute
or other law, rule or regulation. Notwithstanding the foregoing, no party shall
issue any press release, make any public filing or make any public announcement,
written or oral, that is not consistent with the foregoing provisions or that
contains any disparaging remarks relating to any other party hereto or relating
to the terms of any of the transactions contemplated by this Letter Agreement
and the addenda hereto. The parties agree that, without the consent of each
other party hereto, no party will issue any press release, make any public
filing or make a public announcement, written or oral, which assigns an economic
value
Mr. Michael French
Mr. John C. Goff
Mr. Jeffrey L. Stevens
August 10, 1999
Page 4
to such transactions or the components of such transactions. The quoted language
referred to above is as follows:
"Crescent Real Estate Equities Limited Partnership ("CEI"), Magellan Health
Services, Inc. ("Magellan"), Crescent Operating, Inc. ("COPI") and Charter
Behavioral Health Systems, LLC ("CBHS") entered into a binding Letter Agreement
dated August 10, 1999, relating to a proposed recapitalization of CBHS and
restructuring of relationships among the parties. CBHS is the lessee, under a
master lease agreement, of approximately 90 psychiatric hospitals owned by CEI.
"Under the Letter Agreement and consistent with Magellan's strategy of
exiting the hospital provider business, Magellan has agreed that it will, at the
closing of the transactions, transfer its remaining hospital-based assets
(including Charter Advantage, Charter Franchise Services, LLC, the call center
assets, the Charter name and related intellectual property and certain other
assets) to CBHS, and cancel its accrued franchise fees. Thereafter, Magellan
will no longer be obligated to provide franchise services to CBHS. Magellan will
also effectively transfer 80% of its CBHS common interest and all of its
preferred interest to CBHS, leaving Magellan with a 10% common membership
interest, and COPI with a 90% common membership interest and 100% of the
preferred membership interest in CBHS. Additionally, it is anticipated that CBHS
management will have the ability to acquire up to 30% of the common membership
interests. COPI plans to restructure its investment in CBHS so that the closing
of the transactions will not result in COPI's control of CBHS.
"In connection with the execution of the Letter Agreement, Magellan, CBHS,
CEI and COPI have agreed to provide each other with mutual releases of all
claims and disputes against each other, with certain specified exceptions, and
CEI has deferred the August 1999 rent due from CBHS to the last four months of
1999. Additionally, with the execution of the Letter Agreement, the $2.5 million
held in escrow in connection with a pending arbitration between Magellan and
COPI was released to COPI.
"Magellan and CBHS also have modified and extended their existing
arrangement which designates CBHS a preferred provider of inpatient acute
behavioral health services.
"As a result of the execution of the Letter Agreement, the parties expect
that CBHS will be further strengthened by a closing of the transactions
contemplated by the Letter Agreement. CEI also expects that it will agree to
sell up to 20 of the hospitals currently managed by CBHS and use the proceeds to
acquire secured debt of CBHS, subject to the satisfaction of various conditions.
CEI expects that, on an overall basis, CBHS's rent under the master lease would
not be reduced in connection with that transaction.
"The closing of the transactions contemplated by the Letter Agreement is
anticipated to take place within 30 days, subject to the satisfaction of certain
customary closing conditions and consents, and other contingencies. If the
closing does not occur within 30 days, the Letter Agreement terminates."
Mr. Michael French
Mr. John C. Goff
Mr. Jeffrey L. Stevens
August 10, 1999
Page 5
In the event that the closing of the transactions contemplated by this
Letter Agreement and the addenda hereto does not occur within 30 days after the
date hereof, each party shall be permitted to issue a written press release or
make a public filing or public announcement relating to such failure to close,
provided that such party shall not make any disparaging remarks relating to any
other party hereto or relating to the terms of any of such transactions. Any
approval required pursuant to this Paragraph 12 shall not be unreasonably
withheld or delayed by any party hereto.
Mr. Michael French
Mr. John C. Goff
Mr. Jeffrey L. Stevens
August 10, 1999
Page 6
Please return a signed copy of this Letter Agreement to the undersigned to
confirm the binding agreements set forth herein. This Letter Agreement may be
signed in one or more counterparts.
Sincerely,
MAGELLAN HEALTH SERVICES, INC.
By: /s/ Clifford W. Donnelly
-----------------------------------------
Name: Clifford W. Donnelly
------------------------------------
Title: Executive Vice President
and Chief Financial Officer
-----------------------------------
Mr. Michael French
Mr. John C. Goff
Mr. Jeffrey L. Stevens
August 10, 1999
Page 7
Accepted and agreed to this
10th day of August, 1999.
CHARTER BEHAVIORAL HEALTH SYSTEMS, LLC
By: /s/ Michael French
--------------------------------------------
Michael French
President and Chief Executive Officer
Agreed and accepted this 10th day of August, 1999 solely for purposes of
Paragraphs 2, 3, 5, 6, 7, 9, 11 and 12 hereof:
CRESCENT REAL ESTATE EQUITIES LIMITED PARTNERSHIP
By Crescent Real Estate Equities, Ltd., its General Partner
By: /s/ James M. Eidson, Jr.
--------------------------------------------
James M. Eidson, Jr.
Senior Vice President - Acquisitions
Agreed and accepted this 10th day of August, 1999 solely for purposes of
Paragraphs 2, 3, 7, 9, 10, 11 and 12 hereof:
CRESCENT OPERATING, INC.
By: /s/ Jeffrey L. Stevens
--------------------------------------------
Jeffrey L. Stevens
Executive Vice President and Chief Operating Officer
LETTER AGREEMENT ADDENDUM A
TERMS OF TRANSACTIONS
I. PARTIES: Magellan Health Services, Inc.
Charter Behavioral Health Systems, LLC, including its applicable
controlled subsidiaries and affiliates ("CBHS")
II. TRANSACTION: Magellan Health Services, Inc., together with the applicable
controlled subsidiaries and affiliates (excluding the joint ventures listed
on the attached SCHEDULE 2) (collectively, "Magellan") will agree to sell
or transfer certain assets to CBHS, and Magellan and CBHS will enter into
certain agreements. Such sales, asset transfers and agreements are
specified below for each party, and are made and effected in consideration
for the sales, asset transfers and agreements being made by the other party
as provided herein.
III. AGREEMENTS OF PARTIES: Unless otherwise noted, the transactions below will
occur contemporaneously at the closing of all of the transactions
contemplated by this Article III (the "Closing").
A. MAGELLAN
1. Magellan will transfer 80% of its common interest and all of its
preferred interest in CBHS to CBHS pursuant to a redemption
transaction . (Magellan's common and preferred interests are
described on SCHEDULE 1). Following such transfer and after the
completion of the restructuring contemplated by this Addendum A
to the Letter Agreement, Magellan will have 10% of the common
interest of CBHS, representing 10% of the equity (on a fully
diluted basis, including the initial sale of up to 30% of the
common interests of CBHS to members of management or other CBHS
employees) of CBHS. In the case of issuances of equity in
accordance with any of clauses (i) through (iv) of the last
sentence of this Article III.1, Magellan's percentage of the
common interest of CBHS will be diluted on a pro rata basis with
other holders of common interests of CBHS. In connection with the
transfer of its interests in CBHS, Magellan shall cease to have
the right to nominate or select any members of the Governing
Board of CBHS and shall have no rights except as the holder of
10% of the common interests of CBHS. With respect to such 10%
common interest, CBHS will provide Magellan customary and
reasonable anti-dilution protections against stock splits,
mergers, consolidations, sale of all or substantially all of the
assets or other recapitalizations, and issuances of equity for
prices below the market price at the time of any such issuance
except in connection with (i) any issuance of common equity to
employees or (ii) any other issuance of common
equity to or for the benefit of employees pursuant to employee
equity plans, (iii) any issuance of common equity to a
non-affiliate (as defined under the federal securities laws)
where the price to be paid has, in the opinion of the Governing
Board of CBHS, been fully and fairly negotiated and the issuance
has been approved by the Governing Board of CBHS as being in the
interest of CBHS or (iv) any issuance of common equity to an
affiliate (as defined under the federal securities laws) if a
fairness opinion from a nationally recognized independent
valuation firm has been obtained.
2. Magellan will use reasonable best efforts to sell to a subsidiary
of CBHS, all of its interests in the joint ventures and related
real property, as identified on the attached SCHEDULE 2, subject
to required consents. If any joint venture interest or related
real property may not be sold despite all reasonable best
efforts, Magellan will sell the net economic benefit of such
assets (to the extent not otherwise provided to CBHS) as if CBHS
were the owner of the assets or act as a fiduciary nominee for
CBHS with respect to such assets. Magellan will indemnify CBHS
for any and all claims, losses, damages, costs, expenses and
liabilities which CBHS or any of its affiliates or subsidiaries
may incur either (i) as a result of any claim that any such
assignment or other provision to CBHS of the net economic benefit
of the joint ventures listed on the attached SCHEDULE 2 is
invalid or impermissible or otherwise violates the terms of the
agreements governing such joint ventures or (ii) in connection
with the operation of any such joint venture prior to June 16,
1997. The joint venture interests transferred shall include,
without limitation, an amount equal to the amount of any net
proceeds to be received from the proposed sale of Magellan's
interest in the Linden Oaks joint venture, currently anticipated
to be approximately $10 million (representing both purchase price
and working capital components) and Magellan will use good faith
efforts to complete such sale as soon as reasonably practicable.
Magellan will retain its interest in the Charter Heights
facility. In connection with the sale (or other provision of net
economic benefit) of the joint venture interests and related real
property of the joint ventures listed on SCHEDULE 2, CBHS shall
indemnify Magellan for any and all claims, losses, damages,
costs, expenses and liabilities which Magellan may incur in
connection with the operation of any such joint venture after
June 16, 1997, as if such joint venture interests were
transferred on June 17, 1997.
3. The parties agree to negotiate in good faith for a period of 30
days from the date of the Letter Agreement to resolve and
determine the net amount of intercompany receivables/payables
owed between the parties pursuant to the services agreements
between Magellan and CBHS relating to certain of Magellan's joint
ventures and other general intercompany receivables/payables,
excluding the intercompany receivables referred to in Article
III.a.4. below, and including, as a reduction of payables from
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Magellan to CBHS, the $2 million paid by Magellan to CBHS on or
about July 8, 1999 and the $4 million payment made by Magellan
upon execution of the Letter Agreement to which this Addendum A
is attached. SCHEDULE 3 sets forth a preliminary
reconciliation of intercompany receivable/payable amounts. If
amounts remain in dispute at the end of such thirty (30) day
period, the parties shall refer the matter to a mutually
acceptable accounting firm to determine within 30 days the amount
that one party shall pay the other in order to resolve all such
outstanding disputed matters. The parties shall split the cost of
engaging such accounting firm equally. The determination of the
accounting firm of such disputed matters shall be binding on the
parties. Within three business days after the determination of
the accounting firm, Magellan shall pay to CBHS or CBHS shall pay
to Magellan, as the case may be, the net amount of the
intercompany receivable/payable.
4. Magellan will assume all intercompany payables due to Magellan
from CBHS related to (a) amounts collected or due for services
rendered prior to June 17, 1997 to "straddle" patients, who were
hospital patients which were admitted prior to June 17, 1997 and
discharged after such date (the "Straddle Receivables") and (b)
prepaid management fees of approximately $3.3 million (as further
identified on Schedule 8, Item 3).
5. Subject to and upon consummation of the proposed sale by Magellan
of Group Practice Affiliates, Inc. ("GPA") (which sale Magellan
shall use good faith efforts to complete as soon as reasonably
practicable on substantially the same terms as the currently
proposed sale), Magellan will acquire from CBHS the license
rights to the Medical Manager MSO System as set forth in the
Master License Agreement dated April 10, 1998 between CBHS and
Medical Manager Southeast, Inc. (the "Master License Agreement").
The consideration to be paid to CBHS by Magellan for the purchase
of the license rights will be $1 million, less the amount of the
final remaining payment (approximately $400,000) to Medical
Manager Southeast, Inc. to complete the purchase of the licensed
software and the associated training and maintenance provided in
the first year covered by the Master License Agreement. Magellan
shall make such final payment when due. In the event that the
proposed GPA sale is not consummated and Magellan makes the final
payment, the amount of such payment shall be credited to GPA's
share of the expenses to acquire and implement the Medical
Manager MSO System under the current agreement between GPA and
CHBS. Magellan and CBHS will enter into a customary purchase
agreement for this type of transaction with respect to this asset
purchase. The purchase agreement will be executed concurrently
with the execution of the purchase agreement for the proposed
sale of GPA. The Medical Manager MSO System is further described
on SCHEDULE 4. Magellan and CBHS shall enter into a Services
Agreement pursuant to which Magellan (or its assignee) shall
provide to CBHS access to and utilization of the
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software of the Medical Manager MSO System relating to continued
operation of Charter Behavioral Associates for a fee equal to
cost plus 10%. Both CBHS and Magellan (or its assignee) agree to
pay their pro rata share of the maintenance fee due under the
Master License Agreement for periods after this first year of
such license. These agreements shall supersede the existing
agreements between Magellan and CBHS regarding the Medical
Manager MSO System. In connection with the proposed sale of GPA,
Magellan will use reasonable best efforts to facilitate
agreements between the proposed purchaser of GPA and CBHS related
to the purchase and sale of hardware and equipment assets
associated with the Medical Manager MSO System and the Central
Billing Office ("CBO"), as well as service agreements between the
parties related to data center support for the Medical Manager
MSO System and the service and operations of the CBO. Magellan
agrees to use its reasonable best efforts to cause the buyer of
GPA to acquire from CBHS the Pittsburgh Practice Assets (as
identified on SCHEDULE 4A) for the same multiple of EBITDA that
the purchaser is paying for GPA. For purposes of achieving the
foregoing, Magellan will provide CBHS with a reasonable
opportunity to participate directly in negotiations relating to
the foregoing transactions; PROVIDED, HOWEVER, that CBHS shall
have no right to participate in negotiations relating to
Magellan's proposed sale of GPA.
6. As part of the overall transaction, Magellan shall grant an
option to CBHS to receive from Magellan within 30 days after
Closing, for no additional consideration, the Puerto Rico
management operation subject to all obligations, liens, claims
and liabilities, known or unknown, contingent or otherwise,
related to the prior and future operation of the Puerto Rico
operation. Magellan will provide CBHS reasonable access to
personnel and information to permit reasonable due diligence
during the period of the option. In the event that CBHS exercises
this option, Magellan will use reasonable best efforts to assign
to CBHS the Puerto Rico management contracts (identified on
SCHEDULE 5). If such contracts may not be assigned, Magellan will
assign or provide to CBHS the present and future net economic
benefit of such contracts
7. At the Closing, Magellan will transfer and assign to CBHS, the
right to receive an amount equal to the approximately $7.1
million to be paid by Crescent Real Estate Equities Limited
Partnership ("CEI") upon CEI's acquisition of the Ramsay
hospitals pursuant to that certain letter agreement, dated
November 10, 1998, by and among Magellan, Crescent Real Estate
Funding VII, Ltd., CBHS and Charter Mesa Behavioral Health
System, LLC (further described on SCHEDULE 6).
8. As part of the overall transaction, Magellan shall grant to CBHS
an option to purchase from Magellan within 30 days after Closing,
for no additional consideration, the Acadian Oaks, Macon Storage
Facility and Brook MOB
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properties (such properties are further identified on Schedule
7), subject to all obligations, liens, claims and liabilities,
known or unknown, contingent or otherwise, related to these
properties or prior or future operation thereof. Magellan will
provide CBHS reasonable access to personnel and information to
permit reasonable due diligence during the period of the option.
Magellan shall receive rent-free use of and storage rights to the
Brook MOB and the Macon Storage Facility for the duration of all
outstanding AG and OIG investigations; provided that Magellan's
rights to use such facilities and the type and amount of space
available to Magellan for storage shall not exceed those
available to Magellan as of June 30, 1999.
9. Magellan will agree to pay to CBHS $2 million in twelve equal
monthly installments. The first such payment shall be due one
year following the Closing.
10. As part of the overall transaction, Magellan will transfer to
CBHS the entities and assets set forth on SCHEDULE 8 (including,
without limitation Charter Managed Care LLC) for no additional
consideration. The entities and assets on SCHEDULE 8 will be
transferred without any indebtedness for borrowed money. These
entities and assets relate to the franchise and service
agreements between Magellan and CBHS.
11. Magellan will relinquish all rights and obligations under the
Master Franchise Agreement between Magellan, Charter Franchise
Services, LLC ("Charter Franchise") and CBHS which became
effective on June 17, 1997, and the Subsidiary Franchise
Agreements between Magellan, Charter Franchise and each CBHS
facility subsidiary (collectively with the Master Franchise
Agreement, the "Franchise Agreements"). Magellan shall likewise
forgive and cancel all accrued and unpaid amounts due under the
Franchise Agreements from CBHS, including any amounts that become
due at or following Closing.
12. Magellan will release all claims against CBHS, including but not
limited to pending arbitration claims, disputes in connection
with past payments of franchise fees by CBHS to Magellan and all
other issues relating to the original group of transactions,
except with respect to (a) the Orlando arbitration (further
identified on SCHEDULE 9), (b) any disputes related to the
internal investigations set forth on SCHEDULE 10A or governmental
investigations set forth on SCHEDULE 10B including disputes
related to the defense of those investigations or the payment of
legal fees or other costs or liabilities, (c) any obligation
provided for, and any matter the resolution of which is provided
for, in the Letter Agreement, including in this Addendum A, or in
Addendum B, to the Letter Agreement and (d) the indemnification
rights set forth in Section 8.2 of that certain Contribution
Agreement entered into by and among Magellan, Crescent Operating,
Inc.
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("COPI") and CBHS as of June 16, 1997, (subject to the provisions
of Section 8.3 thereof, except for the provisions of Section
8.3(d) thereof). Magellan shall relinquish all rights under the
original transaction agreements (listed on SCHEDULE 11) except as
noted in this paragraph. This provision is not an acknowledgment
by any of the parties of the merits of any such claims and may
not be used by any party or third party as evidence to establish
liability for any such claims. Notwithstanding the foregoing
release and relinquishment, nothing herein contained shall
preclude Magellan from bringing a claim for contribution against
CBHS in connection with any claims, demands or actions brought
against Magellan by a third party, whether private or
governmental, including but not limited to third party claims or
demands that may be settled prior to litigation. Magellan and
CBHS agree to use reasonable best efforts to reach settlement on
the matters set forth under clause (a) above and SCHEDULE 10A
within 30 days of the execution of the Letter Agreement, and any
matters in dispute at the end of such 30 days shall be submitted
to binding arbitration to be performed (i) in accordance with the
Commercial Arbitration Rules of the American Arbitration
Association conducted by a three-person arbitration panel and
(ii) in accordance with such other procedures as shall be
established by Magellan and CBHS.
13. Magellan will not be required to make representations and
warranties concerning the assets to be transferred, other than
that it has good title to the transferred assets free of all
liens and encumbrances.
14. Magellan and CBHS agree to use reasonable best efforts to
resolve, within 30 days of the execution of the Letter Agreement,
the dispute regarding whether Magellan is obligated to pay under
the Franchise Agreement, either pursuant to its terms or in light
of the non-performance of CBHS under the Franchise Agreement
(irrespective of any release contained in Article III.a.12. above
and III.b.5. below), on behalf of CBHS, media buying commissions
and media agency commissions. In the event such matter cannot be
resolved within 30 days, such matter shall be submitted to
binding arbitration to be performed (i) in accordance with the
Commercial Arbitration Rules of the American Arbitration
Association conducted by a three-person arbitration panel and
(ii) in accordance with such other procedures as shall be
established by Magellan and CBHS.
15. As part of the overall transaction, Magellan shall grant an
option to CBHS to receive from Magellan within 30 days after
Closing, for no additional consideration, all of the equity of
Golden Isle Assurance Company Ltd. Magellan will provide CBHS
reasonable access to personnel and information to permit
reasonable due diligence during the period of the option.
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16. Magellan Health Services, Inc. has the power to and will cause
its applicable controlled subsidiaries and affiliates (excluding
the joint ventures listed on the attached Schedule 2) to take
such actions and execute such documents and agreements as may be
necessary to effect the transactions and agreements contemplated
hereby.
17. Magellan will contribute to CBHS (or cause its affiliates to
contribute to CBHS) intangible assets acquired associated with
the following hospitals and related operations: Charleston,
Columbia, Tampa Bay, Paducah, Jackson, Fairmount,
Charlottesville, Orlando-South, Greenville, STAR and Provo
School.
18. Magellan will consent to such reasonable amendments to the
Operating Agreement (i) as may be required to effect the
redemption contemplated by Article III.a.1., (ii) if the
redemption contemplated by Article III.a.1 results in COPI's
ownership of more than 50% of the common interests in CBHS, as
may be requested by COPI to facilitate, at COPI's option, (A) the
distribution of all or any portion of the "COPI Interests," which
are any and all common interests and preferred interests held by
COPI or its designee following a redemption contemplated by
Article III.a.1., (B) the sale of the COPI Interests to any
person or entity, including affiliates of CBHS, (C) the transfer,
other than by sale, of the COPI Interests, or (D) any combination
of the foregoing, (iii) as may be required to reduce the
membership of the CBHS Governing Board to two, provide that
Magellan has ceased to have the right to elect any members to the
Governing Board of CBHS and provide that COPI has the right to
elect both members of the Governing Board, (iv) as may be
required to appoint COPI as the "Tax Matters Member" of CBHS, as
such term is defined in the CBHS Operating Agreement, (v) as may
be required to provide that the income recognized by CBHS as a
result of the cancellation of accrued and unpaid amounts due
under the Franchise Agreements as contemplated by Article
III.a.11. shall be allocated to the capital accounts of the
members of CBHS in the same amounts as the deductions
attributable to such accrued and unpaid amounts were allocated to
such members, and the corresponding items of taxable income,
gain, loss or deduction shall be allocated among the members
consistent with such allocation to capital accounts, (vi) as may
be required to provide that any items of income, gain, loss or
deduction recognized by CBHS as a result of the transfers or
assignments described in the preceding paragraphs of this Article
III (other than the income described in the foregoing clause (v))
shall be allocated to the capital accounts of the members in
accordance with the members' interests on the date of the Closing
(prior to giving effect to the redemption contemplated by Article
III.a.1.), that items attributable to extraordinary transactions
occurring on the date of the Closing but not contemplated by this
Article III shall be allocated to the capital accounts of the
members in accordance with the members' interests after giving
effect to such
-7-
redemption, and that the corresponding items of taxable income,
gain, loss or deduction shall be allocated among the members
consistent with such allocations to capital accounts, (vii) as
may be required to provide that the redemption contemplated by
Article III.a.1. shall be treated for tax purposes as having
occurred immediately following the Closing, and that, upon such
redemption, COPI's Preferred Interest shall be $35,000,000,
(viii) as may be required to provide that allocations of items of
taxable income, gain, loss and deduction of CBHS with respect to
property received from Magellan pursuant to Article III.a.17.
shall be made in accordance with Internal Revenue Code Section
704(c), and (ix) as are consistent with the terms included in and
the transactions contemplated by this Addendum A. COPI is
intended to be a third-party beneficiary of the agreements
contained in this Article III.a.18.
b. CBHS
1. CBHS will indemnify Magellan for 20% of the first $50 million of
all pre-June 16, 1997 liabilities required to be paid by Magellan
after the date hereof (including attorneys' fees and other
litigation costs incurred after the date hereof and net of any
reimbursement from insurance), to the extent, and only to the
extent, that such liabilities are associated with those assets
transferred to CBHS as of June 16, 1997 (including, without
limitation, the joint venture interests and real property listed
on SCHEDULE 2 and with respect to the Charter Heights joint
venture listed on SCHEDULE 12, in each case to the extent
transferred to CBHS at Closing or to the extent CBHS receives the
net economic benefit of such assets in the manner provided in
Article III.a.2.), or the conduct of the business operated using
such assets prior to June 16, 1997, including costs and
liabilities arising under current governmental investigations,
except those internal investigations listed on Schedule 10A. CBHS
shall not be required however, to pay more than $500,000 per year
for such indemnification, with any unpaid amount to be carried
forward and paid in subsequent years, without interest on the
amount carried forward, up to an aggregate maximum amount of $10
million. If Magellan receives any insurance reimbursement on
account of a liability for which CBHS has already paid amounts to
Magellan pursuant to such indemnity, Magellan will promptly pay
over to CBHS 20% of such reimbursement up to the amount paid
pursuant to such indemnity by CBHS.
2. CBHS will release all claims against Magellan, including but not
limited to pending arbitration claims, disputes in connection
with past payments of franchise fees by CBHS, all other issues
relating to the original group of transactions, except with
respect to (a) the Orlando arbitration (further identified on
Schedule 9), (b) any disputes related to the internal
investigations set forth on SCHEDULE 10A or governmental
investigations set forth on SCHEDULE 10B, including disputes
related to the defense of
-8-
those investigations or the payment of legal fees or other costs
or liabilities, (c) any obligation provided for, and any matter
the resolution of which is provided for, in the Letter Agreement,
including in this Addendum A to the Letter Agreement and (d) the
indemnification rights under Section 8.1(ii) of that certain
Contribution Agreement entered into by and among Magellan, COPI
and CBHS as of June 16, 1997, (subject to the provisions of
Section 8.3 thereof, except for the provisions of Section 8.3(d)
thereof). CBHS shall relinquish, with respect to Magellan, all
rights under the original transaction documents except as
provided in this paragraph. This provision is not an
acknowledgment by any of the parties of the merits of any such
claims and may not be used by any party or third party as
evidence to establish liability for any such claims.
Notwithstanding the foregoing release and relinquishment, nothing
herein contained shall preclude CBHS from bringing a claim for
contribution against Magellan in connection with any claims,
demands or actions brought against CBHS by a third party, whether
private or governmental, including but not limited to third party
claims or demands that may be settled prior to litigation. CBHS
and Magellan agree to use reasonable best efforts to reach
settlement on the matters set forth under clause (a) above, and
SCHEDULE 10A within 30 days of the execution of the Letter
Agreement, and any matters in dispute at the end of such 30 days
shall be submitted to binding arbitration to be performed (i) in
accordance with the Commercial Arbitration Rules of the American
Arbitration Association conducted by a three-person arbitration
panel and (ii) in accordance with such other procedures as shall
be established by Magellan and CBHS.
3. CBHS shall use its reasonable best efforts to secure the full and
complete release of Magellan of those guarantees by Magellan or
its affiliates of CBHS obligations (the guarantees are listed on
SCHEDULE 13). CBHS agrees it will indemnify Magellan for any such
guarantee which is not released.
4. CBHS shall assume the business operations and related obligations
with respect to the assets and properties transferred to it
pursuant to Article III.a., subject to the provisions of this
Addendum.
5. CBHS will consent to such reasonable amendments to the Operating
Agreement (i) as may be required to effect the redemption
contemplated by Article III.a.1., or (ii) if the redemption
contemplated by Article III.a.1 results in COPI's ownership of
more than 50% of the common interests in CBHS, as may be
requested by COPI to facilitate, at COPI's option, (A) the
distribution of all or any portion of the COPI Interests, (B) the
sale of the COPI Interests to any person or entity, including
affiliates of CBHS, (C) the transfer, other than by sale, of the
COPI Interests, or (D) any combination of the foregoing, (iii) as
may be required to reduce the membership of the CBHS Governing
Board to two, provide that Magellan
-9-
shall have ceased to have the right to elect any members to the
Governing Board of CBHS and provide that COPI has the right to
elect both members of the Governing Board, (iv) as may be
required to appoint COPI as the "Tax Matters Member" of CBHS, as
such term is defined in the CBHS Operating Agreement, (v) as may
be required to provide that the income recognized by CBHS as a
result of the cancellation of accrued and unpaid amounts due
under the Franchise Agreements as contemplated by Article
III.a.11. shall be allocated to the capital accounts of the
members of CBHS in the same amounts as the deductions
attributable to such accrued and unpaid amounts were allocated to
such members, and the corresponding items of taxable income,
gain, loss or deduction shall be allocated among the members
consistent with such allocation to capital accounts, (vi) as may
be required to provide that any items of income, gain, loss or
deduction recognized by CBHS as a result of the transfers or
assignments described in the preceding paragraphs of this Article
III (other than the income described in the foregoing clause (v))
shall be allocated to the capital accounts of the members in
accordance with the members' interests on the date of the Closing
(prior to giving effect to the redemption contemplated by Article
III.a.1.), that items attributable to extraordinary transactions
occurring on the date of the Closing but not contemplated by this
Article III shall be allocated to the capital accounts of the
members in accordance with the members' interests after giving
effect to such redemption, and that the corresponding items of
taxable income, gain, loss or deduction shall be allocated among
the members consistent with such allocations to capital accounts,
(vii) as may be required to provide that the redemption
contemplated by Article III.a.1. shall be treated for tax
purposes as having occurred immediately following the Closing,
and that, upon such redemption, COPI's Preferred Interest shall
be $35,000,000, (viii) as may be required to provide that
allocations of items of taxable income, gain, loss and deduction
of CBHS with respect to property received from Magellan pursuant
to Article III.a.17. shall be made in accordance with Internal
Revenue Code Section 704(c), and (ix) as are consistent with the
terms included in and the transactions contemplated by this
Addendum A. COPI is intended to be a third-party beneficiary of
the agreements contained in this Article III.b.5.
IV. CLOSING CONDITIONS:
a. The obligations of each of the parties to consummate the transactions
contemplated hereby shall be subject to the satisfaction of each of
the following conditions:
1. Execution of definitive agreements reflecting the terms and
conditions of the transactions set forth herein by all necessary
parties thereto.
-10-
2. Receipt of all necessary consents, regulatory and other
approvals, licenses, permits and other documentation required by
state and federal laws and regulations and any agreements to
which any of the parties is subject, to consummate the
transactions contemplated hereby (including consent under
Magellan's and CBHS' credit agreements and approval of the
Governing Board of CBHS and the Board of Directors of Magellan),
except (with respect to each party) for such consents, regulatory
and other approvals, licenses, permits and other required
documentation the failure to obtain which would not, individually
or in the aggregate, have a material adverse effect on such party
or its business.
3. Receipt by each of Magellan and CBHS of a "fairness" opinion from
their respective investment banking firms or other advisors that
the transactions contemplated by this Addendum A are fair from a
financial point of view. All parties shall bear their own legal
fees and other costs, including fees with respect to fairness
opinions.
4. Receipt of opinions of counsel to the respective parties
regarding authority to enter into the transactions contemplated
hereby, due authorization, and good standing.
V. JOINT DEFENSE OF INVESTIGATIONS:
a. CBHS and Magellan acknowledge and agree that this Addendum A and the
surviving provisions of the original transaction agreements allocate
liability and provide certain cross-indemnification between the
parties for claims related to the operation of the business conducted
by the assets that have been or are being transferred to CBHS and that
certain claims, including those related to the investigations set
forth on Schedule 10A and Schedule 10B, involve time periods that may
implicate liability for both parties. Excepting only reasonable
arrangements to protect established privileges, no provision of, or
action pursuant to this Addendum A shall limit or delay disclosures
required by law, or the production of information or documents to any
governmental entity, or cooperation with any governmental entity.
Without limiting the foregoing, the parties agree that each party in
good faith shall notify the other party of, and offer an opportunity
to participate in, any meeting or communication that a party initiates
with any governmental representative or entity. Where the government
initiates communication with a party, the party may engage in the
communication without indicating agreement to any settlement of
government claims, but that party shall inform the other party of the
communication as soon as practicable thereafter. A party must obtain
approval from the other party of any communication undertaken for the
purpose of discussing or agreeing to a settlement with the government
concerning any governmental investigation, claim or interest, where
such a settlement may reasonably be considered adversely to affect the
financial interest of the other party. If the government should
condition its engagement in communications concerning such settlement
on communicating
-11-
with only one party, that party may proceed to communicate alone with
the government in pursuit of its individual interest, PROVIDED,
HOWEVER, that, if the first party should so proceed, the parties shall
submit to arbitration under the Commercial Arbitration Rules of the
American Arbitration Association any assertion that the first party's
communication or settlement with the government has caused an increase
in the liability of the other party under any indemnification
agreement or other allocation of liability among the parties. If a
three-person arbitration panel should conclude that such an increase
has been proved by the asserting party, the first party shall pay the
asserting party the amount of the increase. Such an assertion of
increased liability may not be made on the basis of any disclosure, or
provision of information, documents or cooperation to the government
that is required by law, subpoena or other official order.
b. The notice, participation and approval provisions of Article V.a.
shall apply to all matters currently known to the parties to be
related to government investigations, including, without limitation,
those set forth on Schedule 10A and Schedule 10B, and any new
investigations addressing liabilities attributable to both pre-June
1997 and post-June 1997. Those provisions of Article V.a. shall not,
however, apply to new government investigations that relate solely to
Magellan's responsibility for financial liabilities attributable to
pre-June 16, 1997, nor shall Article V.a. apply to new government
investigations that relate solely to CBHS's responsibility for
financial liabilities exclusively attributable to post-June 1997.
c. Each party shall have the right to advise the federal government of
the terms of this Article V.
VI. TERMINATION. The consummation of the transactions contemplated hereby shall
occur within 30 days following the date of the Letter Agreement to which
this Addendum A is appended (other than those which by the terms set forth
herein will occur later). The failure to consummate such transactions
within the applicable time period shall terminate all rights and
obligations of the parties to each other hereunder and under the Letter
Agreement (to the extent not previously performed).
-12-
LETTER AGREEMENT ADDENDUM B
MUTUAL RELEASE
THIS MUTUAL RELEASE (this "Release") is entered into as of this __ day of
August, 1999, by and among Magellan Health Services, Inc., a Delaware
corporation ("MAGELLAN"), Crescent Operating, Inc., a Delaware corporation
("COPI"), Crescent Real Estate Equities Limited Partnership, a Delaware limited
partnership ("CEI") and Crescent Real Estate Funding VII, L.P., a Delaware
limited partnership.
W I T N E S S E T H:
WHEREAS, Magellan and Charter Behavioral Health Systems, LLC ("CBHS"), have
entered into a Letter Agreement dated August ___,, 1999 (the "LETTER
AGREEMENT");
WHEREAS, the Letter Agreement has become binding;
WHEREAS, the parties desire to execute this Release to settle disputes
between the parties;
NOW, THEREFORE, in consideration of the mutual promises contained herein
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows.
1. RELEASE BY CEI. CEI hereby remises, releases and forever discharges Magellan
and each of its affiliates and subsidiaries, and their respective current and
former officers and directors, and their respective shareholders, affiliates,
agents, successors and assigns (the "MAGELLAN RELEASEES"), from any and all
claims, demands, actions, causes of action, rights, suits, agreements,
covenants, accounts, debts, damages, costs and liabilities (collectively,
"Claims") of any nature whatsoever, whether known or unknown, whether at law or
in equity, (i) arising out of or related to the transactions consummated
pursuant to the agreements and documents ("Original Transaction Agreements")
listed on Annex I hereto, whether presently existing or hereafter arising, (ii)
arising out of the operation of the business of CBHS and all decisions with
respect thereto, including the payment of franchise fees or other amounts to
Magellan, whether presently existing or hereafter arising, or (iii) arising from
any other matter, event or transaction which has occurred prior to the date of
this Release, whether presently existing or hereafter arising; provided,
however, that (w) the provisions of this Paragraph 1 will not apply to any
Claims arising out of the Letter Agreement, this Release, or any of the
transactions contemplated thereby or hereby; (x) the provisions of this
Paragraph 1 will not apply to any Claims arising out of the indemnification
obligations of Magellan set forth in Section 11.2(a) of that certain Real Estate
Purchase and Sale Agreement, made and entered into as of January 29, 1997, by
and between Magellan and CEI, as amended (the "Purchase Agreement"), as such
obligations are limited by the remainder of the said Section 11.2(a) of the
Purchase Agreement, (y) nothing in this Paragraph 1 shall preclude CEI from
bringing a claim for contribution against any one or more of the Magellan
Releasees in connection with any claims, demands, actions or suits brought
against CEI by a non-affiliated third party, whether private or governmental, or
any debts, damages, costs or li-
-1-
abilities to which CEI becomes subject as a result of any such claim, demand,
action or suit, including but not limited to third party claims, demands,
actions or suits that may be settled prior to litigation and any amounts paid in
connection therewith, and (z) nothing in this Paragraph 1.a. shall be deemed to
constitute a release or discharge of any Claims arising out of any action,
decision, matter, event or transaction made or occurring after the date of this
Release. CEI hereby represents that it has not heretofore assigned or
transferred, or purported to assign or transfer, to any person or entity, any
claim or any portion thereof or interest therein it may have against any
Magellan Releasee.
2. RELEASE BY COPI. COPI hereby remises, releases and forever discharges the
Magellan Releasees from any and all Claims of any nature whatsoever, whether
known or unknown, whether at law or in equity, (i) arising out of or related to
the transactions consummated pursuant to the Original Transaction Agreements,
whether presently existing or hereafter arising, (ii) arising out of the
operation of the business of CBHS and all decisions with respect thereto,
including the payment of franchise fees or other amounts to Magellan, whether
presently existing or hereafter arising, or (iii) arising from any other matter,
event or transaction which has occurred prior to the date of this Release
including, but not limited to, the pending arbitration between COPI and
Magellan, whether presently existing or hereafter arising; provided, however,
that (x) the provisions of this Paragraph 2 will not apply to any Claims arising
out of the Letter Agreement, this Release, or any of the transactions
contemplated thereby or hereby; (y) nothing in this Paragraph 2 shall preclude
COPI from bringing a claim for contribution against the Magellan Releasees in
connection with any claims, demands, actions or suits brought against COPI by a
non-affiliated third party, whether private or governmental, or any debts,
damages, costs or liabilities to which COPI becomes subject as a result of any
such claim, demand, action or suit, including but not limited to third party
claims, demands, actions or suits that may be settled prior to litigation and
any amounts paid in connection therewith, and (z) nothing in this Paragraph 2
shall be deemed to constitute a release or discharge of any Claims arising out
of any action, decision, matter, event or transaction made or occurring after
the date of this Release. COPI hereby represents that it has not heretofore
assigned or transferred, or purported to assign or transfer, to any person or
entity, any claim or any portion thereof or interest therein it may have against
any Magellan Releasee.
3. RELEASE BY MAGELLAN. Magellan hereby remises, releases and forever discharges
CEI and COPI and each of their affiliates and subsidiaries, and their respective
current or former officers and directors, and their respective shareholders,
affiliates, agents, successors and assigns (the "CEI AND COPI RELEASEES"), from
any and all Claims of any nature whatsoever, whether known or unknown, whether
at law or in equity, (i) arising out of or related to the transactions
consummated pursuant to the Original Transaction Agreements, whether presently
existing or hereafter arising, (ii) arising out of the operation of the business
of CBHS and all decisions with respect thereto, whether presently existing or
hereafter arising, or (iii) arising from any other matter, event or transaction
which has occurred prior to the date of this Release including, but not limited
to, the pending arbitration between COPI and Magellan, whether presently
existing or hereafter arising; provided, however, that (w) the provisions of
this Paragraph 3 will not apply to any Claims arising out of the Letter
Agreement, this Release, or any of the transactions contemplated thereby or
hereby; (x) the provisions of this Paragraph 3 will not apply to any Claims
arising out of the indemnification obligations of CEI set forth in Section
11.1(a) of the Purchase Agreement, as such obligations are limited by the
remainder of the said Section 11.1(a) of the Purchase Agreement, (y) nothing in
this Paragraph 3 shall preclude any of the Magellan Releasees from bringing a
claim for contribution against CEI or COPI in connection with any claims,
demands, actions or suits brought against any of the Magellan Releasees by a
non-affiliated third party, whether private or governmental, or any debts,
damages,
-2-
costs or liabilities to which any of the Magellan Releasees becomes subject as a
result of any such claim, demand, action or suit, including but not limited to
third party claims, demands, actions or suits that may be settled prior to
litigation and any amounts paid in connection therewith, and (z) nothing in this
Paragraph 3 shall be deemed to constitute a release or discharge of any Claims
arising out of any action, decision, matter, event or transaction made or
occurring after the date of this Release. Magellan hereby represents that it has
not heretofore assigned or transferred, or purported to assign or transfer, to
any person or entity, any claim or any portion thereof or interest therein it
may have against any CEI or COPI Releasee.
4. NO ACKNOWLEDGMENT OR EVIDENCE. None of the releases contained in Paragraphs
1.a., 2.a. or 3 are an acknowledgment by any of the parties of the merits of any
of the claims, demands, actions, causes of action, rights, suits, agreements,
covenants, accounts, debts, damages or liabilities referred to therein or herein
and may not be used by any party or third party as evidence to establish
liability for any such claims, demands, actions, causes of action, rights,
suits, agreements, covenants, accounts, debts, damages or liabilities.
5. BINDING EFFECT. This Release shall be binding upon Magellan's affiliates,
successors, and assigns, upon CEI's affiliates, successors, and assigns, and
upon COPI's affiliates, successors, and assigns.
6. COUNTERPARTS. This Release may be executed in multiple counterpart copies,
each of which will be considered an original and all of which constitute one and
the same instrument, binding on all parties hereto, even though all the parties
are not signatory to the same counterpart.
7. AMENDMENTS. This Release may not be amended except in a writing duly executed
by the parties hereto.
8. CONSTRUCTION. The parties acknowledge and agree that this Release is the
result of extensive negotiations between the parties and their respective
counsel, and that this Release shall not be construed against either party by
virtue of its role or its counsel's role in the drafting hereof.
9. GOVERNING LAW. This Release shall be governed by and construed in accordance
with the substantive laws of the State of Delaware which apply to a contract
executed and to be performed entirely within the State of Delaware, without
regard to principles of conflicts of laws.
10. HEADINGS. Section headings used in the Release are for convenience only and
shall not be used in construing the terms hereof.
-3-
IN WITNESS WHEREOF, each of the parties has caused this Release to be
executed on the day first above written.
MAGELLAN HEALTH SERVICES, INC.
Witness:
By:
- --------------------------------- ------------------------------------
Cliff Donnelly
Executive Vice President and
Chief Financial Officer
CRESCENT OPERATING, INC.
Witness:
By:
- --------------------------------- ------------------------------------
Jeffrey L. Stevens
Executive Vice President and
Chief Operating Officer
CRESCENT REAL ESTATE EQUITIES
LIMITED PARTNERSHIP
By Crescent Real Estate Equities, Ltd.,
its General Partner
Witness:
By:
- --------------------------------- ------------------------------------
James M. Eidson, Jr.
Senior Vice President - Acquisitions
CRESCENT REAL ESTATE FUNDING VII, L.P.
By CRE Management VII Corp.,
its General Partner
Witness:
By:
- --------------------------------- ------------------------------------
James M. Eidson, Jr.
Senior Vice President - Acquisitions
-4-
ANNEX 1
LIST OF ORIGINAL TRANSACTION AGREEMENTS AND DOCUMENTS
1. Real Estate Purchase and Sale Agreement dated as of January 29, 1997,
between Magellan and the Crescent REIT (the "Real Estate Purchase
Agreement"), as amended by the parties by amendments dated February 28,
1997 and May 29, 1997.
2. Amended and Restated Operating Agreement between Charter Inc. and COI dated
as of June 16, 1997 (the Operating Agreement").
3. Contribution Agreement dated as of June 16, 1997 among Magellan, COI and
CBHS (the "Contribution Agreement").
4. Master Lease dated as of June 16, 1997 between Crescent Funding and CBHS
(the "Master Lease").
5. Master Franchise Agreement between Magellan, Charter Franchise Services,
LLC ("Charter Franchise") and CBHS effective as of June 17, 1997 (the
"Master Franchise Agreement").
6. Subsidiary Franchise Agreement between Magellan, Charter Franchise and each
CBHS facility subsidiary (collectively with the Master Franchise Agreement,
the "Franchise Agreements").
7. Subordination Agreement between Magellan, Charter Franchise, Crescent
Funding and CBHS dated as of June 16, 1997 (the "Subordination Agreement").
8. Other agreements and documents executed pursuant to or in connection with
any of the above documents, other than the Warrant Agreements from,
respectively, COPI and Magellan.