SC 13D/A: Schedule filed to report acquisition of beneficial ownership of 5% or more of a class of equity securities
Published on October 30, 2001
EXHIBIT 99.A
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INVESTMENT AGREEMENT
INVESTMENT AGREEMENT (this "AGREEMENT"), dated as of October 29, 2001,
by and among Omega Healthcare Investors, Inc., a Maryland corporation (the
"COMPANY"), and Explorer Holdings, L.P., a Delaware limited partnership
("PURCHASER").
I. SHARE PURCHASE
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1.1 SHARE PURCHASE. (a) The Board of Directors of the Company
has authorized the issuance and sale to Purchaser hereunder of that number of
newly issued shares (the "SHARES") of (i) Series D Preferred Stock of the
Company, par value $1.00 per share (the "SERIES D PREFERRED STOCK", having the
designations, voting powers, preferences and relative, participating, optional
and other special rights, qualifications, limitations and restrictions thereof,
set forth in the Articles Supplementary attached hereto as EXHIBIT A (the
"SERIES D ARTICLES SUPPLEMENTARY"), or (ii) if the Company Stockholder Approval
shall have been obtained on or prior to the Closing Date, Common Stock, in each
case equal to the Share Amount. The "SHARE AMOUNT" shall mean (i) in the case of
Series D Preferred Stock, that number of shares of Series D Preferred Stock that
would upon conversion on the date of issuance of the Series D Preferred result
in the issuance of a number of shares of Common Stock equal to the quotient of
(A) the difference between $50 million and the gross proceeds received by the
Company from the sale of Common Stock in the Rights Offering (such difference,
the "UNSUBSCRIBED PURCHASE AMOUNT") divided by (B) the Rights Offering Exercise
Price (as defined in EXHIBIT G) and (ii) in the case of Common Stock, that
number of shares of Common Stock equal to the quotient of (A) the Unsubscribed
Purchase Amount divided by (B) the Rights Offering Exercise Price.
(b) At the Closing, the Company will issue and sell to
Purchaser, and Purchaser will purchase from the Company, the Shares for an
aggregate purchase price equal to the Unsubscribed Purchase Amount.
1.2 UNSUBSCRIBED PURCHASE AMOUNT. The Unsubscribed Purchase
Amount will be payable on the Closing Date in cash by bank wire transfer of
immediately available funds to an account of the Company designated by the
Company by written notice to Purchaser at least two Business Days prior to the
Closing.
1.3 CLOSING. Subject to the satisfaction or waiver by
Purchaser of the conditions set forth in Article V, the closing (the "CLOSING")
of the purchase and sale of the Shares will take place at the offices of Jones,
Day, Reavis & Pogue, 599 Lexington Avenue, New York, New York at 10:00 a.m.
local time within the later of (i) ten Business Days after the expiration date
of the Rights Offering (the "CLOSING DATE") and (ii) the date of closing of the
Rights Offering if it occurs.
1.4 CLOSING DELIVERIES. (a) At or prior to the Closing,
Purchaser will deliver to the Company:
(i) the Unsubscribed Purchase Amount, in accordance with
Section 1.2;
(ii) an Amended and Restated Stockholders Agreement in the
form attached hereto as EXHIBIT B (the "STOCKHOLDERS AGREEMENT"),
duly executed by Purchaser;
(iii) an Amended and Restated Registration Rights Agreement in
the form attached hereto as EXHIBIT C (the "REGISTRATION RIGHTS AGREEMENT"),
duly executed by Purchaser; and
(iv) a letter relating to the Advisory Agreement between the
Company and The Hampstead Group, L.L.C. (the "ADVISORY AGREEMENT") , in the form
attached hereto as EXHIBIT D (the "ADVISORY LETTER"), duly executed by The
Hampstead Group, L.L.C.
(b) At or prior to the Closing, the Company will deliver to
Purchaser:
(i) such number of validly issued stock certificates
evidencing the Shares, registered in the name of Purchaser or its Affiliates, as
Purchaser requests at least three Business Days prior to the Closing;
(ii) the Stockholders Agreement duly executed by the Company;
(iii) the Registration Rights Agreement duly executed by the
Company;
(iv) the Advisory Letter, duly executed by the Company;
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(v) the legal opinion of Powell, Goldstein, Frazer & Murphy
LLP, counsel to the Company, addressed to Purchaser and dated as of the Closing
Date, generally as to the matters set forth in Sections 2.1 (as to the Company
only), 2.2, 2.3(a), 2.4 and 2.7(a)(i) and (ii);
(vi) the Bank Agreements; and
(vii) the amendment to the Company Rights Agreement, in the
form attached hereto as EXHIBIT E (the "RIGHTS AMENDMENT"), duly executed by the
Company and First Chicago Trust Company.
(c) At or prior to the Closing, the Company and Purchaser will
deliver to each other such other supporting documents and certificates as the
other party may reasonably request.
(d) At or prior to the Closing, if Series D Preferred Stock
shall be issued on the Closing Date, the Series D Articles Supplementary shall
have been filed and accepted for record by the appropriate Maryland governmental
authority, and shall have become effective in accordance with the laws of the
State of Maryland.
1.5 USE OF PROCEEDS. The Company shall use the proceeds from
the issuance and sale of the Shares and the Common Stock issued in the Rights
Offering to pay indebtedness of the Company and for general working capital
purposes.
II. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Purchaser, except as set
forth in the letter, dated the date hereof, from the Company to Purchaser
specifically referencing this Agreement and delivered prior to or simultaneously
with the execution of this Agreement and initialed by the parties hereto (the
"COMPANY DISCLOSURE LETTER"), as follows:
2.1 EXISTENCE; GOOD STANDING; CORPORATE AUTHORITY. The Company
is a corporation duly incorporated, validly existing and in good standing under
the laws of the State of Maryland. The Company is duly licensed or qualified to
do business as a foreign corporation and is in good standing under the laws of
each state in which the character of the properties owned or leased by it or in
which the transaction of its business makes such qualification necessary, except
where the failure to be so qualified or to be in good standing would not have a
Company
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Material Adverse Effect. The Company has all requisite corporate power and
authority to own, operate and lease its properties and carry on its business as
now conducted. The copies of the Company's Articles of Restatement, as amended
(the "CHARTER") and bylaws delivered to Purchaser on the Closing Date are true,
correct and complete. As used in this Agreement, the term "COMPANY MATERIAL
ADVERSE EFFECT" means any change, effect, event or condition that has had or
could reasonably be expected to (i) have a material adverse effect on the
business, results of operations or financial condition of the Company and its
Subsidiaries, taken as a whole, or (ii) prevent or materially delay the
Company's ability to consummate the transactions contemplated hereby; PROVIDED,
HOWEVER, that without waiving any representation, warranty or covenant in no
event will any of the following constitute a Company Material Adverse Effect:
(a) a change in the trading prices of any of the Company's securities, in and of
itself; (b) effects, changes, events, circumstances or conditions generally
affecting the long-term care or real estate finance industries or arising from
changes in general business or economic conditions, PROVIDED that the effect
thereof is not materially disproportionate on the Company and its Subsidiaries
than the effect on similarly situated companies; (c) effects, changes, events,
circumstances or conditions directly attributable to out-of-pocket fees and
expenses (including without limitation legal, accounting, investigatory,
investment banking and other fees and expenses) incurred in connection with the
transactions contemplated by the Transaction Documents; (d) any effects,
changes, events, circumstances or conditions resulting from the announcement or
pendency of any of the transactions provided for in the Transaction Documents;
(e) any effects, changes, events, circumstances or conditions resulting from
compliance by Purchaser or the Company with the terms of, or the taking of any
actions specifically required to be taken in, the Transaction Documents; (f) the
effect of the financial condition of any operator of any of the Company
Properties described in Section 2.1 of the Company Disclosure Letter; (g) the
effect of any operator of any of the Company Properties in bankruptcy
proceedings as of the date hereof rejecting leases to Company Properties or
Material Contacts; (h) the effect of any matters specifically disclosed in the
Company Disclosure Letter; and (i) the effect of the closure of any of the
securities exchanges on which the Company's securities are then traded for a
period of not more than four consecutive trading days. As used in this
Agreement, the term "SUBSIDIARY" (i) when used with respect to any Person, means
any corporation or other Person, whether incorporated or unincorporated, of
which such Person directly or indirectly owns or controls more than 50% of
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the securities or other interests having by their terms ordinary voting power to
elect a majority of the board of directors or others performing similar
functions and (ii) when used with respect to the Company, shall also include
each of the following entities: (1) Bayside Street II, Inc., a Delaware
corporation, (2) Bayside Alabama Healthcare Second, Inc., an Alabama
corporation, (3) Bayside Arizona Healthcare Second, Inc., an Arizona
corporation, and (4) Bayside Colorado Healthcare Second, Inc., a Colorado
corporation.
2.2 AUTHORIZATION, VALIDITY AND EFFECT OF AGREEMENT. The
Company has the requisite corporate power and authority to execute and deliver
this Agreement and all agreements and documents contemplated hereby to be
executed and delivered by it. This Agreement and the consummation by the Company
of the transactions contemplated hereby have been duly authorized by all
requisite corporate action. This Agreement, the Stockholders Agreement, the
Registration Rights Agreement, the Bank Amendments, the Advisory Letter, the
Series D Articles Supplementary and the Rights Amendment (collectively, the
"TRANSACTION DOCUMENTS") have been (or, in the case of agreements to be
delivered at the Closing, will be at the Closing) duly and validly executed and
delivered by the Company and constitute (or, in the case of agreements to be
delivered at the Closing, will constitute at the Closing) the valid and binding
obligations of the Company, enforceable against the Company in accordance with
their respective terms, except that (i) such enforceability may be subject to
applicable bankruptcy, insolvency or other similar laws now or hereinafter in
effect affecting creditors' rights generally, (ii) 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, and (iii) rights
to indemnification may be limited by public policy considerations.
2.3 CAPITALIZATION; RIGHTS AGREEMENT. (a) The authorized
capital stock of the Company consists of 100,000,000 shares of the Company's
common stock, par value $0.10 per share (the "COMMON STOCK"), 2,300,000 shares
of 9.25% Series A Preferred Stock, par value $1.00 per share (the "SERIES A
PREFERRED STOCK"), 2,000,000 shares of 8.625% Series B Preferred Stock, par
value $1.00 per share (the "SERIES B PREFERRED STOCK"), 2,000,000 shares of
Series C Convertible Preferred Stock, par value $1.00 per share (the "Series C
Preferred Stock"), and 100,000 shares of Series A Junior Participating Preferred
Stock, par value $1.00 per share. As of the close of
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business on October 26, 2001 (the "MEASUREMENT DATE"), (i) 20,076,024 shares
of Common Stock were issued and outstanding, each of which was duly
authorized, validly issued, fully paid and nonassessable and issued free of
any preemptive rights, (ii) 2,300,000 shares of Series A Preferred Stock were
issued and outstanding, each of which was duly authorized, validly issued,
fully paid and nonassessable and issued free of any preemptive rights, (iii)
2,000,000 shares of Series B Preferred Stock were issued and outstanding,
each of which was duly authorized, validly issued, fully paid and
nonassessable and issued free of any preemptive rights, and (iv) 1,048,420
shares of Series C Preferred Stock were issued and outstanding, each of which
was duly authorized, validly issued, fully paid and nonassessable and issued
free of any preemptive rights. Section 2.3 of the Company Disclosure Schedule
set forth (i) the number of shares of Common Stock reserved for issuance
under the stock option plans listed in Section 2.3 of the Company Disclosure
Letter (the "STOCK OPTION PLANS"), (ii) the aggregate number of shares of
Common Stock underlying outstanding options under the Stock Option Plans as
more particularly described in Section 2.3 of the Company Disclosure Letter
(including the holders thereof, the expiration date, the exercise prices
thereof and the dates of grant), and (iii) the aggregate number of Deferred
Compensation Units issued and outstanding pursuant to the Company's 1993
Deferred Compensation Plan as of the close of business on October 26, 2001.
Since the Measurement Date, no additional shares of capital stock of the
Company have been issued and no other options, warrants or other rights to
acquire shares of the Company's capital stock (collectively, the "RIGHTS TO
ACQUIRE") have been granted. Except as described in the second preceding
sentence, the Company has no outstanding bonds, debentures, notes or other
securities or obligations the holders of which have the right to vote or
which are or were convertible into or exercisable for, voting securities,
capital stock or other equity ownership interests in the Company. Except as
set forth in Section 2.3 of the Company Disclosure Letter, there are not at
the date of this Agreement any existing options, warrants, calls,
subscriptions, convertible securities or other Rights To Acquire which
obligate the Company or any of its Subsidiaries to issue, exchange, transfer
or sell any shares of capital stock of the Company or any of its Subsidiaries
other than shares of Common Stock issuable under the Stock Option Plans or
awards granted pursuant thereto. There are no outstanding contractual or
legal obligations of the Company or any of its Subsidiaries (x) to
repurchase, redeem or otherwise acquire any shares of capital stock of the
Company or any of its Subsidiaries, or (y) to vote or to dispose of any
shares of the capital stock of any of its Subsidiaries. Except as
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contemplated by this Agreement or the transactions contemplated hereby, none of
the Company or any of its Subsidiaries has any obligation to issue, transfer or
sell any shares of the capital stock or other securities of the Company or any
of its Subsidiaries.
(b) The Company has taken all necessary action so that neither
the execution, delivery and performance of the Transaction Documents nor the
consummation of the transactions contemplated hereby and thereby shall (i) cause
Purchaser or any of its Affiliates to become an "Acquiring Person" or (ii)
result in the occurrence of a "Triggering Event" or "Distribution Date" (as such
terms are defined in the Company Rights Agreement, dated as of May 12, 1999, as
amended on May 11, 2000 (the "COMPANY RIGHTS AGREEMENT"), between the Company
and First Chicago Trust Company, as rights agent). The board of directors of the
Company (the "COMPANY BOARD") has approved, and the Company has entered into,
the Rights Amendment. Pursuant to the Rights Amendment, among other things,
neither the execution, delivery and performance of the Transaction Documents nor
the consummation of the transactions contemplated hereby or thereby will (x)
result in the distribution of separate certificates representing Rights (as
defined in the Company Rights Agreement), (y) cause the Rights to become
exercisable, or (z) result in the occurrence of a "Triggering Event" or a
"Distribution Date" (as such terms are defined the Company Rights Agreement).
2.4 VALIDITY OF SHARES, ETC. Each of the Shares has been duly
authorized for issuance and, when issued to Purchaser for the consideration set
forth herein and as otherwise provided herein, will be duly and validity issued,
fully paid, non-assessable and free of preemptive rights. Upon issuance of the
Shares in accordance with the terms and conditions of this Agreement or upon
conversion (if applicable) of the Shares from time to time, Purchaser will
acquire good and valid title to such shares of Common Stock, free and clear of
any and all liens, claims, security interests, encumbrances, restrictions on
voting or alienation or otherwise, or adverse interests (collectively, "LIENS"),
except as may be created by Purchaser, the Transaction Documents or by
applicable securities Laws.
2.5 SUBSIDIARIES. Section 2.5 of the Company Disclosure Letter
lists all of the Subsidiaries of the Company. Each of the Company's Subsidiaries
is a corporation, partnership or limited liability company duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation or organization, has the corporate, partnership or
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similar power and authority to own its properties and to carry on its business
as it is now being conducted, and is duly qualified to do business and is in
good standing in each jurisdiction in which the ownership of its property or the
conduct of its business requires such qualification, except for jurisdictions in
which such failure to be so qualified or to be in good standing would not have a
Company Material Adverse Effect. The Company owns, directly or indirectly, all
of the outstanding shares of capital stock (or other ownership interests having
by their terms ordinary voting power to elect a majority of directors or others
performing similar functions with respect to such Subsidiary) of each of the
Company's Subsidiaries, free and clear of all Liens, except as set forth in
Section 2.5 of the Company Disclosure Letter. Each of the outstanding shares of
capital stock (or such other ownership interests) of each of the Company's
Subsidiaries is duly authorized, validly issued, fully paid and nonassessable.
2.6 OTHER INTERESTS. Except for interests in the Company's
Subsidiaries and as set forth in Section 2.6 of the Company Disclosure Letter,
neither the Company nor any of the Company's Subsidiaries owns, directly or
indirectly, any material interest or investment (whether equity or debt) in any
domestic or foreign corporation, company, partnership, joint venture, business,
trust or entity.
2.7 NO CONFLICT; REQUIRED FILINGS AND CONSENTS. (a) Except as
set forth in Section 2.7 of the Company Disclosure Letter, the execution,
delivery and performance of the Transaction Documents by the Company do not, and
the consummation by the Company of the transactions contemplated hereby and
thereby will not, (i) conflict with or violate the articles of incorporation or
bylaws or equivalent organizational documents of the Company or any of its
Subsidiaries, (ii) subject to the Company making any filings, notifications or
registrations and obtaining any approvals identified in Section 2.7(b), conflict
with or violate any domestic or foreign statute, rule, regulation or other legal
requirement ("LAW") or order, judgment, injunction or decree ("ORDER")
applicable to the Company or any of its Subsidiaries or by which any property or
asset of the Company or any of its Subsidiaries is bound or affected, or (iii)
result in any breach of or constitute a default (or an event which with or
without notice or lapse of time or both would become a default) under, result in
the loss of a material benefit under, or give to others any right of purchase or
sale, or any right of termination, amendment, acceleration, increased payments
or cancellation of, or result
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in the creation of a Lien on any property or asset of the Company or any of its
Subsidiaries pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which the Company or any of its Subsidiaries is a party or by which the
Company or any of its Subsidiaries or any property or asset of the Company or
any of its Subsidiaries is bound or affected, except, in the case of clauses
(ii) and (iii), for any such conflicts, violations, breaches, defaults, events,
losses, rights, payments, cancellations, encumbrances or other occurrences that,
individually or in the aggregate, would not have a Company Material Adverse
Effect, or (iv) result in the loss of the Company's status as a real estate
investment trust ("REIT") under Section 856 of the Internal Revenue Code of
1986, as amended (the "CODE").
(b) The execution, delivery and performance of the
Transaction Documents by the Company do not, and the consummation by the
Company of the transactions contemplated hereby and thereby will not, require
any consent, approval, authorization or permit of, or filing with or
notification to, any governmental or regulatory authority, domestic or
foreign, including without limitation any quasi-governmental, supranational,
statutory, environmental entity and any stock exchange, court or arbitral
body (each a "GOVERNMENTAL ENTITY") under any Law, except (i) for (A)
applicable requirements, if any, under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR ACT"), (B) applicable
requirements, if any, of the Securities Act and the Securities Exchange Act
of 1934, as amended (the "EXCHANGE ACT") and (C) the consents, approvals and
authorizations set forth in Section 2.7 of the Company Disclosure Letter, and
(ii) where the failure to obtain any such consent, approval, authorization or
permit, or to make any such filing or notification, would not, individually
or in the aggregate, have a Company Material Adverse Effect.
2.8 COMPLIANCE WITH LAWS. Except as set forth in Section 2.8
of the Company Disclosure Letter, neither the Company nor any of its
Subsidiaries is in conflict with, or in default or violation of, (a) any Law or
Order applicable to the Company or any of its Subsidiaries or by which any
property or asset of the Company or any of its Subsidiaries is bound or affected
(PROVIDED that no representation or warranty is made in this Section 2.8 with
respect to Environmental Laws) or (b) any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which the Company or any of its Subsidiaries is a party or by
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which the Company or any of its Subsidiaries or any property or asset of the
Company or any of its Subsidiaries is bound or affected, and to the Knowledge of
the Company, neither the Company nor any of its Subsidiaries is under review or
investigation with respect to or has been threatened to be charged with or given
notice of any violation of any Law or Order, except in each case for such
conflicts, defaults, violations, reviews or investigations that would not,
individually or in the aggregate, have a Company Material Adverse Effect. The
Company and its Subsidiaries hold all licenses, permits, orders, registrations
and other authorizations ("PERMITS") and have taken all actions required by
applicable Law or regulations of any Governmental Entity in connection with
their business as now conducted, except where the failure to obtain any such
item or to take any such action would not, individually or in the aggregate,
have a Company Material Adverse Effect.
2.9 SEC DOCUMENTS. (a) The Company has timely filed all forms,
reports and documents required to be filed by it with the Securities and
Exchange Commission (the "SEC") since January 1, 1999 (collectively, the
"COMPANY REPORTS"). As of their respective dates, the Company Reports and any
such reports, forms and other documents filed by the Company with the SEC after
the date of this Agreement and until the Closing Date (i) complied, or will
comply, in all material respects with the applicable requirements of the
Securities Act of 1933, as amended (the "SECURITIES ACT"), the Exchange Act and
the rules and regulations thereunder and (ii) did not, and will not, contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements made therein, in the light
of the circumstances under which they were made, not misleading. The
representation in clause (ii) of the preceding sentence does not apply to any
misstatement or omission in any Company Report filed prior to the date of this
Agreement which was superseded by a subsequent Company Report filed prior to the
date of this Agreement. No Subsidiary of the Company is required to file any
periodic reports with the SEC under the Exchange Act.
(b) Each of the financial statements included in or
incorporated by reference into the Company Reports (including the related notes
and schedules) (the "COMPANY FINANCIAL STATEMENTS") presents fairly, in all
material respects, the consolidated financial position of the Company and its
Subsidiaries as of its date and, to the extent applicable, the results of
operations, retained earnings or cash flows, as the
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case may be, of the Company and its Subsidiaries for the periods set forth
therein (subject, in the case of unaudited statements, to normal year-end audit
adjustments, none of which will be material in amount), in each case in
accordance with United States generally accepted accounting principles
consistently applied ("GAAP") during the periods involved, except as may be
noted therein.
2.10 NO UNDISCLOSED MATERIAL LIABILITIES. There are no
material liabilities or obligations of the Company or any of its Subsidiaries of
any kind whatsoever, whether accrued, contingent, absolute, determined,
determinable or otherwise that would result in such a liability, other than (a)
liabilities or obligations disclosed in the Company Financial Statements or in
Section 2.10 of the Company Disclosure Letter and (b) liabilities or obligations
incurred in the ordinary course of business consistent with past practices since
July 1, 2001 that would not have, individually or in the aggregate, a Company
Material Adverse Effect.
2.11 LITIGATION. Except as disclosed in Section 2.11 of the
Company Disclosure Letter or such of the following as would not have a Company
Material Adverse Effect, and other than personal injury and other routine tort
litigation arising from the ordinary course of operations of the Company and its
Subsidiaries which are covered by adequate insurance, as of the date of this
Agreement, there are no actions, suits or proceedings pending, publicly
announced or, to the Knowledge of the Company, threatened against or affecting
the Company or any of its Subsidiaries and there are no Orders of any
Governmental Entity outstanding against the Company or any of its Subsidiaries.
2.12 ABSENCE OF CERTAIN CHANGES. From July 1, 2001 through the
date of this Agreement, the Company and its Subsidiaries have conducted their
respective businesses in the ordinary course consistent with past practice and
there has not been any Company Material Adverse Effect.
2.13 TAXES. (a) Each of the Company and its Subsidiaries and
any consolidated, combined, unitary or aggregate group for tax purposes of which
the Company or any Subsidiary of the Company is or has been a member has timely
filed all Tax Returns required to be filed by it (after giving effect to any
extension properly granted by a Tax Authority having authority to do so) and has
timely paid (or the Company has timely paid on its behalf) all material Taxes
required to be paid by it (whether or not shown on such Tax Returns), except
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Taxes that are being contested in good faith by appropriate proceedings and for
which the Company or the applicable Subsidiary of the Company shall have set
aside on its books adequate reserves.
(b) The Company (i) for all taxable years commencing with its
initial taxable year and through December 31, 2000 has been properly subject to
taxation as a REIT within the meaning of Section 856 of the Code and has
qualified as a REIT for such years, (ii) has operated since December 31, 2000 in
such a manner as to qualify as a REIT (determined without regard to the
dividends paid deduction requirements for the current year) for the taxable year
beginning January 1, 2001 determined as if the taxable year of the REIT ended as
of the Closing, and (iii) has not taken or omitted to take any action that would
result in loss of or a challenge to its status as a REIT, and no such challenge
is pending or, to the Company's Knowledge, threatened. The Company has complied,
and reasonably expects to continue complying, with the income qualification
tests set out in Section 856(c)(2) and (3) of the Code. Neither the Company nor
any Subsidiary has received, or reasonably expects to receive, any material rent
that does not qualify as "rents from real property" within the meaning of
Section 856(d) of the Code, including rent attributable to personal property
under Section 856(d)(1)(C), any contingent rent under Section 856(d)(2)(A) of
the Code, or any rent from a related-party tenant under Section 856(d)(2)(B) of
the Code. Neither the Company nor any Subsidiary has received, or reasonably
expects to receive, any contingent interest that does not qualify as "interest"
under Section 856(f) of the Code or any income from a shared appreciation
provision, as described under Section 856(j) of the Code, that is subject to the
prohibited transaction tax under Section 857(b)(6).
(c) For purposes of this Agreement, (i) "TAXES" means all
taxes, charges, fees, levies or other assessments imposed by any United States
Federal, state, or local taxing authority or by any non-U.S. taxing authority,
including, but not limited to, income, gross receipts, excise, property, sales,
use, transfer, payroll, license, ad valorem, value added, withholding, social
security, national insurance (or other similar contributions or payments),
franchise, estimated, severance, stamp, and other taxes (including any interest,
fines, penalties or additions attributable to or imposed on or with respect to
any such taxes, charges, fees, levies or other assessments), (ii) "TAX RETURN"
means any return, report, information return or other document (including any
related or supporting information and, where
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applicable, profit and loss accounts and balance sheets) with respect to Taxes,
and (iii) "TAX AUTHORITY" shall mean the Internal Revenue Service and any other
domestic or foreign bureau, department, entity, agency or other Governmental
Entity responsible for the administration of any Tax.
2.14 PROPERTIES. (a) Except as would not have a Company
Material Adverse Effect, the Company or one of its Subsidiaries owns marketable
fee simple or leasehold title to, or a valid first priority mortgage Lien on,
all of the real properties identified as such in the Company Reports
(collectively with all buildings, structures and other improvements thereon, the
"COMPANY PROPERTIES" and each, collectively with all buildings, structures and
other improvements thereon, a "COMPANY PROPERTY").
(b) Each material certificate, permit or license from any
Governmental Entity having jurisdiction over any of the Company Properties and
each agreement, easement or other right which is necessary to permit the lawful
use and operation of the buildings and improvements on any of the Company
Properties or which is material to the operation of the property have been
obtained and are in full force and effect, except to the extent that the failure
to obtain or maintain any such certificate, permit, license, agreement, easement
or other right would not have a Company Material Adverse Effect. Neither the
Company nor any of its Subsidiaries has received written notice of any violation
of any Law with respect to any of the Company Properties which, individually or
in the aggregate, would have a Company Material Adverse Effect.
2.15 CONTRACTS. Except as set forth in Section 2.15 of the
Company Disclosure Letter, neither the Company nor any of its Subsidiaries is in
breach or default under any material contract nor, to the Knowledge of the
Company, is any other party to any material contract in breach or default
thereunder, in either case except for such breaches and defaults of any material
contract, either individually or in the aggregate, that would not have a Company
Material Adverse Effect.
2.16 ENVIRONMENTAL MATTERS. (a) Except as disclosed in Section
2.16 of the Company Disclosure Letter and for such exceptions to any of the
following that, individually or in the aggregate, would not have a Company
Material Adverse Effect, (A) none of the Company nor any of its Subsidiaries nor
any other Person has caused or permitted (i) the presence of any Hazardous
Substances on any of the Company's Properties, (ii) any spills, releases,
discharges or disposal of Hazardous Substances to have
13
occurred or be presently occurring on or from the Company Properties as a result
of any construction on or operation and use of the Company Properties, (B) (i)
the Company and its Subsidiaries have complied with all applicable local, state
and federal Environmental Laws, including all regulations, ordinances and
administrative and judicial orders relating to the generation, sale, storage,
handling, transport and disposal of any Hazardous Substances, (ii) the Company
and its Subsidiaries have obtained, currently maintain and, as currently
operating are in compliance with, all Permits necessary under any Environmental
Law ("ENVIRONMENTAL PERMITS") for the conduct of the business and operations of
the Company and its Subsidiaries in the manner now conducted, and, to the
Knowledge of the Company, there are no actions or proceedings pending or
threatened to revoke or materially modify such Permits; (iii) no Hazardous
Substances have been used, stored, manufactured, treated, processed or
transported to or from any such Company Property by the Company and its
Subsidiaries or any other Person, except as necessary to the customary conduct
of business and in compliance with Law and in a manner that does not result in
any material liability under applicable Environmental Laws; and (iv) the Company
and its Subsidiaries have not received any written notice of potential
responsibility, letter of inquiry or written notice of alleged liability from
any Person regarding such Company Property or the business conducted thereon.
For the purposes of this Section 2.16 only, "COMPANY PROPERTIES" shall be deemed
to include all property formerly owned, operated or leased by the Company or its
current or former Subsidiaries, solely, however, as to the period of time when
such property was so owned, operated or leased by the Company or its current or
former Subsidiaries.
(b) For purposes of this Agreement, the term (i)
"ENVIRONMENTAL LAWS" means any national, federal, state or local Law (including,
without limitation, common law), Order, Permit or any agreement with any
Governmental Entity or other third party (whether domestic or foreign) relating
to: (A) releases or threatened releases of Hazardous Substances or materials
containing Hazardous Substances; (B) the manufacture, processing, distribution,
handling, transport, use, treatment, storage or disposal of Hazardous Substances
or materials containing Hazardous Substances; or (C) pollution of the
environment, and (ii) "HAZARDOUS SUBSTANCES" means: (A) those materials,
pollutants and/or substances defined in or regulated under the following federal
statutes and their state counterparts, as each may be amended from time to time,
and all regulations thereunder: the Hazardous Materials Transportation
14
Act of 1980, the Resource Conservation and Recovery Act, the Comprehensive
Environmental Response, Compensation and Liability Act, the Clean Water Act, the
Safe Drinking Water Act, the Atomic Energy Act, the Federal Insecticide,
Fungicide and Rodenticide Act, the Toxic Substances Control Act and the Clean
Air Act; (B) petroleum and petroleum products including crude oil and any
fractions thereof; (C) natural gas, synthetic gas and any mixtures thereof; (D)
radon; (E) asbestos; (F) any other contaminant; and (G) any materials,
pollutants and/or substance with respect to which any Governmental Entity
requires environmental investigation, monitoring, reporting or remediation.
2.17 COMPANY BENEFIT PLANS; ERISA COMPLIANCE. (a) Each Company
Benefit Plan has been administered in accordance with its terms, all applicable
Laws, including ERISA and the Code, except to the extent that the failure to so
administer the applicable plan would not have a Company Material Adverse Effect.
All contributions to, and payments from, each Company Benefit Plan and "multiple
employer plan" (within the meaning of Section 3(40) of ERISA) that are required
to be made in accordance with such Plans and applicable Laws (including ERISA
and the Code) have been timely made.
(b) Except as set forth on Section 2.17(b) of the Company
Disclosure Letter, the consummation of the transactions contemplated by this
Agreement will not, either alone or in combination with another event, (i)
entitle any current or former employee, officer or director of the Company to
severance pay, unemployment compensation or any other payment or (ii) accelerate
the time of payment or vesting, or increase the amount of compensation, equity
rights or benefits due any such employee, officer or director.
(c) The execution, delivery or performance of the transactions
contemplated by the Transaction Documents does not constitute a "Change in
Control" under the employment agreements, incentive stock option or nonqualified
stock option agreements of any of the Company's officers (such agreements, the
"COMPANY CHANGE IN CONTROL AGREEMENTS"). The Compensation Committee of the
Company Board has taken all appropriate action to confirm that none of the
issuance of the Shares to Purchaser, the issuance of shares of Common Stock to
Purchaser upon conversion (if applicable) of the Shares or the execution and
delivery by the Company of any of the Transaction Documents shall result in any
adjustment pursuant to Section 5.2 of the Company's 2000 Stock Incentive Plan.
15
(f) "COMPANY BENEFIT PLAN" means each compensation, bonus,
pension, profit sharing, deferred compensation, incentive compensation, stock
ownership, stock purchase, stock option or other stock related fringe benefit,
retirement, vacation, disability, death benefit, supplemental unemployment
benefits, hospitalization, medical, dental, life, severance, post-employment
benefits or other plan, agreement, arrangement, policies or understanding, or
employment severance, retention, consulting, change of control or similar
agreement whether formal or informal, oral or written, providing benefits to any
current or former employee, officer, director or shareholder of the Company or
any of its Subsidiaries or to which the Company or any of its Subsidiaries
contributes or is or was obligated to contribute.
2.18 NO BROKERS. The Company has not entered into any
contract, arrangement or understanding with any Person or firm which may result
in the obligation of the Company or Purchaser to pay any investment banker's or
finder's fees, brokerage or agent's commissions or other like payments in
connection with the negotiations leading to this Agreement or the consummation
of the transactions contemplated hereby, except that the Company has retained
Shattuck Hammond Partners LLC as its financial advisor (the "FINANCIAL
ADVISOR"), the arrangements with which have been disclosed to Purchaser prior to
the date hereof. The Company will pay all amounts owed pursuant to the foregoing
arrangements.
2.19 PROXY AND REGISTRATION STATEMENT. The proxy statement (as
amended or supplemented, the "PROXY STATEMENT") to be mailed to the holders of
Common Stock of the Company (the "COMPANY STOCKHOLDERS") in connection with the
meeting of the Company Stockholders (the "COMPANY STOCKHOLDERS MEETING") to
approve (i) the issuance to Purchaser of shares of Common Stock upon the
conversion of the Series D Preferred (including any change in control resulting
therefrom), (ii) the amendment of the Company's Charter and Bylaws to increase
the size of the Board that may be authorized to eleven members, and (iii) the
amendment to the terms of the Series C Preferred contemplated by the Amended
Series C Articles Supplementary (the matters to be considered for approval, the
"STOCKHOLDER APPROVAL MATTERS" and such approval, the "STOCKHOLDER APPROVAL"),
and the registration statement to be mailed to the Company Stockholders in
connection with the Rights Offering (as amended or supplemented, the
"REGISTRATION STATEMENT"), at the date mailed to the Company Stockholders and at
the time of the Company Stockholders Meeting, in the case of the Proxy
Statement, and on the
16
effective date of the Registration Statement, on the date mailed to the Company
Stockholders, and on the date of closing of the Rights Offering, in the case of
the Registration Statement, (i) will comply in all material respects with the
applicable requirements of the Securities Act, the Exchange Act and the rules
and regulations thereunder and (ii) will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
2.20 FAIRNESS OPINION. The Company has received the opinion of
the Financial Advisor, dated October 29, 2001, to the effect that, as of such
date, the Financial Terms of the Investment Agreement (as defined in the
Financial Advisor's opinion), taken as a whole, are fair to the Company from a
financial point of view, a signed copy of which has been delivered to Purchaser.
2.21 VOTING REQUIREMENTS. The affirmative vote of no more than
the holders of a majority of the issued and outstanding shares of Common Stock
(giving effect to the conversion of the Series C Preferred), voting as a single
class, at the Company Stockholders Meeting to approve the Stockholder Approval
Matters (the "COMPANY STOCKHOLDER APPROVAL"), is the only vote of the holders of
any class or series of the Company's capital stock necessary to approve the
transactions contemplated hereby.
2.22 STATE TAKEOVER STATUES. The limitations on "business
combinations" (as defined in Subtitle 6 of Title 3 of the Maryland General
Corporation Law ("MGCL")) and the Charter and the limitations on voting rights
of shares of stock acquired in a "control share acquisition" (as defined in
Subtitle 7 of Title 3 of the MGCL) are not applicable to the transactions
contemplated hereby. There is no other provision of the MGCL or the Company's
bylaws or Charter under which special voting or waiting period requirements
would become applicable, or Purchaser would not have rights possessed by other
stockholders, had the Company issued to Purchaser all Shares and shares of
Common Stock upon conversion of the Shares (if applicable) prior to the date
hereof.
2.23 STATEMENTS TRUE AND CORRECT. The representations made by
the Company pursuant to this Agreement and the Company Disclosure Letter do not
contain as of the date hereof any untrue statement of material fact or omit to
state a material
17
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading.
III. REPRESENTATIONS AND WARRANTIES
OF PURCHASER
Purchaser represents and warrants to the Company as follows:
3.1 EXISTENCE; GOOD STANDING; CORPORATE AUTHORITY. Purchaser
is a limited partnership duly formed, validly existing and in good standing
under the laws of the State of Delaware. Purchaser is duly licensed or qualified
to do business as a limited partnership and is in good standing in each
jurisdiction in which the character of the properties owned or leased by it or
in which the transaction of its business makes such qualification necessary,
except where the failure to be so qualified or to be in good standing would not
have a Purchaser Material Adverse Effect. A "PURCHASER MATERIAL ADVERSE EFFECT"
means any change, effect, event or condition that has had or could reasonably be
expected to (i) have a material adverse effect on the business, results of
operations or financial condition of Purchaser and its Subsidiaries, taken as a
whole, PROVIDED, HOWEVER, that no event referred to in clauses (b), (c), (d) or
(e) of the proviso to the definition of Company Material Adverse Effect will, as
applied to Purchaser, constitute a Purchaser Material Adverse Effect, or (ii)
prevent or materially delay Purchaser's ability to consummate the transactions
contemplated hereby. Purchaser has all requisite limited partnership power and
authority to own, operate and lease its properties and carry on its business as
now conducted.
3.2 AUTHORIZATION, VALIDITY AND EFFECT OF TRANSACTION
DOCUMENTS. Purchaser has all requisite limited partnership power and authority
to execute and deliver the Transaction Documents to be executed by it. Each
Transaction Document to which Purchaser is a party and the consummation by
Purchaser of the transactions contemplated hereby and thereby have been duly and
validly authorized by the general partner of Purchaser and the applicable
governing body of Purchaser's general partner, and no other action on the part
of Purchaser or Purchaser's general partner is necessary to authorize such
Transaction Documents or to consummate the transactions contemplated hereby or
thereby. All Transaction Documents executed and delivered by Purchaser
constitute the valid and binding obligations of Purchaser, enforceable against
it in accordance with their respective terms, except that (i) the enforceability
hereof and thereof may be subject to applicable bankruptcy, insolvency or other
similar laws now or hereinafter in effect affecting
18
creditors' rights generally, (ii) 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, and (iii) rights to
indemnification may be limited by public policy considerations.
3.3 NO CONFLICT; REQUIRED FILINGS AND CONSENTS. (a) The
execution, delivery and performance of each Transaction Document to which
Purchaser is a party do not, and the consummation by Purchaser of the
transactions contemplated hereby and thereby will not, (i) conflict with or
violate the articles of incorporation, bylaws or other similar constituent
documents of Purchaser or any of its Subsidiaries, (ii) subject to Purchaser
making any filings, notifications or registrations and obtaining any approvals,
consents or authorizations identified in Section 3.3(b), conflict with or
violate any Law or Order applicable to Purchaser or any of its Subsidiaries or
by which any property or asset of Purchaser or any of its Subsidiaries is bound
or affected, or (iii) result in any breach of or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
result in the loss of a material benefit under, or give to others any right of
termination, amendment, acceleration, increased payments or cancellation of, or
result in the creation of a Lien on any property or asset of Purchaser or any of
its Subsidiaries pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which Purchaser or any of its Subsidiaries is a party or by which Purchaser
or any of its Subsidiaries or any property or asset of Purchaser or any of its
Subsidiaries is bound or affected, except in the case of clauses (ii) and (iii),
for any such conflicts, violations, breaches, defaults, events, losses, rights,
payments, cancellations, encumbrances or other occurrences that would not,
individually or in the aggregate, have a Purchaser Material Adverse Effect.
(b) The execution, delivery and performances of each
Transaction Document to which Purchaser is a party do not, and the consummation
of the transactions contemplated hereby and thereby by it will not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any Governmental Entity, except for (A) applicable requirements, if any, of
the Securities Act and the Exchange Act and (B) where failure to obtain such
consents, approvals, authorizations or permits, or to make such filings or
notifications, would not,
19
individually or in the aggregate, have a Purchaser Material Adverse Effect.
3.4 NO BROKERS. Purchaser has not entered into any contract,
arrangement or understanding with any Person or firm which may result in the
obligation of the Company or any Subsidiary of the Company to pay any investment
banker's or finder's fees, brokerage or agent's commissions or other like
payments in connection with the negotiations leading to this Agreement or the
consummation of the transactions contemplated hereby, any such amounts to be the
sole liability of Purchaser.
3.5 PROXY AND REGISTRATION STATEMENT. None of the information
provided by Purchaser or its officers, directors, representatives, agents or
employees specifically for inclusion in the Proxy Statement or the Registration
Statement will, in the case of the Proxy Statement, on the date the Proxy
Statement is first mailed to the Company Stockholders or at the time of the
Company Stockholders Meeting, and, in the case of the Registration Statement, on
the effective date of the Registration Statement, on the date mailed to the
Company Stockholders, and on the date of closing of the Rights Offering contain
any untrue statement of a material fact, or will omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
3.6 SUFFICIENT FUNDS. Purchaser will have sufficient funds
available to (a) pay all amounts required to be paid pursuant to this Agreement
when due and (b) pay all nonreimbursable fees, costs and expenses incurred by
Purchaser in connection with this Agreement and the transactions contemplated
herein.
3.7 INVESTMENT INTENT. Purchaser is purchasing the Shares to
be purchased by it for its own account and for investment purposes, and does not
intend to redistribute the Shares (except in a transaction or transactions
exempt from registration under the federal and state securities laws or pursuant
to an effective registration statement under such laws). Purchaser acknowledges
that the Shares have not been registered under the Securities Act or any state
blue sky or securities Laws and that the transfer of the Shares may be subject
to compliance with such Laws (in addition to the restrictions set forth in the
Stockholders Agreement). As of the date hereof, Purchaser has no present
intention to transfer the Shares.
20
3.8 INVESTOR SOPHISTICATION; ETC. Purchaser is an "accredited
investor" as defined in Regulation D under the Securities Act, has such
knowledge and experience in financial business matters that it is capable of
evaluating the merits and risks of an investment in the Shares, and, without
limiting the scope or effect of any of the representations and warranties of the
Company in Article II or Purchaser's indemnification rights under Article VI,
has had access to such information as it has deemed necessary in order to
formulate an informed decision to purchase the Shares. Purchaser is not an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
IV. COVENANTS
-------------
4.1 FILINGS, REASONABLE EFFORTS. Upon the terms and subject to
the conditions set forth in this Agreement, each of the parties will use all
commercially reasonable efforts to take, or cause to be taken, all actions, and
to do, or cause to be done, and to assist and cooperate with the other parties
in doing, all things necessary, proper or advisable to consummate and make
effective, in the most expeditious manner practicable, the transactions
contemplated by this Agreement, including without limitation (i) obtaining of
all necessary actions or nonactions, waivers, consents and approvals from
Governmental Entities and making of all necessary registrations and filings
(including filings with Governmental Entities) and taking of all reasonable
steps as may be necessary to obtain an approval or waiver from, or to avoid an
action or proceeding by, any Governmental Entity, (ii) obtaining, in writing, of
all necessary consents, approvals or waivers from third parties in form
reasonably satisfactory to Purchaser, and (iii) executing and delivering any
additional instruments necessary to consummate the transactions contemplated by,
and to fully carry out the purposes of, this Agreement.
4.2 PUBLICITY. The initial press release relating to this
Agreement will be in the form of a joint press release previously agreed between
Purchaser and the Company and thereafter the Company and Purchaser will, subject
to their respective legal obligations (including requirements of stock exchanges
and other similar regulatory bodies), consult with each other, and use
reasonable efforts to agree upon the text of any press release, before issuing
any such press release or otherwise making public statements with respect to the
transactions contemplated hereby and in making any filings with any Governmental
Entity or with any national securities exchange with respect thereto.
21
4.3 PROXY STATEMENT. The Company will promptly prepare the
Proxy Statement and file it with the SEC as soon as practicable after the date
hereof and will use its commercially reasonable best efforts to have the Proxy
Statement cleared by the SEC within 75 calendar days after the date of filing
and promptly thereafter will mail the Proxy Statement to the Company
Stockholders in order for the Company Stockholders Meeting to occur within 90
calendar days after the date hereof. Purchaser will use its commercially
reasonable best efforts to cooperate with the Company in the preparation and
finalization of the Proxy Statement. Any Proxy Statement will disclose the
recommendation of the Company Board as of the date hereof that the Company
Stockholders approve the Stockholder Approval Matters. The Company agrees not to
mail the Proxy Statement to the Stockholders until Purchaser confirms that the
information provided by Purchaser continues to be accurate. If at any time prior
to the Company Stockholders Meeting any event or circumstance relating to the
Company or any of its Subsidiaries or Affiliates, or its or their respective
officers or directors, should be discovered by the Company that is required to
be set forth in a supplement to any Proxy Statement, the Company will inform
Purchaser, supplement such Proxy Statement and mail such supplement to the
Company Stockholders. The Company will promptly advise the Purchaser of any oral
or written comments to the Proxy Statement from the SEC or the issuance of any
stop order with respect to the Proxy Statement. The Company will provide the
Purchaser and its counsel with a reasonable opportunity to review and comment on
the Proxy Statement and any amendment or supplement thereto prior to filing such
with the SEC, and will provide the Purchaser with a copy of all such filings
made with the SEC.
4.4 NYSE LISTING. The Company will use its best efforts to
cause the shares of the Common Stock to be issued hereunder or upon the
conversion of the Series D Preferred Stock, if applicable, and the shares of
Common Stock to be issued in the Rights Offering to be approved for listing on
The New York Stock Exchange ("NYSE"), subject to official notice of issuance.
4.5 COMPANY STOCKHOLDERS MEETING. (a) The Company will take
all action necessary in accordance with applicable Law and its Charter and
bylaws to duly call, give notice of, convene and hold a special meeting of the
Company Stockholders as promptly as practicable (but in no event later than 90
calendar days after the date hereof) and to include for consideration and vote
at the Company Stockholders Meeting the Stockholder
22
Approval Matters. The Company Board will recommend approval of the Stockholder
Approval Matters and the Company will take all lawful action to solicit such
approval, including without limitation timely mailing of the Proxy Statement. In
the event the Stockholder Approval Matters are not approved at the Company
Stockholders Meeting, the Company will (i) use reasonable efforts to obtain as
promptly as practicable a waiver from the NYSE of Stockholder Approval of the
conversion of the Series D Preferred Stock into Common Stock and (ii) if such
waiver is not obtained prior to March 1, 2002, convene and hold a meeting of the
Company Stockholders at least one time during each six month period commencing
on the date of the first Company Stockholders Meeting and include for
consideration and vote at such Company Stockholders Meeting, and recommend
approval of, the Stockholder Approval Matters until such matters have been
approved in accordance with the rules and regulations of NYSE.
(b) Purchaser will, and will cause its Affiliates and any
other entity that becomes an assignee of any voting securities of the Company
owned by Purchaser or its Affiliates to, vote such securities in favor of the
Stockholder Approval Matters at each meeting of the Company Stockholders in
which such matters are considered.
4.6 REIT-RELATED MATTERS. (a) The Company will take such
further actions and engage in such further transactions as Purchaser reasonably
requests to preserve the Company's status as a REIT under the Code (including
with respect to the period following the Closing Date) and to avoid the payment
of any Taxes under Sections 857(b), 859(f), 860(c) or 4981 of the Code. The
Company will not make or rescind any express or deemed election relative to
Taxes (unless required by Law or necessary to preserve the Company's status as a
REIT or the status of any Subsidiary as a partnership for federal income Tax
purposes or as a qualified REIT subsidiary under Section 856(i) of the Code, as
the case may be).
(b) The Company Board will take no action that would render
Section 4 of Article V of the Charter applicable to, and will not exercise any
right provided under such section with respect to, Purchaser or to the
transactions contemplated by the Transaction Documents.
(c) Purchaser will take such actions as may be required to
ensure that Purchaser's manner of holding ownership of the Company's securities
will not cause REIT disqualification under Section 856(a)(6) of the Code and
will not cause more than 9.9% of the value of the Company's securities to be
owned,
23
directly or indirectly, by an individual as determined under the REIT provisions
of the Code, including Section 544 of the Code.
4.7 RIGHTS OFFERING. (a) As promptly as practical after the
date hereof, the Company shall establish a record date (the "RECORD DATE") for
the distribution to all holders of Common Stock as of the Record Date a right
(the "RIGHT") to purchase shares of Common Stock on the terms set forth on
EXHIBIT G hereto (such offering, the "RIGHTS OFFERING"). The Company will
promptly prepare the Registration Statement and file it with the SEC as soon as
practicable after the date hereof and will use its commercially reasonable best
efforts to have the Registration Statement cleared by the SEC within 30 calendar
days after the date of filing and promptly thereafter will mail the prospectus
included as part of such Registration Statement to the Company Stockholders as
of the Record Date.
4.8 FURTHER ACTION. Each of the parties hereto will use all
commercially reasonable efforts to take, or cause to be taken, all appropriate
action, do or cause to be done all things reasonably necessary, proper or
advisable under applicable law, and execute and deliver such documents and other
papers, as may be required to carry out the provisions of the Transaction
Documents and consummate and make effective the transactions contemplated hereby
and thereby.
4.9 OTHER MATTERS. The Company will use all reasonable efforts
to arrange for the signature of the Rights Amendment by First Chicago Trust
Company as soon as practicable after the date hereof. Promptly after the receipt
of Stockholder Approval with respect to the Amended and Restated Series C
Articles Supplementary in the form attached hereto as EXHIBIT F (the "AMENDED
SERIES C ARTICLES SUPPLEMENTARY"), the Company will cause the Amended Series C
Articles Supplementary to be filed and accepted for record by the appropriate
Maryland governmental authority. Notwithstanding anything in the Amended Series
C Articles Supplementary or any of the other Transaction Documents to the
contrary, the letter agreement, dated January 31, 2001, between Purchaser and
the Company shall remain in full force and effect, and all references therein to
the Articles Supplementary for the Series C Preferred Stock shall include the
Amended Series C Articles Supplementary.
4.10 NO PARTICIPATION IN RIGHTS OFFERING OR ADJUSTMENT TO
SERIES C PREFERRED. Purchaser agrees that, notwithstanding anything to the
contrary in the Articles Supplementary for the Series C Preferred Stock, (i)
Purchaser shall not be entitled to any dividend distributed in the Rights
Offering in respect of
24
its Series C Preferred Stock and (ii) there shall be no adjustment to the
conversion price of the Series C Preferred Stock as a result of the declaration
of a dividend, or distribution or exercise of Rights, in the Rights Offering.
V. CONDITIONS TO CLOSING
------------------------
5.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS. The respective
obligations of each party to consummate the transactions contemplated by this
Agreement are subject to there not being in effect on the Closing Date any Order
or Law enacted, entered, promulgated, enforced or issued by any court of
competent jurisdiction or other Governmental Entity or other legal restraint or
prohibition preventing the consummation of the transactions contemplated by this
Agreement (a "GOVERNMENTAL RESTRAINT").
5.2 CONDITIONS TO OBLIGATIONS OF PURCHASER. The obligations of
Purchaser to consummate the transactions contemplated by this Agreement are
subject to the satisfaction or waiver, at or prior to the Closing of each of the
following conditions:
(a) LITIGATION. No action, suit or proceeding shall have been
commenced or threatened in writing by or before any court or other Governmental
Entity against Purchaser, the Company or any of their respective Affiliates,
seeking to restrain or materially and adversely alter the transactions
contemplated hereby or by the other documents contemplated hereby, which (i) is
reasonably likely to render it impossible or unlawful to consummate the
transactions contemplated hereby or thereby, or (ii) in the good faith judgment
of Purchaser could reasonably be expected to have a Company Material Adverse
Effect or materially limit or restrict the rights of the Purchaser under the
Transaction Documents.
(b) RIGHTS AMENDMENT. The Rights Amendment shall continue to
be in effect and no "Triggering Event," "Distribution Date" or "Stock
Acquisition Date" shall have occurred pursuant to and as defined in the Company
Rights Agreement.
(c) BANK AGREEMENTS. Fleet Bank, N.A. and The Provident Bank
shall have (i) entered into amendments to their respective loan agreements with
the Company on terms and conditions satisfactory to each of Purchaser and the
Company in their respective sole discretion, (ii) waived any and all
then-existing covenant defaults, as well as the waiver of the right
25
to assert a default or give notice of an event which, with the giving of notice
and/or the passing of time, could become an event of default under such
agreements, and (iii) with respect to Fleet, extended the current maturity date
of its loan by not less than 12 months (such agreements, the "BANK AGREEMENTS").
Each of the conditions set forth in this Section 5.2 shall be deemed satisfied,
without any further action by the Company or Purchaser, upon the closing of the
Rights Offering (provided that the Closing Condition described in EXHIBIT G has
been satisfied).
VI. INDEMNIFICATION
-------------------
6.1 INDEMNIFICATION OF PURCHASER. (a) RIGHT OF
INDEMNIFICATION. Subject to the terms of this Article VI, the Company covenants
and agrees to indemnify and hold harmless each of Purchaser and its Affiliates
and their respective partners, members, officers, directors, employees,
attorneys, advisors and agents controlling, and any person or entity
controlling, controlled by or under common control with, any of the foregoing
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act, including without limitation The Hampstead Group, L.L.C. and
its Affiliates (collectively, the "INDEMNIFIED PARTIES"), from and against all
losses, claims, liabilities, damages, costs (including without limitation costs
of preparation and reasonable attorneys' fees and charges) and reasonable
expenses (including without limitation expenses incurred in connection with
investigating, preparing or defending any action, claim or proceeding, whether
or not in connection with pending or threatened litigation in which any
Indemnified Party is a party) or actions in respect thereof suffered by any
Indemnified Party, directly or indirectly, arising out of (i) any inaccuracy in
or breach of any of the representations, warranties, covenants or agreements
made by the Company in this Agreement or in any other document contemplated
hereby or (ii) any actual or threatened claim against such Indemnified Party by
a person or entity related to or arising out of or in connection with any
Transaction Document or any actions taken by any Indemnified Party pursuant
hereto or thereto or in connection with the transactions contemplated hereby or
thereby (whether or not the transactions contemplated hereby or thereby are
consummated) (collectively, "LOSSES").
(b) LOSSES. The Company will not be liable to any Indemnified
Party for any Losses to the extent, but only to the extent, that it is finally
judicially determined by a court of competent jurisdiction (which determination
is not subject to
26
appeal) that such Losses resulted primarily from (i) such Indemnified Party's
breach of this Agreement, (ii) a misstatement or omission contained in a report
filed by such Indemnified Party pursuant to the Exchange Act, the Securities Act
or any other Law unless such misstatement or omission relates to information
furnished or confirmed by or on behalf of the Company, or (iii) a misstatement
or omission contained in a report filed by the Company pursuant to the Exchange
Act, the Securities Act or any other Law based on information furnished in
writing by the Indemnified Party to the Company expressly for use therein. The
indemnification provisions of this Section 6.1 are expressly intended to cover
Losses relating to an Indemnified Party's own negligence. The Company will
promptly reimburse each Indemnified Party for all such Losses as they are
incurred. If the foregoing indemnity is unavailable to any Indemnified Party or
insufficient to hold any Indemnified Party harmless, then the Company will
contribute to the amount paid or payable by such Indemnified Party as a result
of such Loss in such proportion as is appropriate to reflect the relative fault
of the Company, on the one hand, and such Indemnified Party, on the other, as
well as any other relevant equitable considerations. The relative fault of the
Company, on the one hand, and any Indemnified Party, on the other, will be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission to state a material fact, has been taken by, or relates to
information supplied by, the Company or such Indemnified Party, and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent any such action, statement or omission. The amount paid or payable by a
party as a result of any Losses will be deemed to include any reasonable legal
or other fees or expenses incurred by such party in connection with any action,
suit or proceeding. The parties hereto agree that it would not be just and
equitable if contribution pursuant to this paragraph were determined by prorata
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to above. No person or entity guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) will be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
(c) THRESHOLD. No Indemnified Party will be entitled to
indemnification pursuant to this Section 6.1 with respect to any Losses in
respect of breaches of representations and warranties until the aggregate amount
of all such Losses
27
suffered by Indemnified Parties in the aggregate exceeds $500,000 (the
"THRESHOLD"), whereupon Indemnified Parties will be entitled to indemnification
pursuant to this Section 6.1 from the Company for the full amount of all such
Losses suffered by Indemnified Parties (regardless of the Threshold) up to an
aggregate total amount of the Unsubscribed Purchase Amount (the "CAP"). The
foregoing provision of this Section 6.1(c) notwithstanding, the Threshold and
the Cap will not apply with respect to any Loss or Losses relating directly or
indirectly to claims of any nature whatsoever (i) relating to, resulting from or
arising out of any breach of any covenant or agreement made by the Company in
this Agreement or in any Transaction Documents or (ii) against any Indemnified
Party or Parties made by or on behalf of any director or officer of the Company
or any of its Subsidiaries.
(d) SURVIVAL. No Indemnified Party will be entitled to give a
Notice of Claim with respect to any actual or alleged breach of any
representation or warranty herein after the second anniversary of the date of
the Closing.
6.2 PROCEDURE FOR CLAIMS. (a) NOTICE OF CLAIM. After obtaining
knowledge of any claim or demand which has given rise to, or could reasonably
give rise to, a claim for indemnification under this Article VI (referred to
herein as an "INDEMNIFICATION CLAIM"), an Indemnified Party will be required to
give written notice to the Company of such Indemnification Claim ("NOTICE OF
CLAIM"). A Notice of Claim will be given with respect to all Indemnification
Claims, whether or not the Threshold has been reached; PROVIDED, HOWEVER, that
the failure to give Notice of Claim to the Company will not relieve the Company
from any liability that it may have to an Indemnified Party hereunder to the
extent that the Company is not prejudiced by such failure. The Notice of Claim
will be required to set forth the amount (or a reasonable estimate) of the Loss
or Losses suffered, or which may be suffered, by an Indemnified Party as a
result of such Indemnification Claim, whether or not the Threshold has been
reached, and a brief description of the facts giving rise to such
Indemnification Claim. The Indemnified Party will furnish to the Company such
information (in reasonable detail) it may have with respect to such
Indemnification Claim (including copies of any summons, complaint or other
pleading which may have been served on it and any written claim, demand,
invoice, billing or other document evidencing or asserting the same).
(b) THIRD PARTY CLAIM. (i) If the claim or demand set forth in
the Notice of Claim is a claim or demand asserted
28
by a third party (a "THIRD PARTY CLAIM"), the Company will have 15 calendar days
after the date of receipt by the Company of the Notice of Claim (the "NOTICE
DATE") to notify the Indemnified Parties in writing of the election by the
Company to defend the Third Party Claim on behalf of the Indemnified Parties,
PROVIDED, HOWEVER, that the Company will be entitled to assume the defense of
any such Third Party Claim only if it unconditionally and irrevocably undertakes
to indemnify all Indemnified Parties in respect thereof (subject to any
applicable limitations set forth in Section 6.1).
(ii) If the Company elects to defend a Third Party Claim on
behalf of the Indemnified Parties, the Indemnified Parties will make available
to the Company and their agents and representatives all records and other
materials in their possession which are reasonably required in the defense of
the Third Party Claim, and the Company will pay all expenses payable in
connection with the defense of the Third Party Claim as they are incurred
(subject to any applicable limitations set forth in Section 6.1).
(iii) In no event may the Company settle or compromise any
Third Party Claim without the Indemnified Parties' consent, which may not be
unreasonably withheld, PROVIDED, HOWEVER, that if a settlement is presented by
the Company to the Indemnified Parties for approval and the Indemnified Parties
withhold their consent thereto, then any amount by which the final Losses
(including reasonable attorneys' fees and charges) resulting from the resolution
of the matter exceeds the sum of the rejected settlement amount plus attorneys'
fees incurred to such date will be excluded from the amount covered by the
indemnification provided for in this Agreement and shall be borne by the
Indemnified Parties.
(iv) If the Company elects to defend a Third Party Claim, the
Indemnified Parties will have the right to participate in the defense of the
Third Party Claim, at the Indemnified Parties' expense (and without the right to
indemnification for such expense under this Agreement), PROVIDED, HOWEVER, that
the reasonable fees and expenses of counsel retained by the Indemnified Parties
will be at the expense of the Company if (A) the use of the counsel chosen by
the Company to represent the Indemnified Parties would present such counsel with
a conflict of interest; (B) the parties to such proceeding include both
Indemnified Parties and the Company and there may be legal defenses available to
Indemnified Parties which are different from or additional to those available to
the Company; (C) within 10 calendar days after being advised by the
29
Company of the identity of counsel to be retained to represent Indemnified
Parties, they shall have objected to the retention of such counsel for valid
reasons (which shall be stated in a written notice to the Company), and the
Company shall not have retained different counsel satisfactory to the
Indemnified Parties; or (D) the Company shall have authorized the Indemnified
Parties to retain a single separate counsel at the expense of the Company, such
authorization to be made by the directors who are not designees of Purchaser or
its Affiliates.
(v) If the Company does not elect to defend a Third Party
Claim, or does not defend a Third Party Claim in good faith, the Indemnified
Parties will have the right, in addition to any other right or remedy it may
have hereunder, at the sole and exclusive expense of the Company, to defend such
Third Party Claim.
(c) COOPERATION IN DEFENSE. The Indemnified Parties will
cooperate with the Company in the defense of a Third Party Claim and make
reasonably available the facts relating to the Third Party Claim. Subject to the
foregoing, (i) no Indemnified Party will have any obligation to participate in
the defense of or to defend any Third Party Claim and (ii) no Indemnified
Parties' defense of, or their participation in, the defense of any Third Party
Claim will in any way diminish or lessen their right to indemnification as
provided in this Agreement.
6.3 INDEMNIFICATION OF THE COMPANY. Purchaser will indemnify
and hold harmless the Company and its current and future officers, directors,
employees and agents from and against all Losses suffered by any of them as a
result of any inaccuracy in or breach of any of the representations, warranties
or covenants made by Purchaser hereunder. The procedures for and limits on
indemnification in respect of the obligations of Purchaser under this Section
6.3 will be the same as those set forth in Section 6.1 and 6.2.
6.4 NON-EXCLUSIVITY OF INDEMNIFICATION. The rights of any
Indemnified Party hereunder will not be exclusive of the rights of any
Indemnified Party under any other agreement or instrument to which the Company
is a party. Nothing in such other agreement or instrument will be interpreted as
limiting or otherwise adversely affecting an Indemnified Party's rights
hereunder and nothing in this Agreement will be interpreted as limiting or
otherwise adversely affecting the Indemnified Party's rights under any such
other agreement or instrument; PROVIDED, HOWEVER, that no Indemnified Party will
be entitled hereunder to recover more than its indemnified Losses. The
30
indemnity, contribution and expense reimbursement obligation of the Company in
this Agreement will be in addition to any liability the Company may otherwise
have. The obligations of the Company to each Indemnified Party will be separate
obligations, and the liability of the Company to any Indemnified Party will not
be extinguished solely because any other Indemnified Party is not entitled to
indemnity or contribution hereunder.
6.5 SURVIVAL OF INDEMNIFICATION. The provisions of this
Article VI will survive notwithstanding any termination hereof or the Closing of
any of the transactions contemplated hereby.
VII. TERMINATION AND WAIVER
---------------------------
7.1 TERMINATION BY MUTUAL CONSENT. This Agreement may be
terminated at any time prior to the Closing Date by the mutual consent of
Purchaser and the Company.
7.2 TERMINATION BY PURCHASER. This Agreement may be terminated
by Purchaser if the Closing shall not have occurred on or before January 15,
2002 (the "OUTSIDE DATE"); PROVIDED, HOWEVER, (i) that Purchaser may not
terminate this Agreement pursuant to this Section 7.2 if Purchaser's failure to
fulfill any of its obligations under this Agreement shall have been the reason
that the Closing shall not have occurred on or before the Outside Date and (ii)
if the Registration Statement has not been declared effective by the SEC on or
prior to December 1, 2001 (other than due to the Company's breach of its
obligation under Section 4.7 of this Agreement), the Outside Date will be
extended beyond December 31, 2001 on a day-for-day basis by that number of days
beyond December 1, 2001 that the Registration Statement has not been declared
effective, not to exceed 30 calendar days.
31
VIII. GENERAL PROVISIONS
------------------------
8.1 NOTICES. Any notice or other communication required to be
given hereunder shall be in writing, and sent by reputable courier service (with
proof of service), by hand delivery or by facsimile (followed on the same day by
delivery by courier service (with proof of delivery) or by hand delivery),
addressed as follows:
IF TO PURCHASER:
---------------
Explorer Holdings, L.P.
4200 Texas Commerce Tower West
2200 Ross Avenue
Dallas, Texas 75201
Attn: William T. Cavanaugh, Jr.
Fax No.: (214) 220-4949
WITH COPIES TO:
--------------
Jones, Day, Reavis & Pogue
599 Lexington Avenue
New York, New York 10022
Attn: Thomas W. Bark
Fax No.: (212) 755-7306
IF TO THE COMPANY:
-----------------
Omega Healthcare Investors, Inc.
900 Victors Way, Suite 350
Ann Arbor, Michigan 48108
Attn: Chief Financial Officer
Fax No.: (734) 887-0322
WITH COPIES TO:
--------------
Powell, Goldstein, Frazer & Murphy LLP
191 Peachtree Street, N.E.
Suite 1600
Atlanta, Georgia 30303
Attn: Rick Miller or Eliot Robinson
Fax No.: (404) 572-6999
or to such other address as any party will specify by written notice so given,
and such notice will be deemed to have been delivered as of the date so
telecommunicated or personally delivered.
32
8.2 ASSIGNMENT; BINDING EFFECT. Neither this Agreement nor any
of the rights, interests or obligations hereunder will be assigned by any party
hereto (whether by operation of Law or otherwise) without the prior written
consent of the other party, except that Purchaser will have the right to assign
to any direct or indirect wholly owned subsidiary of Purchaser or to the
partners of Purchaser any and all rights and obligations of Purchaser under this
Agreement, provided, that any such assignment will not relieve Purchaser from
any of its obligations hereunder. Any assignment not granted in accordance with
the foregoing shall be null and void. Subject to the first sentence of this
Section 8.2, this Agreement will be binding upon and will inure to the benefit
of the parties hereto and their respective successors and assigns.
Notwithstanding anything contained in this Agreement to the contrary, except for
the provisions of Article VI, nothing in this Agreement, expressed or implied,
is intended to confer on any Person other than the parties hereto or their
respective heirs, successors, executors, administrators and assigns any rights,
remedies, obligations or liabilities under or by reason of this Agreement.
8.3 ENTIRE AGREEMENT. This Agreement, the Company Disclosure
Letter, the other Transaction Documents and any documents delivered by the
parties in connection herewith or therewith, constitute the entire agreement
among the parties with respect to the subject matter hereof and supersede all
prior agreements and understandings among the parties with respect thereto,
including, without limitation, any draft proposal or letter of intent with
respect to the transactions contemplated herein.
8.4 AMENDMENT. This Agreement may be amended by the parties
hereto, by action taken by their respective Boards of Directors, or other
equivalent governing bodies, at any time before or after approval of matters
presented to the Company Stockholders, but after any such Company Stockholder
approval, no amendment will be made which by Law requires the further approval
of the Company Stockholders without obtaining such further approval. This
Agreement may not be amended except by an instrument in writing signed on behalf
of each of the parties hereto.
8.5 GOVERNING LAW. This Agreement will be governed by and
construed in accordance with the laws of the State of Delaware, without regard
to its conflict of laws principles.
8.6 COUNTERPARTS. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when
33
so executed and delivered will be an original, but all such counterparts will
together constitute one and the same instrument. Each counterpart may consist of
a number of copies hereof each signed by less than all, but together signed by
all of the parties hereto. A facsimile copy of a signature page shall be deemed
to be an original signature page.
8.7 HEADINGS. Headings of the Articles and Sections of this
Agreement are for the convenience of the parties only, and will be given no
substantive or interpretive effect whatsoever.
8.8 CERTAIN DEFINITIONS/INTERPRETATIONS. (a) For purposes of
this Agreement:
(i) An "AFFILIATE" of any Person means another Person that,
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such first Person;
(ii) "BUSINESS DAY" means any day other than a Saturday,
Sunday or day on which banks in New York, New York are authorized or required by
Law to close;
(iii) "KNOWLEDGE" of any Person which is not an individual
means the actual knowledge of any of such Person's officers after reasonable
inquiry; and
(iv) "PERSON" means an individual, corporation, partnership,
limited liability company, joint venture, association, trust, unincorporated
organization or other entity.
(b) When a reference is made in this Agreement to an Article,
Section, Exhibit or Annex, such reference will be to an Article or Section of,
or an Annex or Exhibit to, this Agreement unless otherwise indicated. Whenever
the words "include," "includes" or "including" are used in this Agreement, they
will be deemed to be followed by the words "without limitation", except when
used in conjunction with a negative predicate. The words "hereof," "herein" and
"hereunder" and words of similar import when used in this Agreement will refer
to this Agreement as a whole and not to any particular provision of this
Agreement. All terms used herein with initial capital letters have the meanings
ascribed to them herein and all terms defined in this Agreement will have such
defined meanings when used in any certificate or other document made or
delivered pursuant hereto unless otherwise defined therein. The definitions
34
contained in this Agreement are applicable to the singular as well as the plural
forms of such terms and to the masculine as well as to the feminine and neuter
genders of such term. Any agreement, instrument or statute defined or referred
to herein or in any agreement or instrument that is referred to herein means
such agreement, instrument or statute as from time to time amended, modified or
supplemented, including (in the case of agreements or instruments) by written
waiver or written consent and (in the case of statutes) by succession of
comparable successor statutes and references to all attachments thereto and
instruments incorporated therein. References to a Person are also to its
permitted successors and assigns.
8.9 WAIVERS. Except as provided in this Agreement, no action
taken pursuant to this Agreement, including without limitation any investigation
by or on behalf of any party, will be deemed to constitute a waiver by the party
taking such action of compliance with any representations, warranties, covenants
or agreements contained in this Agreement. The waiver by any party hereto of a
breach of any provision hereunder will not operate or be construed as a waiver
of any prior or subsequent breach of the same or any other provision hereunder.
At any time any party hereto may (a) extend the time for the performance of any
of the obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto, and (c) waive compliance with any of the
agreements or conditions contained herein. Any such extension or waiver shall be
valid only if set forth in an instrument in writing signed by the party or
parties to be bound thereby.
8.10 SEVERABILITY. Any term or provision of this Agreement
which is invalid or unenforceable in any jurisdiction will, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or enforceability of
any of the terms or provisions of this Agreement in any other jurisdiction. If
any provision of this Agreement is so broad as to be unenforceable, the
provision will be interpreted to be only so broad as is enforceable.
8.11 ENFORCEMENT OF AGREEMENT. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement was not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the parties will be entitled
to an injunction or injunctions to prevent breaches of this Agreement
35
and to enforce specifically the terms and provisions hereof, this being in
addition to any other remedy to which they are entitled at law or in equity.
8.12 EXPENSES. Without limiting the generality or effect of
any other provision hereof, including without limitation Section 6.1 or any
agreement or instrument contemplated hereby, whether or not the Closing occurs,
the Company will reimburse Purchaser for all Purchaser Expenses at the Closing
or the termination of this Agreement, and from time to time thereafter promptly
upon request by Purchaser, not to exceed $1 million. As used in this Agreement,
"PURCHASER EXPENSES" shall be an amount equal to all out-of-pocket costs and
expenses of Purchaser and Purchaser's partners incurred in connection with this
Agreement and the transactions contemplated hereby and any litigation associated
therewith (including, without limitation, all fees and expenses payable to
accountants, counsel, consultants and due diligence expenses, but expressly
excluding the costs of Purchaser's employees and Purchaser's overhead).
"PURCHASER EXPENSES" shall not include (i) any out-of-pocket costs and expenses
of Purchaser or its Affiliates for which Purchaser or its Affiliates would be
entitled to indemnification pursuant to Article VI or to payment pursuant to the
Advisory Agreement and (ii) any fee payable to The Hampstead Group, L.L.C.
pursuant to the Advisory Agreement in respect of the transactions contemplated
by this Agreement.
8.13 JURISDICTION; CONSENT TO SERVICE OF PROCESS. (a) Each
party hereby irrevocably and unconditionally submits, for itself and its
property, to the exclusive jurisdiction of any state or federal court located in
the State of Delaware (a "DELAWARE COURT"), and any appellate court from any
such court, in any suit, action or proceeding arising out of or relating to this
Agreement, or for recognition or enforcement of any judgment resulting from any
such suit, action or proceeding, and each party hereby irrevocably and
unconditionally agrees that all claims in respect of any such suit, action or
proceeding may be heard and determined in a Delaware Court.
(b) It will be a condition precedent to each party's right to
bring any such suit, action or proceeding that such suit, action or proceeding,
in the first instance, be brought in a Delaware Court (unless such suit, action
or proceeding is brought solely to obtain discovery or to enforce a judgment),
and if each such court refuses to accept jurisdiction with respect thereto, such
suit, action or proceeding may be brought in any other court with jurisdiction;
PROVIDED that the foregoing will not apply to any suit, action or proceeding by
a
36
party seeking indemnification or contribution pursuant to this Agreement or
otherwise in respect of a suit, action or proceeding against such party by a
third party if such suit, action or proceeding by such party seeking
indemnification or contribution is brought in the same court as the suit, action
or proceeding against such party.
(c) No party may move to (i) transfer any such suit, action or
proceeding from a Delaware Court to another jurisdiction, (ii) consolidate any
such suit, action or proceeding brought in a Delaware Court with a suit, action
or proceeding in another jurisdiction, or (iii) dismiss any such suit, action or
proceeding brought in a Delaware Court for the purpose of bringing the same in
another jurisdiction.
(d) Each party hereby irrevocably and unconditionally waives,
to the fullest extent it may legally and effectively do so, (i) any objection
which it may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement in a Delaware Court,
(ii) the defense of an inconvenient forum to the maintenance of such suit,
action or proceeding in any such court, and (iii) the right to object, with
respect to such suit, action or proceeding, that such court does not have
jurisdiction over such party. Each party irrevocably consents to service of
process in any manner permitted by law. Notwithstanding the foregoing, this
Section 8.13 will not apply to any suit, action or proceeding to enforce a
judgment of a Delaware Court.
8.14 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING,
CLAIM OR COUNTERCLAIM, WHETHER IN CONTRACT OR TORT, AT LAW OR IN EQUITY, ARISING
OUT OF OR IN ANY WAY RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
8.15 NO STRICT CONSTRUCTION. The parties hereto have
participated jointly in the negotiation and drafting of this Agreement. In the
event an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the parties hereto, and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any of the provisions of this Agreement.
[REMAINDER OF PAGE INTENTIONALLY BLANK]
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IN WITNESS WHEREOF, the parties have executed this Agreement and caused
the same to be duly delivered on their behalf on the day and year first written
above.
OMEGA HEALTHCARE INVESTORS, INC.
By: /s/ C. Taylor Pickett
---------------------------------
C. Taylor Pickett
Chief Executive Officer
EXPLORER HOLDINGS, L.P.
By: Explorer Holdings GenPar, LLC,
its General Partner
By: /s/ William T. Cavanaugh, Jr.
---------------------------------
William T. Cavanaugh, Jr.
Vice President