UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): June
5, 2014 (June 1, 2014)
American Realty Capital Healthcare Trust,
Inc.
(Exact Name of Registrant as Specified in
Charter)
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Maryland |
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000-54688 |
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27-3306391 |
(State or other jurisdiction
of incorporation) |
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(Commission File Number) |
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(I.R.S. Employer
Identification No.) |
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405 Park Avenue
New York, New York 10022 |
(Address, including zip code, of Principal
Executive Offices)
Registrant's telephone number, including
area code: (212) 415-6500 |
Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
S Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
£ Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
£ Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
£ Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 1.01 Entry Into a Material Definitive Agreement.
Agreement and Plan of Merger
On June 1, 2014, American Realty Capital
Healthcare Trust, Inc. (the “Company”) entered into an Agreement and Plan of Merger (the “Merger Agreement”)
with Ventas, Inc., a Delaware corporation (“Ventas”), Stripe Sub, LLC, a Delaware limited liability company
and a direct wholly-owned subsidiary of Ventas (“Merger Sub”), Stripe OP, LP, a Delaware limited partnership
of which Merger Sub is the sole general partner (“OP Merger Sub”), and American Realty Capital Healthcare Trust
Operating Partnership L.P., a Delaware limited partnership (the “OP” or the “Surviving Partnership”),
of which the Company is the sole general partner. The Merger Agreement provides for the merger of the Company with and into Merger
Sub, with Merger Sub surviving as a wholly-owned subsidiary of Ventas (the “Merger”), and for the merger of
OP Merger Sub with and into OP, with OP continuing as the surviving partnership (the “Partnership Merger”).
The board of directors of the Company (the “Board”) has unanimously approved the Merger Agreement, the Merger
and the other transactions contemplated by the Merger Agreement, including the Partnership Merger. Capitalized terms used in this
Current Report on Form 8-K but not defined herein shall have the meanings ascribed to them in the Merger Agreement.
Pursuant to the terms and subject to the
conditions set forth in the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each
share of common stock, par value $0.01, of the Company (“Company Common Stock”) issued and outstanding immediately
prior to the Effective Time (other than shares held by the Company, any wholly owned subsidiary of the Company, Ventas or any wholly
owned subsidiary of Ventas, which will be cancelled) will be converted into the right to receive, pursuant to an election made
by each holder of the Company’s common stock , (i) $11.33 in cash or (ii) 0.1688 (the “Exchange Ratio”)
shares of common stock, par value $0.25, of Ventas (“Ventas Common Stock”). In no event will the aggregate consideration
paid in cash be paid on more than 10% of the shares of Company Common Stock issued and outstanding as of immediately prior to the
Effective Time and, if the aggregate elections for payment in cash exceed such 10% threshold, then the amount of cash consideration
paid on cash elections will be reduced on a pro rata basis with the remaining consideration paid in Ventas Common Stock. Non-electing
stockholders will receive Ventas Common Stock based on the Exchange Ratio. Under the Merger Agreement, at the Effective Time, each
of the Company’s outstanding restricted shares will vest in full and will be converted into the right to receive the merger
consideration as if they were shares of Company Common Stock.
In addition,
pursuant to the Partnership Merger, at the Effective Time: (i) the Company’s interest as the general partner of the OP will
remain outstanding and constitute the only outstanding general partnership interest in the Surviving Partnership; and (ii) each
unit of limited partnership interests in the OP (the “OP Units”) issued and outstanding immediately prior to
the effective time of the Partnership Merger, including the 5,613,374 OP Units to be issued in respect of the termination of the
Listing Note Agreement (as defined below), will be converted into such number of Class C Units (as defined in the limited
partnership agreement of the Surviving Partnership as contemplated to be amended and restated by the Merger Agreement) of the Surviving
Partnership as is equal to the Exchange Ratio. For purposes of clause (ii) above, American Realty Capital Healthcare Special Limited
Partnership, LLC (the “SLP”), the special limited partner of the OP, will be treated as having contributed its
right to distributions from the OP pursuant to its special limited partnership interest in the OP to the OP in exchange for 5,613,374
OP Units. In addition, unless otherwise notified by Ventas, prior to the Effective Time, the Company has agreed to take or cause
to be taken any and all actions necessary or appropriate to terminate the Company’s Employee and Director Incentive Restricted
Share Plan and the Company’s 2011 Stock Option Plan, all, however, contingent on the occurrence of the Effective Time.
The Company and Ventas have made representations
and warranties to each other in the Merger Agreement. Subject to certain exceptions, the Company has agreed, among other things,
not to solicit, initiate, knowingly encourage or knowingly facilitate any inquiry, discussion, offer or request from third parties
regarding other proposals to acquire the Company, and not to engage in any discussions or negotiations regarding any such proposal,
or furnish to any third party non-public information regarding the Company. The Company has also agreed to certain other restrictions
on its ability to respond to any such proposals. The Merger Agreement also includes certain termination rights for both the Company
and Ventas and provides that, in connection with the termination of the Merger Agreement, under specified circumstances, the Company
may be required to pay to Ventas expense reimbursement in an amount equal to $10,000,000. The Merger Agreement also provides for
the payment of a termination fee by the Company in the amount of $55,000,000 (net of the expense reimbursement, if previously paid)
if the Merger Agreement is terminated under specified circumstances.
The completion of the Merger is subject
to various customary conditions, including, among others, the approval by the Company’s stockholders of the Merger, the absence
of any law, order or injunction prohibiting the consummation of the Merger, declaration of effectiveness of the registration statement
on Form S-4 relating to the shares of Ventas Common Stock to be issued in the Merger, and authorization of such shares for listing
on the New York Stock Exchange, subject to official notice of issuance, the accuracy of the other party’s representations
and warranties (subject to customary qualifications), the other party’s material compliance with its covenants and agreements
contained in the Merger Agreement, the absence of any event that has had or would reasonably be expected to have a material adverse
effect on the other party since the date of the Merger Agreement, the receipt by each party of opinions to the effect that the
Merger will qualify for federal income tax purposes as a “reorganization” within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the “Code”) and opinions that both the Company and Ventas qualify
as REITs under the Code, and, in the case of Ventas’s obligation to complete the Merger, the receipt of required regulatory
approvals and certain amendments to agreements to which the Company is a party, including those described below, remaining in full
force and effect.
The foregoing summary description of the
material terms of the Merger Agreement does not purport to be complete and is qualified in its entirety by reference to the full
text of the Merger Agreement, which is filed as Exhibit 2.1 to this Current Report on Form 8-K and is incorporated herein by reference
in its entirety. The representations and warranties in the Merger Agreement were made as of a specified date, may be subject to
a contractual standard of materiality different from what might be viewed as material to stockholders, are subject to scheduled
exceptions and may have been used for the purpose of allocating risk between the parties. Accordingly, the representations and
warranties in the Merger Agreement are not necessarily and should not be relied on as characterizing the actual state of facts
about the Company or Ventas at the time they were made or otherwise and should only be read in conjunction with the other information
that the Company or Ventas (as applicable) makes publicly available in reports, statements and other documents filed with the Securities
and Exchange Commission (the “SEC”).
Amendment to Advisory Agreement
Concurrently with the execution of the
Merger Agreement, the Company entered into an amendment (the “Advisory Agreement Amendment”) to the Third Amended
and Restated Advisory Agreement (the “Advisory Agreement”) dated as of April 7, 2014, by and among the Company,
the OP and American Realty Capital Healthcare Advisors, LLC (“Advisor”). Under the Advisory Agreement Amendment,
the parties to the Advisory Agreement have agreed to terminate the Advisory Agreement immediately prior to, and contingent upon,
the closing of the Merger (the “Closing”) without the need for the 60 days’ advance notice required under
the Advisory Agreement. The Advisory Agreement Amendment will, pursuant to its terms, automatically terminate and be of no further
force or effect if the Merger Agreement is terminated in accordance with its terms.
A copy of the Advisory Agreement Amendment
is attached as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference in its entirety. The foregoing
summary description of the Advisory Agreement Amendment does not purport to be complete and is qualified in its entirety by reference
to the full text of the Advisory Agreement Amendment.
Amendment to Property Management and Leasing Agreement
Concurrently with the execution of
the Merger Agreement, the Company entered into an amendment (the “Property Management Agreement Amendment”)
to the Property Management and Leasing Agreement (the “Property Management Agreement”) dated February 18, 2011,
by and among the Company, the OP and American Realty Capital Healthcare Properties, LLC (the “Manager”). Under
the Property Management Agreement Amendment, the parties have agreed to terminate the Property Management Agreement immediately
prior to, and contingent upon, the Closing. The Property Management Agreement Amendment will, pursuant to its terms, automatically
terminate and be of no further force or effect if the Merger Agreement is terminated in accordance with its terms.
A copy of the Property Management Agreement
Amendment is attached as Exhibit 10.2 to this Current Report on Form 8-K and is incorporated herein by reference in its entirety.
The foregoing summary description of the Property Management Agreement Amendment does not purport to be complete and is qualified
in its entirety by reference to the full text of the Property Management Agreement Amendment.
See also Item 5.02 below, which is incorporated
by reference herein.
Item 5.02 Departure of Directors or Certain Officers; Election
of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Agreement to Terminate Multi-Year Outperformance Agreement
Concurrently with the execution of the
Merger Agreement, the Company, the OP and the Advisor entered into the Agreement (the “OPP Termination Agreement”)
terminating the Company’s 2014 Multi-Year Outperformance Agreement dated as of April 7, 2014, by and among the Company, the
OP and the Advisor (the “OPP”). Under the OPP Termination Agreement, the OPP will terminate without payment
to the Advisor effective as of immediately prior to the Effective Time contingent on the occurrence of the Effective Time.
A copy of the OPP Termination Agreement
is attached as Exhibit 10.3 to this Current Report on Form 8-K and is incorporated herein by reference. The foregoing summary description
of the OPP Termination Agreement does not purport to be complete and is qualified in its entirety by reference to the full text
of the OPP Termination Agreement.
Item 8.01 Other Events.
Amendment to Listing Note
Concurrently with the execution of
the Merger Agreement, the OP and the SLP entered into an amendment (the “Listing Note Amendment”) to the Listing
Note Agreement dated April 7, 2014, by and between the OP and the SLP (the “Listing Note Agreement”), to provide
that: (1) immediately prior to, and contingent upon, the Closing, the SLP will be deemed to have contributed its right to distributions
from the OP pursuant to its special limited partner interest in the OP, the amount of which distributions are evidenced by the
Listing Note Agreement, to the OP in exchange for 5,613,374 OP Units in the OP; and (2) the Listing Note Agreement will terminate
upon receipt by the SLP of such OP Units. The Listing Note Amendment will, pursuant to its terms, automatically terminate and be
of no further force or effect if the Merger Agreement is terminated in accordance with its terms.
A copy of the Listing Note Amendment is
attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference. The foregoing summary description
of the Listing Note Amendment does not purport to be complete and is qualified in its entirety by reference to the full text of
the Listing Note Amendment.
Additional Information about the Proposed Merger and Where
to Find It
This communication does not constitute an
offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. In connection with
the proposed Merger, the Company expects to prepare and file with the SEC a proxy statement and Ventas expects to prepare and file
with the SEC a registration statement on Form S-4 containing the Company’s proxy statement (the “proxy statement/prospectus”),
as well as other documents, with respect to Ventas’s proposed acquisition of the Company. INVESTORS ARE URGED TO READ
THE PROXY STATEMENT/PROSPECTUS (INCLUDING ALL AMENDMENTS AND SUPPLEMENTS THERETO) AND OTHER RELEVANT DOCUMENTS FILED BY THE COMPANY
OR VENTAS WITH THE SEC IF AND WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED MERGER.
Investors may obtain free copies of the
proxy statement/prospectus and other relevant documents filed by the Company and Ventas, as applicable, with the SEC (if and when
they become available) through the website maintained by the SEC at www.sec.gov. Copies of the documents filed by the Company with
the SEC are also available free of charge on the Company’s website at http://www.archealthcaretrust.com. Copies of the documents
filed by Ventas with the SEC are available free of charge on Ventas’s website at http://www.ventasreit.com.
The Company, the Advisor, Ventas and their
respective directors and executive officers may be deemed to be participants in the solicitation of proxies from the Company’s
stockholders in respect of the proposed Merger. Information regarding these persons can be found, with respect to the Company and
the Advisor, in the Company’s definitive proxy statement filed with the SEC on April 28, 2014 and, with respect to Ventas,
in Ventas’s definitive proxy statement for Ventas’s 2014 annual meeting of stockholders, filed with the SEC on April
4, 2014. Additional information regarding the interests of such potential participants will be included in the proxy statement/prospectus
and other relevant documents filed by the Company and Ventas with the SEC in connection with the proposed Merger if and when they
become available. These documents are available free of charge on the SEC’s website and from the Company or Ventas, as applicable,
using the sources indicated above.
Forward-Looking Statements
Information set forth in this Current Report
on Form 8-K (including information included or incorporated by reference herein) includes forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
All statements regarding the Company’s, Ventas’s or their tenants’, operators’, borrowers’ or managers’
expected future financial condition, results of operations, cash flows, funds from operations, dividends and dividend plans, financing
opportunities and plans, capital markets transactions, business strategy, budgets, projected costs, operating metrics, capital
expenditures, competitive positions, acquisitions, investment opportunities, dispositions, merger integration, growth opportunities,
expected lease income, continued qualification as a real estate investment trust (“REIT”), plans and objectives of
management for future operations and statements that include words such as “anticipate,” “if,” “believe,”
“plan,” “estimate,” “expect,” “intend,” “may,” “could,”
“should,” “will” and other similar expressions are forward-looking statements. These forward-looking statements
are inherently uncertain, and actual results may differ from the Company’s or Ventas’s expectations. The Company and
Ventas do not undertake a duty to update these forward-looking statements, which speak only as of the date on which they are made.
The Company’s or Ventas’s actual
future results and trends may differ materially from expectations depending on a variety of factors discussed in the Company’s
and Ventas’s filings with the Securities and Exchange Commission. These factors include without limitation: (a) the occurrence
of any event, change or other circumstances that could give rise to the termination of the merger agreement; (b) the inability
to complete the merger due to the failure to obtain Company stockholder approval of the merger or the failure to satisfy other
conditions to completion of the merger, including that a governmental authority may prohibit, delay or refuse to grant approval
for the consummation of the merger; (c) the inability to obtain regulatory approvals for the merger; (d) risks related to disruption
of management’s attention from the ongoing business operations due to the proposed merger; (e) the effect of the announcement
of the proposed merger on the Company’s or Ventas’s relationships with their respective customers, tenants, lenders,
operating results and businesses generally; (f) the outcome of any legal proceedings relating to the merger or the merger agreement;
(g) risks to the consummation of the merger, including the risk that the merger will not be consummated within the expected time
period or at all; (h) the ability and willingness of the Company’s or Ventas’s tenants, operators, borrowers, managers
and other third parties to satisfy their obligations under their respective contractual arrangements with the Company or Ventas,
including, in some cases, their obligations to indemnify, defend and hold harmless the Company or Ventas from and against various
claims, litigation and liabilities; (i) the ability of the Company’s or Ventas’s tenants, operators, borrowers and
managers to maintain the financial strength and liquidity necessary to satisfy their respective obligations and liabilities to
third parties, including without limitation obligations under their existing credit facilities and other indebtedness; (j) the
Company’s and Ventas’s success in implementing their business strategies and the Company’s and Ventas’s
ability to identify, underwrite, finance, consummate and integrate diversifying acquisitions and investments, including investments
in different asset types and outside the United States; (k) macroeconomic conditions such as a disruption of or lack of access
to the capital markets, changes in the debt rating on U.S. government securities, default or delay in payment by the United States
of its obligations, and changes in the federal or state budgets resulting in the reduction or nonpayment of Medicare or Medicaid
reimbursement rates; (l) the nature and extent of future competition, including new construction in the markets in which the Company’s
or Ventas’s seniors housing communities and MOBs are located; (m) the extent of future or pending healthcare reform and regulation,
including cost containment measures and changes in reimbursement policies, procedures and rates; (n) increases in the Company’s
or Ventas’s borrowing costs as a result of changes in interest rates and other factors; (o) the ability of the Company’s
or Ventas’s operators and managers, as applicable, to comply with laws, rules and regulations in the operation of the Company’s
or Ventas’s properties, to deliver high-quality services, to attract and retain qualified personnel and to attract residents
and patients; (p) changes in general economic conditions or economic conditions in the markets in which the Company or Ventas may,
from time to time, compete, and the effect of those changes on the Company’s or Ventas’s revenues, earnings and funding
sources; (q) the Company’s and Ventas’s ability to pay down, refinance, restructure or extend their indebtedness as
it becomes due; (r) the Company’s and Ventas’s ability and willingness to maintain their qualification as a REIT in
light of economic, market, legal, tax and
other considerations; (s) final determination of the Company’s and Ventas’s
taxable net income for the year ended December 31, 2013 and for the year ending December 31, 2014; (t) the ability and willingness
of the Company’s and Ventas’s tenants to renew their leases with the Company or Ventas upon expiration of the leases,
the Company’s and Ventas’s ability to reposition their properties on the same or better terms in the event of nonrenewal
or in the event the Company or Ventas exercises their right to replace an existing tenant or manager, and obligations, including
indemnification obligations, the Company or Ventas may incur in connection with the replacement of an existing tenant or manager;
(u) risks associated with the Company’s or Ventas’s senior living operating portfolio, such as factors that can cause
volatility in the Company’s or Ventas’s operating income and earnings generated by those properties, including without
limitation national and regional economic conditions, costs of food, materials, energy, labor and services, employee benefit costs,
insurance costs and professional and general liability claims, and the timely delivery of accurate property-level financial results
for those properties; (v) changes in exchange rates for any foreign currency in which the Company or Ventas may, from time to time,
conduct business; (w) year-over-year changes in the Consumer Price Index or retail price index and the effect of those changes
on the rent escalators contained in the Company’s or Ventas’s leases, and on the Company’s earnings; (x) the
Company’s and Ventas’s ability and the ability of their tenants, operators, borrowers and managers to obtain and maintain
adequate property, liability and other insurance from reputable, financially stable providers; (y) the impact of increased operating
costs and uninsured professional liability claims on the Company’s or Ventas’s liquidity, financial condition and results
of operations or that of the Company’s or Ventas’s tenants, operators, borrowers and managers, and the ability of the
Company or Ventas and the Company’s or Ventas’s tenants, operators, borrowers and managers to accurately estimate the
magnitude of those claims; (z) risks associated with the Company’s or Ventas’s MOB portfolio and operations, including
the Company’s and Ventas’s ability to successfully design, develop and manage MOBs, to accurately estimate their costs
in fixed fee-for-service projects and to retain key personnel; (aa) the ability of the hospitals on or near whose campuses the
Company’s or Ventas’s MOBs are located and their affiliated health systems to remain competitive and financially viable
and to attract physicians and physician groups; (ab) the Company’s and Ventas’s ability to build, maintain and expand
their relationships with existing and prospective hospital and health system clients; (ac) risks associated with the Company’s
or Ventas’s investments in joint ventures and unconsolidated entities, including their lack of sole decision-making authority
and its reliance on its joint venture partners’ financial condition; (ad) the impact of market or issuer events on the liquidity
or value of the Company’s or Ventas’s investments in marketable securities; (ae) merger and acquisition activity in
the healthcare and seniors housing industries resulting in a change of control of, or a competitor’s investment in, one or
more of the Company’s or Ventas’s tenants, operators, borrowers or managers or significant changes in the senior management
of the Company’s or Ventas’s tenants, operators, borrowers or managers; and (af) the impact of litigation or any financial,
accounting, legal or regulatory issues that may affect the Company, Ventas or their tenants, operators, borrowers or managers.
Many of these factors are beyond the control of the Company, Ventas and their management.
Item 9.01 Financial Statements and Exhibits.
Exhibit No |
Description |
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2.1 |
Agreement and Plan of Merger, dated as of June 1, 2014, by and among American Realty Capital Healthcare Trust, Inc., Ventas, Inc., Stripe Sub, LLC, Stripe OP, LP and American Realty Capital Healthcare Trust Operating Partnership L.P. |
10.1 |
Amendment to the Third Amended and Restated Advisory Agreement, dated as of June 1, 2014, by and among American Realty Capital Healthcare Trust, Inc., American Realty Capital Healthcare Trust Operating Partnership L.P. and American Realty Capital Healthcare Advisors, LLC. |
10.2 |
Amendment to the Property Management and Leasing Agreement, dated as of June 1, 2014, by and among American Realty Capital Healthcare Trust, Inc., American Realty Capital Healthcare Trust Operating Partnership L.P. and American Realty Capital Healthcare Properties, LLC. |
10.3 |
Agreement Terminating the American Realty Capital Healthcare Trust, Inc. 2014 Advisor Multi-Year Outperformance Agreement, dated as of June 1, 2014, among American Realty Capital Healthcare Trust, Inc., American Realty Capital Healthcare Trust Operating Partnership L.P. and American Realty Capital Healthcare Advisors, LLC. |
99.1 |
Amendment to the Listing Note Agreement, dated as of June 1, 2014, by and between American Realty Capital Healthcare Trust Operating Partnership L.P. and the American Realty Capital Healthcare Special Limited Partnership, LLC. |
SIGNATURES
Pursuant to the requirements
of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
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AMERICAN REALTY CAPITAL HEALTHCARE TRUST, INC. |
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Date: June 5, 2014 |
By: /s/ Thomas P. D’Arcy |
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Name: Thomas P. D’Arcy |
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Title: Chief Executive Officer |
EXECUTION VERSION
AGREEMENT AND PLAN OF MERGER
By and Among
VENTAS, INC.,
STRIPE SUB, LLC,
STRIPE OP, LP,
AMERICAN REALTY CAPITAL HEALTHCARE TRUST,
INC.,
AND
AMERICAN REALTY CAPITAL HEALTHCARE TRUST
OPERATING PARTNERSHIP, L.P.
Dated as of June 1, 2014
TABLE OF CONTENTS
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Page |
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Article I DEFINITIONS |
2 |
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Section 1.1 |
Definitions |
2 |
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Article II THE MERGERS |
14 |
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Section 2.1 |
The Mergers |
14 |
Section 2.2 |
Closing |
15 |
Section 2.3 |
Effective Time |
16 |
Section 2.4 |
Organizational Documents of the Surviving Entity and Surviving Partnership |
16 |
Section 2.5 |
Tax Consequences |
16 |
Section 2.6 |
Subsequent Actions |
17 |
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Article III EFFECT OF THE MERGERS |
17 |
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Section 3.1 |
Effect of the Mergers |
17 |
Section 3.2 |
Proration |
19 |
Section 3.3 |
Election Procedures |
20 |
Section 3.4 |
Deposit of Merger Consideration |
22 |
Section 3.5 |
Delivery of Merger Consideration |
22 |
Section 3.6 |
Share Transfer Books |
23 |
Section 3.7 |
Dividends with Respect to Parent Common Stock |
23 |
Section 3.8 |
Termination of Exchange Fund |
23 |
Section 3.9 |
No Liability |
23 |
Section 3.10 |
Equity Awards |
24 |
Section 3.11 |
Withholding Rights |
24 |
Section 3.12 |
Lost Certificates |
24 |
Section 3.13 |
Dissenters’ Rights |
25 |
Section 3.14 |
Fractional Shares |
25 |
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Article IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE COMPANY OPERATING PARTNERSHIP |
25 |
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Section 4.1 |
Organization and Qualification; Subsidiaries |
25 |
Section 4.2 |
Organizational Documents |
27 |
Section 4.3 |
Capital Structure |
27 |
Section 4.4 |
Authority |
29 |
Section 4.5 |
No Conflict; Required Filings and Consents |
30 |
Section 4.6 |
Permits; Compliance With Law |
31 |
Section 4.7 |
SEC Filings; Financial Statements |
32 |
Section 4.8 |
Disclosure Documents |
34 |
Section 4.9 |
Absence of Certain Changes or Events |
34 |
Section 4.10 |
Employee Benefit Plans |
34 |
Section 4.11 |
Labor and Other Employment Matters |
36 |
Section 4.12 |
Material Contracts |
36 |
Section 4.13 |
Litigation |
38 |
Section 4.14 |
Environmental Matters |
38 |
Section 4.15 |
Intellectual Property |
39 |
Section 4.16 |
Properties |
40 |
Section 4.17 |
Taxes |
42 |
Section 4.18 |
Insurance |
46 |
Section 4.19 |
Opinion of Financial Advisor |
46 |
Section 4.20 |
Takeover Statutes |
46 |
Section 4.21 |
Vote Required |
46 |
Section 4.22 |
Brokers |
47 |
Section 4.23 |
Investment Company Act |
47 |
Section 4.24 |
Affiliate Transactions |
47 |
Section 4.25 |
Advisor |
47 |
Section 4.26 |
[Reserved] |
48 |
Section 4.27 |
[Reserved] |
48 |
Section 4.28 |
[Reserved] |
48 |
Section 4.29 |
Fees and Disbursements |
48 |
Section 4.30 |
No Other Representations or Warranties |
48 |
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Article V REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB |
49 |
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Section 5.1 |
Organization and Qualification; Subsidiaries |
49 |
Section 5.2 |
Organizational Documents |
50 |
Section 5.3 |
Capital Structure |
50 |
Section 5.4 |
Authority |
51 |
Section 5.5 |
No Conflict; Required Filings and Consents |
52 |
Section 5.6 |
Permits; Compliance With Law |
53 |
Section 5.7 |
SEC Filings; Financial Statements |
53 |
Section 5.8 |
Disclosure Documents |
55 |
Section 5.9 |
Absence of Certain Changes or Events |
56 |
Section 5.10 |
Litigation |
56 |
Section 5.11 |
Taxes |
56 |
Section 5.12 |
Vote Required |
57 |
Section 5.13 |
Brokers |
57 |
Section 5.14 |
Investment Company Act |
57 |
Section 5.15 |
Sufficient Funds |
57 |
Section 5.16 |
Ownership of Merger Sub; No Prior Activities |
57 |
Section 5.17 |
Takeover Statutes |
57 |
Section 5.18 |
Material Contracts |
58 |
Section 5.19 |
No Other Representations or Warranties |
58 |
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Article VI COVENANTS AND AGREEMENTS |
58 |
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Section 6.1 |
Conduct of Business by the Company |
58 |
Section 6.2 |
Conduct of Business by Parent and Merger Sub |
64 |
Section 6.3 |
Preparation of Form S-4 and Proxy Statement; Stockholder Meeting |
66 |
Section 6.4 |
Access to Information; Confidentiality |
67 |
Section 6.5 |
Acquisition Proposals |
68 |
Section 6.6 |
Appropriate Action; Consents; Filings |
72 |
Section 6.7 |
Notification of Certain Matters; Transaction Litigation |
74 |
Section 6.8 |
Termination of Advisory and Other Agreements |
75 |
Section 6.9 |
Public Announcements |
75 |
Section 6.10 |
Directors’ and Officers’ Indemnification and Insurance |
76 |
Section 6.11 |
Certain Tax Matters |
78 |
Section 6.12 |
Merger Sub |
78 |
Section 6.13 |
Section 16 Matters |
78 |
Section 6.14 |
Stock Exchange Listing |
79 |
Section 6.15 |
Voting of Shares |
79 |
Section 6.16 |
Termination of Company Equity Plans |
79 |
Section 6.17 |
Financing |
79 |
Section 6.18 |
Dividends |
80 |
Section 6.19 |
Treatment of Outstanding Indebtedness; Payoff Letter |
81 |
Section 6.20 |
Partnership Agreement |
81 |
|
|
|
Article VII CONDITIONS |
81 |
|
|
|
Section 7.1 |
Conditions to the Obligations of Each Party |
81 |
Section 7.2 |
Conditions to the Obligations of Parent and Merger Sub |
82 |
Section 7.3 |
Conditions to the Obligations of the Company |
83 |
|
|
|
Article VIII TERMINATION, AMENDMENT AND WAIVER |
85 |
|
|
|
Section 8.1 |
Termination |
85 |
Section 8.2 |
Effect of Termination |
87 |
Section 8.3 |
Fees and Expenses |
87 |
Section 8.4 |
Amendment |
90 |
Section 8.5 |
Waiver |
90 |
Section 8.6 |
Fees and Expenses |
91 |
Section 8.7 |
Transfer Taxes |
91 |
|
|
|
Article IX GENERAL PROVISIONS |
91 |
|
|
|
Section 9.1 |
Non-Survival of Representations and Warranties |
91 |
Section 9.2 |
Notices |
91 |
Section 9.3 |
Interpretation; Certain Definitions |
93 |
Section 9.4 |
Severability |
93 |
Section 9.5 |
Assignment; Delegation |
93 |
Section 9.6 |
Entire Agreement |
93 |
Section 9.7 |
No Third-Party Beneficiaries |
94 |
Section 9.8 |
Specific Performance |
94 |
Section 9.9 |
Counterparts |
94 |
Section 9.10 |
Governing Law |
94 |
Section 9.11 |
Consent to Jurisdiction |
95 |
Section 9.12 |
WAIVER OF JURY TRIAL |
95 |
Section 9.13 |
Consents and Approvals |
96 |
Exhibit A |
Term Sheet for Amended and Restated Limited Partnership Agreement |
|
|
Schedule 6.11(c) |
Certain Tax Matters |
AGREEMENT
AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of June 1, 2014
(this “Agreement”), is made by and among Ventas, Inc., a Delaware corporation (“Parent”),
Stripe Sub, LLC, a Delaware limited liability company and a direct wholly owned subsidiary of Parent (“Merger Sub”),
Stripe OP, LP (“OP Merger Sub”), a Delaware limited partnership, American Realty Capital Healthcare Trust, Inc.,
a Maryland corporation (the “Company”) and American Realty Capital Healthcare Trust Operating Partnership, L.P.
(the “Company Operating Partnership”).
WITNESSETH:
WHEREAS, the Company is a Maryland corporation
operating as a real estate investment trust for U.S. federal income tax purposes;
WHEREAS, Parent is a Delaware corporation
operating as a real estate investment trust for U.S. federal income tax purposes;
WHEREAS, the parties hereto wish to effect
a business combination transaction in which the Company will be merged with and into Merger Sub, with Merger Sub being the surviving
entity (the “Merger”), and each outstanding share of common stock, $0.01 par value per share (the “Company
Common Stock”), of the Company will be converted into the right to receive the Merger Consideration, upon the terms and
subject to the conditions set forth in this Agreement and in accordance with the MGCL and the DLLCA;
WHEREAS, the parties also wish to effect
a merger of OP Merger Sub with and into the Company Operating Partnership, with the Company Operating Partnership continuing as
the surviving partnership (the “Partnership Merger” and together with the Merger, the “Mergers”)
upon the terms and subject to the conditions set forth in this Agreement and in accordance with the DRULPA;
WHEREAS, the Company Board has approved
this Agreement, the Merger and the other transactions contemplated by this Agreement and declared that this Agreement, the Merger
and the other transactions contemplated by this Agreement are advisable;
WHEREAS, the Parent Board has approved this
Agreement, the Merger and the other transactions contemplated by this Agreement and declared that this Agreement, the Merger and
the other transactions contemplated by this Agreement are advisable;
WHEREAS, the Company Board has directed
that the Merger and, to the extent stockholder approval is required, the other transactions contemplated by this Agreement, be
submitted for consideration at a meeting of the Company’s stockholders and has resolved to recommend that the Company’s
stockholders vote to approve the Merger and, to the extent stockholder approval is required, the other transactions contemplated
by this Agreement;
WHEREAS, Parent, in its capacity as the
sole member of Merger Sub, has taken all actions required for the execution of this Agreement by Merger Sub and to adopt and approve
this Agreement and to approve the consummation by Merger Sub of the Merger and the other transactions contemplated by this Agreement;
WHEREAS, the Company,
as the sole general partner of the Company Operating Partnership, and Merger Sub, as the sole general partner of OP Merger Sub,
have each separately approved this Agreement, the Partnership Merger and the transactions contemplated by this Agreement and declared
that this Agreement, the Partnership Merger and the other transactions contemplated by this Agreement are advisable, and the Company
has determined that the Partnership Merger and the other transactions contemplated by this Agreement are fair to, advisable and
in the best interests of the holders of units of limited partnership interests in the Company Operating Partnership (the “OP
Units”);
WHEREAS, for U.S. federal income tax purposes,
it is intended that the Merger shall qualify as a “reorganization” under, and within the meaning of, Section 368(a)
of the Code, and this Agreement is intended to be and is adopted as a “plan of reorganization” for the Merger for purposes
of Sections 354 and 361 of the Code; and
WHEREAS, each of the parties hereto desire
to make certain representations, warranties, covenants and agreements in connection with the Mergers, and also to prescribe various
conditions to the Mergers.
NOW, THEREFORE, in consideration of the
foregoing and the mutual representations, warranties and covenants and subject to the conditions herein contained, and intending
to be legally bound hereby, the parties hereto hereby agree as follows:
Article I
DEFINITIONS
Section 1.1 Definitions.
(a) For
purposes of this Agreement:
“Acceptable Confidentiality Agreement” shall
mean a confidentiality agreement that contains provisions as to the treatment of confidential information that are no less favorable
in any material respect to the Company and the other Company Entities than those contained in the Confidentiality Agreement; provided,
however, that such confidentiality agreement shall expressly permit any Company Entity’s compliance with any provision
of this Agreement, and shall not contain any provision that adversely affects the rights of the Company Entity thereunder upon
compliance by the Company Entity with any provision of this Agreement.
“Action” shall mean any claim, action, suit,
charge, demand, directive, inquiry, subpoena, proceeding, arbitration, mediation or other investigation.
“Affiliate” of a specified Person shall mean
a Person who, directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control
with, such specified Person.
“Benefit Plan” shall mean any “employee
benefit plan” (within the meaning of Section 3(3) of ERISA) and any employment, consulting, termination, severance,
change in control, separation, retention stock option, restricted stock, profits interest unit, outperformance, stock purchase,
deferred compensation, bonus, incentive compensation, fringe benefit, health, medical, dental, disability, accident, life insurance,
welfare benefit, cafeteria, vacation, paid time off, perquisite, retirement, pension, or savings or any other compensation or employee
benefit plan, agreement, program, policy or other arrangement, whether or not subject to ERISA.
“Business Day” shall mean any day other than
a Saturday, a Sunday or a day on which all banking institutions in New York, New York are authorized or obligated by Law or executive
order to close (provided that, with respect to filings to be made with the SEC, a day on which such a filing is to be made is a
Business Day only if the SEC is open to accept filings).
“Code” shall mean the U.S. Internal Revenue
Code of 1986, as amended.
“Company Credit Agreement” shall mean the
First Amended and Restated Senior Unsecured Credit Agreement, dated as of July 24, 2013, by and among American Realty Capital Healthcare
Trust Operating Partnership, L.P., Key Bank National Association, as agent for the lenders, and the parties thereto, as amended
by the First Amendment thereto, dated as of January 23, 2014 and the Second Amendment thereto, dated as of April 7, 2014.
“Company Entities” shall mean the Company
and the Company Subsidiaries.
“Company Equity Plans” shall mean each of
the following: (i) the Employee and Director Incentive Restricted Share Plan of American Realty Capital Healthcare Trust, Inc.,
(ii) the American Realty Capital Healthcare Trust, Inc. 2011 Stock Option Plan, and (iii) the OPP Agreement.
“Company Material Adverse Effect” shall mean
any event, circumstance, change or effect (a) that is material and adverse to the business, assets, properties, liabilities,
financial condition or results of operations of the Company and the Company Subsidiaries, taken as a whole or (b) that will,
or would reasonably be expected to, prevent or materially impair the ability of the Company to consummate the Mergers before the
Outside Date; provided, however, that for purposes of clause (a) “Company Material Adverse Effect” shall
not include any event, circumstance, change or effect to the extent arising out of or resulting from (i) any failure of the
Company to meet any internal or external projections or forecasts or any decrease in the net asset value of the Company Common
Stock (it being understood and agreed that any event, circumstance, change or effect giving rise to such failure or decrease may
otherwise be taken into account in determining whether there has been a Company Material Adverse Effect), (ii) any events,
circumstances, changes or effects that affect the industries in which the Company and the Company Subsidiaries operate generally,
(iii) any changes in the United States or global economy or capital, financial or securities markets generally, including changes
in interest or exchange rates, (iv) any changes in legal or regulatory conditions, (v) the commencement, escalation or worsening
of a war or armed hostilities or the occurrence of acts of terrorism or sabotage, (vi) the negotiation, execution or announcement
of this Agreement, or the consummation or anticipation of the Mergers or other transactions contemplated hereby, (vii) the taking
of any action expressly required by, or the failure to take any action expressly prohibited by, this Agreement, or the taking of
any action at the written request or with the prior written consent of an executive officer of Parent, (viii) earthquakes,
hurricanes, floods or other natural disasters, (ix) any damage or destruction of any Company Property that is substantially covered
by insurance, or (x) changes in Law or GAAP or the interpretation thereof, which in the case of each of clauses (ii), (iii), (iv),
(v) and (x) do not disproportionately affect the Company and the Company Subsidiaries, taken as a whole, relative to other similarly
situated participants in the industries in which the Company and the Company Subsidiaries operate, and in the case of clause (viii)
do not disproportionately affect the Company and the Company Subsidiaries, taken as a whole, relative to other participants in
the industries in which the Company and the Company Subsidiaries operate in the geographic regions in which the Company and the
Company Subsidiaries operate or own or lease properties.
“Company Restricted Shares” shall mean any
restricted shares granted pursuant to the Company Equity Plans, as in effect as of the date hereof.
“Company Stockholder Meeting” shall mean
the meeting of the holders of shares of Company Common Stock for the purpose of seeking the Company Stockholder Approval, including
any postponement or adjournment thereof.
“Company Subsidiary” shall mean the Company
Operating Partnership and any corporation, other partnership, limited liability company, joint venture, business trust, real estate
investment trust or other organization, whether incorporated or unincorporated, or other legal entity of which (a) the Company
and/or the Company Operating Partnership directly or indirectly owns or controls at least a majority of the capital stock or other
equity interests having by their terms ordinary voting power to elect a majority of the board of directors or others performing
similar functions, (b) the Company and/or any Person that is a Company Subsidiary by reason of the application of clause (a) or
clause (c) of this definition of “Company Subsidiary” is a general partner, manager, managing member, trustee, director
or the equivalent, (c) the Company and/or the Company Operating Partnership, directly or indirectly, holds a majority of the beneficial,
equity, capital, profits or other economic interest, and (d) all of the joint ventures listed on Section 1.1 of the Company
Disclosure Letter of which the Company or a Company Subsidiary is the managing member.
“Company Third Party” shall mean any Person
or group of Persons other than the Company and its Affiliates.
“Confidentiality Agreement” shall mean the
letter agreement, dated April 9, 2014, between the Company and Parent, concerning the disclosure of certain information concerning
the Company, as amended, modified or supplemented from time to time.
“control” (including the terms “controlled
by” and “under common control with”) shall mean the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, as trustee
or executor, by contract or otherwise.
“Delaware Secretary” shall mean the Secretary
of State of the State of Delaware.
“DLLCA” shall mean the Delaware Limited Liability
Company Act, as amended.
“DRULPA” shall mean the Delaware Revised
Uniform Limited Partnership Act, as amended.
“Environmental Law” shall mean any Law (including
common law) relating to the pollution or protection of the environment (including air, surface water, groundwater, land surface
or subsurface land), or human health or safety (as such matters relate to Hazardous Substances), including Laws relating to the
use, handling, presence, transportation, treatment, storage, disposal, release or discharge of Hazardous Substances.
“Environmental Permit” shall mean any permit,
approval, license or other authorization required under any applicable Environmental Law.
“ERISA” shall mean the Employee Retirement
Income Security Act of 1974, as amended.
“ERISA Affiliate” shall mean any entity,
trade or business (whether or not incorporated) that, together with any other entity, trade or business (whether or not incorporated),
is required to be treated as a single employer under Section 414(b), (c), (m) or (o) of the Code.
“Exchange Act” shall mean the Securities
Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Exchange Ratio” shall mean 0.1687.
“Expenses” shall mean all expenses (including
all fees and expenses of counsel, accountants, investment bankers, experts and consultants to a party hereto and its Affiliates)
incurred by a party or on its behalf in connection with or related to the authorization, preparation, negotiation, execution and
performance of this Agreement, the preparation, printing, and filing of the Form S-4, the preparation, printing, filing and mailing
of the Proxy Statement and all SEC and other regulatory filing fees incurred in connection with the Form S-4 and the Proxy Statement,
the solicitation of stockholder approvals, engaging the services of the Exchange Agent, obtaining third party consents, any other
filings with the SEC and all other matters related to the closing of the Mergers and the other transactions contemplated by this
Agreement.
“GAAP” shall mean the United States generally
accepted accounting principles.
“Governmental Authority” shall mean any United
States (federal, state or local) or foreign government, arbitration panel, or any governmental or quasi-governmental, regulatory,
judicial or administrative authority, board, bureau, agency, commission (including the IRS and any other U.S. federal authority,
board, bureau, agency, commission or other body and any state, local and/or foreign Tax authority, board, bureau, agency, commission
or other body) or self-regulatory organization.
“Hazardous Substances” shall mean (i) those
substances listed in, defined in or regulated under any Environmental Law, including the following federal statutes and their state
counterparts, as each may be amended from time to time, and all regulations thereunder: the Resource Conservation and Recovery
Act, the Comprehensive Environmental Response, Compensation and Liability Act, the Toxic Substances Control Act, the Clean Water
Act, the Safe Drinking Water Act, the Atomic Energy Act and the Clean Air Act; (ii) petroleum and petroleum products, including
crude oil and any fractions thereof; and (iii) polychlorinated biphenyls, mold, methane, asbestos, and radon.
“Indebtedness” shall mean, with respect to
any Person, without duplication, (i) all indebtedness, notes payable, accrued interest payable or other obligations for borrowed
money, whether secured or unsecured, (ii) all indebtedness evidenced by a note, bond, debenture or other similar instrument or
debt security, (iii) all obligations under conditional sale or other title retention agreements, or incurred as financing, in either
case with respect to property acquired by such Person, (iv) all obligations issued, undertaken or assumed as the deferred purchase
price for any property or assets, (v) all obligations under capital leases, (vi) all obligations in respect of bankers acceptances
or letters of credit, (vii) all obligations under interest rate cap, swap, collar or similar transaction or currency hedging transactions
(valued at the termination value thereof), and (viii) any indebtedness or obligations of another Person (the “Other Person”)
of the type referred to in the foregoing clauses (i) through (vii) (A) that is guaranteed by such Person or (B) in respect of which
such Person pledges its assets or provides any other credit support, or (C) in respect of which such Person has promised to maintain
or cause to be maintained the financial position or financial covenants of such Other Person or to purchase such indebtedness of
such Other Person, together, in the case of each of the foregoing, with all accrued and unpaid interest, premiums, penalties, breakage
costs, make-whole amounts and other fees and expenses (if any) relating thereto.
“Indemnitee” shall mean any individual who,
at or prior to the Effective Time, was an officer, director, partner, member, trustee or agent of the Company or served on behalf
of the Company as an officer, director, partner, member or trustee of any of the Company Subsidiaries.
“Intellectual Property” shall mean all United
States and foreign (i) patents, patent applications, invention disclosures, and all related continuations, continuations-in-part,
divisionals, reissues, re-examinations, substitutions and extensions thereof, (ii) trademarks, service marks, trade dress, logos,
trade names, corporate names, Internet domain names, design rights and other source identifiers, together with the goodwill symbolized
by any of the foregoing, (iii) copyrightable works and copyrights, (iv) confidential and proprietary information, including trade
secrets, know-how, ideas, formulae, models and methodologies, (v) all rights in the foregoing and in other similar intangible assets,
and (vi) all applications and registrations for the foregoing.
“Intervening Event” shall mean any material
event or development or material change in circumstances first occurring after the date of this Agreement and prior to receipt
of the Company Stockholder Approval, to the extent that such event, development or change in circumstances was not reasonably foreseeable
(or if foreseeable, the consequences of which were not reasonably foreseeable) as of or prior to the date of this Agreement; provided,
however, that in no event shall the following events, developments or changes in circumstances constitute an Intervening
Event: (A) the receipt, existence or terms of an Acquisition Proposal or any matter relating thereto or consequence thereof or
(B) changes in the market price or trading volume of the Company Common Stock or Parent Common Stock or the fact that the Company
meets or exceeds (or that Parent fails to meet or exceed) internal or published projections, forecasts or revenue or earnings predictions
for any period; provided, however, that the underlying causes of such change or fact shall not be excluded by this
clause (B).
“Investment Company Act” shall mean the Investment
Company Act of 1940, as amended, and the rules and regulations promulgated thereunder.
“IRS” shall mean the United States Internal
Revenue Service or any successor agency.
“knowledge” shall mean the actual knowledge
of the following officers and employees of the Company and Parent Parties, as applicable, after inquiry reasonable under the circumstances:
(i) for the Company: each person identified as an executive officer of the Company in the Company’s 2014 proxy statement;
and (ii) for any of the Parent Parties: each person identified as an executive officer of Parent in Parent’s 2014 proxy statement.
“Law” shall mean any and all domestic (federal,
state or local) or foreign laws, rules, regulations, orders, judgments or decrees promulgated by any Governmental Authority.
“Lender Consents” shall mean the consents
and approvals required pursuant to the terms of any Indebtedness of the Company or any of the Company Subsidiaries as a result
of the execution and delivery of this Agreement by the Company or the performance of this Agreement and the consummation of the
Mergers and the other transactions contemplated hereby by the Company, which consents and approvals shall be in form and substance
reasonably satisfactory to Parent.
“Lien” shall mean with respect to any asset
(including any security), any mortgage, deed of trust, claim, condition, covenant, lien, pledge, charge, security interest, preferential
arrangement, option or other third party right (including right of first refusal or first offer), restriction, right of way, easement,
or title defect or encumbrance of any kind in respect of such asset, including any restriction on the use, voting, transfer, receipt
of income or other exercise of any attributes of ownership.
“LTIP Unit” shall mean an OP Unit designated
as an LTIP Unit under the Company Operating Partnership Agreement, as in effect as of the date hereof, that was issued to the Company
Advisor pursuant to the terms and conditions of the OPP Agreement.
“MGCL” shall mean the Maryland General Corporation
Law, as amended from time to time.
“Minimum Distribution Dividend” shall mean
a distribution with respect to either (i) any taxable year of the Company ending on or prior to the Closing Date or (ii) any taxable
year of Parent ending on or prior to the last day of Parent’s taxable year that includes the Merger, and, in each case, which
is required to be paid by the Company or Parent, as applicable, prior to the Effective Time to (a) satisfy the distribution requirements
set forth in Section 857(a) of the Code and (b) avoid, to the extent possible, the imposition of income tax under Section 857(b)
of the Code and the imposition of excise tax under Section 4981 of the Code.
“NASDAQ” shall mean the NASDAQ Stock Market.
“NYSE” shall mean the New York Stock Exchange.
“OPP Agreement” shall mean the American Realty
Capital Healthcare Trust, Inc. 2014 Advisor Multi-Year Outperformance Agreement, made as of April 7, 2014, between the Company,
the Company Operating Partnership and the Company Advisor, as in effect on the date hereof subject to Section 3.10(b).
“Order” shall mean a judgment, order or decree
of a Governmental Authority.
“Parent Entities” shall mean Parent and the
Parent Subsidiaries, including Merger Sub.
“Parent Equity Plans” means each of the following:
(i) the Ventas 2000 Incentive Compensation Plan (Employee Plan), as amended (formerly known as the 1997 Incentive Compensation
Plan); (ii) the Ventas, Inc. 2004 Stock Plan for Directors, as amended; (iii) the Ventas Employee and Director Stock
Purchase Plan, as amended; (iv) the Ventas, Inc. 2006 Incentive Plan, as amended; (v) the Ventas, Inc. 2006
Stock Plan for Directors, as amended; (vi) the Nationwide Health Properties, Inc. 2005 Performance Incentive Plan, as
amended; (vii) the Ventas, Inc. 2012 Incentive Plan; (viii) the Ventas Nonemployee Directors’ Deferred Stock Compensation
Plan, as amended; and (ix) the Ventas Executive Deferred Stock Compensation Plan, as amended.
“Parent Expense Amount” shall mean ten million
dollars ($10,000,000).
“Parent Material Adverse Effect” shall mean
any event, circumstance, change or effect (a) that is material and adverse to the business, assets, properties, liabilities, financial
condition or results of operations of the Parent and the Parent Subsidiaries, taken as a whole or (b) that will, or would reasonably
be expected to, prevent or materially impair the ability of the Parent Parties to consummate the Mergers before the Outside Date;
provided, however, that for purposes of clause (a) “Parent Material Adverse Effect” shall not include
any event, circumstance, change or effect to the extent arising out of or resulting from (i) any failure of Parent to meet any
internal or external projections or forecasts or any decrease in the market price of the Parent Common Stock (it being understood
and agreed that any event, circumstance, change or effect giving rise to such failure or decrease may otherwise be taken into account
in determining whether there has been a Parent Material Adverse Effect), (ii) any events, circumstances, changes or effects that
affect the industries in which Parent and the Parent Subsidiaries operate generally, (iii) any changes in the United States or
global economy or capital, financial or securities markets generally, including changes in interest or exchange rates, (iv) any
changes in legal or regulatory conditions, (v) the commencement, escalation or worsening of a war or armed hostilities or the occurrence
of acts of terrorism or sabotage, (vi) the negotiation, execution or announcement of this Agreement, or the consummation or anticipation
of the Mergers or other transactions contemplated hereby, (vii) the taking of any action expressly required by, or the failure
to take any action expressly prohibited by, this Agreement, or the taking of any action at the written request or with the prior
written consent of an executive officer of the Company, (viii) earthquakes, hurricanes, floods or other natural disasters, (ix)
any damage or destruction of any real property owned or leased (as lessee or sublessee), including ground leased, by Parent or
any Parent Subsidiary (including any buildings, structures and other improvements and fixtures located on or under such real property
and any easements, rights and other appurtenances to such real property) that is substantially covered by insurance, or (x) changes
in Law or GAAP or the interpretation thereof, which in the case of each of clauses (ii), (iii), (iv), (v) and (x) do not disproportionately
affect Parent and the Parent Subsidiaries, taken as a whole, relative to other similarly situated participants in the industries
in which Parent and the Parent Subsidiaries operate generally, and in the case of clause (viii) do not disproportionately affect
Parent and the Parent Subsidiaries, taken as a whole, relative to other participants in the industries in which Parent and the
Parent Subsidiaries operate in the geographic regions in which Parent and the Parent Subsidiaries operate or own or lease properties.
“Parent Material Contract” shall mean each
contract or agreement in effect as of the date of this Agreement to which Parent or any Parent Subsidiary is a party (specifically
excluding (x) any contract or agreement that will no longer be in effect following the Closing and (y) any contract or agreement
that is, or at the Closing will be, terminable-at-will (as defined below) or terminable upon not more than ninety (90) days’
notice by Parent or any Parent Subsidiary without penalty) that is required to be filed as an exhibit to the most recent Annual
Report on Form 10-K and Quarterly Reports on Form 10-Q and Current Reports on Form 8-K subsequent thereto filed by Parent as of
the date hereof pursuant to Items 601(b)(2), (4), (9) and (10) of Regulation S-K promulgated by the SEC. A contract or agreement
is “terminable-at-will”, as that expression is used in this definition if it expressly provides that it is terminable-at-will,
regardless of whether any covenant of good faith and fair dealing may be implied as a matter of law in connection with the termination
thereof.
“Parent Parties” shall mean Parent, Merger
Sub and OP Merger Sub.
“Parent Subsidiary” shall mean any corporation,
other partnership, limited liability company, joint venture, business trust, real estate investment trust or other organization,
whether incorporated or unincorporated, or other legal entity of which (a) Parent directly or indirectly owns or controls
at least a majority of the capital stock or other equity interests having by their terms ordinary voting power to elect a majority
of the board of directors or others performing similar functions, (b) Parent and/or any Person that is a Parent Subsidiary
by reason of the application of clause (a) or clause (c) of this definition of “Parent Subsidiary” is a general
partner, manager, managing member, trustee, director or the equivalent, or (c) Parent, directly or indirectly, holds a majority
of the beneficial, equity, capital, profits or other economic interest.
“Per Share Cash Amount” shall mean $11.33.
“Person” shall mean an individual, corporation,
partnership, limited partnership, limited liability company, person (including a “person” as defined in Section 13(d)(3)
of the Exchange Act), trust, association or other entity or a Governmental Authority or a political subdivision, agency or instrumentality
of a Governmental Authority.
“Representative” shall mean, with respect
to any Person, such Person’s directors, officers, employees, consultants, advisors (including attorneys, accountants, consultants,
investment bankers, and financial advisors), agents and other representatives (including, with respect to the Company, the Company
Advisor and its directors, officers and employees).
“Sarbanes-Oxley Act” shall mean the Sarbanes-Oxley
Act of 2002, as amended.
“SEC” shall mean the United States Securities
and Exchange Commission (including the staff thereof).
“Securities Act” shall mean the Securities
Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Significant Subsidiary” shall have the meaning
set forth in Rule 1-02 of Regulation S-X (17 C.F.R. Part 210).
“Tax” or “Taxes” shall
mean any and all federal, state, local or foreign or other taxes of any kind, together with any interest, penalties and additions
to tax, imposed by any Governmental Authority, including taxes on or with respect to income, franchises, gross receipts, gross
income, property, sales, use, transfer, capital stock, escheat, payroll, employment, unemployment, alternative or add on minimum,
estimated and net worth, and taxes in the nature of excise, withholding, backup withholding and value added taxes.
“Tax Return” shall mean any return, report
or similar statement, together with any attached exhibit or schedule that is provided or required to be provided to a Governmental
Authority with respect to Taxes, including information returns, refunds claims, amended returns and declarations of estimated Tax.
“Termination Fee” shall mean fifty-five million
dollars ($55,000,000).
“Termination Payment” shall mean the Parent
Expense Amount or the Termination Fee, as the context may require.
“Third Party” shall mean any Person or group
of Persons other than Parent, Merger Sub and their respective Affiliates.
(b) The
following terms shall have the respective meanings set forth in the Section set forth below opposite such term:
Acceptable Confidentiality Agreement |
Section 1.1(a) |
Acquisition Proposal |
Section 6.5(h)(i) |
Action |
Section 1.1(a) |
Adverse Recommendation Change |
Section 6.5(d) |
Advisory Agreement |
Section 4.25 |
Affiliate |
Section 1.1(a) |
Agreement |
Preamble |
Allocation Agreement |
Section 4.25 |
Alternative Acquisition Agreement |
Section 6.5(a) |
Articles of Merger |
Section 2.3(a) |
Benefit Plan |
Section 1.1(a) |
Book-Entry Share |
Section 3.1(b) |
Business Day |
Section 1.1(a) |
Cash Consideration |
Section 3.1(a)(ii)(1) |
Cash Conversion Number |
Section 3.2(a) |
Cash Election |
Section 3.1(a)(ii)(1) |
Cash Election Number |
Section 3.2(b)(i) |
Cash Election Shares |
Section 3.1(a)(ii)(1) |
Certificate |
Section 3.1(b) |
Certificate of Merger |
Section 2.3(a) |
Class C Units |
Section 3.1(e) |
Closing |
Section 2.2 |
Closing Date |
Section 2.2 |
Code |
Section 1.1(a) |
Company |
Preamble |
Company Additional Dividend Amount |
Section 6.18(a) |
Company Advisor |
Section 4.25 |
Company Board |
Section 4.4(a) |
Company Bylaws |
Section 4.2 |
Company Charter |
Section 4.2 |
Company Common Stock |
Recitals |
Company Credit Agreement |
Section 1.1(a) |
Company Disclosure Letter |
Article IV |
Company Entities |
Section 1.1(a) |
Company Equity Plans |
Section 1.1(a) |
Company Insurance Policies |
Section 4.18 |
Company Leases |
Section 4.16(e) |
Company Material Adverse Effect |
Section 1.1(a) |
Company Material Contract |
Section 4.12(a) |
Company Operating Partnership |
Preamble |
Company Operating Partnership Agreement |
Section 2.4 |
Company Permits |
Section 4.6(a) |
Company Permitted Liens |
Section 4.16(b) |
Company Preferred Stock |
Section 4.3(a) |
Company Properties |
Section 4.16(a) |
Company Property |
Section 4.16(a) |
Company Recommendation |
Section 4.4(a) |
Company Restricted Shares |
Section 1.1(a) |
Company SEC Filings |
Section 4.7(a) |
Company Stockholder Approval |
Section 4.21 |
Company Stockholder Meeting |
Section 1.1(a) |
Company Subsidiary |
Section 1.1(a) |
Company Subsidiary Partnership |
Section 4.17(i) |
Company Tax Protection Agreements |
Section 4.17(i) |
Company Tax Representation Letter |
Section 6.1(b) |
Company Third Party |
Section 1.1(a) |
Company Title Insurance Policies |
Section 4.16(g) |
Company Title Insurance Policy |
Section 4.16(g) |
Confidentiality Agreement |
Section 1.1(a) |
control |
Section 1.1(a) |
D&O Insurance |
Section 6.10(c) |
Debt Financing |
Section 6.17 |
Delaware Secretary |
Section 1.1(a) |
DLLCA |
Section 1.1(a) |
DRULPA |
Section 1.1(a) |
Effective Time |
Section 2.3(a) |
Election |
Section 3.3(a) |
Election Deadline |
Section 3.3(d) |
Environmental Law |
Section 1.1(a) |
Environmental Permit |
Section 1.1(a) |
ERISA |
Section 1.1(a) |
ERISA Affiliate |
Section 1.1(a) |
Exchange Act |
Section 1.1(a) |
Exchange Agent |
Section 3.3(d) |
Exchange Agent Agreement |
Section 3.3(d) |
Exchange Fund |
Section 3.4 |
Exchange Ratio |
Section 1.1(a) |
Expenses |
Section 1.1(a) |
Form of Election |
Section 3.3(b) |
Form S-4 |
Section 4.5(b) |
Frontier |
Section 4.17(c) |
Funded Debt Payoff Amount |
Section 6.19 |
GAAP |
Section 1.1(a) |
Governmental Authority |
Section 1.1(a) |
Hazardous Substances |
Section 1.1(a) |
HCT II |
Section 4.25 |
Holder |
Section 3.3 |
Indebtedness |
Section 1.1(a) |
Indemnitee |
Section 1.1(a) |
Inquiry |
Section 6.5(a) |
Intellectual Property |
Section 1.1(a) |
Interim Period |
Section 6.1(a) |
Intervening Event |
Section 1.1(a) |
Investment Company Act |
Section 1.1(a) |
IRS |
Section 1.1(a) |
knowledge |
Section 1.1(a) |
Law |
Section 1.1(a) |
Lender Consents |
Section 1.1(a) |
Lien |
Section 1.1(a) |
Listing Agreement |
Section 4.25 |
Listing Termination Agreement |
Section 6.8 |
LTIP Unit |
Section 1.1(a) |
Mailing Date |
Section 3.3(c) |
Management Agreement |
Section 4.25 |
Manager |
Section 4.25 |
MD Courts |
Section 9.11(a) |
Merger |
Recitals |
Merger Consideration |
Section 3.1(a)(ii) |
Merger Sub |
Preamble |
Merger Sub Interests |
Section 3.1(c) |
Mergers |
Recitals |
MGCL |
Section 1.1(a) |
Minimum Distribution Dividend |
Section 1.1(a) |
NASDAQ |
Section 1.1(a) |
Non-Electing Shares |
Section 3.1(a)(ii)(3) |
Notice of Adverse Recommendation Change |
Section 6.5(e) |
NYSE |
Section 1.1(a) |
OP Merger Sub |
Preamble |
OPP Agreement |
Section 4.25 |
OPP Termination Agreement |
Section 3.10(b) |
OP Units |
Recitals |
Order |
Section 1.1(a) |
Other Company Subsidiary |
Section 4.1(c) |
Outside Date |
Section 8.1(b)(i) |
Parent |
Preamble |
Parent Additional Dividend Amount |
Section 6.18(a) |
Parent Board |
Section 5.4(a) |
Parent Bylaws |
Section 5.2 |
Parent Charter |
Section 5.2 |
Parent Common Stock |
Section 3.1(a)(ii)(2) |
Parent Disclosure Letter |
Article V |
Parent Entities |
Section 1.1(a) |
Parent Equity Plans |
Section 1.1(a) |
Parent Expense Amount |
Section 1.1(a) |
Parent Material Adverse Effect |
Section 1.1(a) |
Parent Material Contract |
Section 1.1(a) |
Parent Parties |
Section 1.1(a) |
Parent Permits |
Section 5.6(a) |
Parent Preferred Stock |
Section 5.3(a) |
Parent REIT Counsel |
Section 7.3(e) |
Parent SEC Filings |
Section 5.7(a) |
Parent Subsidiary |
Section 1.1(a) |
Parent Tax Representation Letter |
Section 6.2(a) |
Partnership Certificate of Merger |
Section 2.3(b) |
Partnership Merger |
Recitals |
Partnership Merger Effective Time |
Section 2.3(b) |
Per Share Cash Amount |
Section 1.1(a) |
Person |
Section 1.1(a) |
Proxy Statement |
Section 4.5(b) |
Qualified REIT Subsidiary |
Section 4.1(c) |
Qualifying Income |
Section 8.3(d)(i) |
REIT |
Section 4.17(b) |
Relevant Company Partnership Interest |
Section 4.17(i) |
Representative |
Section 1.1(a) |
Required Regulatory Approvals |
Section 5.5(b) |
Sarbanes-Oxley Act |
Section 1.1(a) |
SDAT |
Section 2.3(a) |
SEC |
Section 1.1(a) |
Securities Act |
Section 1.1(a) |
Significant Subsidiary |
Section 1.1(a) |
Special Limited Partner |
Section 4.25 |
Specified Company Leases |
Section 4.16(f) |
Stock Consideration |
Section 3.1(a)(ii)(2) |
Stock Election |
Section 3.1(a)(ii)(2) |
Stock Election Shares |
Section 3.1(a)(ii)(2) |
Superior Proposal |
Section 6.5(h)(ii) |
Surviving Entity |
Section 2.1(a) |
Surviving Partnership |
Section 2.1(b) |
Surviving Partnership Agreement |
Section 6.20 |
Tax |
Section 1.1(a) |
Tax Return |
Section 1.1(a) |
Taxable REIT Subsidiary |
Section 4.1(c) |
Taxes |
Section 1.1(a) |
Termination Agreements |
Section 6.8 |
Termination Fee |
Section 1.1(a) |
Termination Payee |
Section 8.3(d)(i) |
Termination Payment |
Section 1.1(a) |
Termination Payor |
Section 8.3(d)(i) |
Third Party |
Section 1.1(a) |
Transfer Taxes |
Section 8.7 |
Article II
THE MERGERS
Section 2.1 The
Mergers.
(a) Upon
the terms and subject to the conditions of this Agreement, and in accordance with the MGCL and the DLLCA, at the Effective Time,
the Company shall be merged with and into Merger Sub, whereupon the separate existence of the Company shall cease, and Merger Sub
shall continue under the name “Stripe Sub, LLC” as the surviving entity in the Merger (the “Surviving Entity”)
and shall be governed by the laws of the State of Delaware. The Merger shall have the effects specified in the MGCL, the DLLCA
and this Agreement. Without limiting the generality of the foregoing, and subject thereto, from and after the Effective Time, the
Surviving Entity shall possess all properties, rights, privileges, powers and franchises of the Company and Merger Sub, and all
of the claims, obligations, liabilities, debts and duties of the Company and Merger Sub shall become the claims, obligations, liabilities,
debts and duties of the Surviving Entity.
(b) Upon
the terms and subject to the conditions of this Agreement, and in accordance with the DRULPA, at the Partnership Merger Effective
Time, OP Merger Sub shall be merged with and into the Company Operating Partnership, whereupon the separate existence of OP Merger
Sub shall cease, and the Company Operating Partnership shall continue as the surviving entity in the Partnership Merger (the “Surviving
Partnership”) and shall be governed by the laws of the State of Delaware. The Partnership Merger shall have the effects
specified in the DRULPA and this Agreement. Without limiting the generality of the foregoing, and subject thereto, from and after
the Partnership Merger Effective Time, the Surviving Partnership shall possess all properties, rights, privileges, powers and franchises
of the Company Operating Partnership and OP Merger Sub, and all of the claims, obligations, liabilities, debts and duties of the
Company Operating Partnership and OP Merger Sub shall become the claims, obligations, liabilities, debts and duties of the Surviving
Partnership.
Section 2.2 Closing.
The closing of the Mergers (the “Closing”) shall occur at 10:00 a.m. (Eastern time), on the third (3rd)
Business Day after all of the conditions set forth in Article VII (other than those conditions that by their terms are required
to be satisfied or waived at the Closing, but subject to the satisfaction or waiver of such conditions) shall have been satisfied
or waived by the party entitled to the benefit of the same or at such other time and date as shall be agreed upon by the parties
hereto; provided, however, that notwithstanding the satisfaction or waiver of all of the conditions set forth in
Article VII (other than those conditions that by their terms are required to be satisfied or waived at the Closing), in
no event shall Parent, Merger Sub or OP Merger Sub be required to consummate the Mergers until the later of:
(a) the
earlier of (i) the date that is five (5) Business Days after the receipt of (A) the Lender Consents (other than any such consents that, in the aggregate, relate to Indebtedness for which the aggregate principal
amount does not exceed the amount set forth in Section 2.2(a) of the Company Disclosure Letter) and (B) the Required Regulatory
Approvals (which shall have been obtained and remain in full force and effect, and all waiting periods relating to such approvals,
authorizations and consents shall have expired or been terminated); provided, further, that in the event that the
Closing is delayed pursuant to any provision of the previous proviso, if Parent and Merger Sub are prepared to consummate the Merger
at any time prior to the Outside Date, Parent shall deliver written notice to the Company stating that it is prepared to consummate
the Closing and the Closing shall occur on the third (3rd) Business Day following the delivery of such notice; and
(b) the
Outside Date;
(subject, in the case of either (a) or (b), to the satisfaction
or waiver (by the party hereto entitled to grant such waiver) of all of the conditions set forth in Article VII as of the
date determined pursuant to this proviso). The date on which the Closing occurs is referred to in this Agreement as the “Closing
Date”. The Closing shall take place at the offices of Wachtell, Lipton, Rosen & Katz, 51 West 52nd St., New York,
NY, 10019, or at such other place as agreed to by the parties hereto.
Section 2.3 Effective
Time.
(a) Prior
to the Closing, Parent shall prepare and, on the Closing Date, the Company, Parent and Merger Sub shall (i) cause articles of merger
with respect to the Merger (the “Articles of Merger”) to be duly executed and filed with and accepted for record
by the State Department of Assessments and Taxation of Maryland (the “SDAT”) as provided under the MGCL, (ii)
cause a certificate of merger with respect to the Merger (the “Certificate of Merger”) to be duly executed and
filed with the Delaware Secretary as provided under the DLLCA and (iii) make any other filings, recordings or publications required
to be made by the Company or Merger Sub under the MGCL or DLLCA in connection with the Merger. The Merger shall become effective
at the later of the time the Articles of Merger are accepted for record by the SDAT and the Certificate of Merger shall have been
duly filed with the Delaware Secretary on the Closing Date or on such other date and time (not to exceed thirty (30) days from
the date the Articles of Merger are accepted for record by the SDAT and the Certificate of Merger is duly filed with the Delaware
Secretary) as shall be agreed to by the Company and Parent and specified in the Articles of Merger and Certificate of Merger (the
date and time the Merger becomes effective being the “Effective Time”), it being understood and agreed that
the parties shall cause the Effective Time to occur on the Closing Date.
(b) Prior
to the Closing, Parent shall prepare and, on the Closing Date immediately after the filing of the Articles of Merger, the parties
shall (i) cause a certificate of merger with respect to the Partnership Merger (the “Partnership Certificate of Merger”)
to be duly executed and filed with the Delaware Secretary as provided under the DRULPA and (ii) make any other filings, recordings
or publications required to be made under the DRULPA in connection with the Partnership Merger. The Partnership Merger shall become
effective upon such time as the Partnership Certificate of Merger has been filed with the Delaware Secretary, or at such later
time as shall be agreed to by the parties and specified in the Partnership Certificate of Merger (the date and time the Partnership
Merger becomes effective being the “Partnership Merger Effective Time”), it being understood and agreed that
the parties shall cause the Partnership Merger Effective Time to occur immediately after the Effective Time.
Section 2.4 Organizational
Documents of the Surviving Entity and Surviving Partnership. At the Effective Time, the certificate of formation and limited
liability company agreement of Merger Sub, as in effect immediately prior to the Effective Time, shall be the certificate of formation
and limited liability company agreement of the Surviving Entity, until thereafter amended in accordance with applicable Law and
the applicable provisions of such certificate of formation and limited liability company agreement. At the Partnership Merger Effective
Time, the Second Amended and Restated Agreement of Limited Partnership of the Company Operating Partnership (the “Company
Operating Partnership Agreement”), as in effect immediately prior to the Partnership Merger Effective Time, shall be
amended and restated in its entirety in accordance with Section 6.20 and as so amended and restated shall be the limited
partnership agreement of the Surviving Partnership until thereafter amended in accordance with applicable Law and the applicable
provisions thereof. Following the Partnership Merger Effective Time, the certificate of limited partnership of the Company Operating
Partnership shall be the certificate of limited partnership of the Surviving Partnership until further amended in accordance with
the DRULPA.
Section 2.5 Tax
Consequences. It is intended that, for U.S. federal income tax purposes, the Merger shall qualify as a reorganization within
the meaning of Section 368(a) of the Code, and that this Agreement be, and is hereby adopted as, a plan of reorganization
for purposes of Sections 354 and 361 of the Code.
Section 2.6 Subsequent
Actions.
(a) If
at any time after the Effective Time the Surviving Entity shall determine, in its sole and absolute discretion, that any actions
are necessary or desirable to vest, perfect or confirm of record or otherwise in the Surviving Entity its right, title or interest
in, to or under any of the rights or properties of the Company acquired or to be acquired by the Surviving Entity as a result of,
or in connection with, the Merger or otherwise to carry out this Agreement, then the members, officers and managers of the Surviving
Entity shall be authorized to take all such actions as may be necessary or desirable to vest all right, title or interest in, to
or under such rights or properties in the Surviving Entity or otherwise to carry out this Agreement.
(b) If
at any time after the Partnership Merger Effective Time the Surviving Partnership shall determine, in its sole and absolute discretion,
that any actions are necessary or desirable to vest, perfect or confirm of record or otherwise in the Surviving Partnership its
right, title or interest in, to or under any of the rights or properties of the Company Operating Partnership acquired or to be
acquired by the Surviving Partnership as a result of, or in connection with, the Partnership Merger or otherwise to carry out this
Agreement, then the general partner of the Surviving Partnership shall be authorized to take all such actions as may be necessary
or desirable to vest all right, title or interest in, to or under such rights or properties in the Surviving Entity or otherwise
to carry out this Agreement.
Article III
EFFECT OF THE MERGERS
Section 3.1 Effect
of the Mergers.
(a) At
the Effective Time, by virtue of the Merger and without any action on the part of the Company, Parent, Merger Sub or the holder
of any securities of the Company, Parent or Merger Sub:
(i) Each
share of Company Common Stock issued and outstanding immediately prior to the Effective Time that is held by the Company, any wholly
owned Company Subsidiary, by Parent or any wholly owned Parent Subsidiary shall no longer be outstanding and shall automatically
be cancelled and retired and shall cease to exist, and no payment shall be made with respect thereto.
(ii) Subject
to Section 3.1(d) and 3.2, each share of Company Common Stock issued and outstanding immediately prior to the Effective
Time (other than shares cancelled pursuant to Section 3.1(a)(i)) shall be converted, at the election of the holder thereof,
in accordance with the procedures set forth in Section 3.3, into the right to receive the following consideration (collectively,
the “Merger Consideration”), in each case without interest:
(1) for
each share of Company Common Stock with respect to which an election to receive cash has been effectively made and not revoked
or deemed revoked pursuant to this Article III (a “Cash Election”), the right to receive in cash from
Parent an amount (the “Cash Consideration”) equal to the Per Share Cash Amount (such shares collectively, the
“Cash Election Shares”), subject to Section 3.2(b);
(2) for
each share of Company Common Stock with respect to which an election to receive validly issued, fully paid and non-assessable shares
of common stock, par value $0.25 per share, of Parent (the “Parent Common Stock”) has been effectively made
and not revoked or deemed revoked pursuant to this Article III (a “Stock Election” and such shares
collectively, the “Stock Election Shares”) or which is otherwise to receive shares of Parent Common Stock in
accordance with the terms of this Agreement, the right to receive from Parent a number of shares of Parent Common Stock equal to
the Exchange Ratio (the “Stock Consideration”); and
(3) for
each share of Company Common Stock other than Cash Election Shares and Stock Election Shares (collectively, the “Non-Electing
Shares”), the right to receive from Parent the Stock Consideration.
(b) All
shares of Company Common Stock, when so converted pursuant to Section 3.1(a)(ii), shall no longer be outstanding and shall
automatically be cancelled and retired and shall cease to exist, and each holder of a certificate (a “Certificate”)
or book-entry share registered in the transfer books of the Company (a “Book-Entry Share”) that immediately
prior to the Effective Time represented shares of Company Common Stock shall cease to have any rights with respect to such Company
Common Stock other than the right to receive the Merger Consideration in accordance with Section 3.5, including the right,
if any, to receive, pursuant to Section 3.14, cash in lieu of fractional shares of Parent Common Stock into which such shares
of Company Common Stock have been converted pursuant to Section 3.1(a)(ii), together with the amounts, if any, payable pursuant
to Section 3.7.
(c) All
membership interests in Merger Sub (the “Merger Sub Interests”), issued and outstanding immediately prior to
the Effective Time shall remain as the only issued and outstanding membership interests in the Surviving Entity.
(d) Without
limiting the other provisions of this Agreement and subject to Section 6.1(c)(ii) and Section 6.1(c)(iii), if at
any time during the period between the date of this Agreement and the Effective Time, the Company should split, combine or otherwise
reclassify the shares of Company Common Stock, or make a dividend or other distribution in shares of Company Common Stock (including
any dividend or other distribution of securities convertible into Company Common Stock), or engage in a reclassification, reorganization,
recapitalization or exchange or other like change, then (without limiting any other rights of the Parent Parties hereunder), the
Merger Consideration shall be ratably adjusted to reflect fully the effect of any such change. Without limiting the other provisions
of this Agreement and subject to Section 6.2(b)(ii), if at any time during the period between the date of this Agreement
and the Effective Time, Parent should split, combine or otherwise reclassify the shares of Parent Common Stock, or make a distribution
in shares of Parent Common Stock (including any dividend or other distribution of securities convertible into Parent Common Stock),
or engage in a reclassification, reorganization, recapitalization or exchange or other like change, then the Merger Consideration
shall be ratably adjusted to reflect any such change.
(e) At
the Partnership Merger Effective Time, by virtue of the Partnership Merger and without any action on the part of the Company Operating
Partnership, OP Merger Sub or the holder of any unit of limited partnership interest in the Company Operating Partnership or OP
Merger Sub: (i) the general partnership interest of the Company Operating Partnership shall remain outstanding and constitute the
only outstanding general partnership interest in the Surviving Partnership; (ii) the general partnership interest of OP Merger
Sub and each unit of limited partnership interest of OP Merger Sub issued and outstanding immediately prior to the Partnership
Merger Effective Time shall no longer be outstanding and shall automatically be cancelled and retired and shall cease to exist,
and no payment shall be made with respect thereto; and (iii) each OP Unit issued and outstanding immediately prior to the Partnership
Merger Effective Time, including the 5,613,374 OP Units to be issued in respect of the termination of the Listing Agreement, shall
be converted into such number of Class C Units (as defined in the Surviving Partnership Agreement to be entered into in accordance
with Section 6.20) (“Class C Units”) of the Surviving Partnership as is equal to the Exchange Ratio;
provided, that immediately prior to the actions in this clause (iii), the Special Limited Partner shall be treated as having
contributed its right to distributions from the Company Operating Partnership pursuant to its special limited partnership interest
in the Company Operating Partnership, the amount of which distributions is evidenced by the Listing Agreement, to the Company Operating
Partnership in exchange for 5,613,374 OP Units in a transaction intended to qualify as a contribution of property pursuant to Section
721 of the Code, and such contribution shall cause the capital accounts of the partners of the Company Operating Partnership to
be “booked-up” in accordance with Treasury Regulations Sections 1.704-1(b)(2)(iv)(f) and (g), to the extent possible,
as of immediately prior to the Partnership Merger Effective Time which “book-up” shall be allocated to the partners
in accordance with the allocations provisions of the Company Operating Partnership Agreement.
Section 3.2 Proration.
(a) Notwithstanding
any other provision contained in this Agreement, the maximum number of shares of Company Common Stock that may be converted into
the right to receive the Cash Consideration pursuant to this Article III (the “Cash Conversion Number”),
shall be equal to the product (rounded down to the nearest whole share) of ten percent (10%) times the number of shares of Company
Common Stock issued and outstanding immediately prior to the Effective Time (including Company Restricted Shares). All other shares
of Company Common Stock issued and outstanding immediately prior to the Effective Time (other than shares of Company Common Stock
to be cancelled as provided in Section 3.1(a)(i)) shall be converted into the right to receive the Stock Consideration.
(b) Within
two (2) Business Days after the Effective Time, Parent shall instruct the Exchange Agent to effect the allocation among former
holders of Company Common Stock of rights to receive the Cash Consideration and the Stock Consideration as follows:
(i) If
the aggregate number of shares of Company Common Stock with respect to which Cash Elections shall have been made (the “Cash
Election Number”) exceeds the Cash Conversion Number, then all Stock Election Shares and all Non-Electing Shares shall
be converted into the right to receive the Stock Consideration and Cash Election Shares held by a holder thereof will be converted
into the right to receive the Cash Consideration in respect of that number of Cash Election Shares equal to the product obtained
by multiplying (A) the number of Cash Election Shares held by such holder by (B) a fraction, the numerator of which is the Cash
Conversion Number and the denominator of which is the Cash Election Number (with the Exchange Agent to determine, consistent with
Section 3.2(a), whether fractions of Cash Election Shares shall be rounded up or down), with the remaining number of such
holder’s Cash Election Shares being converted into the right to receive the Stock Consideration; and
(ii) If
the Cash Election Number is less than or equal to the Cash Conversion Number, then all Cash Election Shares shall be converted
into the right to receive the Cash Consideration and the Non-Electing Shares and Stock Election Shares shall be converted into
the right to receive the Stock Consideration.
Section 3.3 Election
Procedures. Each holder of record of shares of Company Common Stock issued and outstanding immediately prior to the Effective
Time, and (each holder of Company Restricted Shares (any of the foregoing, a “Holder”) shall have the right,
subject to the limitations set forth in this Article III, to submit an election on or prior to the Election Deadline in
accordance with the following procedures:
(a) Each
Holder may specify in a request made in accordance with the provisions of this Section 3.3 (herein called an “Election”)
(i) the number of shares of Company Common Stock owned by such Holder with respect to which such Holder desires to make a Stock
Election and (ii) the number of shares of Company Common Stock owned by such Holder with respect to which such Holder desires to
make a Cash Election.
(b) Parent
shall prepare a form reasonably acceptable to the Company (the “Form of Election”), which shall be mailed by
the Company to record holders of Company Common Stock and delivered to holders of Company Restricted Shares so as to permit those
Holders to exercise their right to make an Election prior to the Election Deadline.
(c) The
Company shall mail or cause to be mailed or delivered, as applicable, the Form of Election to record holders of Common Stock and
holders of Company Restricted Shares as of the record date for the Company Stockholder Meeting not less than twenty (20) Business
Days prior to the anticipated Election Deadline (the “Mailing Date”). Parent shall make available one or more
Forms of Election as may reasonably be requested from time to time by all persons who become holders of record of Company Common
Stock during the period following the record date for the Company Stockholder Meeting and prior to the Election Deadline.
(d) Prior
to the Mailing Date, Parent shall appoint an exchange agent, which shall be a bank or trust company reasonably acceptable to the
Company (the “Exchange Agent”), for the purpose of receiving Elections and exchanging shares of Company Common
Stock represented by Certificates for Merger Consideration, pursuant to an exchange agent agreement entered into prior to the Mailing
Date (the “Exchange Agent Agreement”). Any Election shall have been made properly only if the Exchange Agent
shall have received, by the Election Deadline, a Form of Election properly completed and signed and accompanied by Certificates
representing the shares of Company Common Stock to which such Form of Election relates, duly endorsed in blank or otherwise in
form acceptable for transfer on the books of the Company or by an appropriate customary guarantee of delivery of such Certificates,
as set forth in such Form of Election, from a firm that is an “eligible guarantor institution” (as defined in Rule
17Ad-15 under the Exchange Act); provided, that such Certificates are in fact delivered to the Exchange Agent by the time
required in such guarantee of delivery, and, in the case of Book-Entry Shares, any additional documents specified in the procedures
set forth in the Form of Election. Failure to deliver shares of Company Common Stock covered by such a guarantee of delivery within
the time set forth on such guarantee shall be deemed to invalidate any otherwise properly made Election, unless otherwise determined
by Parent, in its sole and absolute discretion. As used herein, unless otherwise agreed in advance by the Company and Parent, “Election
Deadline” means 5:00 p.m. local time (in the city in which the principal office of the Exchange Agent is located) on
the later of (i) the date immediately prior to the Company Stockholder Meeting and (ii) the date that Parent and the Company shall
agree is two (2) Business Days prior to the expected Closing Date. The Company and Parent shall issue a press release reasonably
satisfactory to each of them announcing the anticipated date of the Election Deadline not more than fifteen (15) Business Days
before, and at least five (5) Business Days prior to, the Election Deadline. If the Closing is delayed to a subsequent date, the
Election Deadline shall be similarly delayed to a subsequent date (which shall be the second (2nd) Business Day prior to the Closing
Date) and the Company and Parent shall cooperate to promptly publicly announce such rescheduled Election Deadline and Closing.
(e) Any
Holder may, at any time prior to the Election Deadline, change or revoke his or her Election by written notice received by the
Exchange Agent prior to the Election Deadline accompanied by a properly completed and signed revised Form of Election or by withdrawal
prior to the Election Deadline of his or her Certificates, or of the guarantee of delivery of such Certificates, or any documents
in respect of Book-Entry Shares, previously deposited with the Exchange Agent. After an Election is validly made with respect to
any shares of Company Common Stock or Company Restricted Shares, any subsequent transfer of such shares of Company Common Stock
or Company Restricted Shares shall automatically revoke such Election. Notwithstanding anything to the contrary in this Agreement,
all Elections shall be automatically deemed revoked upon receipt by the Exchange Agent of written notification from Parent or the
Company that this Agreement has been terminated in accordance with Article VIII. Subject to the terms of the Exchange Agent
Agreement and this Agreement, the Exchange Agent shall have reasonable discretion to determine if any Election is not properly
made with respect to any shares of Company Common Stock or Company Restricted Shares (neither Parent nor the Company nor the Exchange
Agent being under any duty to notify any stockholder of any such defect); in the event the Exchange Agent makes such a determination,
such Election shall be deemed to be not in effect, and the shares of Company Common Stock or Company Restricted Shares covered
by such Election shall, for purposes hereof, be deemed to be Non-Electing Shares, unless a proper Election is thereafter timely
made with respect to such shares.
(f) Subject
to the terms of the Exchange Agent Agreement, Parent and the Company, in the exercise of their reasonable discretion, shall have
the joint right to make all determinations, not inconsistent with the terms of this Agreement, governing (i) the manner and extent
to which Elections are to be taken into account in making the determinations prescribed by Section 3.2, (ii) the issuance
and delivery of certificates representing the number of shares of Parent Common Stock into which shares of Company Common Stock
or Company Restricted Shares are converted into the right to receive in the Merger and (iii) the method of payment of cash for
shares of Company Common Stock converted into the right to receive the Cash Consideration and cash in lieu of fractional shares
of Parent Common Stock.
Section 3.4 Deposit
of Merger Consideration. At or prior to the Effective Time, Parent shall deposit, or shall cause to be deposited, with the
Exchange Agent for the benefit of the holders of shares of Company Common Stock and Company Restricted Shares at the Effective
Time, for exchange in accordance with this Article III, (i) evidence of Parent Common Stock in book-entry form issuable
pursuant to Section 3.1(a) equal to the aggregate Stock Consideration and (ii) immediately available funds equal to the
aggregate Cash Consideration (together with, to the extent then determinable, any cash payable in lieu of fractional shares pursuant
to Section 3.14) (collectively, the “Exchange Fund”) and Parent shall instruct the Exchange Agent to
timely pay the Cash Consideration and cash in lieu of fractional shares, in accordance with this Agreement. The cash portion of
the Exchange Fund shall be invested by the Exchange Agent as directed by Parent or the Surviving Entity. Interest and other income
on the Exchange Fund shall be the sole and exclusive property of Parent and the Surviving Entity and shall be paid to Parent or
the Surviving Entity, as Parent directs. No investment of the Exchange Fund shall relieve Parent, the Surviving Entity or the Exchange
Agent from making the payments required by this Article III, and following any losses from any such investment, Parent shall
promptly provide additional funds to the Exchange Agent to the extent necessary to satisfy Parent’s obligations hereunder
for the benefit of the holders of shares of Company Common Stock at the Effective Time, which additional funds will be deemed to
be part of the Exchange Fund.
Section 3.5 Delivery
of Merger Consideration. As soon as reasonably practicable after the Effective Time and in any event not later than the fifth
(5th) Business Day following the Effective Time, the Exchange Agent shall mail to each holder of record of a Certificate or Book-Entry
Share immediately prior to the Effective Time a form of letter of transmittal (which shall specify that delivery shall be effected,
and risk of loss and title to the Certificates or Book-Entry Shares shall pass, only upon delivery of the Certificates or Book-Entry
Shares to the Exchange Agent) and instructions for use in effecting the surrender of the Certificates or Book-Entry Shares in exchange
for the Merger Consideration, in such form as the Company and Parent may reasonably agree. Upon proper surrender of a Certificate
or Book-Entry Share for exchange and cancellation to the Exchange Agent, together with a letter of transmittal, duly completed
and validly executed in accordance with the instructions thereto, and such other documents as may be required pursuant to such
instructions, the holder of such Certificate or Book-Entry Share shall be entitled to receive in exchange therefor the Merger Consideration
(which, to the extent it is Stock Consideration, shall be in non-certificated book-entry form) in respect of the shares of Company
Common Stock formerly represented by such Certificate or Book-Entry Share and such Certificate or Book-Entry Share so surrendered
shall forthwith be cancelled. No interest will be paid or accrued for the benefit of holders of the Certificates or Book-Entry
Shares on the Merger Consideration payable upon the surrender of the Certificates or Book-Entry Shares.
Section 3.6 Share
Transfer Books. At the Effective Time, the share transfer books of the Company shall be closed, and thereafter there shall
be no further registration of transfers of shares of Company Common Stock. From and after the Effective Time, Persons who held
shares of Company Common Stock or Company Restricted Shares immediately prior to the Effective Time shall cease to have rights
with respect to such shares, except as otherwise provided for herein. On or after the Effective Time, any Certificates presented
to the Exchange Agent or the Surviving Entity for any reason shall be cancelled and exchanged for the Merger Consideration with
respect to the shares of Company Common Stock formerly represented thereby.
Section 3.7 Dividends
with Respect to Parent Common Stock. No dividends or other distributions with respect to Parent Common Stock with a record
date after the Effective Time shall be paid to the holder of any unsurrendered Certificate with respect to the shares of Parent
Common Stock issuable with respect to such Certificate in accordance with this Agreement, and all such dividends and other distributions
shall be paid by Parent to the Exchange Agent and shall be included in the Exchange Fund, in each case until the surrender of such
Certificate (or affidavit of loss in lieu thereof) in accordance with this Agreement. Subject to applicable Laws, following surrender
of any such Certificate (or affidavit of loss in lieu thereof) there shall be paid to the record holder of the shares of Parent
Common Stock, if any, issued in exchange therefor, without interest, (i) all dividends and other distributions payable in respect
of any such shares of Parent Common Stock with a record date after the Effective Time and a payment date on or prior to the date
of such surrender and not previously paid and (ii) at the appropriate payment date, the amount of dividends or other distributions
with a record date after the Effective Time but prior to such surrender and with a payment date subsequent to such surrender payable
with respect to such shares of Parent Common Stock.
Section 3.8 Termination
of Exchange Fund. Any portion of the Exchange Fund (including any interest and other income received with respect thereto)
which remains undistributed to the former holders of shares of Company Common Stock or Company Restricted Shares on the first (1st)
anniversary of the Effective Time shall be delivered to Parent, upon demand, and any former holders of shares of Company Common
Stock or Company Restricted Shares who have not theretofore received any Merger Consideration (including any cash in lieu of fractional
shares and any applicable dividends or other distributions with respect to Parent Common Stock) to which they are entitled under
this Article III shall thereafter look only to Parent and the Surviving Entity for payment of their claims with respect
thereto.
Section 3.9 No
Liability. None of Parent, Merger Sub, the Company, the Surviving Entity, OP Merger Sub, the Company Operating Partnership,
the Surviving Partnership or the Exchange Agent, or any employee, officer, director, agent or Affiliate of any of them, shall be
liable to any holder of shares of Company Common Stock in respect of any cash that would have otherwise been payable in respect
of any Certificate or Book-Entry Share from the Exchange Fund delivered to a public official pursuant to any applicable abandoned
property, escheat or similar Law. Any amounts remaining unclaimed by holders of any such shares immediately prior to the time at
which such amounts would otherwise escheat to, or become property of, any Governmental Authority shall, to the extent permitted
by applicable Law, become the property of the Surviving Entity, free and clear of any claims or interest of any such holders or
their successors, assigns or personal representatives previously entitled thereto.
Section 3.10 Equity
Awards.
(a) Company
Restricted Shares. Each Company Restricted Share that is outstanding immediately prior to the Effective Time shall, effective
immediately prior to the Effective Time, by virtue of the occurrence of the Closing and without any action on the part of any holder
of any Company Restricted Share, vest in full, and the restrictions with respect thereto shall lapse. Each such Company Restricted
Share shall be deemed an issued and outstanding share of Company Common Stock as of immediately prior to the Effective Time and
shall be entitled to receive the Merger Consideration determined in accordance with this Agreement and otherwise subject to the
terms and conditions of this Agreement (including Section 3.1 and Section 3.3). Any amounts withheld with respect
to the Restricted Shares pursuant to Section 3.11 shall be withheld first from the aggregate Cash Consideration payable
in respect of such holder’s Company Restricted Shares.
(b) LTIP
Units. The parties to the OPP Agreement have as of the date hereof, entered into an agreement to terminate the OPP Agreement
(without payment thereunder to the Company Advisor or any of its Affiliates) effective as of immediately prior to the Effective
Time and contingent on the occurrence of the Effective Time (the “OPP Termination Agreement”). A true, correct
and complete copy of the OPP Termination Agreement has been provided to Parent.
(c) Notwithstanding
anything to the contrary contained herein, prior to the Effective Time, the Company shall take all actions necessary to effectuate
the provisions of this Section 3.10.
Section 3.11 Withholding
Rights. Each and any Parent Party, the Company, the Surviving Entity, the Company Operating Partnership, the Surviving Partnership
or the Exchange Agent, as applicable, shall be entitled to deduct and withhold from the Merger Consideration and any other amounts
or property otherwise payable or distributable to any Person pursuant to this Agreement such amounts or property (or portions thereof)
as such Parent Party, the Company, the Surviving Entity, the Surviving Partnership or the Exchange Agent is required to deduct
and withhold with respect to the making of such payment or distribution under the Code, and the rules and regulations promulgated
thereunder, or any provision of applicable Tax Law. To the extent that amounts are so deducted or withheld and paid over to the
appropriate Governmental Authority by a Parent Party, the Company, the Surviving Entity, the Surviving Partnership or the Exchange
Agent, as applicable, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the Person
in respect of which such deduction and withholding was made by the Parent Party, the Company, the Surviving Entity or the Exchange
Agent, as applicable.
Section 3.12 Lost
Certificates. If any Certificate shall have been lost, stolen or destroyed, then upon the making of an affidavit of that fact
by the Person claiming such Certificate to be lost, stolen or destroyed and, if required by the Surviving Entity, the posting by
such Person of a bond in such reasonable and customary amount as the Surviving Entity may direct, as indemnity against any claim
that may be made against it with respect to such Certificate, the Exchange Agent will issue in exchange for such lost, stolen or
destroyed Certificate the Merger Consideration to which the holder thereof is entitled pursuant to this Article III.
Section 3.13 Dissenters’
Rights. No dissenters’ or appraisal rights shall be available with respect to the Mergers or the other transactions contemplated
by this Agreement.
Section 3.14 Fractional
Shares. No certificate or scrip representing fractional shares of Parent Common Stock or Class C Units of the Surviving Partnership
shall be issued upon the surrender for exchange of Certificates or with respect to Book-Entry Shares or otherwise, and such fractional
share interests shall not entitle the owner thereof to vote or to any other rights of a stockholder of Parent. Notwithstanding
any other provision of this Agreement, (i) each holder of shares of Company Common Stock converted pursuant to the Merger who would
otherwise have been entitled to receive a fraction of a share of Parent Common Stock and (ii) each holder who would otherwise have
been entitled to receive a fraction of a Class C Unit of the Surviving Partnership shall receive (aggregating for this purpose
all the shares of Parent Common Stock or Class C Units, as applicable, that such holder is entitled to receive hereunder), in lieu
thereof, cash, without interest, in an amount equal to the product of (a) such fractional part of a share of Parent Common Stock
or Class C Unit, as applicable, multiplied by (b) the per share closing price of Parent Common Stock on the Closing Date on the
NYSE, as reported in The Wall Street Journal.
Article IV
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY AND THE COMPANY OPERATING PARTNERSHIP
Except (a) as set forth in the disclosure letter that has been
prepared by the Company and delivered by the Company to the Parent Parties in connection with the execution and delivery of this
Agreement (the “Company Disclosure Letter”) (it being agreed that disclosure of any item in any Section of the
Company Disclosure Letter with respect to any Section or subsection of this Agreement shall be deemed disclosed with respect to
any other Section or subsection of this Agreement to the extent the applicability of such disclosure is reasonably apparent, provided
that nothing in the Company Disclosure Letter is intended to broaden the scope of any representation or warranty of the Company
made herein), or (b) as disclosed in publicly available Company SEC Filings, filed with, or furnished to, as applicable, the
SEC on or after January 1, 2013 and prior to the date of this Agreement (excluding any risk factor disclosures contained in such
documents under the heading “Risk Factors” and any disclosure of risks or other matters included in any “forward-looking
statements” disclaimer or other statements that are cautionary, predictive or forward-looking in nature), the Company and
the Company Operating Partnership hereby jointly and severally represent and warrant to the Parent Parties that:
Section 4.1 Organization
and Qualification; Subsidiaries.
(a) The
Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Maryland and has
the requisite corporate power and authority and any necessary governmental authorization to own, lease and, to the extent applicable,
operate its properties and to carry on its business as it is now being conducted. The Company is duly qualified or licensed to
do business, and is in good standing, in each jurisdiction where the character of the properties owned, operated or leased by it
or the nature of its business makes such qualification, licensing or good standing necessary, except for such failures to be so
qualified, licensed or in good standing that, individually or in the aggregate, have not had and would not reasonably be expected
to have a Company Material Adverse Effect.
(b) Each
Company Subsidiary is duly incorporated or organized, validly existing and in good standing under the Laws of the jurisdiction
of its incorporation or organization, as the case may be, and has the requisite organizational power and authority and any necessary
governmental authorization to own, lease and, to the extent applicable, operate its properties and to carry on its business as
it is now being conducted, except, with respect only to each Company Subsidiary that would not constitute a Significant Subsidiary,
for such failures to be so organized, in good standing or have certain power and authority that, individually or in the aggregate,
have not had and would not reasonably be expected to have a Company Material Adverse Effect. Each Company Subsidiary is duly qualified
or licensed to do business, and is in good standing, in each jurisdiction where the character of the properties owned, operated
or leased by it or the nature of its business makes such qualification, licensing or good standing necessary, except for such failures
to be so qualified, licensed or in good standing that, individually or in the aggregate, have not had and would not reasonably
be expected to have a Company Material Adverse Effect.
(c) Section
4.1(c) of the Company Disclosure Letter sets forth a true and complete list of the Company Subsidiaries and each other corporate
or non-corporate subsidiary in which the Company owns any direct or indirect voting, capital, profits or other beneficial interest
(“Other Company Subsidiary”), including a list of each Company Subsidiary or Other Company Subsidiary that is
a “qualified REIT subsidiary” within the meaning of Section 856(i)(2) of the Code (“Qualified REIT Subsidiary”)
or a “taxable REIT subsidiary” within the meaning of Section 856(l) of the Code (“Taxable REIT Subsidiary”),
together with (i) the jurisdiction of incorporation or organization, as the case may be, of each Company Subsidiary and each
Other Company Subsidiary, (ii) the type of and percentage of voting, equity, profits, capital and other beneficial interest held,
directly or indirectly, by the Company in and to each Company Subsidiary and each Other Company Subsidiary, (iii) the names
of and the type of and percentage of voting, equity, profits, capital and other beneficial interest held by any Person other than
the Company or a Company Subsidiary in each Company Subsidiary and, to the knowledge of the Company, each Other Company Subsidiary,
and (iv) the classification for U.S. federal income tax purposes of each Company Subsidiary and, to the knowledge of the Company,
each Other Company Subsidiary.
(d) Except
as set forth in Section 4.1(d) of the Company Disclosure Letter, neither the Company nor any Company Subsidiary, directly
or indirectly, owns any interest or investment (whether equity or debt) in any Person (other than equity interests in the Company
Subsidiaries or Other Company Subsidiaries, loans to any Taxable REIT Subsidiary of the Company and investments in bank time deposits
and money market accounts).
(e) Except
as set forth in Section 4.1(e) of the Company Disclosure Letter, the Company has not exempted any “Person” from
the “Aggregate Share Ownership Limit” or established or increased an “Excepted Holder Limit,” as such terms
are defined in the Company Charter, which exemption or Excepted Holder Limit is currently in effect.
(f) There
are no partners of the Company Operating Partnership other than the Company, American Realty Capital Healthcare Advisors, LLC,
American Realty Capital Healthcare Special Limited Partnership, LLC and Healthcare Advisors Profit Plan LLC. Section 4.1(f)
of the Company Disclosure Letter sets forth the number of partnership units held by each partner in the Company Operating Partnership.
The Company is the sole general partner of the Company Operating Partnership.
Section 4.2 Organizational
Documents. The Company has made available to Parent complete and correct copies of (a) the Company’s charter (the “Company
Charter”) and the Company’s bylaws, as amended to date (the “Company Bylaws”) and (b) the organizational
documents of each Company Subsidiary (other than the applicable certificate of formation), each as in effect on the date hereof.
Section 4.3 Capital
Structure.
(a) The
authorized capital stock of the Company consists of 300,000,000 shares of Company Common Stock and 50,000,000 shares of preferred
stock, $0.01 par value per share (the “Company Preferred Stock”). At the close of business on May 30, 2014,
(i) 169,316,257 shares of Company Common Stock were issued and outstanding (including 225,905 Company Restricted Shares),
and (iii) 17,576,015 shares of Company Common Stock were available for grant under the Company Equity Plans. All issued and outstanding
shares of the capital stock of the Company are duly authorized, validly issued, fully paid and non-assessable, and no class of
capital stock of the Company is entitled to preemptive rights. There are no outstanding bonds, debentures, notes or other indebtedness
of the Company having the right to vote (or convertible into, or exchangeable for, securities having the right to vote) on any
matter on which holders of shares of Company Common Stock may vote. Section 4.3(a) of the Company Disclosure Letter, sets
forth for each holder of Company Restricted Shares outstanding as of the date of this Agreement (A) the name with respect
to the holder (B) the number of such Company Restricted Shares held by such holder, (C) the date of grant of such Company Restricted
Shares, and (D) the vesting schedule for such Company Restricted Shares. There are no other rights, options, stock or unit appreciation
rights, phantom stock or units, restricted stock units, dividend equivalents or similar rights with respect to the Company Common
Stock other than as disclosed on Section 4.3(a) of the Company Disclosure Letter. Each Company Restricted Share grant and
each LTIP Unit grant was made in accordance in all material respects with the terms of the Company Equity Plans and applicable
Law. Prior to the Closing (and as close to Closing as reasonably practicable), the Company will provide to Parent a complete and
correct list that contains the information required to be provided in Section 4.3(a) of the Company Disclosure Letter, that
is correct and complete as of the date such list is provided; provided, however, that delivery of such updated schedule
shall not cure any breach of this Section 4.3(a) for purposes of determining whether the applicable closing condition has
been satisfied. There are 1,443,897 OP Units issued and outstanding (other than 5,613,374 OP Units to be issued in respect of the
termination of the Listing Agreement), (ii) no Class B OP Units issued and outstanding and (iii) 9,219,108 LTIP Units issued and
outstanding, each of which LTIP Units is owned of record and beneficially by the Company Advisor, and each of which LTIP Units
shall be forfeited immediately prior to the Effective Time. Except as set forth in the preceding sentence, there are no other partnership
interests or other equity or ownership interests in the Company Operating Partnership and there are no existing options, warrants,
calls, subscriptions, convertible securities or other securities, agreements, commitments or obligations of any character relating
to the partnership interests or other equity or ownership interests in the Company Operating Partnership or other securities which
would require the Company Operating Partnership to issue or sell any partnership interests or other equity or ownership interests
in the Company Operating Partnership.
(b) All
of the outstanding shares of capital stock of each of the Company Subsidiaries that is a corporation are duly authorized, validly
issued, fully paid and nonassessable. All equity interests in each of the Company Subsidiaries that is a partnership or limited
liability company are duly authorized and validly issued. All shares of capital stock of (or other ownership interests in) each
of the Company Subsidiaries that may be issued upon exercise of outstanding options or exchange rights are duly authorized and,
upon issuance will be validly issued, fully paid and nonassessable. Except as set forth in Section 4.1(c) of the Company
Disclosure Letter, the Company owns, directly or indirectly, all of the issued and outstanding capital stock and other ownership
interests of each of the Company Subsidiaries, free and clear of all encumbrances other than statutory or other liens for Taxes
or assessments which are not yet due or delinquent or the validity of which is being contested in good faith by appropriate proceedings
and for which adequate reserves are being maintained, and there are no existing options, warrants, calls, subscriptions, convertible
securities or other securities, agreements, commitments or obligations of any character relating to the outstanding capital stock
or other securities of any Company Subsidiary or which would require any Company Subsidiary to issue or sell any shares of its
capital stock, ownership interests or securities convertible into or exchangeable for shares of its capital stock or ownership
interests.
(c) Except
as set forth in this Section 4.3 or in Section 4.3(a) of the Company Disclosure Letter, as of the date of this Agreement,
there are no securities, options, warrants, calls, rights, commitments, agreements, rights of first refusal, arrangements or undertakings
of any kind to which the Company or any Company Subsidiary is a party or by which any of them is bound, obligating the Company
or any Company Subsidiary to issue, deliver or sell or create, or cause to be issued, delivered or sold or created, additional
shares of Company Common Stock, shares of Company Preferred Stock or other equity securities or phantom stock or other contractual
rights the value of which is determined in whole or in part by the value of any equity security of the Company or any of the Company
Subsidiaries or obligating the Company or any Company Subsidiary to issue, grant, extend or enter into any such security, option,
warrant, call, right, commitment, agreement, right of first refusal, arrangement or undertaking. Except as set forth in Section
4.3(c) of the Company Disclosure Letter, as of the date of this Agreement, there are no outstanding contractual obligations
of the Company or any Company Subsidiary to repurchase, redeem or otherwise acquire any shares of Company Common Stock, shares
of Company Preferred Stock or other equity securities of the Company or any Company Subsidiary (other than in satisfaction of withholding
Tax obligations pursuant to certain awards outstanding under the Company Equity Plans in the event the grantees otherwise fail
to satisfy withholding Tax obligations). Neither the Company nor any Company Subsidiary is a party to or bound by any agreements
or understandings concerning the voting (including voting trusts and proxies) of any capital stock of the Company or any of the
Company Subsidiaries.
(d) All
dividends or other distributions on the shares of Company Common Stock and Company Preferred Stock and any material dividends or
other distributions on any securities of any Company Subsidiary which have been authorized or declared prior to the date hereof
have been paid in full (except to the extent such dividends have been publicly announced and are not yet due and payable).
Section 4.4 Authority.
(a) Each
of the Company and the Company Operating Partnership has the requisite corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and, subject to receipt of the Company Stockholder Approval, to consummate the
transactions contemplated by this Agreement. The execution and delivery of this Agreement by the Company and the Company Operating
Partnership and the consummation by the Company and the Company Operating Partnership of the transactions contemplated hereby have
been duly and validly authorized by all necessary corporate and partnership action, as applicable, and the Company has approved
this Agreement and the Partnership Merger as the sole general partner of the Company Operating Partnership, and the limited partners
of the Company Operating Partnership have approved this Agreement, the Merger, the Partnership Merger, and the transactions contemplated
by this Agreement (including the amendment and restatement of the Company Operating Partnership Agreement in the form of the Surviving
Partnership Agreement) by the consent of the limited partners holding more than a majority of the percentage interest of all limited
partners, and no other corporate or partnership proceedings on the part of the Company or the Company Operating Partnership are
necessary to authorize this Agreement or the Mergers or to consummate the transactions contemplated hereby, subject to receipt
of the Company Stockholder Approval, the filing of the Articles of Merger with and acceptance for record of the Articles of Merger
by the SDAT and the due filing of the Certificate of Merger and the Partnership Certificate of Merger with the Delaware Secretary.
The Company’s board of directors (the “Company Board”), at a duly held meeting, has, by unanimous vote
of all of the Company Board members voting, (i) duly and validly authorized the execution and delivery of this Agreement and declared
advisable the Merger and the other transactions contemplated hereby, (ii) directed that the Merger and, to the extent stockholder
approval is required, the other transactions contemplated hereby be submitted for consideration at the Company Stockholder Meeting,
and (iii) resolved to recommend that the stockholders of the Company vote in favor of the approval of the Merger and, to the extent
stockholder approval is required, the other transactions contemplated hereby (the “Company Recommendation”)
and to include such recommendation in the Proxy Statement, subject to Section 6.5.
(b) This
Agreement has been duly executed and delivered by the Company and the Company Operating Partnership and, assuming due authorization,
execution and delivery by each of Parent, Merger Sub and OP Merger Sub, constitutes a legally valid and binding obligation of the
Company and the Company Operating Partnership, enforceable against the Company and the Company Operating Partnership in accordance
with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar Laws affecting creditors’ rights generally and by general principles of equity (regardless of whether enforceability
is considered in a proceeding in equity or at Law).
Section 4.5 No
Conflict; Required Filings and Consents.
(a) Except
as set forth in Section 4.5(a) of the Company Disclosure Letter, the execution and delivery of this Agreement by the Company
and the Company Operating Partnership does not, and the performance of this Agreement and the consummation of the Mergers and the
other transactions contemplated hereby by the Company and the Company Operating Partnership will not, (i) assuming receipt of the
Company Stockholder Approval, conflict with or violate any provision of (A) the Company Charter or the Company Bylaws or the Company
Operating Partnership Agreement or (B) any equivalent organizational or governing documents of any Company Subsidiary, (ii) assuming
that all consents, approvals, authorizations and permits described in Section 4.5(b) have been obtained, all filings and
notifications described in Section 4.5(b) have been made and any waiting periods thereunder have terminated or expired,
conflict with or violate any Law applicable to the Company or any other Company Subsidiary or by which any property or asset of
the Company or any Company Subsidiary is bound, or (iii) require any consent or approval (except as contemplated by Section
4.5(b)) under, result in any breach of or any loss of any benefit or material increase in any cost or obligation of the Company
or any Company Subsidiary under, or constitute a default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any right of termination, acceleration, cancellation or payment (including disposition or similar
fees) (with or without notice or the lapse of time or both) of, or give rise to any right of purchase, first offer or forced sale
under or result in the creation of a Lien on any property or asset of the Company or any Company Subsidiary pursuant to, any note,
bond, mortgage, debt instrument, indenture, contract, agreement, ground lease, license, permit or other legally binding obligation
to which the Company or any Company Subsidiary is a party, except, as to clauses (i)(B), (ii) and (iii), respectively, for
any such conflicts, violations, breaches, defaults or other occurrences which, individually or in the aggregate, have not had and
would not reasonably be expected to have a Company Material Adverse Effect (provided that, for the avoidance of doubt, for
purposes of this Section 4.5(a) the exceptions set forth in clauses (vi) and (vii) of the definition of “Company Material
Adverse Effect” shall not apply to any such conflicts, violations, breaches, defaults or other occurrences in determining
whether a Company Material Adverse Effect has occurred).
(b) The
execution and delivery of this Agreement by the Company and the Company Operating Partnership does not, and the performance of
this Agreement by the Company and the Company Operating Partnership will not, require any consent, approval, authorization or permit
of, or filing with or notification to, any Governmental Authority, except (i) the filing with the SEC of (A) a proxy statement
in preliminary and definitive form relating to the Company Stockholder Meeting (together with any amendments or supplements thereto,
the “Proxy Statement”) and of a registration statement on Form S-4 pursuant to which the offer and sale of shares
of Parent Common Stock in the Mergers will be registered pursuant to the Securities Act and in which the Proxy Statement will be
included as a prospectus (together with any amendments or supplements thereto, the “Form S-4”), and declaration
of effectiveness of the Form S-4, and (B) such reports under, and other compliance with, the Exchange Act (and the rules and regulations
promulgated thereunder) and the Securities Act (and the rules and regulations promulgated thereunder) as may be required in connection
with this Agreement and the transactions contemplated hereby, (ii) the filing of the Articles of Merger with and the acceptance
for record of the Articles of Merger by the SDAT pursuant to the MGCL, (iii) the due filing of the Certificate of Merger and
the Partnership Certificate of Merger with the Delaware Secretary, (iv) such filings and approvals as may be required by any applicable
state securities or “blue sky” Laws, (v) such filings as may be required in connection with state and local transfer
Taxes, (vi) as may be required under the rules and regulations of the NYSE or NASDAQ, and (vii) where failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or notifications, individually or in the aggregate, has not had and
would not reasonably be expected to have a Company Material Adverse Effect.
Section 4.6 Permits;
Compliance With Law.
(a) Except
for the authorizations, licenses, permits, certificates, approvals, variances, exemptions, orders, franchises, certifications and
clearances that are the subject of Section 4.14 or Section 4.15 which are addressed solely in those Sections, the
Company and each Company Subsidiary is in possession of all authorizations, licenses, permits, certificates, approvals, variances,
exemptions, orders, franchises, certifications and clearances of any Governmental Authority and accreditation and certification
agencies, bodies or other organizations, including building permits and certificates of occupancy, necessary for the Company and
each Company Subsidiary to own, lease and, to the extent applicable, operate its properties or to carry on its respective business
substantially as it is being conducted as of the date hereof (the “Company Permits”), and all such Company Permits
are valid and in full force and effect, except where the failure to be in possession of, or the failure to be valid or in full
force and effect of, any of the Company Permits, individually or in the aggregate, has not had and would not reasonably be expected
to have a Company Material Adverse Effect. All applications required to have been filed for the renewal of the Company Permits
have been duly filed on a timely basis with the appropriate Governmental Authority, and all other filings required to have been
made with respect to such Company Permits have been duly made on a timely basis with the appropriate Governmental Authority, except
in each case for failures to file which, individually or in the aggregate, have not had and would not reasonably be expected to
have a Company Material Adverse Effect. Neither the Company nor any Company Subsidiary has received any claim or notice nor has
any knowledge indicating that the Company or any Company Subsidiary is currently not in compliance with the terms of any such Company
Permits, except where the failure to be in compliance with the terms of any such Company Permits, individually or in the aggregate,
have not had and would not reasonably be expected to have a Company Material Adverse Effect.
(b) Neither
the Company nor any Company Subsidiary is or has been in conflict with, or in default or violation of (i) any Law applicable to
the Company or any Company Subsidiary or by which any property or asset of the Company or any Company Subsidiary is bound (except
for Laws addressed in Section 4.10, Section 4.11, Section 4.14, Section 4.15 or Section 4.17),
or (ii) any Company Permits (except for the Company Permits addressed in Section 4.14 or Section 4.15), except in
each case for any such conflicts, defaults or violations that, individually or in the aggregate, have not had and would not reasonably
be expected to have a Company Material Adverse Effect.
Section 4.7 SEC
Filings; Financial Statements.
(a) The
Company has filed with, or furnished (on a publicly available basis) to, the SEC all forms, reports, schedules, statements and
documents required to be filed or furnished by it under the Securities Act or the Exchange Act, as the case may be, including any
amendments or supplements thereto, from and after January 1, 2012 (collectively, the “Company SEC Filings”).
Each Company SEC Filing, as amended or supplemented, if applicable, (i) as of its date, or, if amended or supplemented, as
of the date of the most recent amendment or supplement thereto, complied in all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be, and the applicable rules and regulations of the SEC thereunder, and (ii)
did not, at the time it was filed (or became effective in the case of registration statements), or, if amended or supplemented,
as of the date of the most recent amendment or supplement thereto, contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading. As of the date of this Agreement, no Company Subsidiary is separately subject to the
periodic reporting requirements of the Exchange Act.
(b) Each
of the consolidated financial statements contained or incorporated by reference in the Company SEC Filings (as amended, supplemented
or restated, if applicable), including the related notes and schedules, was prepared (except as indicated in the notes thereto)
in accordance with GAAP applied on a consistent basis throughout the periods indicated, and each such consolidated financial statement
presented fairly, in all material respects, the consolidated financial position, results of operations, stockholders’ equity
and cash flows of the Company and its consolidated subsidiaries as of the respective dates thereof and for the respective periods
indicated therein (subject, in the case of unaudited quarterly financial statements, to normal year-end adjustments).
(c) The
records, systems, controls, data and information of the Company and the Company Subsidiaries that are used in the system of internal
accounting controls described in the following sentence are recorded, stored, maintained and operated under means that are under
the exclusive ownership and direct control of the Company or the Company Subsidiaries or accountants, except for any non-exclusive
ownership and non-direct control that would not reasonably be expected to have a materially adverse effect on the system of internal
accounting controls. The Company and the Company Subsidiaries have devised and maintain a system of internal accounting controls
sufficient to provide reasonable assurances regarding the reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with GAAP, including that: (1) transactions are executed only in accordance with management’s
authorization; (2) transactions are recorded as necessary to permit preparation of the financial statements of the Company and
the Company Subsidiaries and to maintain accountability for the assets of the Company and the Company Subsidiaries; (3) access
to such assets is permitted only in accordance with management’s authorization; (4) the reporting of such assets is compared
with existing assets at regular intervals; and (5) accounts, notes and other receivables and inventory are recorded accurately,
and proper and adequate procedures are implemented to effect the collection thereof on a current and timely basis. The Company’s
principal executive officer and its principal financial officer have disclosed to the Company’s auditors and the audit committee
of the Company Board (i) all significant deficiencies and material weaknesses in the design or operation of internal controls over
financial reporting that are reasonably likely to adversely affect the Company’s ability to record, process, summarize and
report financial data, and (ii) any fraud, whether or not material, that involves management or other employees who have a significant
role in the Company’s internal controls, and the Company has made available to Parent copies of any material written materials
relating to the foregoing. The Company has established and maintains disclosure controls and procedures (as such term is defined
in Rule 13a-15 promulgated under the Exchange Act) designed to ensure that material information relating to the Company required
to be included in reports filed under the Exchange Act, including its consolidated subsidiaries, is made known to the Company’s
principal executive officer and its principal financial officer by others within those entities, particularly during the periods
in which the periodic reports required under the Exchange Act are being prepared, and, to the knowledge of the Company, such disclosure
controls and procedures are effective in timely alerting the Company’s principal executive officer and its principal financial
officer to material information required to be included in the Company’s periodic reports required under the Exchange Act.
Since the enactment of the Sarbanes-Oxley Act, none of the Company or any Company Subsidiary has made any prohibited loans to any
director or executive officer of the Company (as defined in Rule 3b-7 promulgated under the Exchange Act).
(d) Except
as and to the extent disclosed or reserved against on the Company’s most recent balance sheet (or, in the notes thereto)
included in the Company SEC Filings, none of the Company or its consolidated subsidiaries has any liabilities or obligations of
any nature (whether accrued, absolute, contingent or otherwise), except for liabilities or obligations (i) expressly contemplated
by or under this Agreement, including Section 6.1 hereof, (ii) incurred in the ordinary course of business consistent
with past practice since the most recent balance sheet set forth in the Company SEC Filings made through and including the date
of this Agreement, (iii) described in any section of the Company Disclosure Letter or (iv) that, individually or in the aggregate,
have not had and would not reasonably be expected to have a Company Material Adverse Effect.
(e) Except
as set forth in Section 4.7(e) of the Company Disclosure Letter, to the knowledge of the Company, none of the Company SEC
Filings is as of the date hereof the subject of ongoing SEC review and the Company has not received any comments from the SEC with
respect to any of the Company SEC Filings which remain unresolved, nor has it received any inquiry or information request from
the SEC as of the date hereof as to any matters affecting the Company which has not been adequately addressed. None of the Company
SEC Filings as of the date hereof is the subject of any confidential treatment request by the Company.
Section 4.8 Disclosure
Documents.
(a) None
of the information supplied or to be supplied in writing by or on behalf of the Company or any Company Subsidiary for inclusion
or incorporation by reference in (i) the Form S-4 will, at the time such document is filed with the SEC, at any time such
document is amended or supplemented or at the time such document is declared effective by the SEC, contain any untrue statement
of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein
not misleading, or (ii) the Proxy Statement will, at the date it is first mailed to the stockholders of the Company, at the time
of the Company Stockholder Meeting, at the time the Form S-4 is declared effective by the SEC or at the Effective Time, contain
any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were made, not misleading. All documents that the Company is responsible
for filing with the SEC in connection with the transactions contemplated herein, to the extent relating to the Company or any Company
Subsidiary or other information supplied by or on behalf of the Company or any Company Subsidiary for inclusion therein, will comply
as to form, in all material respects, with the provisions of the Securities Act or Exchange Act, as applicable, and the rules and
regulations of the SEC thereunder and each such document required to be filed with any Governmental Authority (other than the SEC)
will comply in all material respects with the provisions of any applicable Law as to the information required to be contained therein.
(b) Notwithstanding
anything to the contrary in this Section 4.8 or this Agreement, the Company makes no representation or warranty with respect
to statements made or incorporated, or omissions included, in the Form S-4 or the Proxy Statement to the extent based upon information
supplied to the Company by or on behalf of Parent or Merger Sub.
Section 4.9 Absence
of Certain Changes or Events. Between December 31, 2013 and the date hereof, except as contemplated by this Agreement or as
set forth in Section 4.9 of the Company Disclosure Letter, the Company and each Company Subsidiary has conducted its business
in all material respects in the ordinary course. Between December 31, 2013 and the date hereof, there has not been any Company
Material Adverse Effect or any effect, event, development or circumstance that, individually or in the aggregate with all other
effects, events, developments and changes, would reasonably be expected to result in a Company Material Adverse Effect.
Section 4.10 Employee
Benefit Plans.
(a) Other
than the Company Equity Plans, the Company and the Company Subsidiaries do not, and are not required to, and have not and have
never been required to, maintain, sponsor or contribute to any Benefit Plans. Except as individually or in the aggregate, have
not had and would not reasonably be expected to have a Company Material Adverse Effect, none of Company, any Company Subsidiary
or any of their respective ERISA Affiliates has incurred any obligation or liability with respect to or under any employee benefit
plan, program or arrangement (including any agreement, program, policy or other arrangement under which any current or former employee,
director or consultant has any present or future right to benefits), which has created or will create any obligation with respect
to, or has resulted in or will result in any liability to Parent, Merger Sub, OP Merger Sub or any of their respective subsidiaries.
(b) Except
as, individually or in the aggregate, have not had and would not reasonably be expected to have a Company Material Adverse Effect:
(i) each Company Equity Plan has been maintained and administered in compliance with its terms and with applicable Law, including
ERISA and the Code to the extent applicable thereto; (ii) all contributions or other amounts payable by the Company or any
Company Subsidiary as of the date hereof with respect to each Company Equity Plan in respect of current or prior plan years have
been paid or accrued in accordance with GAAP (other than with respect to amounts not yet due); and (iii) there are no pending,
threatened or, to the knowledge of Company, anticipated claims (other than non-material claims for benefits in accordance with
the terms of the Company Equity Plans and appeals of such claims) by, on behalf of or against any of the Company Equity Plans or
any trusts related thereto that could reasonably be expected to result in any liability of the Company or any Company Subsidiary.
(c) Except
as provided in this Agreement or applicable Law or as set forth in Section 4.10(c) 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, consultant or officer of Company or any of the Company Subsidiaries to severance pay, or any other
payment from Company or any Company Subsidiary, or (ii) accelerate the time of payment or vesting, or increase the amount
of compensation due to any such employee, consultant or officer.
(d) None
of Company, any Company Subsidiary or any of their respective ERISA Affiliates has ever maintained, contributed to, or participated
in, or otherwise has any obligation or liability in connection with: (i) a “pension plan” under Section 3(2) of ERISA
that is subject to Title IV or Section 302 of ERISA or Section 412 or 4971 of the Code, (ii) a “multiemployer plan”
(as defined in Section 3(37) of ERISA), (iii) a “multiple employer welfare arrangement” (as defined in Section 3(40)
of ERISA), or (iv) a “multiple employer plan” (as defined in Section 413(c) of the Code).
(e) Except
as set forth in Section 4.10(e) the Company Disclosure Letter, or as individually or in the aggregate, have not had and
would not reasonably be expected to have a Company Material Adverse Effect, no amount that could be received (whether in cash or
property or the vesting of property) as a result of the Merger or any of the other transactions contemplated hereby (alone or in
combination with any other event) by any Person who is a “disqualified individual” (as such term is defined in Treasury
Regulation Section 1.280G-1) under any compensation arrangement could be characterized as an “excess parachute payment”
(as such term is defined in Section 280G(b)(1) of the Code).
(f) Except
as set forth in Section 4.10(f) of the Company Disclosure Letter, neither the Company nor any Company Subsidiary has any
indemnity obligation with respect to the Company Equity Plans for any Taxes imposed under Section 4999 or 409A of the Code.
(g) Except
as individually or in the aggregate have not had and would not reasonably be expected to have a Company Material Adverse Effect,
each Company Equity Plan has been operated and administered in compliance with Section 409A of the Code.
(h) The
Company Equity Plans are not mandated by a government other than the United States and are not subject to the Laws of a jurisdiction
outside of the United States.
Section 4.11 Labor
and Other Employment Matters. Neither the Company nor any Company Subsidiary has, or has ever had, any employees.
Section 4.12 Material
Contracts.
(a) Except
for contracts listed in Section 4.12 of the Company Disclosure Letter or filed as exhibits to the Company SEC Filings, as
of the date of this Agreement, neither the Company nor any Company Subsidiary is a party to or bound by any contract that, as of
the date hereof:
(i) is
required to be filed as an exhibit to the Company’s Annual Report on Form 10-K pursuant to Item 601(b)(2), (4), (9) or (10)
of Regulation S-K promulgated by the SEC;
(ii) obligates
the Company or any Company Subsidiary to make non-contingent aggregate annual expenditures (other than principal and/or interest
payments or the deposit of other reserves with respect to debt obligations) in excess of $1,000,000 and is not cancelable within
ninety (90) days without material penalty to the Company or any Company Subsidiary, except for any Company Lease or any ground
lease affecting any Company Property;
(iii) contains
any non-compete or exclusivity provisions with respect to any line of business or geographic area that restricts the business of
the Company or any Company Subsidiary, or that otherwise restricts the lines of business conducted by the Company or any Company
Subsidiary or the geographic area in which the Company or any Company Subsidiary may conduct business, except for any Company Lease
or any ground lease affecting any Company Property, recorded property declarations, reciprocal easement agreements or restrictive
covenant agreements that contain non-compete or exclusivity provisions that do not in any way restrict activities of the Company
or any Company Subsidiary outside of a twenty-five mile radius of the applicable Company Property;
(iv) other
than the Company Charter and the Company Bylaws, is an agreement which obligates the Company or any Company Subsidiary to indemnify
any past or present directors, officers, trustees, employees and agents of the Company or any Company Subsidiary pursuant to which
the Company or any Company Subsidiary is the indemnitor, other than any operating agreements or property management agreements
or any similar agreement pursuant to which a Company Subsidiary that is not wholly owned, directly or indirectly, by the Company
provides such an indemnification to any such directors, officers, trustees, employees or agents in connection with the indemnification
by such non-wholly owned Company Subsidiary of the Company or another Company Subsidiary thereunder;
(v) constitutes
an Indebtedness obligation of the Company or any Company Subsidiary with a principal amount as of the date hereof greater than
$2,000,000;
(vi) [Reserved];
(vii) requires
the Company or any Company Subsidiary to dispose of or acquire assets or properties (other than in connection with the expiration
of a Company Lease or a ground lease affecting a Company Property) with a fair market value in excess of $1,000,000, or involves
any pending or contemplated merger, consolidation or similar business combination transaction, except for any Company Lease or
any ground lease affecting any Company Property;
(viii) constitutes
an interest rate cap, interest rate collar, interest rate swap or other contract or agreement relating to a forward, swap or other
hedging transaction of any type, whether or not entered into for bona fide hedging purposes;
(ix) is
an agreement, arrangement or understanding between the Company or any Company Subsidiary, on the one hand, and the Company Advisor,
or any Affiliate of the Company or of the Company Advisor, on the other hand;
(x) sets
forth the operational terms of a joint venture, partnership, limited liability company with a Company Third Party member or strategic
alliance of the Company or any Company Subsidiary; or
(xi) constitutes
a loan to any Person (other than a wholly owned Company Subsidiary) by the Company or any Company Subsidiary (other than advances
made pursuant to and expressly disclosed in the Company Leases or pursuant to any disbursement agreement, development agreement,
or development addendum entered into in connection with a Company Lease with respect to the development, construction, or equipping
of Company Properties or the funding of improvements to Company Properties) in an amount in excess of $2,000,000.
Each contract of the type described above in this Section
4.12(a), whether or not listed on Section 4.12 of the Company Disclosure Letter (and, for the avoidance of doubt, including
any contract filed as an exhibit to the Company SEC Filings that is not listed on Section 4.12 of the Company Disclosure
Letter but otherwise is of the type described in clauses (i) through (xi) above) to which the Company or any Company Subsidiary
is a party or by which it is bound as of the date hereof is referred to herein as a “Company Material Contract”.
(b) Except
as, individually or in the aggregate, has not had and would not reasonably be expected to have a Company Material Adverse Effect,
each Company Material Contract is legal, valid, binding and enforceable on the Company and each Company Subsidiary that is a party
thereto and, to the knowledge of the Company, each other party thereto, and is in full force and effect, except as may be limited
by bankruptcy, insolvency, reorganization, moratorium or other similar Laws affecting creditors’ rights generally and by
general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at Law). Except as,
individually or in the aggregate, have not had and would not reasonably be expected to have a Company Material Adverse Effect,
the Company and each Company Subsidiary has performed all obligations required to be performed by it prior to the date hereof under
each Company Material Contract and, to the knowledge of the Company, each other party thereto has performed all obligations required
to be performed by it under such Company Material Contract prior to the date hereof. None of the Company or any Company Subsidiary,
nor, to the knowledge of the Company, any other party thereto, is in material breach or violation of, or default under, any Company
Material Contract, and no event has occurred that with notice or lapse of time or both would constitute a violation, breach or
default under any Company Material Contract, except where in each case such breach, violation or default is not reasonably likely
to have, individually or in the aggregate, a Company Material Adverse Effect. Neither the Company nor any Company Subsidiary has
received notice of any violation or default under any Company Material Contract, except for violations or defaults that would not,
individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.
Section 4.13 Litigation.
Except as individually or in the aggregate, have not had and would not reasonably be expected to have a Company Material Adverse
Effect, or as set forth in Section 4.13 of the Company Disclosure Letter (a) there is no Action pending or, to the
knowledge of the Company, threatened, nor, to the knowledge of the Company, is there any investigation pending or threatened by
any Governmental Authority, in each case, against the Company or any Company Subsidiary, and (b) neither the Company nor any Company
Subsidiary, nor any of the Company’s or any Company Subsidiary’s respective property, is subject to any outstanding
judgment, order, writ, injunction or decree of any Governmental Authority.
Section 4.14 Environmental
Matters.
(a) Except
as individually or in the aggregate, has not had and would not reasonably be expected to have a Company Material Adverse Effect,
or as set forth in Section 4.14 of the Company Disclosure Letter or in any Phase I or Phase II report listed in Section
4.14(a)(preamble) of the Company Disclosure Letter and made available to Parent prior to the date hereof in the electronic
data room created by the Company in connection with this Agreement and the transactions contemplated hereby:
(i) The
Company and each Company Subsidiary are in compliance with all Environmental Laws.
(ii) The
Company and each Company Subsidiary have all Environmental Permits necessary to conduct their current operations and are in compliance
with their respective Environmental Permits, and all such Environmental Permits are in good standing.
(iii) Neither
the Company nor any Company Subsidiary has received any written notice, demand, letter or claim alleging that the Company or any
such Company Subsidiary is in violation of, or liable under, any Environmental Law or that any judicial, administrative or compliance
order has been issued against the Company or any Company Subsidiary which remains unresolved. There is no litigation, investigation,
request for information or other proceeding pending, or, to the knowledge of the Company, threatened against the Company and any
Company Subsidiary under any Environmental Law.
(iv) Except
with respect to conditions included in “no further action letters” made available to Parent prior to the date hereof,
neither the Company nor any Company Subsidiary has entered into or agreed to any consent decree or order or is subject to any judgment,
decree or judicial, administrative or compliance order relating to compliance with Environmental Laws, Environmental Permits or
the investigation, sampling, monitoring, treatment, remediation, removal or cleanup of Hazardous Substances and no investigation,
litigation or other proceeding is pending or, to the knowledge of the Company, threatened against the Company or any Company Subsidiary
under any Environmental Law.
(v) Neither
the Company nor any Company Subsidiary has assumed, by contract or, to the knowledge of the Company, by operation of Law, any liability
under any Environmental Law or relating to any Hazardous Substances, or is an indemnitor in connection with any threatened or asserted
claim by any third-party indemnitee for any liability under any Environmental Law or relating to any Hazardous Substances.
(vi) Neither
the Company nor any Company Subsidiary has caused, and to the knowledge of the Company, no Company Third Party has caused any release
of a Hazardous Substance that would be required to be investigated or remediated by the Company or any Company Subsidiary under
any Environmental Law.
(vii) There
is no site to which the Company or any Company Subsidiary has transported or arranged for the transport of Hazardous Substances
which, to the knowledge of the Company, is or may become the subject of any Action under Environmental Law.
(b) None
of the transactions contemplated by this Agreement will trigger any filing requirement or other action under any Environmental
Law.
(c) This
Section 4.14 contains the exclusive representations and warranties of the Company with respect to environmental matters.
Section 4.15 Intellectual
Property.
(a) Except
as set forth in Section 4.15(a) of the Company Disclosure Letter or as, individually or in the aggregate, has not had and
would not reasonably be expected to have a Company Material Adverse Effect, (i) the Company and the Company Subsidiaries own or
are licensed or otherwise possess valid rights to use all Intellectual Property necessary to conduct the business of the Company
and the Company Subsidiaries as it is currently conducted, (ii) the conduct of the business of the Company and the Company Subsidiaries
as it is currently conducted does not infringe, misappropriate or otherwise violate the Intellectual Property rights of any Company
Third Party, (iii) there are no pending or, to the knowledge of the Company, threatened claims with respect to any of the Intellectual
Property rights owned by the Company or any Company Subsidiary, and (iv) to the knowledge of the Company, no Company Third Party
is currently infringing or misappropriating Intellectual Property owned by the Company or any Company Subsidiary. The Company and
the Company Subsidiaries are taking all actions that are reasonably necessary to maintain and protect each material item of Intellectual
Property that they own.
(b) This
Section 4.15 contains the exclusive representations and warranties of the Company with respect to intellectual property
matters.
Section 4.16 Properties.
(a) Section
4.16(a) (Part I) of the Company Disclosure Letter sets forth a list of the address of each real property owned or leased (as
lessee or sublessee), including ground leased, by the Company or any Company Subsidiary as of the date of this Agreement (all such
real property interests, together with all buildings, structures and other improvements and fixtures located on or under such real
property and all easements, rights and other appurtenances to such real property, are individually referred to herein as a “Company
Property” and collectively referred to herein as the “Company Properties”). Section 4.16(a)
(Part II) of the Company Disclosure Letter sets forth a list of the address of each facility and real property which, as of the
date of this Agreement, is under contract or signed letter of intent by the Company or a Company Subsidiary for purchase or sale
by the Company or such Company Subsidiary or which is required under a binding contract to be leased or subleased by the Company
or a Company Subsidiary after the date of this Agreement. Except as set forth in Section 4.16(a) (Part II) of the Company
Disclosure Letter, there are no real properties that the Company or any Company Subsidiary is obligated to buy, lease or sublease
at some future date. Section 4.16(a) (Part III) of the Company Disclosure Letter sets forth a list of all commissions, fees
and other amounts payable (or to become payable) in connection with the disposition of each Company Property that is currently
under contract for sale, being marketed or held for sale by the Company or a Company Subsidiary.
(b) The
Company or a Company Subsidiary owns good and marketable fee simple title or leasehold title (as applicable) to each of the Company
Properties, in each case, free and clear of Liens, except for Company Permitted Liens that have not had and would not reasonably
be expected to have, individually or in the aggregate, a Company Material Adverse Effect. For the purposes of this Agreement, “Company
Permitted Liens” shall mean any (i) Liens relating to any Indebtedness incurred in the ordinary course of business
consistent with past practice, (ii) Liens that result from any statutory or other Liens for Taxes or assessments that are not yet
subject to penalty or the validity of which is being contested in good faith by appropriate proceedings and for which there are
adequate reserves on the financial statements of the Company (if such reserves are required pursuant to GAAP), (iii) Liens imposed
or promulgated by Law or any Governmental Authority, including zoning regulations, permits and licenses, (iv) Liens that are disclosed
on the existing Company Title Insurance Policies made available by or on behalf of the Company or any Company Subsidiary to Parent
prior to the date hereof and, with respect to leasehold interests, Liens on the underlying fee or leasehold interest of the applicable
ground lessor, lessor or sublessor, (v) any cashiers’, landlords’, workers’, mechanics’, carriers’,
workmen’s, repairmen’s and materialmen’s liens and other similar Liens imposed by Law and incurred in the ordinary
course of business consistent with past practice that are not yet subject to penalty or the validity of which is being contested
in good faith by appropriate proceedings, and (vi) any other Liens that do not materially impair the value of the applicable Company
Property or the continued use and operation of the applicable Company Property as currently used and operated.
(c) To
the knowledge of the Company, except as has not had and would not reasonably be expected to have a Company Material Adverse Effect,
the Company Properties (x) are supplied with utilities and other services reasonably required for their continued operation
as they are now being operated and (y) are in working order sufficient for their normal operation in the manner currently being
operated and without any material structural defects other than as may be disclosed in any physical condition reports that have
been made available to Parent.
(d) To
the knowledge of the Company, except as has not had and would not reasonably be expected to have a Company Material Adverse Effect,
each of the Company Properties has sufficient access to and from publicly dedicated streets for its current use and operation,
without any constraints that interfere with the normal use, occupancy and operation thereof.
(e) Except
for discrepancies, errors or omissions that, individually or in the aggregate, have not had and would not reasonably be expected
to have a Company Material Adverse Effect, (i) the rent rolls for each of the Company Properties, as of April 30, 2014, which rent
rolls have previously been made available by or on behalf of the Company or any Company Subsidiary to Parent, and the schedules
with respect to the Company Properties subject to triple-net leases, which schedules have previously been made available to Parent,
correctly reference each lease or sublease that was in effect as of April 30, 2014 and to which the Company or the Company Subsidiaries
are parties as lessors or sublessors with respect to each of the applicable Company Properties (all leases or subleases (including
any triple-net leases), together with all amendments, modifications, supplements, renewals, exercise of options and extensions
related thereto, the “Company Leases”) and (ii) Section 4.16(e) of the Company Disclosure Letter
sets forth the current rent annualized and security deposit amounts currently held for each Company Lease (which security deposits
are in all material respects in the amounts required by the applicable Company Lease).
(f) True
and complete in all material respects copies of (i) all ground leases affecting the interest of the Company or any Company Subsidiary
in the Company Properties and (ii) all Company Leases (collectively, the “Specified Company Leases”), in each
case in effect as of the date hereof, together with all amendments, modifications, supplements, renewals and extensions through
the date hereof related thereto, have been made available to Parent. Except as set forth on Section 4.16(f) of the Company
Disclosure Letter or as individually or in the aggregate, have not had and would not reasonably be expected to have a Company Material
Adverse Effect, (1) neither the Company nor any Company Subsidiary is and, to the knowledge of the Company, no other party is in
breach or violation of, or default under, any Specified Company Lease, (2) neither the Company nor any Company Subsidiary is in
receipt of any rent under any Company Lease paid more than thirty (30) days before such rent is due and payable, and (3) each Specified
Company Lease is valid, binding and enforceable in accordance with its terms and is in full force and effect with respect to the
Company or a Company Subsidiary and, to the knowledge of the Company, with respect to the other parties thereto, except as may
be limited by bankruptcy, insolvency, reorganization, moratorium or other similar Laws affecting creditors’ rights generally
and by general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at Law). Neither
the Company nor any Company Subsidiary is party to any oral Company Lease.
(g) The
Company and each Company Subsidiary, as applicable, is in possession of title insurance policies or valid marked-up title commitments
evidencing title insurance with respect to each Company Property (each, a “Company Title Insurance Policy” and,
collectively, the “Company Title Insurance Policies”). A copy of each Company Title Insurance Policy in the
possession of the Company has been made available to Parent. No written claim has been made against any Company Title Insurance
Policy, which, individually or in the aggregate, would be material to any Company Property.
(h) To
the knowledge of the Company, Section 4.16(h) of the Company Disclosure Letter lists each Company Property which is (i)
under development as of the date hereof, and (ii) which is subject to a binding agreement for development or commencement of construction
by the Company or a Company Subsidiary, in each case other than those pertaining to capital repairs, replacements and other similar
correction of deferred maintenance items in the ordinary course of business being performed by the Company or a Company Subsidiary
that are individually in the amount of $1,000,000 or less.
(i) The
Company and the Company Subsidiaries have good and valid title to, or a valid and enforceable leasehold interest in, or other right
to use, all personal property owned, used or held for use by them as of the date of this Agreement (other than property owned by
tenants and used or held in connection with the applicable tenancy), except as, individually or in the aggregate, has not had and
would not reasonably be expected to have a Company Material Adverse Effect. None of the Company’s or any of the Company Subsidiaries’
ownership of or leasehold interest in any such personal property is subject to any Liens, except for Company Permitted Liens and
Liens that have not had and would not reasonably be expected to have a Company Material Adverse Effect.
(j) Section
4.16(j) of the Company Disclosure Letter lists the parties currently providing third-party property management services to
the Company or a Company Subsidiary and the number of facilities currently managed by each such party.
(k) [Reserved]
(l) No
condemnation, eminent domain, rezoning or similar proceeding has occurred or is pending or, to the knowledge of the Company, threatened
with respect to any owned Company Property or Company Lease, except for condemnation, eminent domain, rezoning or similar proceedings
that have not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.
(m) Except
for Company Permitted Liens and except as has not had, and would not reasonably be expected to have, individually or in the aggregate,
a Company Material Adverse Effect, there are no other outstanding rights or agreements to enter into any contract for sale, ground
lease or letter of intent to sell or ground lease any Company Property or any portion thereof that is owned by any Company Subsidiary,
which, in each case, is in favor of any party other than the Company or a Company Subsidiary.
Section 4.17 Taxes.
Except as expressly set forth in Section 4.17 of the Company Disclosure Letter:
(a) The
Company and each Company Subsidiary has (i) duly and timely filed (or there have been filed on their behalf) with the appropriate
Governmental Authority all U.S. federal and all other material Tax Returns required to be filed by them, taking into account any
extensions of time within which to file such Tax Returns, and all such Tax Returns were and are true, correct and complete in all
material respects, and (ii) duly and timely paid in full (or there has been duly and timely paid in full on their behalf), or made
adequate provision for, all material amounts of Taxes required to be paid by them, whether or not shown (or required to be shown)
on any Tax Return. True and materially complete copies of all U.S. federal income Tax Returns that have been filed with the IRS
by the Company and each Company Subsidiary with respect to the taxable years ending on or after December 31, 2011 have been
provided or made available to representatives of Parent.
(b) The
Company (i) for its taxable years commencing with the Company’s initial taxable year that ended on December 31, 2011 and
through and including its taxable year ended December 31, 2013 has been subject to taxation as a real estate investment trust within
the meaning of and under the provisions of Sections 856 et seq. of the Code (a “REIT”) and has satisfied
all requirements to qualify as a REIT, and has so qualified, for U.S. federal Tax purposes for such taxable years; (ii) has operated
since January 1, 2014 to the date hereof in such a manner so as to qualify as a REIT for U.S. federal Tax purposes; (iii) intends
to continue to operate (including with regard to the REIT distribution requirements in the taxable year that includes and/or that
ends on the Closing Date) through to the Merger (and the consummation thereof) in such a manner so as to qualify as a REIT for
its taxable year that will end with the Merger (and consummation thereof); and (iv) except as set forth in Section 4.17(b)
of the Company Disclosure Letter, has not taken or omitted to take any action that would reasonably be expected to result in a
challenge by the IRS or any other Governmental Authority to its status as a REIT, and no such challenge is pending or, to the Company’s
knowledge, threatened.
(c) None
of the Company and any of its Affiliates are or have been related, directly or indirectly, to any extent, to Frontier Management,
LLC, any of its Affiliates, or its owner (“Frontier”), and none of the Company and any of its Affiliates has
or has had any relationship, contractual or otherwise, with Frontier, other than pursuant to the agreements listed on Section
4.17(c) of the Company Disclosure Letter.
(d) Each
Company Subsidiary and Other Company Subsidiary has been since the later of its acquisition or formation and continues to be treated
for U.S. federal and state income Tax purposes as (i) a partnership (or a disregarded entity) and not as a corporation or an association
or publicly traded partnership taxable as a corporation, (ii) a Qualified REIT Subsidiary, or (iii) a Taxable REIT Subsidiary.
(e) Neither
the Company nor any Company Subsidiary holds, directly or indirectly, any asset the disposition of which would be subject to (or
to rules similar to) Section 1374 of the Code.
(f) (i)
There are no disputes, audits, examination, investigations or proceedings pending (or threatened in writing), or claims asserted,
for and/or in respect of any material Taxes or material Tax Returns of the Company or any Company Subsidiary and neither the Company
nor any Company Subsidiary is a party to any litigation or administrative proceeding relating to Taxes; (ii) no deficiency for
Taxes of the Company or any Company Subsidiary has been claimed, proposed or assessed in writing or, to the knowledge of the Company,
threatened, by any Governmental Authority, which deficiency has not yet been settled, except for such deficiencies which are being
contested in good faith or with respect to which the failure to pay, individually or in the aggregate, has not had and would not
reasonably be expected to have a Company Material Adverse Effect; (iii) neither the Company nor any Company Subsidiary has extended
or waived (nor granted any extension or waiver of) the limitation period for the assessment or collection of any Tax that has not
since expired; (iv) neither the Company nor any Company Subsidiary currently is the beneficiary of any extension of time within
which to file any material Tax Return that remains unfiled; (v) neither the Company nor any Company Subsidiary has received a written
claim by any Governmental Authority in any jurisdiction where any of them does not file Tax Returns or pay any Taxes that it is
or may be subject to taxation by that jurisdiction and (vi) neither the Company nor any Company Subsidiary has entered into any
“closing agreement” as described in Section 7121 of the Code (or any corresponding or similar provision of state,
local or foreign income Tax Law).
(g) Since
the Company’s formation, (i) neither the Company nor any Company Subsidiary has incurred any liability for Taxes under
Sections 857(b), 857(f), 860(c) or 4981 of the Code; and (ii) neither the Company nor any Company Subsidiary has incurred any material
liability for any other Taxes other than (x) in the ordinary course of business or consistent with past practice, or (y) transfer
or similar Taxes arising in connection with acquisitions or dispositions of property. No event has occurred, and no condition or
circumstance exists, which presents a material risk that any material amount of Tax described in the previous sentence will be
imposed upon the Company or any Company Subsidiary.
(h) The
Company and each Company Subsidiary has complied in all material respects with all applicable Laws relating to the payment and
withholding of Taxes (including withholding of Taxes pursuant to Sections 1441, 1442, 1445, 1446, 3102 and 3402 of the Code or
similar provisions under any state and foreign Laws) and have duly and timely withheld and, in each case, have paid over to the
appropriate Governmental Authorities any and all material amounts required to be so withheld and paid over on or prior to the due
date thereof under all applicable Laws.
(i) There
are no Company Tax Protection Agreements currently in force, and no Person has raised, or to the knowledge of the Company threatened
to raise, a material claim against the Company or any Company Subsidiary for any breach of any Company Tax Protection Agreement
and none of the transactions contemplated by this Agreement will give rise to any liability or obligation to make any payment under
any Company Tax Protection Agreement. As used herein, “Company Tax Protection Agreements” means any agreement
to which the Company or any Company Subsidiary is a party and pursuant to which (i) any liability to any direct or indirect holder
of partnership units of the Company Operating Partnership or any other partnership interest in any Company Subsidiary Partnership
(“Relevant Company Partnership Interest”) relating to Taxes may arise, whether or not as a result of the consummation
of the transactions contemplated by this Agreement; (ii) in connection with the deferral of income Taxes of a direct or indirect
holder of a Relevant Company Partnership Interest, a party to such agreement has agreed to (A) maintain a minimum level of debt
or continue a particular debt, (B) retain or not dispose of assets for a period of time that has not since expired, (C) make or
refrain from making Tax elections, (D) operate (or refrain from operating) in a particular manner, (E) use (or refrain from using)
a specified method of taking into account book-tax disparities under Section 704(c) of the Code with respect to one or more
assets of such party or any of its direct or indirect subsidiaries, (F) use (or refrain from using) a particular method for allocating
one or more liabilities of such party or any of its direct or indirect subsidiaries under Section 752 of the Code and/or (G)
only dispose of assets in a particular manner; (iii) any Person has been or is required to be given the opportunity to guaranty,
indemnify or assume debt of such Company Subsidiary Partnership or any direct or indirect subsidiary of such Company Subsidiary
Partnership or are so guarantying or indemnifying, or have so assumed, such debt; and/or (iv) any other agreement that would require
any Company Subsidiary Partnership or the general partner, manager, managing member or other similarly-situated Person of such
Company Subsidiary Partnership or any direct or indirect subsidiary of such Company Subsidiary Partnership to consider separately
the interests of the limited partners, members or other beneficial owners of such Company Subsidiary Partnership or the holder
of interests in such Company Subsidiary Partnership in connection with any transaction or other action. As used herein, “Company
Subsidiary Partnership” means a Company Subsidiary or Other Company Subsidiary that is a partnership for U.S. federal
income tax purposes.
(j) There
are no material Tax Liens upon any property or assets of the Company or any Company Subsidiary except Liens for Taxes not yet due
and payable or that are being contested in good faith by appropriate proceedings and for which adequate reserves have been established
in accordance with GAAP.
(k) Neither
the Company nor any Company Subsidiary has requested, has received or is subject to any written ruling of a Governmental Authority
or has entered into any written agreement with a Governmental Authority with respect to any Taxes.
(l) There
are no Tax allocation or sharing agreements or similar arrangements with respect to or involving the Company or any Company Subsidiary,
and after the Closing Date neither the Company nor any Company Subsidiary shall be bound by any such Tax allocation agreements
or similar arrangements or have any liability thereunder for amounts due in respect of periods prior to the Closing Date, in each
case, other than customary provisions of commercial or credit agreements and Company Tax Protection Agreements.
(m) Neither
the Company nor any Company Subsidiary (A) has been a member of an affiliated group filing a consolidated U.S. federal income Tax
Return or (B) has any liability for the Taxes of any Person (other than the Company or any Company Subsidiary) under Treasury
Regulations Section 1.1502-6 (or any similar provision of state, local, or foreign law), as a transferee or successor, or
otherwise.
(n) Neither
the Company nor any Company Subsidiary has participated in any “listed transaction” within the meaning of Treasury
Regulations Section 1.6011-4(b)(2).
(o) Neither
the Company nor any Company Subsidiary (other than Taxable REIT Subsidiaries) has or has had any earnings and profits attributable
to such entity or any other corporation in any non-REIT year within the meaning of Section 857 of the Code.
(p) The
Company is not aware of any fact or circumstance that could reasonably be expected to prevent the Merger from qualifying as a reorganization
within the meaning of Section 368(a) of the Code.
(q) Neither
the Company nor any of the Company Subsidiaries has constituted either a “distributing corporation” or a “controlled
corporation” (within the meaning of Section 355(a) of the Code) in a distribution of stock qualifying for tax-free treatment
under Section 355 of the Code in the two (2) years prior to the date of this Agreement.
Section 4.18 Insurance.
Except as has not had, and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse
Effect, the insurance policies (including title insurance policies, fidelity bonds or other insurance service contracts) covering
the Company Properties (the “Company Insurance Policies”) are sufficient in order for the Company to comply
with all applicable Laws and the requirements of any Specified Company Lease. Except as individually or in the aggregate, have
not had and would not reasonably be expected to have a Company Material Adverse Effect, there is no claim for coverage by the Company
or any Company Subsidiary pending under any of the Company Insurance Policies that has been denied or disputed by the insurer.
Except as individually or in the aggregate, have not had and would not reasonably be expected to have a Company Material Adverse
Effect, all premiums payable under all Company Insurance Policies have been paid, and the Company and the Company Subsidiaries
have otherwise complied in all material respects with the terms and conditions of all the Company Insurance Policies. To the knowledge
of the Company, such Company Insurance Policies are valid and enforceable in accordance with their terms and are in full force
and effect. No written notice of cancellation or termination has been received by the Company or any Company Subsidiary with respect
to any such policy which has not been replaced on substantially similar terms prior to the date of such cancellation.
Section 4.19 Opinion
of Financial Advisor. The Company Board has received the oral opinion of Citigroup Global Markets Inc., to be confirmed in
writing, to the effect that, as of the date of such opinion and based on and subject to the assumptions, qualifications, limitations
and other matters set forth in such written opinion, the Merger Consideration to be paid to the holders of the Company Common Stock
(other than Parent and its Affiliates and Affiliates of the Company) is fair, from a financial point of view, to such holders.
Section 4.20 Takeover
Statutes. None of the Company or any Company Subsidiary is, nor at any time during the last two (2) years has been, an “interested
stockholder” of Parent as defined in Section 3-601 of the MGCL. The Company Board has (a) taken all action necessary
to render inapplicable to the Merger: (i) the provisions of Subtitle 6 of Title 3 of the MGCL, (ii) Subtitle 7 of Title 3 of the
MGCL and (iii) any other “business combination,” “control share acquisition,” “fair price,”
“moratorium” or other takeover or anti-takeover statute or similar federal or state Law; and (b) incorporated the requisite
exemptions in the Company Bylaws or by resolution of the Company Board.
Section
4.21 Vote Required. The affirmative vote of the holders of
shares of Company Common Stock entitled to cast a majority of all the votes entitled to be cast on the matter (the
“Company Stockholder Approval”) is the only vote of the holders of any class or series of shares of stock
of the Company necessary to approve the Merger, the Partnership Merger or the other transactions contemplated hereby. No vote
of the holders of any limited partnership units of the Company Operating Partnership is necessary to approve the Merger, the
Partnership Merger or the other transactions contemplated hereby.
Section 4.22 Brokers.
Except as set forth in Section 4.22 of the Company Disclosure Letter, no broker, finder or investment banker (other than
Citigroup Global Markets Inc., J.P. Morgan Securities, LLC, and RCS Capital, a division of Realty Capital Securities, LLC), in
an amount not to exceed the amount set forth in Section 4.22 of the Company Disclosure Letter pursuant to the terms of the
engagement letter between the Company and each of Citigroup Global Markets Inc. J.P. Morgan Securities, LLC, and RCS Capital, a
division of Realty Capital Securities, LLC, a true, complete and correct copy of which has been provided to Parent) is entitled
to any brokerage, finder’s or other fee or commission in connection with the Mergers based upon arrangements made by or on
behalf of the Company or any Company Subsidiary.
Section 4.23 Investment
Company Act. Neither the Company nor any Company Subsidiary is required to be registered as an investment company under the
Investment Company Act.
Section 4.24 Affiliate
Transactions. Except as set forth in Section 4.24 of the Company Disclosure Letter or in the Company SEC Filings made
through and including the date of this Agreement or as permitted by this Agreement, from January 1, 2012 through the date of this
Agreement there have been no transactions, agreements, arrangements or understandings between the Company or any Company Subsidiary,
on the one hand, and any Affiliates (other than Company Subsidiaries) of the Company or other Persons, on the other hand, that
would be required to be disclosed under Item 404 of Regulation S-K promulgated by the SEC.
Section 4.25 Advisor.
American Realty Capital Healthcare Advisors, LLC (the “Company Advisor”) is the Company’s advisor. The
Company has provided Parent with a true, correct and complete copy of each of the Third Amended and Restated Advisory Agreement,
dated as of April 7, 2014 by and among the Company, Company Operating Partnership and Company Advisor (the “Advisory Agreement”);
the Company Operating Partnership Agreement; the Listing Note Agreement (the “Listing Agreement”), dated April
7, 2014, between the Company, the Company Operating Partnership and American Realty Capital Healthcare Special Limited Partnership,
LLC (the “Special Limited Partner”); the OPP Agreement; the Investment Opportunity Allocation Agreement (the
“Allocation Agreement”), dated as of April 9, 2013 by and among the Company and American Realty Capital Healthcare
Trust II, Inc (“HCT II”); the Property Management and Leasing Agreement (the “Management Agreement”),
dated February 18, 2011, by and among the Company, the Company OP and American Realty Capital Healthcare Properties LLC. (the “Manager”)
and any amendments and extensions thereto. Prior to the Closing, the Company shall cause the Advisor and each Affiliate of the
Advisor to deliver to the Company any contracts and records in its possession or control to the extent they pertain to the business
of the Company and its Subsidiaries. Notwithstanding anything to the contrary set forth herein, between the date hereof and the
Closing, the Company shall be permitted to (x) pay compensation payable to the Company Advisor and the Manager between the date
hereof and the Closing in the ordinary course consistent with past practice (other than in connection with the transactions contemplated
hereby) in accordance with the existing Advisory Agreement and the Management Agreement and (y) make distributions permitted by
Section 6.1(c)(iii) payable in respect of the OP Units and LTIP Units in accordance with the terms of the Company Operating
Partnership Agreement and the OPP Agreement, respectively, and (z) pay fees and expenses payable to RCS Capital, a division of
Realty Capital Securities, LLC that are included in the amount set forth on Section 4.29 of the Company Disclosure Letter.
Other than payments and distributions made in accordance with the preceding sentence, and except as otherwise expressly contemplated
by this Agreement, including Section 6.8, no Company Entity shall make any payments or distributions to the Company Advisor,
the Special Limited Partner, the Healthcare Advisors Profit Plan LLC, HCT II, the Manager, or any Affiliate of the Company or of
the Company Advisor prior to the Effective Time.
Section 4.26 [Reserved]
Section 4.27 [Reserved]
Section 4.28 [Reserved]
Section 4.29 Fees
and Disbursements. Other than fees and expenses with respect to or arising from any Action in connection with the transactions
contemplated hereby, the obtainment of consents in connection with the transactions contemplated hereby, prepayment penalties,
assumption costs, defeasance costs, make whole payments or similar amounts associated with Indebtedness arising as a result of
the transactions contemplated hereby, indemnification liabilities (including any indemnification liabilities to any service provider
entitled to any indemnification from the Company or any Company Subsidiary, but excluding any indemnification liabilities incurred
in connection with any actions pursuant to which the Company Advisor or the Special Limited Partner have any obligations to indemnify
Parent), and accounting expenses, all transaction expenses incurred by the Company and any Company Subsidiary in connection with
the Mergers and the other transactions contemplated by this Agreement, including fees payable to Citigroup Global Markets Inc.,
RCS Capital, a division of Realty Capital Securities, LLC, J.P. Morgan Securities, LLC, Proskauer Rose LLP, Venable LLP and other
professional advisors, shall not exceed the amount set forth on Section 4.29 of the Company Disclosure Letter.
Section 4.30 No
Other Representations or Warranties. Except for the representations and warranties contained in Article V, the Company
and the Company Operating Partnership each acknowledges that neither Parent, any Parent Party nor any other Person on behalf of
Parent has made, and the Company and the Company Operating Partnership have not relied upon, any representation or warranty, whether
express or implied, with respect to Parent or any of the Parent Subsidiaries or their respective businesses, affairs, assets, liabilities,
financial condition, results of operations, future operating or financial results, estimates, projections, forecasts, plans or
prospects (including the reasonableness of the assumptions underlying such estimates, projections, forecasts, plans or prospects)
or with respect to the accuracy or completeness of any other information provided or made available to the Company or the Company
Operating Partnership by or on behalf of Parent.
Article V
REPRESENTATIONS AND WARRANTIES
OF PARENT AND MERGER SUB
Except (a) as set forth in the disclosure letter that has been
prepared by the Parent Parties and delivered by the Parent Parties to the Company in connection with the execution and delivery
of this Agreement (the “Parent Disclosure Letter”) (it being agreed that disclosure of any item in any Section
of the Parent Disclosure Letter with respect to any Section or subsection of this Agreement shall be deemed disclosed with respect
to any other Section or subsection of this Agreement to the extent the applicability of such disclosure is reasonably apparent,
provided that nothing in the Parent Disclosure Letter is intended to broaden the scope of any representation or warranty
of Parent or Merger Sub made herein), or (b) as disclosed in publicly available Parent SEC Filings, filed with, or furnished to,
as applicable, the SEC on or after January 1, 2013 and prior to the date of this Agreement (excluding any risk factor disclosures
contained in such documents under the heading “Risk Factors” and any disclosure of risks or other matters included
in any “forward-looking statements” disclaimer or other statements that are cautionary, predictive or forward-looking
in nature), the Parent Parties hereby jointly and severally represent and warrant to the Company that:
Section 5.1 Organization
and Qualification; Subsidiaries.
(a) Parent
is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has the requisite
organizational power and authority and any necessary governmental authorization to own, lease and, to the extent applicable, operate
its properties and to carry on its business as it is now being conducted. Parent is duly qualified or licensed to do business,
and is in good standing, in each jurisdiction where the character of the properties owned, operated or leased by it or the nature
of its business makes such qualification, licensing or good standing necessary, except for such failures to be so qualified, licensed
or in good standing that, individually or in the aggregate, have not had and would not reasonably be expected to have a Parent
Material Adverse Effect.
(b) Merger
Sub is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware
and has the requisite organizational power and authority and any necessary governmental authorization to own, lease and, to the
extent applicable, operate its properties and to carry on its business as it is now being conducted. Merger Sub is duly qualified
or licensed to do business, and is in good standing, in each jurisdiction where the character of the properties owned, operated
or leased by it or the nature of its business makes such qualification, licensing or good standing necessary, except for such failures
to be so qualified, licensed or in good standing that, individually or in the aggregate, have not had and would not reasonably
be expected to have a Parent Material Adverse Effect.
(c) Each
Parent Subsidiary (other than Merger Sub) is duly organized, validly existing and in good standing under the Laws of the jurisdiction
of its incorporation or organization, as the case may be, and has the requisite organizational power and authority and any necessary
governmental authorization to own, lease and, to the extent applicable, operate its properties and to carry on its business as
it is now being conducted, except for such failures to be so organized, in good standing or have certain power and authority that,
individually or in the aggregate, have not had and would not reasonably be expected to have a Parent Material Adverse Effect. Each
Parent Subsidiary is duly qualified or licensed to do business, and is in good standing, in each jurisdiction where the character
of the properties owned, operated or leased by it or the nature of its business makes such qualification, licensing or good standing
necessary, except for such failures to be so qualified, licensed or in good standing that, individually or in the aggregate, have
not had and would not reasonably be expected to have a Parent Material Adverse Effect.
Section 5.2 Organizational
Documents. Parent has made available to the Company complete and correct copies of (a) Parent’s charter (the “Parent
Charter”), and bylaws, as amended to date (the “Parent Bylaws”), and (b) Merger Sub’s certificate
of formation.
Section 5.3 Capital
Structure.
(a) As
of the date hereof, The authorized capital stock of Parent consists of (i) 600,000,000 shares of Parent Common Stock and (ii)
10,000,000 shares of preferred stock, par value $1.00 per share (the “Parent Preferred Stock”). At the close
of business on May 29, 2014, (A) 294,353,748 shares of Parent Common Stock were issued and outstanding (which includes 462,815
shares of restricted stock granted pursuant to the Parent Equity Plans), (B) 366 shares of Parent Common Stock were held by Parent
in its treasury, (C) no shares of Parent Preferred Stock were issued and outstanding, (D) 101,411 shares of Parent Common
Stock were reserved for issuance in respect of outstanding restricted stock units granted and deferred units issued pursuant to
the Parent Equity Plans, (E) 3,133,956 shares of Parent Common Stock were reserved for issuance upon exercise of outstanding options
to purchase Parent Common Stock granted pursuant to the Parent Equity Plans, (F) 10,424,979 shares of Parent Common Stock were
reserved for issuance pursuant to future grants or issuances under the Parent Equity Plans, (G) 24,099,658 shares of Parent Common
Stock were reserved for issuance under the Ventas, Inc. Dividend, Reinvestment and Stock Purchase Plan, and (H) 2,075,679 shares
of Parent Common Stock were reserved for issuance to holders of NHP/PMB L.P. Class A Partnership Units upon redemption. All of
the outstanding shares of Parent Common Stock are duly authorized, validly issued, fully paid and non-assessable, and all shares
of Parent Common Stock to be issued as the Stock Consideration, when so issued in accordance with the terms of this Agreement,
will be duly authorized, validly issued, fully paid and non-assessable. No class or series of capital stock of Parent is entitled
to preemptive rights. Except as disclosed in Section 5.3(a) of the Parent Disclosure Letter, there are no outstanding bonds,
debentures, notes or other indebtedness of Parent having the right to vote (or convertible into, or exchangeable for, securities
having the right to vote) on any matter on which holders of shares of Parent Common Stock may vote.
(b) All
of the Merger Sub Interests are owned by, and have always been owned by, Parent. All of the Merger Sub Interests are duly authorized
and validly issued, and are not entitled to preemptive rights. There are no outstanding bonds, debentures, notes or other indebtedness
of Merger Sub having the right to vote (or convertible into, or exchangeable for, securities having the right to vote) on any matter
on which holders of Merger Sub Interests may vote.
(c) All
of the outstanding shares of capital stock of each of the Parent Subsidiaries that is a corporation are duly authorized, validly
issued, fully paid and nonassessable. All equity interests in each of the Parent Subsidiaries that is a partnership or limited
liability company are duly authorized and validly issued. All shares of capital stock of (or other ownership interests in) each
of the Parent Subsidiaries that may be issued upon exercise of outstanding options or exchange rights are duly authorized and,
upon issuance will be validly issued, fully paid and nonassessable. Except as set forth in Section 5.3(c) of the Parent
Disclosure Letter, Parent owns, directly or indirectly, all of the issued and outstanding capital stock and other ownership interests
of each of the Parent Subsidiaries that is a Significant Subsidiary, free and clear of all encumbrances other than statutory or
other liens for Taxes or assessments which are not yet due or delinquent or the validity of which is being contested in good faith
by appropriate proceedings and for which adequate reserves are being maintained, and there are no existing options, warrants, calls,
subscriptions, convertible securities or other securities, agreements, commitments or obligations of any character relating to
the outstanding capital stock or other securities of any Parent Subsidiary or which would require any Parent Subsidiary to issue
or sell any shares of its capital stock, ownership interests or securities convertible into or exchangeable for shares of its capital
stock or ownership interests.
Section 5.4 Authority.
(a) Each
of Parent, OP Merger Sub and Merger Sub has the requisite corporate, limited liability company or limited partnership power and
authority, as applicable, to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions
contemplated by this Agreement. The execution and delivery of this Agreement by each of Parent, OP Merger Sub and Merger Sub and
the consummation by each of Parent, OP Merger Sub and Merger Sub of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate, limited partnership and limited liability company action, and no other corporate, limited
partnership or limited liability company proceedings on the part of Parent, OP Merger Sub or Merger Sub, as applicable, are necessary
to authorize this Agreement or the Mergers or to consummate the transactions contemplated hereby, subject to the filing of the
Articles of Merger with and acceptance for record of the Articles of Merger by the SDAT and the due filing of the Certificate of
Merger and Partnership Certificate of Merger with the Delaware Secretary. Parent’s board of directors (the “Parent
Board”), at a duly held meeting, has, by unanimous vote of all of the Parent Board members voting, duly and validly authorized
the execution and delivery of this Agreement and declared advisable the Merger and the other transactions contemplated hereby.
(b) This
Agreement has been duly executed and delivered by each of Parent, OP Merger Sub and Merger Sub and, assuming due authorization,
execution and delivery by the Company and the Company Operating Partnership, constitutes a legally valid and binding obligation
of each of Parent, OP Merger Sub and Merger Sub, enforceable against Parent, OP Merger Sub and Merger Sub in accordance with its
terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar
Laws affecting creditors’ rights generally and by general principles of equity (regardless of whether enforceability is considered
in a proceeding in equity or at Law).
Section 5.5 No
Conflict; Required Filings and Consents.
(a) Except
as set forth in Section 5.5(a) of the Parent Disclosure Letter, the execution and delivery of this Agreement by each of
Parent, OP Merger Sub and Merger Sub does not, and the performance of this Agreement and the consummation of the Mergers and the
other transactions contemplated hereby by each of Parent, OP Merger Sub and Merger Sub will not, (i) conflict with or violate any
provision of (A) the Parent Charter or the Parent Bylaws or Merger Sub’s certificate of formation or limited liability company
agreement or (B) any equivalent organizational or governing documents of any other Parent Subsidiary, (ii) assuming that all consents,
approvals, authorizations and permits described in Section 5.5(b) have been obtained, all filings and notifications described
in Section 5.5(b) have been made and any waiting periods thereunder have terminated or expired, conflict with or violate
any Law applicable to Parent, Merger Sub, or any Parent Subsidiary or by which any property or asset of Parent, Merger Sub, or
any Parent Subsidiary is bound, or (iii) require any consent or approval under, result in any breach of or any loss of any benefit
or material increase in any cost or obligation of Parent, or any Parent Subsidiary under, or constitute a default (or an event
which with notice or lapse of time or both would become a default) under, or give to others any right of termination, acceleration,
cancellation or payment (including disposition or similar fees) (with or without notice or the lapse of time or both) of, or give
rise to any right of purchase, first offer or forced sale under or result in the creation of a Lien on any property or asset of
Parent, Merger Sub, or any Parent Subsidiary pursuant to, any note, bond, debt instrument, indenture, contract, agreement, ground
lease, license, permit or other legally binding obligation to which Parent, Merger Sub or any Parent Subsidiary is a party, except,
as to clauses (i)(B), (ii) and (iii), respectively, for any such conflicts, violations, breaches, defaults or other occurrences
which, individually or in the aggregate, have not had and would not reasonably be expected to have a Parent Material Adverse Effect.
(b) The
execution and delivery of this Agreement by each of Parent, OP Merger Sub and Merger Sub does not, and the performance of this
Agreement by each of Parent, OP Merger Sub and Merger Sub will not, require any consent, approval, authorization or permit of,
or filing with or notification to, any Governmental Authority, except (i) the filing with the SEC of (A) the Proxy Statement and
the Form S-4 and the declaration of effectiveness of the Form S-4, and (B) such reports under, and other compliance with, the Exchange
Act (and the rules and regulations promulgated thereunder) and the Securities Act (and the rules and regulations promulgated thereunder)
as may be required in connection with this Agreement and the transactions contemplated hereby, (ii) as may be required under the
rules and regulations of the NASDAQ or the NYSE, (iii) the filing of the Articles of Merger with and the acceptance for record
of the Articles of Merger by the SDAT pursuant to the MGCL, (iv) the due filing of the Certificate of Merger and the Partnership
Certificate of Merger with the Delaware Secretary, (v) such filings and approvals as may be required by any applicable state securities
or “blue sky” Laws, (vi) such filings as may be required in connection with state and local transfer Taxes, (vii)
the filings, consents, authorizations and approvals set forth on Section 5.5(b) of the Parent Disclosure Letter (the “Required
Regulatory Approvals”) and (viii) where failure to obtain such consents, approvals, authorizations or permits, or
to make such filings or notifications, individually or in the aggregate, has not had and would not reasonably be expected to have
a Parent Material Adverse Effect.
Section 5.6 Permits;
Compliance With Law.
(a) Parent,
Merger Sub and each other Parent Subsidiary is in possession of all authorizations, licenses, permits, certificates, approvals,
variances, exemptions, orders, franchises, certifications and clearances of any Governmental Authority and accreditation and certification
agencies, bodies or other organizations, including building permits and certificates of occupancy, necessary for Parent, Merger
Sub and each other Parent Subsidiary to own, lease and, to the extent applicable, operate its properties or to carry on its respective
business substantially as it is being conducted as of the date hereof (the “Parent Permits”), and all such Parent
Permits are valid and in full force and effect, except where the failure to be in possession of, or the failure to be valid or
in full force and effect of, any of the Parent Permits, individually or in the aggregate, has not had and would not reasonably
be expected to have a Parent Material Adverse Effect. All applications required to have been filed for the renewal of Parent Permits
have been duly filed on a timely basis with the appropriate Governmental Authority, and all other filings required to have been
made with respect to such Parent Permits have been duly made on a timely basis with the appropriate Governmental Authority, except
in each case for failures to file which, individually or in the aggregate, have not had and would not reasonably be expected to
have a Parent Material Adverse Effect. Neither Parent nor any Parent Subsidiary has received any claim or notice nor has any knowledge
indicating that Parent or any Parent Subsidiary is currently not in compliance with the terms of any such Parent Permits, except
where the failure to be in compliance with the terms of any such Parent Permits, individually or in the aggregate, have not had
and would not reasonably be expected to have a Parent Material Adverse Effect.
(b) None
of Parent, Merger Sub or any other Parent Subsidiary is or has been in conflict with, or in default or violation of (i) any Law
applicable to Parent, Merger Sub or any other Parent Subsidiary or by which any property or asset of Parent, Merger Sub or any
other Parent Subsidiary is bound, or (ii) any Parent Permits, except in each case for any such conflicts, defaults or violations
that, individually or in the aggregate, have not had and would not reasonably be expected to have a Parent Material Adverse Effect.
Section 5.7 SEC
Filings; Financial Statements.
(a) Parent
has filed with, or furnished (on a publicly available basis) to, the SEC all forms, reports, schedules, statements and documents
required to be filed or furnished by it under the Securities Act or the Exchange Act, as the case may be, including any amendments
or supplements thereto, from and after January 1, 2012 (collectively, the “Parent SEC Filings”). Each Parent
SEC Filing, as amended or supplemented, if applicable, (i) as of its date, or, if amended or supplemented, as of the date of the
most recent amendment or supplement thereto, complied in all material respects with the requirements of the Securities Act or the
Exchange Act, as the case may be, and the applicable rules and regulations of the SEC thereunder, and (ii) did not, at the
time it was filed (or became effective in the case of registration statements), or, if amended or supplemented, as of the date
of the most recent amendment or supplement thereto, contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading. As of the date of this Agreement, neither Merger Sub nor any other Parent Subsidiary
is separately subject to the periodic reporting requirements of the Exchange Act.
(b) Each
of the consolidated financial statements contained or incorporated by reference in the Parent SEC Filings (as amended, supplemented
or restated, if applicable), including the related notes and schedules, was prepared (except as indicated in the notes thereto)
in accordance with GAAP applied on a consistent basis throughout the periods indicated, and each such consolidated financial statement
presented fairly, in all material respects, the consolidated financial position, results of operations, stockholders’ equity
and cash flows of Parent and its consolidated subsidiaries as of the respective dates thereof and for the respective periods indicated
therein (subject, in the case of unaudited quarterly financial statements, to normal year-end adjustments).
(c) The
records, systems, controls, data and information of Parent and the Parent Subsidiaries that are used in the system of internal
accounting controls described in the following sentence are recorded, stored, maintained and operated under means that are under
the exclusive ownership and direct control of Parent or the Parent Subsidiaries or accountants, except for any non-exclusive ownership
and non-direct control that would not reasonably be expected to have a materially adverse effect on the system of internal accounting
controls. Parent and the Parent Subsidiaries have devised and maintain a system of internal accounting controls sufficient to provide
reasonable assurances regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with GAAP, including that: (1) transactions are executed only in accordance with management’s authorization;
(2) transactions are recorded as necessary to permit preparation of the financial statements of Parent and the Parent Subsidiaries
and to maintain accountability for the assets of Parent and the Parent Subsidiaries; (3) access to such assets is permitted only
in accordance with management’s authorization; (4) the reporting of such assets is compared with existing assets at regular
intervals; and (5) accounts, notes and other receivables and inventory are recorded accurately, and proper and adequate procedures
are implemented to effect the collection thereof on a current and timely basis. Parent’s principal executive officer and
its principal financial officer have disclosed to Parent’s auditors and the audit committee of the Parent Board (i) all significant
deficiencies and material weaknesses in the design or operation of internal controls over financial reporting that are reasonably
likely to adversely affect Parent’s ability to record, process, summarize and report financial data, and (ii) any fraud,
whether or not material, that involves management or other employees who have a significant role in Parent’s internal controls,
and Parent has made available to the Company copies of any material written materials relating to the foregoing. Parent has established
and maintains disclosure controls and procedures (as such term is defined in Rule 13a-15 promulgated under the Exchange Act) designed
to ensure that material information relating to Parent required to be included in reports filed under the Exchange Act, including
its consolidated subsidiaries, is made known to Parent’s principal executive officer and its principal financial officer
by others within those entities, particularly during the periods in which the periodic reports required under the Exchange Act
are being prepared, and, to the knowledge of Parent, such disclosure controls and procedures are effective in timely alerting Parent’s
principal executive officer and its principal financial officer to material information required to be included in Parent’s
periodic reports required under the Exchange Act. Since the enactment of the Sarbanes-Oxley Act, none of Parent, Merger Sub or
any other Parent Subsidiary has made any prohibited loans to any director or executive officer of Parent (as defined in Rule 3b-7
promulgated under the Exchange Act).
(d) Except
as and to the extent disclosed or reserved against on Parent’s most recent balance sheet (or, in the notes thereto) included
in the Parent SEC Filings, none of Parent or its consolidated subsidiaries has any liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise), except for liabilities or obligations (i) expressly contemplated by or under this
Agreement, including Section 6.2 hereof, (ii) incurred in the ordinary course of business consistent with past practice
since the most recent balance sheet set forth in the Parent SEC Filings made through and including the date of this Agreement,
(iii) described in any section of the Parent Disclosure Letter or (iv) that, individually or in the aggregate, have not had and
would not reasonably be expected to have a Parent Material Adverse Effect.
(e) Except
as set forth in Section 5.7(e) of the Parent Disclosure Letter, to the knowledge of Parent, none of the Parent SEC Filings
is as of the date hereof the subject of ongoing SEC review and Parent has not received any comments from the SEC with respect to
any of the Parent SEC Filings which remains unresolved, nor has it received any inquiry or information request from the SEC as
of the date hereof as to any matters affecting Parent which has not been adequately addressed. None of the Parent SEC Filings as
of the date hereof is the subject of any confidential treatment request by Parent.
Section 5.8 Disclosure
Documents.
(a) None
of the information supplied or to be supplied in writing by or on behalf of Parent, Merger Sub or any other Parent Subsidiary for
inclusion or incorporation by reference in (i) the Form S-4 will, at the time such document is filed with the SEC, at any time
such document is amended or supplemented or at the time such document is declared effective by the SEC, contain any untrue statement
of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein
not misleading, or (ii) the Proxy Statement will, at the date it is first mailed to the stockholders of the Company, at the
time of the Company Stockholder Meeting, at the time the Form S-4 is declared effective by the SEC or at the Effective Time, contain
any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were made, not misleading. All documents that Parent is responsible
for filing with the SEC in connection with the transactions contemplated herein, to the extent relating to Parent or any Parent
Subsidiary or other information supplied by or on behalf of Parent or any Parent Subsidiary for inclusion therein, will comply
as to form, in all material respects, with the provisions of the Securities Act or Exchange Act, as applicable and the rules and
regulations of the SEC thereunder and each such document required to be filed with any Governmental Authority (other than the SEC)
will comply in all material respects with the provisions of any applicable Law as to the information required to be contained therein.
(b) Notwithstanding
anything to the contrary in this Section 5.8 or this Agreement, neither Parent nor Merger Sub makes any representation or
warranty with respect to statements made or incorporated, or omissions included, in the Form S-4 or the Proxy Statement to the
extent based upon information supplied to Parent by or on behalf of the Company.
Section 5.9 Absence
of Certain Changes or Events. Between December 31, 2013 and the date hereof, except as contemplated by this Agreement or set
forth on Section 5.9 of the Parent Disclosure Letter, Parent, Merger Sub and each other Parent Subsidiary has conducted
its business in all material respects in the ordinary course. Between December 31, 2013 and the date hereof, there has not been
any Parent Material Adverse Effect or any effect, event, development or circumstance that, individually or in the aggregate with
all other effects, events, developments and changes, would reasonably be expected to result in a Parent Material Adverse Effect.
Section 5.10 Litigation.
Except as, individually or in the aggregate, have not had and would not reasonably be expected to have a Parent Material Adverse
Effect or as set forth in Section 5.10 of the Parent Disclosure Letter, (a) there is no Action pending or, to the knowledge
of Parent, threatened, nor, to the knowledge of Parent, is there any investigation pending or threatened by any Governmental Authority,
in each case, against Parent, Merger Sub or any other Parent Subsidiary, and (b) none of Parent, Merger Sub or any other Parent
Subsidiary, nor any of Parent or any Parent Subsidiary’s respective property, is subject to any outstanding judgment, order,
writ, injunction or decree of any Governmental Authority.
Section 5.11 Taxes.
Except as expressly set forth in Section 5.11 of the Parent Disclosure Letter:
(a) Parent
and each Parent Subsidiary has (i) duly and timely filed (or there have been filed on their behalf) with the appropriate Governmental
Authority all U.S. federal and all other Tax Returns required to be filed by them, taking into account any extensions of time within
which to file such Tax Returns, and all such Tax Returns were and are true, correct and complete in all respects, and (ii) duly
and timely paid in full (or there has been duly and timely paid in full on their behalf), or made adequate provision for, all amounts
of Taxes required to be paid by them, whether or not shown (or required to be shown) on any Tax Return, except, in each case, as
has not had and would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect.
(b) Parent
(i) for all of its taxable years commencing with Parent’s initial taxable year that ended on December 31, 1999 and through
and including its taxable year ended December 31, 2013 has been subject to taxation as a REIT and has satisfied all requirements
to qualify as a REIT, and has so qualified, for U.S. federal Tax purposes for all such taxable years; (ii) has operated since January
1, 2014 to the date hereof in such a manner so as to qualify as a REIT for U.S. federal Tax purposes; (iii) intends to continue
to operate (including with regard to the REIT distribution requirements in the taxable year that includes the Closing Date) in
such a manner so as to qualify as a REIT for its taxable year that will end December 31 of the year that includes the Merger (and
consummation thereof); and (iv) has not taken or omitted to take any action that would reasonably be expected to result in a challenge
by the IRS or any other Governmental Authority to its status as a REIT, and no such challenge is pending or, to Parent’s
knowledge, threatened.
(c) Neither
Parent nor any Parent Subsidiary has participated in any “listed transaction” within the meaning of Treasury Regulations
Section 1.6011-4(b)(2).
(d) Parent
is not aware of any fact or circumstance that could reasonably be expected to prevent the Merger from qualifying as a reorganization
within the meaning of Section 368(a) of the Code.
Section 5.12 Vote
Required. No vote of the holders of Parent Common Stock is required to approve this Agreement or the transactions contemplated
hereby.
Section 5.13 Brokers.
No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with
the Mergers based upon arrangements made by or on behalf of Parent, Merger Sub or any other Parent Subsidiary, other than Centerview
Partners, LLC and any other brokerage, finder or investment banker the fees or commissions of which shall be paid by Parent, Merger
Sub or another Parent Subsidiary.
Section 5.14 Investment
Company Act. None of Parent, Merger Sub or any other Parent Subsidiary is required to be registered as an investment company
under the Investment Company Act.
Section 5.15 Sufficient
Funds. At the Effective Time, Parent will have available, and Parent will provide Merger Sub with sufficient cash or lines
of credit available to pay (i) the Cash Consideration, (ii) any cash in lieu of fractional shares of Parent Common Stock pursuant
to Section 3.14 and (iii) any and all other amounts required to be paid in connection with the consummation of the transactions
contemplated by this Agreement, including the Mergers, and any related fees and expenses.
Section 5.16 Ownership
of Merger Sub; No Prior Activities.
(a) Merger
Sub was formed solely for the purpose of engaging in the transactions contemplated by this Agreement. All of the interests of Merger
Sub are owned directly by Parent.
(b) Except
for the obligations or liabilities incurred in connection with its organization and the transactions contemplated by this Agreement,
Merger Sub has not, and will not have prior to the Effective Time, incurred, directly or indirectly through any subsidiary or Affiliate,
any obligations or liabilities or engaged in any business activities of any type or kind whatsoever or entered into any agreements
or arrangements with any Person.
Section 5.17 Takeover
Statutes. None of Parent, Merger Sub or any other Parent Subsidiary is, nor at any time during the last two (2) years has been,
an “interested stockholder” of the Company as defined in Section 3-601 of the MGCL.
Section 5.18 Material
Contracts. All Parent Material Contracts have been filed as exhibits to the most recent Annual Report on Form 10-K and Quarterly
Reports on Form 10-Q and Current Reports on Form 8-K subsequent thereto filed by Parent as of the date of this Agreement. Each
Parent Material Contract is in full force and effect and is valid, binding and enforceable against Parent and/or any Parent Subsidiary
party thereto, and, to the knowledge of Parent, each other party thereto in accordance with its terms, except for such failures
to be in such full force and effect or to be valid, binding and enforceable as are not reasonably likely to have, individually
or in the aggregate, a Parent Material Adverse Effect. None of Parent or any Parent Subsidiary, nor, to the knowledge of Parent,
any other party thereto, is in material breach or violation of, or default under, any Parent Material Contract, and no event has
occurred that with notice or lapse of time or both would constitute a violation, breach or default under any Parent Material Contract,
except where in each case such breach, violation or default is not reasonably likely to have, individually or in the aggregate,
a Parent Material Adverse Effect. Except as would not reasonably be expected to have, individually or in the aggregate, a Parent
Material Adverse Effect, none of Parent or any Parent Subsidiary has received any written notice of an event of default pursuant
to the terms of any Parent Material Contract.
Section 5.19 No
Other Representations or Warranties. Except for the representations and warranties contained in Article IV, each of
Parent, OP Merger Sub and Merger Sub acknowledge that neither the Company, the Company Operating Partnership nor any other Person
on behalf of the Company or the Company Operating Partnership has made, and none of Parent, OP Merger Sub or Merger Sub has relied
upon, any representation or warranty, whether express or implied, with respect to the Company or any of the Company Subsidiaries
or their respective businesses, affairs, assets, liabilities, financial condition, results of operations, future operating or financial
results, estimates, projections, forecasts, plans or prospects (including the reasonableness of the assumptions underlying such
estimates, projections, forecasts, plans or prospects) or with respect to the accuracy or completeness of any other information
provided or made available to Parent, OP Merger Sub or Merger Sub by or on behalf of the Company or the Company Operating Partnership.
Article VI
COVENANTS AND AGREEMENTS
Section 6.1 Conduct
of Business by the Company.
(a) The
Company and the Company Operating Partnership each covenants and agrees that, between the date of this Agreement and the earlier
to occur of the Effective Time and the date, if any, on which this Agreement is terminated pursuant to Section 8.1 (the
“Interim Period”), except to the extent required by Law, as may be agreed in writing by Parent (which consent
shall not be unreasonably withheld, delayed or conditioned), as may be expressly required or permitted pursuant to this Agreement,
or as set forth in Section 6.1(a) or Section 6.1(c) of the Company Disclosure Letter, the Company shall, and shall
cause each of the other Company Entities to, (i) conduct its business in all material respects in the ordinary course and in a
manner consistent with past practice (including performance of its obligations under each of the categories of Contracts described
in Section 6.1(c)(xxii)), and (ii) use its reasonable best efforts to maintain its material assets and properties in their
current condition (normal wear and tear and damage caused by casualty or by any reason outside of the Company’s or the Company
Subsidiaries’ control excepted), preserve intact in all material respects its current business organization, goodwill, ongoing
businesses and relationships with third parties, keep available the services of its present officers, maintain all Company Insurance
Policies, and maintain the status of the Company as a REIT. The consent of Parent shall be deemed to have been given for purposes
of this Section 6.1(a) and Section 6.1(c) if Parent does not object in writing within five (5) Business Days from
the date on which the written request for such consent is provided by the Company to Parent.
(b) The
Company shall (i) use its commercially reasonable efforts to obtain the opinions of counsel referred to Section 7.2(e) and
Section 7.3(f), (ii) deliver to Proskauer Rose LLP and Wachtell, Lipton, Rosen & Katz an officer’s certificate,
dated as of the effective date of the Form S-4 and the Closing Date, respectively, and signed by an officer of the Company, containing
representations of the Company as shall be reasonably necessary or appropriate to enable Wachtell, Lipton, Rosen & Katz and
Proskauer Rose LLP to render the opinions described in Section 7.2(f) and Section 7.3(f), respectively, on the effective
date of the Form S-4, satisfying the requirements of Item 601 of Regulation S-K under the Securities Act, and on the Closing Date,
(a “Company Tax Representation Letter”) and (iii) deliver to Proskauer Rose LLP an officer’s certificate,
dated as of the Closing Date, signed by an officer of the Company and the Company Operating Partnership and in form and substance
reasonably satisfactory to Parent, containing representations of the Company and the Company Operating Partnership (x) as shall
be reasonably necessary or appropriate to enable Proskauer Rose LLP to render the opinion described in Section 7.2(e) on
the Closing Date and (y) which reflect reasonable due inquiry with the assistance of nationally recognized tax counsel and/or a
“Big Four” accounting firm.
(c) Without
limiting the foregoing, the Company covenants and agrees that, during the Interim Period, except to the extent required by Law,
as may be consented to in writing by Parent (which consent shall not be unreasonably withheld, delayed or conditioned), as may
be expressly required or permitted pursuant to this Agreement, or as set forth in Section 6.1(a), 6.1(c) or 6.1(e)
of the Company Disclosure Letter, the Company shall not, and shall not cause or permit any other Company Entity to, do any of the
following:
(i) amend
or propose to amend the Company Charter or Company Bylaws (or such equivalent organizational or governing documents of any Company
Subsidiary), waive the stock ownership limit under the Company Charter or create an Excepted Holder Limit (as defined in the Company
Charter);
(ii) split,
combine, reclassify or subdivide any shares of stock or other equity securities or ownership interests of the Company or any Company
Subsidiary (other than any wholly-owned Company Subsidiary);
(iii) declare,
set aside or pay any dividend on or make any other distributions (whether in cash, stock, property or otherwise) with respect to
shares of capital stock of the Company or any Company Subsidiary or other equity securities or ownership interests in the Company
or any Company Subsidiary, except for (A) the declaration and payment by the Company of monthly dividends in accordance with past
practice at a rate not to exceed an annualized rate of $0.68 per share of Company Common Stock, (B) the declaration and payment
by the Operating Partnership of regular monthly distributions per OP Unit and LTIP Unit in the same amount as the dividend per
share of Company Common Stock permitted pursuant to clause (A) above (it being understood that, pursuant to Section 5.02(a)(i)
of the Company Operating Partnership Agreement as in effect on the date hereof, in the case of distributions on LTIP Units, the
amount to be distributed shall be only ten percent (10%) of such permissible dividend per share amount, and it being further understood
that no distributions or payments shall be made in respect of LTIP Units at any time following the date hereof other than as set
forth in this parenthetical, and that no distributions or payments shall be made in respect of LTIP Units as of and following termination
of the OPP Agreement in accordance with Section 3.10(b)), (C) the declaration and payment of dividends or other distributions
to the Company by any directly or indirectly wholly owned Company Subsidiary, (D) distributions by any Company Subsidiary
that is not wholly owned, directly or indirectly, by the Company, in accordance with the requirements of the organizational documents
of such Company Subsidiary, and (E) dividend equivalents accrued or paid with respect to the Company Restricted Shares (to the
extent permitted under the terms of the applicable award agreement); provided, however, that, notwithstanding the
restriction on dividends and other distributions in this Section 6.1(c)(iii), and subject to Section 6.18, the Company
and any Company Subsidiary shall be permitted to make distributions, including under Sections 857, 858 or 860 of the Code, reasonably
necessary for the Company to maintain its status as a REIT under the Code or avoid or reduce the imposition of any entity level
income or excise Tax under the Code;
(iv) redeem,
repurchase or otherwise acquire, directly or indirectly, any shares of its capital stock or other equity interests of the Company
or a Company Subsidiary, other than (A) the withholding of shares of Company Common Stock to satisfy withholding Tax obligations
with respect to awards granted pursuant to the Company Equity Plans, including the vesting of Company Restricted Shares or (B)
pursuant to Section 5.7 of the Company Charter;
(v) except
(A) for issuances by a wholly owned Company Subsidiary to the Company or another wholly owned Company Subsidiary, or (B) as otherwise
contemplated in Section 6.1(c)(vi), issue, sell, pledge, dispose, encumber or grant any shares of the Company’s or
any of the Company Subsidiaries’ capital stock, or any options, warrants, convertible securities or other rights of any kind
to acquire any shares of the Company’s or any of the Company Subsidiaries’ capital stock or other equity interests;
(vi) except
as set forth on Section 6.1(c)(vi) of the Company Disclosure Letter, grant, confer, award, or modify the terms of any Company
Restricted Shares or LTIP Units (except as set forth in Section 3.10(b)), convertible securities, or other rights to acquire, or
denominated in, any of the Company’s or any of the Company Subsidiaries’ capital stock or other equity securities or
amend or modify the Company Equity Plans (except as set forth in Section 3.10(b));
(vii) acquire
or agree to acquire (including by merger, consolidation or acquisition of stock or assets) any real property, personal property
(other than personal property at a total cost of less than $500,000 in the aggregate), corporation, partnership, limited liability
company, other business organization or any division or material amount of assets thereof, except (A) acquisitions by the Company
or any wholly owned Company Subsidiary of or from an existing wholly owned Company Subsidiary, or (B) except as permitted or required
under Section 6.1(e);
(viii) sell,
pledge, lease, assign, transfer, dispose of or encumber, or effect a deed in lieu of foreclosure with respect to, any property
or assets, except for involuntary liens arising by operation of law that would not be material to any Company Property or any assets
of the Company or any Company Subsidiary;
(ix) other
than (A) amending loan agreements as contemplated or necessary to comply with Section 6.19 hereof (provided that such amendments
are in form and substance reasonably acceptable to Parent) or (B) the assumption of Indebtedness as a result of the consummation
of the acquisitions contemplated by Section 6.1(e) hereof (it being understood that the Company and the Company Subsidiaries
shall use reasonable best efforts in connection with such assumption to obtain any required Lender Consent in respect of such Indebtedness),
incur, create, assume, refinance, replace or prepay any Indebtedness for borrowed money or issue or amend the terms of any Indebtedness
for borrowed money of the Company or any of the Company Subsidiaries or assume, guarantee or endorse, or otherwise become responsible
(whether directly, contingently or otherwise) for the Indebtedness of any other Person (other than a wholly owned Company Subsidiary),
except Indebtedness incurred under the revolving facility of the Company Credit Agreement in the ordinary course of business consistent
with past practice in an aggregate amount not to exceed $1,500,000 for general corporate purposes and such additional amounts as
may be necessary to consummate the acquisitions of real property pursuant to Section 6.1(e) and the payment of dividends
or other distributions pursuant to Section 6.1(c)(iii) of the Company Disclosure Letter;
(x) make
any loans, advances or capital contributions to, or investments in, any other Person (including to any of its officers, directors,
employees, Affiliates, agents or consultants), make any change in its existing borrowing or lending arrangements for or on behalf
of such Persons, or enter into any “keep well” or similar agreement to maintain the financial condition of another
entity, other than (A) by the Company or a wholly owned Company Subsidiary to the Company or a wholly owned Company Subsidiary,
and (B) loans or advances required to be made under any of the Company Leases or ground lease pursuant to which any third party
is a lessee or sublessee on any Company Property;
(xi) enter
into, renew, modify, amend or terminate, or waive, release, compromise or assign any rights or claims under, any Company Material
Contract (or any Contract that, if existing as of the date hereof, would be a Company Material Contract), other than (A) any termination
or renewal in accordance with the terms of any existing Company Material Contract that occurs automatically without any action
by the Company or any Company Subsidiary, (B) the entry into any Lender Consent or (C) as may be reasonably necessary to comply
with the terms of this Agreement, provided that the terms are reasonably acceptable to Parent;
(xii) except
as set forth in Section 6.1(c)(xii) of the Company Disclosure Letter, enter into, renew, modify, amend or terminate, or
waive, release, compromise or assign any rights or claims under, any Company Lease (or any lease for real property that, if existing
as of the date hereof, would be a Company Lease), except for (A) entering into any new lease or renewing any Company Lease
in the ordinary course of business consistent with past practice on market terms and where the aggregate annual payments under
any such new lease or Company Lease are less than $500,000, or (B) terminating any Company Lease as a result of a default by the
counterparty to such Company Lease (in accordance with the terms of such Company Lease and subject to any applicable cure period
therein);
(xiii) waive,
release, assign any material rights or claims or make any payment, direct or indirect, of any liability of the Company or any Company
Subsidiary before the same comes due in accordance with its terms, other than in the ordinary course of business consistent with
past practice;
(xiv) settle
or compromise (A) any legal action, suit, investigation, arbitration or proceeding, in each case made or pending against the Company
or any of the Company Subsidiaries (other than settlements providing solely for the payment of money damages to the extent not
exceeding, individually or in the aggregate, $100,000 that does not involve the imposition of injunctive or equitable relief against
the Company or any Company Subsidiary or an admission of liability or wrongdoing), or (B) any legal action, suit or proceeding
involving any present, former or purported holder or group of holders of the Company Common Stock other than in accordance with
Section 6.7;
(xv) except
as required pursuant to Section 3.10, Section 4.29, Section 6.8, and Section 6.16 (A) hire, pay any
compensation to, or terminate any officer, director (other than payments to directors consistent with past practice), consultant,
advisor or employee of the Company or any Company Subsidiary or promote or appoint any Person to a position of executive officer
or director of the Company or any Company Subsidiary, in each case, other than payments required pursuant to the terms of the Advisory
Agreement as in effect on the date hereof, (B) increase, or accelerate the vesting or payment of, compensation or other benefits
payable or provided to the Company’s directors, executive officers, consultants (including, for the avoidance of doubt, the
Company Advisor) or employees, or (C) enter into, amend or adopt any Benefit Plan;
(xvi) fail
to maintain all financial books and records in all material respects in accordance with GAAP (or any interpretation thereof) or
make any material change to its methods of accounting in effect at December 31, 2013, except as required by a change in GAAP (or
any interpretation thereof) or in applicable Law, or make any change with respect to accounting policies, unless required by GAAP
or the SEC;
(xvii) enter
into any new line of business;
(xviii) fail
to duly and timely file all material reports and other material documents required to be filed with NASDAQ, the SEC, or any other
Governmental Authority, subject to extensions permitted by Law or applicable rules and regulations;
(xix) except
as set forth in Section 6.1(c)(xix) of the Company Disclosure Letter, take any action, or fail to take any action, which
action or failure would reasonably be expected to cause (A) the Company to fail to qualify as a REIT or (B) any Company Subsidiary
(1) to cease to be treated as any of (x) a partnership or disregarded entity for U.S. federal income tax purposes or (y) a
Qualified REIT Subsidiary or a Taxable REIT Subsidiary under the applicable provisions of Section 856 of the Code, as the
case may be or (2) that is not treated as a Taxable REIT Subsidiary under the applicable provisions of Section 856 of the
Code as the date hereof to be so treated;
(xx) adopt
a plan of merger, complete or partial liquidation or resolutions providing for or authorizing such merger, liquidation or a dissolution,
consolidation, recapitalization or bankruptcy reorganization, except by a Company Subsidiary in connection with any acquisitions
permitted pursuant to Section 6.1(e) in a manner that would not reasonably be expected to be adverse to the Company or to
prevent or impair the ability of the Company to consummate the Mergers;
(xxi) form
any new funds, joint ventures or non-traded real estate investment trusts or other pooled investment vehicles;
(xxii) take
any action to cause the termination or amendment or waiver of any provision of any advisory Contract, property management Contract,
dealer manager agreement, soliciting dealer agreement (including, in each case, related addendums) or similar Contract to which
the Company or any Company Subsidiary is a party;
(xxiii) amend
or modify the compensation terms or any other obligations of the Company contained in the engagement letter with each of Citigroup
Global Markets Inc., J.P. Morgan Securities, LLC, and RCS Capital, a division of Realty Capital Securities, LLC in a manner adverse
to the Company, any Company Subsidiary or Parent or engage other financial advisers in connection with the transactions contemplated
by this Agreement;
(xxiv) except
as set forth in Section 6.1(c)(xxiv) of the Company Disclosure Letter, make, change or rescind any election relating to
Taxes, change a material method of Tax accounting, amend any material Tax Return, settle or compromise any material federal, state,
local or foreign income Tax liability, audit, claim or assessment, enter into any material closing agreement related to Taxes,
or surrender any right to claim a material refund of Taxes, except in each case as necessary or appropriate to (x) preserve the
Company’s qualification as a REIT under the Code or (y) qualify or preserve the status of any Company Subsidiary as a disregarded
entity or partnership for U.S. federal income tax purposes or as a Qualified REIT Subsidiary or a Taxable REIT Subsidiary or a
REIT under the applicable provisions of Section 856 of the Code; or
(xxv) authorize,
or enter into any contract, agreement, commitment or arrangement to do any of the foregoing.
(d) Notwithstanding
anything to the contrary set forth in this Agreement, nothing in this Agreement shall prohibit the Company from taking any action
(i) at any time or from time to time, that in the reasonable judgment of the Company Board, upon advice of counsel to the Company,
is reasonably necessary for the Company to avoid incurring entity level income or excise Taxes under the Code or to maintain its
qualification as a REIT under the Code for any period or portion thereof ending on or prior to the Effective Time, including making
dividend or other distribution payments to stockholders of the Company in accordance with this Agreement or otherwise, or (ii)
with the prior written consent of Parent (which consent shall not be unreasonably withheld, delayed or conditioned), as is reasonably
necessary to minimize the risk that the gross income of the Company and the Company Operating Partnership does not qualify as gross
income under Section 856(c)(2) and/or Section 856(c)(3) of the Code.
(e) The
Company has caused the transfer and assignment to the Company or a Company Entity of all of the rights, interests and obligations
of each Affiliate of the Company or other acquiring party that is not a Company Entity in each of the letters of intent or purchase
and sale agreements listed on Section 6.1(e) of the Company Disclosure Letter, and in the event that any such transfer or
assignment has not been properly completed as of the date hereof, the Company shall as promptly as practicable (and in any event
prior to the Closing) effect such transfer or assignment. The Company shall, and shall cause each of the Company Entities and the
Company’s Affiliates or other acquiring party (on behalf of the Company Entities) to (a) if requested or consented to by
Parent, use reasonable best efforts to negotiate and execute purchase and sale agreements in the name of the Company or, if requested
by Parent, a Subsidiary of the Company, generally reflecting the terms of the letters of intent listed on Section 6.1(e)
of the Company Disclosure Letter and other customary or reasonable provisions which are agreed upon on the basis of an arm’s
length negotiation in consultation with Parent, and (b) use commercially reasonable efforts to take all actions within its and
their control reasonably necessary to consummate the closing of the transactions contemplated by the purchase and sale agreements
listed on Section 6.1(e) of the Company Disclosure Letter pursuant to the terms of such purchase and sale agreements; provided,
however, that in the case of clause (a), the Company, the Company Entities and the Company’s Affiliates will not enter
into any definitive agreement or otherwise become subject to any binding obligation in connection with such letters of intent or
purchase and sale agreements without Parent’s prior written consent (it being agreed that Parent will not unreasonably delay
its decision as to whether to grant such consent upon request).
(f) If
requested by Parent at least forty-five (45) days prior to the anticipated Closing Date, the Company shall dispose of the properties
listed in Section 6.1(f) of the Company Disclosure Letter without any continuing obligations or liabilities of any Company
Entity with respect thereto, for no less than $40 million in cash.
Section 6.2 Conduct
of Business by Parent and Merger Sub.
(a) The
Parent Parties shall (i) use their commercially reasonable efforts to obtain the opinions of counsel referred to in Section
7.3(e) and Section 7.2(f), (ii) deliver to Wachtell, Lipton, Rosen & Katz and Proskauer Rose LLP an officer’s
certificate, dated as of the effective date of the Form S-4 and the Closing Date, respectively, and signed by an officer of Parent,
containing representations of Parent as shall be reasonably necessary or appropriate to enable Wachtell, Lipton, Rosen & Katz
and Proskauer Rose LLP to render the opinion described in Section 7.2(f) and Section 7.3(f), respectively, on the
effective date of the Form S-4, satisfying the requirements of Item 601 of Regulation S-K under the Securities Act, and on the
Closing Date (a “Parent Tax Representation Letter”), and (iii) deliver to Parent REIT Counsel (as defined
below) an officer’s certificate, dated as of the effective Date of the Form S-4 and the Closing Date, respectively, and signed
by an officer of Parent, containing representations of Parent as shall be reasonably necessary or appropriate to enable Parent
REIT Counsel (as defined below) to render the opinion described in Section 7.3(e) on the effective date of the Form
S-4, satisfying the requirements of Item 601 of Regulation S-K under the Securities Act, and on the Closing Date.
(b) Without
limiting the foregoing, each Parent Party covenants and agrees that, during the Interim Period, except to the extent required by
Law, as may be consented to in writing by the Company (which consent shall not be unreasonably withheld, delayed or conditioned),
as may be expressly required or permitted pursuant to this Agreement, or as set forth in Section 6.2(b) of the Parent Disclosure
Letter, the Parent Parties shall not, and shall not cause or permit any of the other Parent Entities to, do any of the following:
(i) Amend
the Parent Charter or Parent Bylaws in a manner that would adversely affect the economic benefits of the Mergers to the holders
of Company Common Stock;
(ii) split,
combine, reclassify or subdivide any shares of stock or other equity securities or ownership interests of Parent, Merger Sub or
OP Merger Sub;
(iii) adopt
a plan of complete or partial liquidation or resolutions providing for or authorizing such liquidation or a dissolution, consolidation,
recapitalization or bankruptcy reorganization;
(iv) take
any action, or fail to take any action, which action or failure would reasonably be expected to cause (A) Parent to fail to qualify
as a REIT or (B) any Parent Subsidiary (1) to cease to be treated as any of (x) a partnership or disregarded entity for U.S. federal
income tax purposes or (y) a Qualified REIT Subsidiary or a Taxable REIT Subsidiary under the applicable provisions of Section
856 of the Code, as the case may be or (2) that is not treated as a Taxable REIT Subsidiary under the applicable provisions of
Section 856 of the Code as of the date hereof to be so treated; or
(v) authorize,
or enter into any contract, agreement, commitment or arrangement to do any of the foregoing.
(c) Notwithstanding
anything to the contrary set forth in this Agreement, nothing in this Agreement shall prohibit Parent from taking any action, at
any time or from time to time, that in the reasonable judgment of the Parent Board, upon advice of counsel to Parent, is reasonably
necessary for Parent to continue to avoid incurring entity level income or excise Taxes under the Code or to maintain its qualification
as a REIT under the Code, including making dividend or other distribution payments to stockholders of Parent in accordance with
this Agreement or otherwise.
Section 6.3 Preparation
of Form S-4 and Proxy Statement; Stockholder Meeting.
(a) As
promptly as reasonably practicable following the date of this Agreement, (i) the Company and Parent shall jointly prepare and cause
to be filed with the SEC the Form S-4, which will include the Proxy Statement as a prospectus. Each of the Company and Parent shall
use its reasonable best efforts to (x) have the Form S-4 declared effective under the Securities Act as promptly as practicable
after such filing, (y) ensure that the Form S-4 complies in all material respects with the applicable provisions of the Exchange
Act and the Securities Act, and (z) keep the Form S-4 effective for so long as necessary to complete the Mergers. Each of the Company
and Parent shall furnish all information concerning itself, its Affiliates and the holders of its capital stock to the other and
provide such other assistance as may be reasonably requested in connection with the preparation, filing and distribution of the
Form S-4 and Proxy Statement. The Form S-4 and Proxy Statement shall include all information reasonably requested by such other
party to be included therein. Each of the Company and Parent shall promptly notify the other upon the receipt of any comments from
the SEC or any request from the SEC for amendments or supplements to the Form S-4 or Proxy Statement, and shall, as promptly as
practicable after receipt thereof, provide the other with copies of all correspondence between it and its Representatives, on the
one hand, and the SEC, on the other hand, and all written comments with respect to the Proxy Statement or the Form S-4 received
from the SEC and advise the other party of any oral comments with respect to the Proxy Statement or the Form S-4 received from
the SEC. Each of the Company and Parent shall use its reasonable best efforts to respond as promptly as practicable to any comments
from the SEC with respect to the Proxy Statement and the Form S-4. Notwithstanding the foregoing, prior to filing the Form S-4
(or any amendment or supplement thereto) or mailing the Proxy Statement (or any amendment or supplement thereto) or responding
to any comments from the SEC with respect thereto, each of the Company and Parent shall cooperate and provide the other a reasonable
opportunity to review and comment on such document or response (including the proposed final version of such document or response).
Parent shall advise the Company, promptly after it receives notice thereof, of the time of effectiveness of the Form S-4, the issuance
of any stop order relating thereto or the suspension of the qualification of the Parent Common Stock issuable in connection with
the Mergers for offering or sale in any jurisdiction, and Parent and the Company shall use their reasonable best efforts to have
any such stop order or suspension lifted, reversed or otherwise terminated. Parent shall also take any other action required to
be taken under the Securities Act, the Exchange Act, any applicable foreign or state securities or “blue sky” Laws
and the rules and regulations thereunder in connection with the issuance of the Parent Common Stock in the Merger, and the Company
shall furnish all information concerning the Company and the holders of the Company Common Stock as may be reasonably requested
in connection with any such actions.
(b) If,
at any time prior to the receipt of the Company Stockholder Approval, any information relating to the Company or Parent, or any
of their respective Affiliates, should be discovered by the Company or Parent which, in the reasonable judgment of the Company
or Parent, should be set forth in an amendment of, or a supplement to, any of the Form S-4 or the Proxy Statement, so that any
of such documents would not include any misstatement of a material fact or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were made, not misleading, the party which discovers such information
shall promptly notify the other parties hereto, and the Company and Parent shall cooperate in the prompt filing with the SEC of
any necessary amendment of, or supplement to, the Proxy Statement or the Form S-4 and, to the extent required by Law, in disseminating
the information contained in such amendment or supplement to stockholders of the Company and the stockholders of Parent. Nothing
in this Section 6.3(b) shall limit the obligations of any party under Section 6.3(a). For purposes of Section
4.8, Section 5.8 and this Section 6.3, any information concerning or related to the Company, its Affiliates or
the Company Stockholder Meeting will be deemed to have been provided by the Company, and any information concerning or related
to Parent or its Affiliates will be deemed to have been provided by Parent.
(c) As
promptly as practicable following the date of this Agreement, the Company shall, in accordance with applicable Law and the Company
Charter and Company Bylaws, establish a record date for, duly call, give notice of, convene and hold the Company Stockholder Meeting.
The Company shall use its reasonable best efforts to cause the Proxy Statement to be mailed to the stockholders of the Company
entitled to vote at the Company Stockholder Meeting and to hold the Company Stockholder Meeting as soon as practicable after the
Form S-4 is declared effective under the Securities Act. The Company shall, through the Company Board, recommend to its stockholders
that they give the Company Stockholder Approval, include such recommendation in the Proxy Statement and solicit and use its reasonable
best efforts to obtain the Company Stockholder Approval, except to the extent that the Company Board shall have made an Adverse
Recommendation Change as permitted by Section 6.5(d); provided, however, the Company’s obligation to
duly call, give notice of, convene and hold the Company Stockholder Meeting shall be unconditional unless this Agreement is terminated
in accordance with its terms and shall not be affected by any Adverse Recommendation Change. Notwithstanding the foregoing provisions
of this Section 6.3(c), if, on a date for which the Company Stockholder Meeting is scheduled, the Company has not received
proxies representing a sufficient number of shares of Company Common Stock to obtain the Company Stockholder Approval, whether
or not a quorum is present, the Company shall have the right to make one or more successive postponements or adjournments of the
Company Stockholder Meeting; provided that the Company Stockholder Meeting is not postponed or adjourned to a date that
is more than (i) thirty (30) days after the date for which the Company Stockholder Meeting was originally scheduled (excluding
any adjournments or postponements required by applicable Law) or (ii) one hundred twenty (120) days after the record date for the
Company Stockholder Meeting.
Section 6.4 Access
to Information; Confidentiality.
(a) During
the Interim Period, to the extent permitted by applicable Law, the Company shall, and shall cause each of the other Company Entities
to, (x) afford to the Parent Parties and to their Representatives reasonable access during normal business hours and upon reasonable
advance notice to all of their properties, offices, books, contracts, commitments, personnel and records and, during such period,
the Company shall and shall cause each of the other Company Entities to, furnish reasonably promptly to the Parent Parties (i) a
copy of each report, schedule, registration statement and other document filed by it during such period pursuant to the requirements
of federal or state securities Laws, and (ii) all other information (financial or otherwise) concerning its business, properties
and personnel as the Parent Parties may reasonably request and (y) afford to the Parent Parties and to any nationally recognized
accounting firm selected by Parent access to all of their properties, offices, books, contracts, commitments, personnel and records,
and any other items as the Parent Parties or such accounting firm may reasonably request to enable the Parent Parties and such
accounting firm to reasonably confirm the accuracy of the representations and warranties in Section 4.17(b)(i) and Section 4.17(b)(ii),
in each case, without regard to the Company’s receipt of the ruling described in Schedule 6.11(c). Notwithstanding
the foregoing, the Company shall not be required by this Section 6.4 to provide the Parent Parties or their Representatives
with access to or to disclose information (w) relating to the consideration, negotiation and performance of this Agreement and
related agreements, (x) that is subject to the terms of a confidentiality agreement with a third party entered into prior
to the date of this Agreement (provided, however, that the Company shall use its reasonable best efforts to obtain
the required consent of such third party to such access or disclosure), (y) the disclosure of which would violate any Law or legal
duty of the party or any of its representatives (provided, however, that the Company shall use its reasonable best
efforts to make appropriate substitute arrangements to permit reasonable disclosure not in violation of any Law or statutory duty)
or (z) that is subject to any attorney-client, attorney work product or other legal privilege (provided, however,
that the Company shall use its reasonable best efforts to allow for such access or disclosure to the maximum extent that does not
result in a loss of any such attorney-client, attorney work product or other legal privilege). The Parent Parties will use their
reasonable best efforts to minimize any disruption to the businesses of the Company that may result from the requests for access,
data and information hereunder.
(b) The
Parent Parties will hold, and will cause their Representatives and Affiliates to hold, any nonpublic information, including any
information exchanged pursuant to this Section 6.4, in confidence to the extent required by and in accordance with, and
will otherwise comply with, the terms of the Confidentiality Agreement.
Section 6.5 Acquisition
Proposals.
(a) Subject
to the other provisions of this Section 6.5, during the Interim Period, the Company agrees that it shall not, and shall
cause each of the other Company Entities not to, and shall not authorize and shall use reasonable best efforts to cause its and
their officers and directors, managers or equivalent, and other Representatives not to, directly or indirectly through another
Person, (i) solicit, initiate, knowingly encourage or knowingly facilitate any inquiry, discussion, offer or request that constitutes,
or could reasonably be expected to lead to, an Acquisition Proposal (an “Inquiry”), (ii) engage in any discussions
or negotiations regarding, or furnish to any Third Party any non-public information in connection with, or knowingly facilitate
in any way any effort by, any Third Party in furtherance of any Acquisition Proposal or Inquiry, (iii) approve or recommend an
Acquisition Proposal, or enter into any letter of intent, memorandum of understanding, agreement in principle, acquisition agreement,
merger agreement, share purchase agreement, asset purchase agreement, share exchange agreement, option agreement or other similar
definitive agreement (other than an Acceptable Confidentiality Agreement entered into in accordance with this Section 6.5)
providing for or relating to an Acquisition Proposal (an “Alternative Acquisition Agreement”), or (iv) propose
or agree to do any of the foregoing.
(b) Notwithstanding
anything to the contrary in this Section 6.5, at any time prior to obtaining the Company Stockholder Approval, the
Company may, directly or indirectly through any Representative, in response to an unsolicited bona fide written Acquisition Proposal
by a Third Party made after the date of this Agreement (i) furnish non-public information to such Third Party (and such Third Party’s
Representatives) making an Acquisition Proposal (provided, however, that (A) prior to so furnishing such information,
the Company receives from the Third Party an executed Acceptable Confidentiality Agreement, and (B) any non-public information
concerning the Company Entities that is provided to such Third Party shall, to the extent not previously provided to Parent or
Merger Sub, be provided to Parent or Merger Sub prior to or substantially at the same time that such information is provided to
such Third Party), and (ii) engage in discussions or negotiations with such Third Party (and such Third Party’s Representatives)
with respect to the Acquisition Proposal if, in the case of each of clauses (i) and (ii), the Company Board determines in
good faith, after consultation with outside legal counsel and financial advisors, that such Acquisition Proposal constitutes, or
is reasonably likely to result in, a Superior Proposal.
(c) The
Company shall notify Parent promptly (but in no event later than twenty-four (24) hours) after receipt of any Acquisition Proposal
or any request for nonpublic information relating to the Company Entities by any Third Party, or any Inquiry from any Person seeking
to have discussions or negotiations with the Company relating to a possible Acquisition Proposal. Such notice shall be made orally
and confirmed in writing, and shall indicate the identity of the Third Party making the Acquisition Proposal, request or Inquiry
and the material terms and conditions of any Acquisition Proposals, Inquiries, proposals or offers (including a copy thereof if
in writing and any related documentation or correspondence). The Company shall also promptly, and in any event within twenty-four
(24) hours, notify Parent orally and in writing, if it enters into discussions or negotiations concerning any Acquisition Proposal
or provides nonpublic information or data to any Person in accordance with this Section 6.5(c) and keep Parent reasonably
informed of the status and material terms of any such proposals, offers, discussions or negotiations on a current basis, including
by providing a copy of all material documentation or material correspondence relating thereto.
(d) Except
as permitted by this Section 6.5(d), neither the Company Board nor any committee thereof shall (i) withhold, withdraw, modify
or qualify (or publicly propose to withhold, withdraw, modify or qualify), in a manner adverse to any Parent Party, the Company
Recommendation, (ii) approve, adopt or recommend (or publicly propose to approve, adopt or recommend) any Acquisition Proposal,
(iii) fail to include the Company Recommendation in the Proxy Statement or any Schedule 14D-9, as applicable, (iv) fail to publicly
recommend against any Acquisition Proposal within five (5) Business Days of the request of Parent and/or fail to reaffirm the Company
Recommendation within five (5) Business Days of the request of Parent, or such fewer number of days as remains prior to the Company
Stockholders Meeting (provided that Parent shall not be permitted to make such request (x) on more than one (1) occasion
in respect of each Acquisition Proposal and (y) on more than one (1) occasion in respect of each material modification to an Acquisition
Proposal, if any) (any of the actions described in clauses (i), (ii), (iii) and (iv) of this Section
6.5(d), an “Adverse Recommendation Change”), or (v) approve, adopt, declare advisable or recommend (or agree
to, resolve or propose to approve, adopt, declare advisable or recommend), or cause or permit any Company Entity to enter into,
any Alternative Acquisition Agreement (other than an Acceptable Confidentiality Agreement entered into in accordance with this
Section 6.5). Notwithstanding anything to the contrary set forth in this Agreement (A) at any time prior to obtaining the
Company Stockholder Approval, if the Company Board (x) has received an unsolicited bona fide Acquisition Proposal (that did not
result from a breach of this Section 6.5) that, in the good faith determination of the Company Board, after consultation
with outside legal counsel and financial advisors, constitutes a Superior Proposal, after having complied with, and giving effect
to all of the adjustments which may be offered by the Parent Parties pursuant to Section 6.5(e), and such Acquisition Proposal
is not withdrawn, and (y) determines in good faith, after consultation with outside legal counsel, that failure to take such action
would be inconsistent with the directors’ duties under applicable Law, then in such case the Company may (i) terminate this
Agreement pursuant to Section 8.1(c)(ii) or (ii) make an Adverse Recommendation Change, including approving or recommending
such Superior Proposal to the Company’s stockholders, and, in the case of a termination, the Company may immediately prior
to or concurrently with such termination of this Agreement, enter into an Alternative Acquisition Agreement with respect to such
Superior Proposal; or (B) in response to an Intervening Event, if the Company Board determines in good faith, after consultation
with outside legal counsel, that failure to take such action would be inconsistent with the directors’ duties under applicable
Law, the Company may make an Adverse Recommendation Change, provided, that, in the event of any termination by the
Company pursuant to Section 8.1(c)(ii) or by Parent pursuant to Section 8.1(d)(ii), as may be applicable, the Company
complies with its obligation to pay the Termination Fee pursuant to Section 8.3(a).
(e) The
Company Board shall not be entitled to effect an Adverse Recommendation Change pursuant to Section 6.5(d) or terminate this
Agreement pursuant to Section 8.1(c)(ii) unless (i) the Company has provided a written notice (a “Notice of Adverse
Recommendation Change”) to the Parent Parties that the Company intends to take such action, specifying in reasonable
detail the reasons therefor and, in the case of an Adverse Recommendation Change pursuant to Section 6.5(d)(A), describing
the material terms and conditions of, and attaching a complete copy of, the Superior Proposal that is the basis of such action
(it being understood that such material terms shall include the identity of the Third Party), (ii) during the three (3) Business
Day period following the Parent Parties’ receipt of the Notice of Adverse Recommendation Change, the Company shall, and shall
cause its Representatives to, negotiate with the Parent Parties in good faith (to the extent the Parent Parties desire to negotiate)
to make such adjustments in the terms and conditions of this Agreement so that such Adverse Recommendation Change or termination
of this Agreement is no longer necessary, and (iii) following the end of the three (3) Business Day period, the Company Board
shall have determined in good faith, after consultation with outside legal counsel and financial advisors, taking into account
any changes to this Agreement proposed in writing by the Parent Parties in response to the Notice of Adverse Recommendation Change
or otherwise, (x) that in the case of an Adverse Recommendation Change pursuant to Section 6.5(d)(A), the Superior Proposal
giving rise to the Notice of Adverse Recommendation Change continues to constitute a Superior Proposal, and (y) in the case of
an Adverse Recommendation Change pursuant to either Section 6.5(d)(A) or Section 6.5(d)(B), after consultation with
outside legal counsel, that failure to take such action would be inconsistent with the directors’ duties under applicable
Law. Any material change to the terms of such Superior Proposal, including any change to the financial terms, and any material
change to the facts and circumstances relating to an Intervening Event, as applicable, shall require a new Notice of Adverse Recommendation
Change and the provisions of this Section 6.5(e) shall again apply with respect to such Superior Proposal or Intervening
Event, as applicable.
(f) Nothing
contained in this Section 6.5 or elsewhere in this Agreement shall prohibit the Company or the Company Board, directly or
indirectly through its Representatives, from disclosing to the Company’s stockholders a position contemplated by Rule 14e-2(a)
or Rule 14d-9 promulgated under the Exchange Act or making any disclosure to its stockholders if the Company Board has determined,
after consultation with outside legal counsel, that the failure to do so would be inconsistent with applicable Law; provided,
however, that any disclosure other than a “stop, look and listen” or similar communication of the type contemplated
by Rule 14d-9(f) promulgated under the Exchange Act, an express rejection of any applicable Acquisition Proposal or an express
reaffirmation of the Company Recommendation shall be deemed to be an Adverse Recommendation Change.
(g) Upon
execution of this Agreement, the Company shall, and shall cause each of the other Company Entities, and its and their officers
and directors, managers or equivalent, and other Representatives to (i) immediately cease any existing discussions, negotiations
or communications with any Person conducted heretofore with respect to any Acquisition Proposal and (ii) take such action as is
necessary to enforce any confidentiality or standstill provisions or provisions of similar effect to which any Company Entity is
a party or of which any Company Entity is a beneficiary. The Company shall use reasonable best efforts to cause all Third Parties
who have been furnished confidential information regarding any Company Entity in connection with the solicitation of or discussions
regarding an Acquisition Proposal within the six (6) months prior to the date of this Agreement to promptly return or destroy such
information (to the extent that they are entitled to have such information returned or destroyed).
(h) For
purposes of this Agreement:
(i) “Acquisition
Proposal” shall mean any bona fide inquiry, proposal or offer made by any Person, whether in one transaction or a series
of related transactions, relating to (i) any merger, consolidation, share exchange, business combination or similar transaction
involving any of the Company Entities, (ii) any sale, lease, exchange, mortgage, pledge, license, transfer or other disposition,
directly or indirectly, by merger, consolidation, sale of equity interests, share exchange, joint venture, business combination
or otherwise, of any assets of any Company Entity representing fifteen percent (15%) or more of the consolidated assets of the
Company Entities, taken as a whole as determined on a book-value basis, (iii) any issue, sale or other disposition of (including
by way of merger, consolidation, joint venture, business combination, share exchange or any similar transaction) securities (or
options, rights or warrants to purchase, or securities convertible into, such securities) representing fifteen percent (15%) or
more of the voting power of the Company, (iv) any tender offer or exchange offer in which any Person or “group”
(as such term is defined in Rule 13d-3 promulgated under the Exchange Act) shall seek to acquire beneficial ownership (as such
term is defined in Rule 13d-3 promulgated under the Exchange Act), or the right to acquire beneficial ownership, of fifteen percent
(15%) or more of the outstanding shares of any class of voting securities of the Company, or (v) any recapitalization, restructuring,
liquidation, dissolution or other similar type of transaction with respect to the Company in which a Third Party shall acquire
beneficial ownership of fifteen percent (15%) or more of the outstanding shares of any class of voting securities of the Company;
provided, however, that the term “Acquisition Proposal” shall not include the Mergers or the other transactions
contemplated by this Agreement.
(ii) “Superior
Proposal” shall mean a bona fide written Acquisition Proposal (except that, for purposes of this definition, the references
in the definition of “Acquisition Proposal” to “fifteen percent (15%)” shall be replaced by “fifty
percent (50%)”) made by a Third Party on terms that the Company Board determines in good faith, after consultation with the
Company’s outside legal counsel and financial advisors, taking into account all financial, legal, regulatory and any other
aspects of the transaction described in such proposal that the Company Board deems relevant, including the identity of the Person
making such proposal, any break-up fees, expense reimbursement provisions and conditions to consummation, as well as any changes
to the financial terms of this Agreement proposed by the Parent Parties in response to such proposal or otherwise, to be (A) more
favorable to the Company and the Company’s stockholders (solely in their capacity as such) from a financial point of view
than the transactions contemplated by this Agreement and (B) reasonably likely to receive all required governmental approvals on
a timely basis and otherwise reasonably capable of being completed on the terms proposed.
Section 6.6 Appropriate
Action; Consents; Filings.
(a) Upon
the terms and subject to the conditions set forth in this Agreement, the Company and each of the Parent Parties shall and shall
cause the other Company Entities and the other Parent Entities, respectively, to use its reasonable best efforts to take, or cause
to be taken, all actions, and to do, or cause to be done, and to assist and cooperate with the other party in doing, all things
necessary, proper or advisable under applicable Law or pursuant to any contract or agreement to consummate and make effective,
as promptly as practicable, the Mergers and the other transactions contemplated by this Agreement, including (i) the taking
of all actions necessary to cause the conditions to Closing set forth in Article VII to be satisfied, (ii) the obtaining
of all necessary actions or nonactions, waivers, consents (including the Lender Consents) and approvals from Governmental Authorities
or other Persons necessary in connection with the consummation of the Mergers and the other transactions contemplated by this Agreement
and the making of all necessary registrations and filings (including filings with Governmental Authorities, if any) and the taking
of all reasonable steps as may be necessary to obtain an approval or waiver from, or to avoid an action or proceeding by, any Governmental
Authority or other Persons necessary in connection with the consummation of the Mergers and the other transactions contemplated
by this Agreement (including promptly responding to all requests by a Governmental Authority or other Person for additional information
in support of any such filing or request for approval or waiver), (iii) the defending of any lawsuits or other legal proceedings,
whether judicial or administrative, challenging this Agreement or the consummation of the Mergers or the other transactions contemplated
by this Agreement, including seeking to have any stay or temporary restraining order entered by any court or other Governmental
Authority vacated or reversed, the avoidance of each and every impediment under any antitrust, merger control, competition or trade
regulation Law that may be asserted by any Governmental Authority with respect to the Mergers so as to enable the Closing to occur
as soon as reasonably possible, and (iv) the execution and delivery of any additional instruments necessary to consummate the Mergers
and the other transactions contemplated by this Agreement and to fully carry out the purposes of this Agreement.
(b) In
connection with and without limiting the foregoing, each of the Parent Parties and the Company shall give (or shall cause the other
Parent Entities or the other Company Entities, respectively, to give) any notices to Third Parties, and each of the Parent Parties
and the Company shall use, and cause each of their respective Affiliates to use, its reasonable best efforts to obtain any Third
Party consents not covered by Section 6.6(a) that are necessary, proper or advisable to consummate the Mergers. Each of
the parties hereto will furnish to the other such necessary information and reasonable assistance as the other may request in connection
with the preparation of any required governmental filings or submissions and will cooperate in responding to any inquiry from a
Governmental Authority, including promptly informing the other parties of such inquiry, consulting in advance before making any
presentations or submissions to a Governmental Authority, and supplying each other with copies of all material correspondence,
filings or communications between either party and any Governmental Authority with respect to this Agreement. To the extent reasonably
practicable, the parties or their Representatives shall have the right to review in advance and each of the parties will consult
the others on, all the information relating to the other and each of their Affiliates that appears in any filing made with, or
written materials submitted to, any Governmental Authority in connection with the Mergers and the other transactions contemplated
by this Agreement, except that confidential competitively sensitive business information may be redacted from such exchanges. To
the extent reasonably practicable, none of the parties hereto shall, nor shall they permit their respective Representatives to,
participate independently in any meeting or engage in any substantive conversation with any Governmental Authority in respect of
any filing, investigation or other inquiry without giving the other party prior notice of such meeting or conversation and, to
the extent permitted by applicable Law, without giving the other parties the opportunity to attend or participate (whether by telephone
or in person) in any such meeting with such Governmental Authority. Notwithstanding the foregoing, obtaining any approval or consent
from any third party pursuant to this Section 6.6(b) shall not be a condition to the obligations of Parent and Merger Sub
to consummate the Merger.
(c) In
connection with obtaining the Lender Consents, and without limitation of the foregoing, the Parent Parties shall, and Parent shall
cause the other Parent Entities to, furnish such information and provide such assistance to, and otherwise cooperate with, the
Company, in each case, as the Company may reasonably request, in connection with any actions contemplated to be taken by the Company
with respect to obtaining the Lender Consents, including by agreeing to provide, from and after the Closing, customary non-recourse
carve-out or “bad boy,” guaranties with respect to events that are customarily the subject of such guaranties. The
Parent Parties agree that the Company shall be expressly entitled to incur and pay any customary fees and expenses reasonably necessary
to obtain the Lender Consents. Notwithstanding the foregoing, Parent may elect to exclude any Lender Consent from the provisions
of this Section 6.6(c); provided, that the amount of Indebtedness to which such excluded Lender Consent relates shall
not be applied toward the threshold set forth in Section 2.2(a).
(d) Notwithstanding
anything to the contrary in this Agreement, in connection with obtaining any approval or consent from any Person (other than any
Governmental Authority) with respect to the Merger, none of the parties hereto, any of the other Company Entities or any of the
other Parent Entities, or any of the their respective Representatives, shall be obligated to pay or commit to pay to such Person
whose approval or consent is being solicited any cash or other consideration, make any accommodation or commitment or incur any
liability or other obligation to such Person (unless expressly required by a written agreement that was entered into prior to the
date hereof with such Person), unless such party is promptly reimbursed for such payment. The parties shall cooperate with respect
to accommodations that may be requested or appropriate to obtain such consents.
Section 6.7 Notification
of Certain Matters; Transaction Litigation.
(a) The
Company shall give prompt notice to the Parent Parties, and the Parent Parties shall give prompt notice to the Company, of any
notice or other communication received by such party from any Governmental Authority in connection with this Agreement, the Mergers
or the other transactions contemplated by this Agreement, or from any Person alleging that the consent of such Person is or may
be required in connection with the Mergers or the other transactions contemplated by this Agreement.
(b) The
Company shall give prompt notice to the Parent Parties, and the Parent Parties shall give prompt notice to the Company, if (i)
any representation or warranty made by it contained in this Agreement becomes untrue or inaccurate such that it would be reasonable
to expect that the applicable closing conditions would be incapable of being satisfied by the Outside Date or (ii) it fails to
comply with or satisfy in any material respect any covenant, condition or agreement to be complied with or satisfied by it under
this Agreement; provided, however, that no such notification shall affect the representations, warranties, covenants
or agreements of the parties or the conditions to the obligations of the parties under this Agreement. Without limiting the foregoing,
the Company shall give prompt notice to the Parent Parties, and the Parent Parties shall give prompt notice to the Company, if,
to the knowledge of such party, the occurrence of any state of facts, change, development, event or condition would cause, or would
reasonably be expected to cause, any of the conditions to Closing set forth herein not to be satisfied or satisfaction to be materially
delayed. Notwithstanding anything to the contrary in this Agreement, the failure by the Company or the Parent Parties to provide
such prompt notice under this Section 6.7(b) shall not constitute a breach of covenant for purposes of Section 7.2(b)
or Section 7.3(b).
(c) Each
of the parties hereto agrees to give prompt written notice to the other parties upon becoming aware of the occurrence or impending
occurrence of any event or circumstance relating to it or any of the other Company Entities or the other Parent Entities, respectively,
which could reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect or a Parent Material
Adverse Effect, as the case may be.
(d) The
Company shall give prompt notice to the Parent Parties, and the Parent Parties shall give prompt notice to the Company, of any
Action commenced or, to such party’s knowledge, threatened against, relating to or involving such party or any of the other
Company Entities or the other Parent Entities, respectively, which relate to this Agreement, the Mergers or the other transactions
contemplated by this Agreement. The Company shall give the Parent Parties the opportunity to reasonably participate in the defense
and settlement of any stockholder litigation against the Company and/or its directors relating to this Agreement and the transactions
contemplated hereby, and no such settlement shall be agreed to without Parent’s prior written consent (which consent shall
not be unreasonably withheld, conditioned or delayed). The Parent Parties shall give the Company the opportunity to reasonably
participate in the defense and settlement of any stockholder litigation against the Parent Parties and/or their directors relating
to this Agreement and the transactions contemplated hereby, and no such settlement shall be agreed to without the Company’s
prior written consent (which consent shall not be unreasonably withheld, conditioned or delayed).
Section 6.8 Termination
of Advisory and Other Agreements. On the date hereof, the Company or another Company Entity, as applicable, has entered into
amendments to the Advisory Agreement, the Listing Agreement (the “Listing Termination Agreement”), the Management
Agreement, and any other agreements between the Company or any of the Company Entities, on the one hand, and the Advisor, the Special
Limited Partner, the Manager, or any other Affiliate of the Company or of the Company Advisor, on the other hand (other than the
Company Operating Partnership Agreement), terminating all such agreements effective immediately prior to, and contingent upon,
the Closing (such agreements, together with the OPP Termination Agreement, the “Termination Agreements”), and
such terminations shall be without any liability to the Company, any of the Company Entities, Parent, any Affiliate of Parent,
or the Surviving Entity. The Company has provided to Parent true, correct and complete copies of the Termination Agreements. Immediately
prior to the Closing, the Company shall deliver to the Company Advisor and the Manager all amounts owed to such Person under the
Advisory Agreement and the Management Agreement, respectively, and in exchange for such payments, the Company shall cause the Company
Advisor, the Special Limited Partner, the Manager, and any other Affiliates of the Company or of the Company Advisor to execute
a full and unconditional release of any claims or liabilities whatsoever that they may have against the Company, any of the Company
Entities, Parent, any Affiliate of Parent, or the Surviving Entity, including without limitation any claims arising under (i) the
Advisory Agreement, (ii) the Listing Agreement, (iii) the OPP Agreement, (iv) the Investment Opportunity Allocation Agreement,
dated as of April 9, 2013 by and among the Company and American Realty Capital Healthcare Trust II, Inc., (v) the Management Agreement
and (vi) the Company Operating Partnership Agreement (for the avoidance of doubt, excluding any claims to receive the Class C Units
to which they are entitled under the terms of this Agreement (in each case, other than indemnification rights in favor of the Company
Advisor or its Affiliates that, as of the date hereof, exist under such agreements). Prior to the termination of this Agreement
in accordance with its terms, neither the Company Operating Partnership nor any other Company Entity shall make any payment or
distribution of any kind to the Special Limited Partner, the Company Advisor, or any of their Affiliates pursuant to the Listing
Agreement, other than at the Closing as expressly provided in Section 2(b) of the Listing Termination Agreement.
Section 6.9 Public
Announcements. For so long as this Agreement is in effect, the parties hereto shall, and shall cause their respective Affiliates
to, to the extent reasonably practicable, consult with each other before issuing any press release or otherwise making any public
statements or filings with respect to this Agreement or any of the transactions contemplated hereby, and none of the parties shall
issue any such press release or make any such public statement or filing prior to obtaining the other parties’ consent (which
consent shall not be unreasonably withheld, conditioned or delayed); provided, however, that a party may, without
obtaining the other parties’ consent, issue such press release or make such public statement or filing as may be required
by Law, Order or the applicable rules of any stock exchange or the applicable provisions of any listing agreement of any party
hereto. If for any reason it is not practicable to consult with the other party before making any public statement with respect
to this Agreement or any of the transactions contemplated hereby, then the party making such statement shall not make a statement
that is inconsistent with public statements or filings to which the other party had previously consented; provided, further,
that such consultation and consent shall not be required with respect to any release, communication or announcement specifically
permitted without the other party’s consent by Section 6.5.
Section 6.10 Directors’
and Officers’ Indemnification and Insurance.
(a) From
and after the Effective Time, the Surviving Entity shall provide exculpation, indemnification and advancement of expenses for each
Indemnitee, which is at least as favorable in scope and amount to such Indemnitee as the exculpation, indemnification and advancement
of expenses provided to such Indemnitee by the Company and the Company Subsidiaries immediately prior to the Effective Time in
the Company Charter and the Company Bylaws or each of the Company Subsidiaries’ respective articles or certificates of incorporation
or bylaws (or comparable organizational or governing documents) as the case may be, as in effect on the date of this Agreement;
provided that such exculpation, indemnification and advancement of expenses covers actions or omissions at or prior to the
Effective Time, including all transactions contemplated by this Agreement.
(b) Without
limiting or being limited by the provisions of Section 6.10(a), during the period commencing as of the Effective Time and
ending on the sixth (6th) anniversary of the Effective Time, Parent and the Surviving Entity shall (and Parent shall cause the
Surviving Entity to): (i) indemnify, defend and hold harmless each Indemnitee against and from any costs or expenses (including
attorneys’ fees), judgments, fines, losses, claims, damages, liabilities and amounts paid in settlement in connection with
any Action, whether civil, criminal, administrative or investigative, to the extent such Action arises out of or pertains to (x)
any action or omission or alleged action or omission in such Indemnitee’s capacity as a director, officer, partner, member,
trustee, employee or agent of the Company or any of the Company Subsidiaries, or (y) this Agreement or any of the transactions
contemplated hereby, including the Merger; and (ii) pay in advance of the final disposition of any such Action the expenses
(including attorneys’ fees and any expenses incurred by any Indemnitee in connection with enforcing any rights with respect
to indemnification) of any Indemnitee without the requirement of any bond or other security, in each case to the fullest extent
permitted by Law, but subject to Parent’s and the Surviving Entity’s receipt of an undertaking by or on behalf of such
Indemnitee to repay such amount if it shall ultimately be determined that such Indemnitee is not entitled to be indemnified. Notwithstanding
anything to the contrary set forth in this Agreement, Parent or the Surviving Entity (i) shall not be liable for any settlement
effected without their prior written consent (which consent shall not be unreasonably withheld, delayed or conditioned) and (ii)
shall not have any obligation hereunder to any Indemnitee to the extent that a court of competent jurisdiction shall determine
in a final and non-appealable order that such indemnification is prohibited by applicable Law, in which case the Indemnitee shall
promptly refund to Parent or the Surviving Entity the amount of all such expenses theretofore advanced pursuant hereto.
(c) Prior
to the Effective Time, the Company shall, in consultation with Parent, or, if the Company is unable to, Parent shall cause the
Surviving Entity as of the Effective Time to, obtain and fully pay the premium for the non-cancellable extension of the coverage
afforded by the Company’s existing directors’ and officers’ liability insurance policies and the Company’s
existing fiduciary liability insurance policies (collectively, the “D&O Insurance”), in each case, for a
claims reporting or discovery period of at least six (6) years from and after the Effective Time with respect to any claim related
to any period of time at or prior to the Effective Time from one or more insurance carriers with the same or better Best’s
credit rating as the Company’s current insurance carrier with respect to D&O Insurance with terms, conditions and retentions
that are no less favorable in the aggregate than the coverage provided under the Company’s existing policies and with limits
of liability that are no lower than the limits on the Company’s existing policies as long as the annual premium in the aggregate
does not exceed in any one year three hundred percent (300%) of the annual aggregate premium(s) under the Company’s existing
policies. If the Company or the Surviving Entity for any reason fails to obtain such “tail” insurance policies
as of the Effective Time, (i) the Surviving Entity shall continue to maintain in effect, for a period of at least six (6) years
from and after the Effective Time, the D&O Insurance in place as of the date hereof with the Company’s current insurance
carrier or with an insurance carrier with the same or better Best’s credit rating as the Company’s current insurance
carrier with respect to D&O Insurance with terms, conditions, retentions and limits of liability that are no less favorable
in the aggregate than the coverage provided under the Company’s existing policies as of the date hereof, or (ii) Parent shall
provide, or shall cause the Surviving Entity to provide, for a period of not less than six (6) years after the Effective Time,
the Indemnitees who are insured under the Company’s D&O Insurance with comparable D&O Insurance that provides coverage
for acts or omissions occurring at or prior to the Effective Time from an insurance carrier with the same or better credit rating
as the Company’s current insurance carrier, that is no less favorable in the aggregate than the existing policy of the Company
(which may be provided under Parent’s D&O Insurance policy) or, if substantially equivalent insurance coverage is unavailable,
the best available coverage; provided, however, that Parent and the Surviving Entity shall not be required to pay
an annual premium for the D&O Insurance in excess of (for any one year) three hundred percent (300%) of the annual premium
paid by the Company for such insurance as of the date hereof; and provided, further, that if the annual premiums
of such insurance coverage exceed such amount, Parent or the Surviving Entity shall be obligated to obtain a policy with the greatest
coverage available, with respect to matters occurring prior to the Effective Time, for a cost not exceeding such amount.
(d) The
Indemnitees to whom this Section 6.10 applies are third-party beneficiaries of this Section 6.10. The provisions
of this Section 6.10 shall be for the benefit of each Indemnitee and his or her successors, heirs, executors, trustees,
fiduciaries, administrators or representatives. Parent shall pay all reasonable expenses, including attorneys’ fees, that
may be incurred by any Indemnitee in successfully enforcing the indemnity and other obligations provided in this Section 6.10.
(e) The
rights of each Indemnitee under this Section 6.10 shall be in addition to any rights such Person or any employee of the
Company or any Company Subsidiary may have under the Company Charter, the Company Bylaws or the certificate of incorporation or
bylaws (or equivalent organizational or governing documents) of any of the Company Subsidiaries, or the Surviving Entity or any
of its subsidiaries, or under any applicable Law or under any agreement of any Indemnitee. Nothing in this Agreement is intended
to, shall be construed to or shall release, waive or impair any rights to directors’ and officers’ insurance claims
under any policy that is or has been in existence with respect to the Company or its officers, directors and employees, it being
understood and agreed that the indemnification provided for in this Section 6.10 is not prior to, or in substitution for,
any such claims under any such policies.
(f) Notwithstanding
anything contained in Section 9.1 or Section 9.7 to the contrary, this Section 6.10 shall survive the consummation
of the Merger indefinitely and shall be binding, jointly and severally, on all successors and assigns of Parent, the Surviving
Entity and its subsidiaries, and shall be enforceable by the Indemnitees and their successors, heirs or representatives. In the
event that Parent or the Surviving Entity or any of its successors or assigns consolidates with or merges into any other Person
and shall not be the continuing or surviving corporation or entity of such consolidation or merger, or transfers or conveys all
or a majority of its properties and assets to any Person, then, and in each such case, proper provision shall be made so that the
successors and assigns of Parent or the Surviving Entity, as applicable, shall succeed to the obligations set forth in this Section
6.10. Parent hereby guarantees the payment and performance of the Surviving Entity’s obligations pursuant to this Section
6.10.
Section 6.11 Certain
Tax Matters.
(a) Each
of Parent and the Company shall use its reasonable best efforts to cause the Merger to qualify as a reorganization within the meaning
of Section 368(a) of the Code, including by executing and delivering the officers’ certificates referred to herein and
reporting consistently for all federal, state, and local income Tax or other purposes. None of Parent or the Company shall take
any action, or fail to take any action, that would reasonably be expected to cause the Merger to fail to qualify as a reorganization
within the meaning of Section 368(a) of the Code.
(b) The
Company and its Affiliates shall, with Parent’s prior consent (which consent shall not be unreasonably withheld, conditioned
or delayed), take any actions, including making or causing its subsidiaries to make elections pursuant to Treasury Regulations
Section 301.7701-3(c)(1)(i) and Section 856(l) of the Code, as are reasonably necessary to preserve its qualification as a REIT,
and the Company and its Affiliates shall cooperate with Parent and its Representatives in taking any such actions as Parent may
reasonably request.
(c) Parent
and the Company shall take the actions described in Schedule 6.11(c).
Section 6.12 Merger
Sub. Parent shall take all actions necessary to (a) cause the other Parent Parties to perform their obligations under this
Agreement and to consummate the Mergers on the terms and conditions set forth in this Agreement, and (b) ensure that, prior
to the Effective Time, Merger Sub shall not conduct any business or make any investments or incur or guarantee any indebtedness
other than as specifically contemplated by this Agreement. The Company shall take all actions necessary to cause the Company Operating
Partnership to perform its obligations under this Agreement and to consummate the Mergers on the terms and conditions set forth
in this Agreement.
Section 6.13 Section
16 Matters. Prior to the Effective Time, the Company and Parent shall, as applicable, take all such steps to cause any
dispositions of Company Common Stock or acquisitions of Parent Common Stock (including derivative securities related to such stock)
resulting from the Merger and the other transactions contemplated by this Agreement by each officer or director who is subject
to the reporting requirements of Section 16(a) of the Exchange Act with respect to the Company to be exempt under Rule 16b-3 promulgated
under the Exchange Act. Upon request, the Company shall promptly furnish Parent with all requisite information for Parent to take
the actions contemplated by this Section 6.13.
Section 6.14 Stock
Exchange Listing. Parent shall use its reasonable best efforts to cause the shares of Parent Common Stock to be issued in the
Mergers to be approved for listing on the NYSE, subject to official notice of issuance, prior to the Effective Time.
Section 6.15 Voting
of Shares. Parent shall vote all shares of Company Common Stock beneficially owned by it or any of the Parent Subsidiaries
as of the record date for the Company Stockholder Meeting, if any, in favor of approval of the Merger.
Section 6.16 Termination
of Company Equity Plans. Unless otherwise notified by Parent in writing, prior to the Effective Time, the Company shall take
or cause to be taken any and all actions necessary or appropriate to terminate the Company Equity Plans effective no later than
immediately prior to the Effective Time, contingent on the occurrence of the Effective Time.
Section 6.17 Financing.
The Company shall, and shall cause the other Company Entities to, and shall use commercially reasonable efforts to cause their
respective Representatives to, cooperate with the Parent Parties in any of their efforts to arrange debt financing or maintain,
and amend and/or increase, any Parent Entities’ existing credit facilities (collectively, the “Debt Financing”),
for (in whole or part) satisfying Parent’s obligations to pay (a) any Cash Consideration and other amounts due by the Parent
Parties hereunder, (b) any Expenses and (c) the refinancing of the Company Credit Agreement or any other Indebtedness of the Company
or any of the Company Subsidiaries; provided that such cooperation does not unreasonably interfere with the ongoing operations
of the Company and the Company Subsidiaries. None of the representations, warranties or covenants of the Company shall be deemed
breached or violated by any action taken by the Company at the request of any Parent Party pursuant to this Section 6.17.
Anything in this Section 6.17 to the contrary notwithstanding, until the Effective Time occurs, neither the Company nor
any of the Company Subsidiaries, nor any of their respective officers or directors, as the case may be, shall (i) be required to
pay any commitment or other similar fee in connection with any proposed Debt Financing, (ii) enter into any definitive agreement
related to any proposed Debt Financing containing any material obligation that is not conditioned upon consummation of the Mergers
or (iii) unless promptly reimbursed by Parent, be required to incur any other out of pocket expenses in connection with the Debt
Financing. Parent shall promptly reimburse the Company for all reasonable out of pocket costs incurred by the Company or any of
the Company Subsidiaries or their respective Representatives in connection with any action taken by any of them at the request
of the Parent Parties or their financing sources pursuant to, and in accordance with, this Section 6.17, and shall indemnify
and hold harmless the Company, the Company Subsidiaries and their respective Representatives from and against any and all damages,
losses, costs, liabilities or expenses suffered or incurred by any of them in connection with the arrangement of the Debt Financing
and any information used in connection therewith (other than information provided by the Company or any of the Company Subsidiaries)
and all other actions taken by the Company, the Company Subsidiaries and their respective Representatives at the request of Parent
pursuant to this Section 6.17, except to the extent finally determined by a court of competent jurisdiction to have arisen from
any Company Entity’s or their respective Representatives’ fraud, gross negligence, willful misconduct, intentional
misrepresentation or bad faith. Notwithstanding anything to the contrary provided herein or in the Confidentiality Agreement, that
Parent Entities and their Representatives shall be permitted to disclose information consistent with customary practices in connection
with the Debt Financing subject to customary confidentiality arrangements.
Section 6.18 Dividends.
(a) Each
of Parent and the Company shall declare a dividend to their respective stockholders, the record and payment date for which shall
be the close of business on the last Business Day prior to the Effective Time, in each case, subject to funds being legally available
therefor. The per share dividend amount payable by the Company shall be an amount equal to (i) the Company’s most recent
monthly dividend, multiplied by the number of days elapsed since the last dividend record date through and including the day prior
to the day on which the Effective Time occurs, and divided by the actual number of days in the calendar month in which such dividend
is declared, plus (ii) if necessary to enable the Company to make aggregate dividend distributions during its final taxable
period equal to the Minimum Distribution Dividend, an additional amount (the “Company Additional Dividend Amount”)
necessary so that the aggregate dividend payable is equal to the Minimum Distribution Dividend, plus (iii) the Parent Additional
Dividend Amount, if any, divided by the quotient of (A) one (1) divided by (B) the Exchange Ratio. The per share dividend amount
payable by Parent shall be an amount equal to (i) Parent’s most recent quarterly dividend, multiplied by the number of days
elapsed since the last dividend record date through and including the day prior to the day on which the Effective Time occurs,
and divided by the actual number of days in the calendar quarter in which such dividend is declared, plus (ii) the Company Additional
Dividend Amount, if any, divided by the Exchange Ratio, plus (iii) if necessary to enable Parent to make aggregate dividend distributions
during the taxable year that includes the Closing Date equal to the Minimum Distribution Dividend, an additional amount (the “Parent
Additional Dividend Amount”) necessary so that the aggregate dividend payable is equal to the Minimum Distribution Dividend.
If the Company determines it is necessary to declare the Additional Dividend Amount, the Company shall notify Parent of such determination
at least ten (10) days prior to the Company Stockholder Meeting.
(b) Subject
to Section 6.18(a), Parent shall not make, declare or set aside any dividend or other distribution to its stockholders other
than the authorization and payment of (i) distributions at its stated dividend or distribution rates with respect to the Parent
Preferred Stock and (ii) regular quarterly cash distributions in respect of Parent Common Stock at an annual rate not in excess
of $2.90 per share (with such increases in such annual rate as may be approved by Parent’s board of directors from time to
time).
(c) In
the event that a distribution or dividend with respect to the shares of Company Common Stock permitted under the terms of this
Agreement has (i) a record date prior to the Effective Time and (ii) has not been paid as of the Effective Time, the holders of
shares of Company Common Stock shall be entitled to receive such distribution or dividend from the Company at the time such shares
are exchanged pursuant to Article III of this Agreement.
Section 6.19 Treatment
of Outstanding Indebtedness; Payoff Letter. With respect to the Company Credit Agreement and any other Indebtedness of the
Company or any of the Company Subsidiaries identified by Parent in writing at least ten (10) Business Days prior to the Closing
Date, (i) the Company shall, or shall cause the applicable Company Subsidiary to, use reasonable best efforts to deliver all notices
and take other actions required to facilitate the termination of commitments in respect of such Indebtedness, repayment in full
of all obligations in respect of such Indebtedness and release of any Liens and guarantees in connection therewith on the Closing
Date and (ii) the Company shall use its reasonable best efforts to deliver to Parent a customary payoff letter with respect to
the Company Credit Agreement and each such other series of Indebtedness, executed by the lenders thereunder (or the applicable
agent thereunder on their behalf), in form and substance reasonably satisfactory to Parent, no later than three (3) Business Days
prior to the Closing Date (or such later date as Parent may agree in writing, but in any event, on or prior to the Closing Date),
setting forth all amounts (including the outstanding principal, accrued and unpaid interest and all prepayment, defeasance or other
fees and penalties) required to be paid by the Company or any other Company Entity under the Company Credit Agreement to cause
the termination thereof on the Closing Date and the release of all Liens, if any, in connection therewith on the assets of the
Company or any Company Subsidiary or otherwise on the business or operations of the Company or any of the Company Subsidiaries
(collectively, the “Funded Debt Payoff Amount”). Notwithstanding anything to the contrary in this Agreement,
no Company Entity shall be obligated, by virtue of this Agreement, to make any prepayments with respect to the amounts outstanding
under the Company Credit Agreement (i) prior to the Closing Date and (ii) unless Parent or Merger Sub provides funds to the Company
in an amount sufficient to, or places in escrow or otherwise pays on behalf of such Company Entity, the Funded Debt Payoff Amount.
Section 6.20 Partnership
Agreement. Within twenty (20) Business Days after the date of this Agreement, Parent and the Company shall cooperate in good
faith and use their reasonable best efforts to revise the existing Company Partnership Agreement in a manner consistent with Exhibit
A, which agreement shall become the limited partnership agreement of the Surviving Partnership at the Partnership Merger Effective
Time (as so amended and restated, the “Surviving Partnership Agreement”).
Article VII
CONDITIONS
Section 7.1 Conditions
to the Obligations of Each Party. The respective obligations of each party to effect the Mergers and to consummate the other
transactions contemplated by this Agreement shall be subject to the satisfaction or (to the extent permitted by Law) waiver by
each of the parties, at or prior to the Effective Time, of the following conditions:
(a) Stockholder
Approvals. The Company Stockholder Approval shall have been obtained.
(b) No
Restraints. No Law, Order (whether temporary, preliminary or permanent) or other legal restraint or prohibition entered, enacted,
promulgated, enforced or issued by any Governmental Authority of competent jurisdiction shall be in effect which prohibits, makes
illegal, enjoins, or otherwise restricts, prevents or prohibits the consummation of the Mergers or any of the transactions contemplated
by this Agreement.
(c) Form
S-4. The Form S-4 shall have been declared effective by the SEC under the Securities Act and no stop order suspending the effectiveness
of the Form S-4 shall have been issued by the SEC and no proceedings for that purpose shall have been initiated or threatened by
the SEC that have not been withdrawn.
(d) Listing.
The shares of Parent Common Stock to be issued in the Mergers shall have been authorized for listing on the NYSE, subject to official
notice of issuance.
Section 7.2 Conditions
to the Obligations of Parent and Merger Sub. The respective obligations of the Parent Parties to effect the Mergers and to
consummate the other transactions contemplated by this Agreement are subject to the satisfaction or (to the extent permitted by
Law) waiver by Parent, at or prior to the Effective Time, of the following additional conditions:
(a) Representations
and Warranties. (i) The representations and warranties set forth in Section 4.1 (Organization and Qualification; Subsidiaries),
Section 4.3(a) (Capital Structure) (except for the first two sentences and the last two sentences), Section 4.4 (Authority),
Section 4.19 (Opinion of Financial Advisor), Section 4.20 (Takeover Statutes), Section 4.21 (Vote Required),
Section 4.22 (Brokers), Section 4.25 (Advisor) and Section 4.29 (Fees and Disbursements) shall be true and
correct in all material respects as of the date of this Agreement and as of the Effective Time, as though made as of the Effective
Time, (ii) the representations and warranties set forth in the first two sentences and the last two sentences of Section 4.3(a)
(Capital Structure) shall be true and correct in all but de minimis respects as of the date of this Agreement and as of the Effective
Time, as though made as of the Effective Time, (iii) Parent shall be reasonably satisfied that the representations and warranties
set forth in Section 4.17(b)(i) and Section 4.17(b)(ii) shall be true and correct in all respects (notwithstanding
anything contained in Section 4.17(b) of the Company Disclosure Letter) as of the Effective Time, as though made as of the
Effective Time (it being understood that this condition shall automatically be satisfied if the ruling described in Schedule
6.11(c) is obtained, and the failure to obtain such ruling shall not in and of itself be determinative in concluding that this
condition has not been satisfied), and (iv) each of the other representations and warranties of the Company and the Company Operating
Partnership contained in this Agreement shall be true and correct as of the date of this Agreement and as of the Effective Time,
as though made as of the Effective Time, except (x) in each case, representations and warranties that are made as of a specific
date shall be true and correct only on and as of such date, and (y) in the case of clause (iv) where the failure of such representations
or warranties to be true and correct (without giving effect to any materiality or “Company Material Adverse Effect”
qualifications set forth therein) does not have, and would not reasonably be expected to have, individually or in the aggregate,
a Company Material Adverse Effect.
(b) Agreements
and Covenants. The Company and the Company Operating Partnership shall have performed or complied in all material respects
with all agreements and covenants required by this Agreement to be performed or complied with by it on or prior to the Closing
Date.
(c) Officer’s
Certificate. The Company shall have delivered to Parent a certificate, dated the date of the Closing and signed by its chief
executive officer or another senior officer on behalf of the Company, certifying to the effect that the conditions set forth in
Section 7.2(a) and Section 7.2(b) have been satisfied.
(d) Absence
of Material Adverse Effect. Since the date of this Agreement, there shall not have been any event, change or occurrence that,
individually or in the aggregate, has had or would reasonably be expected to have a Company Material Adverse Effect.
(e) REIT
Opinion. The Company shall have received a written opinion of Proskauer Rose LLP on which Parent shall be entitled to rely,
dated as of the Closing Date and in form and substance reasonably satisfactory to Parent, to the effect that, commencing with the
Company’s taxable year that ended on December 31, 2011, the Company has been organized and operated in conformity with
the requirements for qualification and taxation as a REIT under the Code and its actual method of operation has enabled the Company
to meet, through the Effective Time, the requirements for qualification and taxation as a REIT under the Code, which opinion will
be subject to customary exceptions, assumptions and qualifications and based on customary representations contained in an officer’s
certificate executed by the Company provided pursuant to, and as described in, Section 6.1(b).
(f) Section
368 Opinion. Parent shall have received the written opinion of its special counsel, Wachtell, Lipton, Rosen & Katz, dated
as of the Closing Date and in form and substance reasonably satisfactory to Parent, to the effect that, on the basis of facts,
representations and assumptions set forth or referred to in such opinion, the Merger will qualify as a reorganization within the
meaning of Section 368(a) of the Code. In rendering such opinion, Wachtell, Lipton, Rosen & Katz may rely upon the Company
Tax Representation Letter and Parent Tax Representation Letter. The condition set forth in this Section 7.2(f) shall not
be waivable after receipt of the Company Stockholder Approval, unless further stockholder approval is obtained with appropriate
disclosure.
(g) Regulatory
Approvals. All Required Regulatory Approvals shall have been obtained and remain in full force and effect, and all waiting
periods relating to such Required Regulatory Approvals shall have expired or been terminated.
(h) Termination
Agreements. The Termination Agreements shall be in full force and effect, and no provision thereof shall have been amended,
modified or waived.
Section 7.3 Conditions
to the Obligations of the Company. The obligations of the Company and the Company Operating Partnership to effect the Mergers
and to consummate the other transactions contemplated by this Agreement are subject to the satisfaction or (to the extent permitted
by Law) waiver by the Company, at or prior to the Effective Time, of the following additional conditions:
(a) Representations
and Warranties. (i) The representations and warranties set forth in Section 5.1 (Organization and Qualification; Subsidiaries),
Section 5.3(a) (Capital Structure) (except the first two sentences), Section 5.4 (Authority), Section 5.12
(Vote Required), Section 5.13 (Brokers); Section 5.14 (Investment Company Act) and Section 5.17 (Takeover
Statutes) shall be true and correct in all material respects as of the date of this Agreement and as of the Effective Time, as
though made as of the Effective Time, (ii) the representations and warranties set forth in the first two sentences of Section
5.3(a) (Capital Structure) shall be true and correct in all but de minimis respects as of the date of this Agreement and as
of the Effective Time, as though made as of the Effective Time, and (iii) each of the other representations and warranties of the
Parent Parties contained in this Agreement shall be true and correct as of the date of this Agreement and as of the Effective Time,
as though made as of the Effective Time, except (x) in each case, representations and warranties that are made as of a specific
date shall be true and correct only on and as of such date, and (y) in the case of clause (iii) where the failure of such representations
or warranties to be true and correct (without giving effect to any materiality or “Parent Material Adverse Effect”
qualifications set forth therein) does not have, and would not reasonably be expected to have, individually or in the aggregate,
a Parent Material Adverse Effect.
(b) Agreements
and Covenants. The Parent Parties shall have performed or complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by them on or prior to the Closing Date.
(c) Officer’s
Certificate. Parent shall have delivered to the Company a certificate, dated the date of the Closing and signed by its chief
executive officer or another senior officer on behalf of Parent, certifying to the effect that the conditions set forth in Section 7.3(a)
and Section 7.3(b) have been satisfied.
(d) Absence
of Material Adverse Effect. Since the date of this Agreement, there shall not have been any event, change or occurrence that,
individually or in the aggregate, has had or would reasonably be expected to have a Parent Material Adverse Effect.
(e) REIT
Opinion. Parent shall have received a written opinion of nationally recognized tax counsel reasonably acceptable to the Company
(“Parent REIT Counsel”) on which the Company shall be entitled to rely, dated as of the Closing Date and in
form and substance reasonably satisfactory to the Company, to the effect that, commencing with Parent’s taxable year that
ended on December 31, 1999, Parent has been organized and has operated in conformity with the requirements for qualification and
taxation as a REIT under the Code, and its proposed method of operation will enable Parent to continue to meet the requirements
for qualification and taxation as a REIT under the Code, which opinion will be subject to customary exceptions, assumptions and
qualifications and based on customary representations contained in an officer’s certificate executed by Parent and provided
pursuant to Section 6.2(a).
(f) Section
368 Opinion. The Company shall have received a written opinion of its special counsel, Proskauer Rose LLP, dated as of the
Closing Date and in form and substance reasonably satisfactory to the Company, to the effect that, on the basis of facts, representations
and assumptions set forth or referred to in such opinion, the Merger will qualify as a reorganization within the meaning of Section 368(a)
of the Code. In rendering such opinion, Proskauer Rose LLP may rely upon the Company Tax Representation Letter and Parent Tax Representation
Letter. The condition set forth in this Section 7.3(f) shall not be waivable after receipt of the Company Stockholder Approval,
unless further stockholder approval is obtained with appropriate disclosure.
Article VIII
TERMINATION, AMENDMENT AND WAIVER
Section 8.1 Termination.
This Agreement may be terminated at any time prior to the Effective Time, whether before or after receipt of the Company Stockholder
Approval (except as otherwise expressly noted), as follows:
(a) by
mutual written agreement of each of Parent and the Company; or
(b) by
either Parent or the Company, if:
(i) the
Effective Time shall not have occurred on or before 5:00 P.M. (Eastern Time) on January 31, 2015 (the “Outside Date”),
provided, that the right to terminate this Agreement pursuant to this Section 8.1(b)(i) shall not be available to
any party if the failure of such party (and in the case of Parent, including the failure of the other Parent Parties, and in the
case of the Company, including the failure of the Company Operating Partnership) to perform any of its obligations under this Agreement
has been a principal cause of, or resulted in, the failure of the Mergers to be consummated on or before such date; provided,
further, that if, on the Outside Date, any of the conditions to the Closing set forth in Section 7.2(a)(iii) or Section
7.2(g) shall not have been satisfied or waived by Parent but all other conditions to the Closing set forth in Section 7.1
and Section 7.2 shall have been satisfied, then the Company or Parent, by written notice delivered to the other prior to
5:00 P.M. (Eastern Time) on January 31, 2015, may elect to extend the Outside Date until 5:00 P.M. (Eastern Time) on February 28,
2015, and such time and date shall become the Outside Date for purposes of this Agreement; provided, further, that
if, on February 28, 2015, any of the conditions to the Closing set forth in Section 7.2(a)(iii) or Section 7.2(g)
shall not have been satisfied or waived by Parent but all other conditions to the Closing set forth in Section 7.1 and Section
7.2 shall have been satisfied, then the Company or Parent, by written notice delivered to the other prior to 5:00 P.M. (Eastern
Time) on February 28, 2015, may elect to extend the Outside Date until 5:00 P.M. (Eastern Time) on March 31, 2015, and such time
and date shall become the Outside Date for purposes of this Agreement; provided, further, that if, on March 31, 2015,
any of the conditions to the Closing set forth in Section 7.2(a)(iii) or Section 7.2(g) shall not have been satisfied
or waived by Parent but all other conditions to the Closing set forth in Section 7.1 and Section 7.2 shall have been
satisfied, then the Company or Parent, by written notice delivered to the other prior to 5:00 P.M. (Eastern Time) on March 31,
2015, may elect to extend the Outside Date until 5:00 P.M. (Eastern Time) on April 30, 2015, and such time and date shall become
the Outside Date for purposes of this Agreement; provided, further, that if, on April 30, 2015, any of the conditions
to the Closing set forth in Section 7.2(a)(iii) or Section 7.2(g) shall not have been satisfied or waived by Parent
but all other conditions to the Closing set forth in Section 7.1 and Section 7.2 shall have been satisfied, then
the Company or Parent, by written notice delivered to the other prior to 5:00 P.M. (Eastern Time) on April 30, 2015, may elect
to extend the Outside Date until 5:00 P.M. (Eastern Time) on May 31, 2015, and such date shall become the Outside Date for purposes
of this Agreement; or
(ii) any
Governmental Authority of competent jurisdiction shall have issued an Order permanently restraining, enjoining or otherwise prohibiting
the transactions contemplated by this Agreement, and such Order or other action shall have become final and non-appealable; provided,
however, that the right to terminate this Agreement under this Section 8.1(b)(ii) shall not be available to
a party if the issuance of such final, non-appealable Order was primarily due to the failure of such party (and in the case of
Parent, including the failure of the other Parent Parties, and in the case of the Company, including the failure of the Company
Operating Partnership) to perform any of its obligations under this Agreement, including pursuant to Section 6.6; or
(iii) the
Company Stockholder Approval shall not have been obtained at a duly held Company Stockholder Meeting (including any adjournment
or postponement thereof) at which the Merger and the other transactions contemplated hereby have been voted upon, provided that
the right to terminate this Agreement under this Section 8.1(b)(iii) shall not be available to a party if the failure to
obtain such Company Stockholder Approval was primarily due to such party’s failure (and in the case of Parent, including
the failure of any other Parent Party, and in the case of the Company, including the failure of the Company Operating Partnership)
to perform any of its obligations under this Agreement.
(c) by
the Company:
(i) if
any Parent Party shall have breached or failed to perform in any material respect any of its representations, warranties, covenants
or other agreements set forth in this Agreement, which breach or failure to perform (x) would, or would reasonably be expected
to, result in a failure of a condition set forth in Section 7.3(a) or Section 7.3(b) and (y) cannot be cured on or
before the Outside Date or, if curable, is not cured by the Parent Parties within twenty (20) days of receipt by Parent of written
notice of such breach or failure; provided that the Company shall not have the right to terminate this Agreement pursuant to this
Section 8.1(c)(i) if the Company is then in breach of any of its representations, warranties, covenants or agreements
set forth in this Agreement such that the conditions set forth in either Section 7.2(a) or Section 7.2(b) would not
be satisfied; or
(ii) at
any time prior to the receipt of the Company Stockholder Approval in order to enter into an Alternative Acquisition Agreement with
respect to a Superior Proposal in accordance with Section 6.5(d); provided, that such termination shall be null and
void unless the Company shall concurrently pay the Termination Fee in accordance with Section 8.3.
(d) by
Parent, if:
(i) the
Company or the Company Operating Partnership shall have breached or failed to perform in any material respect any of its representations,
warranties, covenants or other agreements set forth in this Agreement (other than the representations and warranties in Section
4.17(b)(i) or Section 4.17(b)(ii)), which breach or failure to perform (x) would, or would reasonably be expected to,
result in a failure of a condition set forth in Section 7.2(a) or Section 7.2(b) and (y) cannot be cured on or before
the Outside Date or, if curable, is not cured by the Company within twenty (20) days of receipt by the Company of written notice
of such breach or failure; provided that Parent shall not have the right to terminate this Agreement pursuant to this Section
8.1(d)(i) if any Parent Party is then in breach of any of their respective representations, warranties, covenants or agreements
set forth in this Agreement such that the conditions set forth in either Section 7.3(a) or Section 7.3(b) would not
be satisfied; or
(ii) (x)
the Company Board shall have made an Adverse Recommendation Change or (y) the Company shall have materially breached its obligations
under Section 6.5 or its obligations pursuant to the third sentence of Section 6.3(c), which material breach, in
each case in this clause (y), if curable by the Company, shall not have been fully cured by the Company within five (5) calendar
days following the Company’s receipt of written notice of such material breach (provided that any material breach
pursuant to this clause (y) that results in an Acquisition Proposal that is publicly disclosed shall not be curable).
Section 8.2 Effect
of Termination. In the event that this Agreement is terminated and the Merger and the other transactions contemplated by this
Agreement are abandoned pursuant to Section 8.1, written notice thereof shall be given to the other party or parties, specifying
the provisions hereof pursuant to which such termination is made and describing the basis therefor in reasonable detail, and this
Agreement shall forthwith become null and void and of no further force or effect whatsoever without liability on the part of any
party hereto (or any of the other Company Entities, the other Parent Entities or any of the Company’s or Parent’s respective
Representatives), and all rights and obligations of any party hereto shall cease; provided, however, that, notwithstanding
anything in the foregoing to the contrary, (a) no such termination shall relieve any party hereto of any liability or damages resulting
from or arising out of any fraud or willful and intentional breach of this Agreement and (b) the Confidentiality Agreement, this
Section 8.2, Section 8.3, Section 8.6, Article IX and the definitions of all defined terms appearing
in such sections shall survive any termination of this Agreement pursuant to Section 8.1. If this Agreement is terminated
as provided herein, all filings, applications and other submissions made pursuant to this Agreement, to the extent practicable,
shall be withdrawn from the Governmental Authority or other Person to which they were made.
Section 8.3 Fees
and Expenses.
(a) If,
but only if, the Agreement is terminated:
(i) by
either the Company or Parent pursuant to Section 8.1(b)(i) or by Parent pursuant to Section 8.1(d)(i) and (A) in
the case of a termination pursuant to Section 8.1(b)(i), the Company Stockholder Approval shall not have been obtained prior
to such termination, and (B) in any such case (x) after the date of this Agreement, an Acquisition Proposal shall have been
made to the Company or any Person shall have publicly announced an intention (whether or not conditional) to make an Acquisition
Proposal with respect to the Company (and such Acquisition Proposal or publicly announced intention shall not have been publicly
withdrawn without qualification before such termination), and (y) the Company, within twelve (12) months of the termination of
this Agreement, consummates a transaction regarding, or executes a definitive agreement with respect to, an Acquisition Proposal
(whether or not the same Acquisition Proposal as that referred to in clause (x)), then the Company shall pay, or cause to be paid,
to Parent, the Termination Fee, by wire transfer of same day funds to an account designated by Parent, not later than the earlier
of the execution of a definitive agreement with respect to and the consummation of such transaction arising from such Acquisition
Proposal; provided, however, that for purposes of this Section 8.3(a)(i), the references to “fifteen percent (15%)”
in the definition of Acquisition Proposal shall be deemed to be references to “fifty percent (50%)”; or
(ii) by
either the Company or Parent pursuant to Section 8.1(b)(iii), the Company shall pay, or cause to be paid, to Parent the
Parent Expense Amount (by wire transfer to an account designated by Parent) within two (2) Business Days of such termination; or
(iii) by
either the Company or Parent pursuant to Section 8.1(b)(iii), and (x) after the date of this Agreement, an Acquisition
Proposal shall have been made to the Company or any Person shall have publicly announced an intention (whether or not conditional)
to make an Acquisition Proposal with respect to the Company (and such Acquisition Proposal or publicly announced intention shall
not have been publicly withdrawn without qualification before the Company Stockholder Meeting), and (y) the Company, within
twelve (12) months of the termination of this Agreement, consummates a transaction regarding, or executes a definitive agreement
with respect to, an Acquisition Proposal (whether or not the same Acquisition Proposal as that referred to in clause (x)), then
the Company shall pay or cause to be paid, to Parent the Termination Fee (less, if previously paid pursuant to Section 8.3(a)(ii)
above, the Parent Expense Amount), by wire transfer of same day funds to an account designated by Parent, not later than the earlier
of the execution of a definitive agreement with respect to and the consummation of such transaction arising from such Acquisition
Proposal; provided, however, that for purposes of this Section 8.3(a)(iii), the references to “fifteen
percent (15%)” in the definition of Acquisition Proposal shall be deemed to be references to “fifty percent (50%)”;
or
(iv) by
the Company pursuant to Section 8.1(c)(ii), then the Company shall pay, or cause to be paid, to Parent the Termination Fee,
by wire transfer of same day funds to an account designated by Parent as a condition to the effectiveness of such termination;
or
(v) by
Parent pursuant to Section 8.1(d)(ii) (or by the Company pursuant to Section 8.1(b)(iii) and at the time of such
termination Parent would have been permitted to terminate this Agreement pursuant to Section 8.1(d)(ii)) then the Company
shall pay, or cause to be paid, to Parent the Termination Fee, by wire transfer of same day funds to an account designated by Parent,
within two (2) Business Days of such termination.
(b) Notwithstanding
anything to the contrary set forth in this Agreement, the parties agree that:
(i) under
no circumstances shall the Company be required to pay the Termination Payment earlier than one (1) full Business Day after receipt
of appropriate wire transfer instructions from the party entitled to payment; and
(ii) under
no circumstances shall the Company be required to pay the Termination Fee on more than one occasion.
(c) Each
of the parties hereto acknowledges that (i) the agreements contained in this Section 8.3 are an integral part of the transactions
contemplated by this Agreement, (ii) the Termination Payment is not a penalty, but is liquidated damages, in a reasonable
amount that will compensate Parent in the circumstances in which such fee is payable for the efforts and resources expended and
opportunities foregone while negotiating this Agreement and in reliance on this Agreement and on the expectation of the consummation
of the transactions contemplated hereby, which amount would otherwise be impossible to calculate with precision, and (iii) without
these agreements, Parent would not enter into this Agreement; accordingly, if the Company fails to timely pay any amount due pursuant
to this Section 8.3 and, in order to obtain such payment, Parent commences a suit that results in a judgment against the
Company for the payment of any amount set forth in this Section 8.3, the Company shall pay Parent its costs and Expenses
in connection with such suit, together with interest on such amount at the annual rate of five percent (5%) for the period from
the date such payment was required to be made through the date such payment was actually received, or such lesser rate as is the
maximum permitted by applicable Law.
(d) (i) If
the Company (the “Termination Payor”) is required to pay Parent (the “Termination Payee”)
the Termination Payment such Termination Payment shall be paid into escrow on the date such payment is required to be paid by the
Termination Payor pursuant to this Agreement by wire transfer of immediately available funds to an escrow account designated in
accordance with this Section 8.3(d). In the event that the Termination Payor is obligated to pay the Termination Payee
the Termination Payment, the amount payable to the Termination Payee in any tax year of the Termination Payee shall not exceed
the lesser of (i) the Termination Payment payable to the Termination Payee, and (ii) the sum of (A) the maximum amount that can
be paid to the Termination Payee without causing the Termination Payee to fail to meet the requirements of Section 856(c)(2)
and (3) of the Code for the relevant tax year, determined as if the payment of such amount did not constitute income described
in Sections 856(c)(2) or 856(c)(3) of the Code (“Qualifying Income”) and the Termination Payee has $1,000,000
of income from unknown sources during such year which is not Qualifying Income (in addition to any known or anticipated income
which is not Qualifying Income), in each case, as determined by the Termination Payee’s independent accountants, plus (B)
in the event the Termination Payee receives either (x) a letter from the Termination Payee’s counsel indicating that the
Termination Payee has received a ruling from the IRS as described below in this Section 8.3(d) or (y) an opinion from
the Termination Payee’s outside counsel as described below in this Section 8.3(d), an amount equal to the excess of
the Termination Payment less the amount payable under clause (A) above.
(ii) To
secure the Termination Payor’s obligation to pay these amounts, the Termination Payor shall deposit into escrow an amount
in cash equal to the Termination Payment with an escrow agent selected by the Termination Payor on such terms (subject to this
Section 8.3(d)) as shall be mutually agreed upon by the Termination Payor, the Termination Payee and the escrow agent. The
payment or deposit into escrow of the Termination Payment pursuant to this Section 8.3(d) shall be made at the time the
Termination Payor is obligated to pay the Termination Payee such amount pursuant to Section 8.3 by wire transfer. The escrow
agreement shall provide that the Termination Payment in escrow or any portion thereof shall not be released to the Termination
Payee unless the escrow agent receives any one or combination of the following: (i) a letter from the Termination Payee’s
independent accountants indicating the maximum amount that can be paid by the escrow agent to the Termination Payee without causing
the Termination Payee to fail to meet the requirements of Sections 856(c)(2) and (3) of the Code determined as if the payment of
such amount did not constitute Qualifying Income and the Termination Payee has $1,000,000 of income from unknown sources during
such year which is not Qualifying Income (in addition to any known or anticipated income which is not Qualifying Income), in which
case the escrow agent shall release such amount to the Termination Payee, or (ii) a letter from the Termination Payee’s counsel
indicating that (A) the Termination Payee received a ruling from the IRS holding that the receipt by the Termination Payee of the
Termination Payment would either constitute Qualifying Income or would be excluded from gross income within the meaning of Sections
856(c)(2) and (3) of the Code or (B) the Termination Payee’s outside counsel has rendered a legal opinion to the effect that
the receipt by the Termination Payee of the Termination Payment should either constitute Qualifying Income or should be excluded
from gross income within the meaning of Sections 856(c)(2) and (3) of the Code, in which case the escrow agent shall release the
remainder of the Termination Payment to the Termination Payee. The Termination Payor agrees to amend this Section 8.3(d)
at the reasonable request of the Termination Payee in order to (i) maximize the portion of the Termination Payment that may be
distributed to the Termination Payee hereunder without causing the Termination Payee to fail to meet the requirements of Sections
856(c)(2) and (3) of the Code, or (ii) assist the Termination Payee in obtaining a favorable ruling or legal opinion from
its outside counsel, in each case, as described in this Section 8.3(d). Any amount of the Termination Payment that remains
unpaid as of the end of a taxable year shall be paid as soon as possible during the following taxable year, subject to the foregoing
limitations of this Section 8.3(d).
Section 8.4 Amendment.
Subject to compliance with applicable Law, this Agreement may be amended by mutual agreement of the parties hereto by action taken
or authorized by their respective boards of directors (or similar governing body or entity) at any time before or after receipt
of the Company Stockholder Approval and prior to the Effective Time; provided, however, that after the Company Stockholder
Approval has been obtained, there shall not be (a) any amendment of this Agreement that changes the amount or the form of
the consideration to be delivered under this Agreement to the holders of Company Common Stock, or which by applicable Law or in
accordance with the rules of any stock exchange requires the further approval of the stockholders of the Company without such further
approval of such stockholders, or (b) any amendment or change not permitted under applicable Law. This Agreement may not be amended
except by an instrument in writing signed by each of the parties hereto.
Section 8.5 Waiver.
At any time prior to the Effective Time, subject to applicable Law, the Parent Parties, on the one hand, and the Company and the
Company Operating Partnership, on the other hand, may (a) extend the time for the performance of any obligation or other act of
the others, (b) waive any inaccuracy in the representations and warranties of the others contained herein or in any document delivered
pursuant hereto, and (c) subject to the proviso of Section 8.4, waive compliance with any agreement of the others or
any condition of such parties contained herein. Any agreement on the part of a party hereto to any such extension or waiver shall
be valid only if set forth in an instrument in writing signed by the party or parties to be bound thereby. Notwithstanding the
foregoing, no failure or delay by the Company, the Company Operating Partnership, Parent, OP Merger Sub or Merger Sub in exercising
any right hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further
exercise of any other right hereunder.
Section 8.6 Fees
and Expenses. Except as otherwise provided in this Agreement, all Expenses incurred in connection with this Agreement and the
transactions contemplated by this Agreement shall be paid by the party incurring such Expenses, whether or not the transactions
contemplated by this Agreement are consummated; provided, however, that the Company and Parent shall share equally
all Expenses related to the printing and filing of the Form S-4 and the printing, filing and distribution of the Proxy Statement,
other than attorneys’ and accountants’ fees.
Section 8.7 Transfer
Taxes. Parent and the Company shall cooperate in the preparation, execution and filing of all returns, questionnaires, applications
or other documents regarding any real property transfer or gains, sales, use, transfer, value added, stock transfer or stamp taxes,
any transfer, recording, registration and other fees and any similar taxes that become payable in connection with the transactions
contemplated by this Agreement (together with any related interests, penalties or additions to Tax, “Transfer Taxes”),
and shall cooperate in attempting to minimize the amount of Transfer Taxes. From and after the Effective Time, the Surviving Entity
shall pay or cause to be paid, without deduction or withholding from any consideration or amounts payable to holders of the Company
Common Stock, all Transfer Taxes.
Article IX
GENERAL PROVISIONS
Section 9.1 Non-Survival
of Representations and Warranties. None of the representations or warranties in this Agreement or any certificate or other
writing delivered pursuant to this Agreement, including any rights arising out of any breach of such representations or warranties,
shall survive the earlier of (a) the Effective Time or (b) termination of this Agreement (except, in the case of termination, as
set forth in Section 8.2), and after such time there shall be no liability in respect thereof (except, in the case of termination,
as set forth in Section 8.2), whether such liability has accrued prior to or after such expiration of the representations
and warranties. This Section 9.1 does not limit any covenant or agreement of the parties which by its terms contemplates
performance after the Effective Time or the termination of this Agreement. The Confidentiality Agreement and the Parent Confidentiality
Agreement will survive termination of this Agreement in accordance with its terms.
Section 9.2 Notices.
Except for any notice that is specifically required by the terms of this Agreement to be delivered orally, any notice, request,
claim, demand and other communication hereunder shall be in writing and shall be deemed to have been duly given or made as follows:
(a) if personally delivered to an authorized representative of the recipient, when actually delivered to such authorized representative;
(b) if sent by facsimile transmission (providing confirmation of transmission), when transmitted, or if sent by e-mail of a pdf
attachment, upon acknowledgement of receipt of such notice by the intended recipient (provided that any notice received
by facsimile transmission or otherwise at the addressee’s location on any Business Day after 5:00 p.m. (in the time zone
of the recipient) or any day other than a Business Day shall be deemed to have been received at 9:00 a.m. on the next Business
Day); (c) if sent by reliable overnight delivery service (such as DHL or Federal Express) with proof of service, upon receipt of
proof of delivery; and (d) if sent by certified or registered mail (return receipt requested and first-class postage prepaid),
upon receipt; provided, in each case, such notice, request, claim, demand or other communication is addressed as follows (or at
such other address for a party as shall be specified in a notice given in accordance with this Section 9.2):
if to the Company or the Company Operating
Partnership prior to the Closing:
American Realty Capital Healthcare Trust, Inc.
405 Park Avenue, 15th Floor
New York, New York 10022
Fax: (212) 415-6507; and (646) 861-7743
Phone: (212) 415-6501
Attention: Nicholas S. Schorsch and James A. Tanaka
Email: nschorsch@arlcap.com; and jtanaka@rcscapital.com
with a copy (which shall not constitute
notice) to:
Proskauer Rose LLP
Eleven Times Square
New York, New York 10036
Phone: (212) 969-3000
Fax: (212) 969-2900
Attention: Peter M. Fass, Esq., Steven L. Lichtenfeld, Esq., and
Daniel I. Ganitsky, Esq.
Email: PFass@proskauer.com; SLichtenfeld@proskauer.com; and
DGanitsky@proskauer.com
if to the Parent Parties:
Ventas, Inc.
10350 Ormsby Park Place, Suite 300
Louisville, Kentucky 40223
Fax: (502) 357-9029
Phone: (502) 357-9029
Attention: T. Richard Riney, Esq.
Email: rriney@ventasreit.com
with a copy (which shall not constitute
notice) to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd St
New York, New York 10019
Phone: (212) 403-1000
Fax: (212) 403-2000
Attention: Robin Panovka, Esq. and Ronald Chen, Esq.
Email: RPanovka@WLRK.com; and RCChen@wlrk.com
Section 9.3 Interpretation;
Certain Definitions. The parties hereto have participated jointly in the negotiation and drafting of this Agreement. Consequently,
in the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties hereto, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship
of any provision of this Agreement. References to “this Agreement” shall include the Company Disclosure Letter and
the Parent Disclosure Letter. When a reference is made in this Agreement to an Article, Section, Appendix, Annex or Exhibit, such
reference shall be to an Article or Section of, or an Appendix, Annex or Exhibit to, this Agreement, unless otherwise indicated.
The table of contents and headings for this Agreement are for reference purposes only and shall not affect in any way the meaning
or interpretation of this Agreement. Whenever the words “include,” “includes” or “including”
are used in this Agreement, they shall be deemed to be followed by the words “without limitation.” The words “hereof,”
“herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement
as a whole and not to any particular provision of this Agreement. All terms defined in this Agreement shall have the defined meanings
when used in any certificate or other instrument made or delivered pursuant hereto unless otherwise defined therein. The definitions
contained in this Agreement are applicable to the singular as well as the plural forms of such terms and to the masculine as well
as to the feminine and neuter genders of such term. Any Law defined or referred to herein or in any agreement or instrument that
is referred to herein means such Law as from time to time amended, modified or supplemented, including (in the case of statutes)
by succession of comparable successor Laws. References to a Person are also to its successors and permitted assigns. All references
to “dollars” or “$” refer to currency of the United States of America (unless otherwise expressly provided
herein).
Section 9.4 Severability.
If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced under any present or future
Law or public policy, (a) such term or other provision shall be fully separable, (b) this Agreement shall be construed and
enforced as if such invalid, illegal or unenforceable provision had never comprised a part hereof, and (c) all other conditions
and provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable
term or other provision or by its severance herefrom so long as the economic or legal substance of the transactions contemplated
by this Agreement is not affected in any manner materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement
so as to effect promptly the original intent of the parties as closely as possible in a mutually acceptable manner in order that
transactions contemplated by this Agreement be consummated as originally contemplated to the fullest extent possible.
Section 9.5 Assignment;
Delegation. Other than to the Surviving Entity, neither this Agreement nor any rights, interests or obligations hereunder shall
be assigned or delegated, in whole or in part, by any of the parties hereto (whether by operation of Law or otherwise) without
the prior written consent of the other parties hereto.
Section 9.6 Entire
Agreement. This Agreement (including the Exhibits, Annexes and Appendices hereto) constitutes, together with the Confidentiality
Agreement, the entire agreement between the parties with respect to the subject matter hereof and thereof and supersedes all prior
agreements and understandings, both written and oral, among the parties, or any of them, with respect to the subject matter hereof
and thereof.
Section 9.7 No
Third-Party Beneficiaries. This Agreement is not intended to and shall not confer any rights or remedies upon any Person other
than the parties hereto and their respective successors and permitted assigns, except for the provisions of Section 6.10
(from and after the Effective Time), which shall be to the benefit of the parties referred to in such section. The representations
and warranties in this Agreement are the product of negotiations among the parties hereto and are for the sole benefit of the parties
hereto. Any inaccuracies in such representations and warranties are subject to waiver by the parties hereto in accordance with
Section 8.5 without notice or liability to any other Person. The representations and warranties in this Agreement may represent
an allocation among the parties hereto of risks associated with particular matters regardless of the knowledge of any of the parties
hereto. Accordingly, Persons other than the parties hereto may not rely upon the representations and warranties in this Agreement
as characterizations of actual facts or circumstances as of the date of this Agreement or as of any other date.
Section 9.8 Specific
Performance. The parties hereto agree that irreparable damage, for which monetary damages (even if available) would not be
an adequate remedy, would occur in the event that the parties hereto do not perform the provisions of this Agreement (including
failing to take such actions as are required of it hereunder to consummate the Mergers and the other transactions contemplated
by this Agreement) in accordance with its specified terms or otherwise breach such provisions. Accordingly, the parties acknowledge
and agree that the parties shall be entitled to seek an injunction, specific performance and other equitable relief to prevent
breaches of this Agreement and to enforce specifically the terms and provisions hereof, in addition to any other remedy to which
they are entitled at Law or in equity. Each of the parties agrees that it will not oppose the granting of an injunction, specific
performance and other equitable relief on the basis that any other party has an adequate remedy at Law or that any award of specific
performance is not an appropriate remedy for any reason at Law or in equity. Any party seeking an injunction or injunctions to
prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement shall not be required
to provide any bond or other security in connection with any such order or injunction.
Section 9.9 Counterparts.
This Agreement may be executed in one or more counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.
Delivery of an executed counterpart of a signature page to this Agreement by facsimile transmission or by e-mail of a pdf attachment
shall be effective as delivery of a manually executed counterpart of this Agreement.
Section 9.10 Governing
Law. This Agreement and all Actions (whether based on contract, tort or otherwise), directly or indirectly, arising out of
or relating to this Agreement or the actions of the parties hereto in the negotiation, administration, performance and enforcement
thereof, shall be governed by, and construed in accordance with, the Laws of the State of Maryland, without giving effect to any
choice or conflict of Laws provision or rule (whether of the State of Maryland or any other jurisdiction) that would cause the
application of the Laws of any jurisdiction other than the State of Maryland.
Section 9.11 Consent
to Jurisdiction.
(a) Each
of the parties hereto hereby irrevocably submits to the exclusive jurisdiction of the courts of the State of Maryland and to the
jurisdiction of the United States District Court for the State of Maryland (the “MD Courts”), for the purpose
of any Action (whether based on contract, tort or otherwise), directly or indirectly, arising out of or relating to this Agreement
or the actions of the parties hereto in the negotiation, administration, performance and enforcement thereof, and each of the parties
hereto hereby irrevocably agrees that all claims in respect to such Action may be heard and determined exclusively in any MD Court.
(b) Each
of the parties hereto (i) irrevocably consents to the service of the summons and complaint and any other process in any other Action
relating to the transactions contemplated by this Agreement, on behalf of itself or its property, in the manner provided by Section
9.2 and nothing in this Section 9.11 shall affect the right of any party to serve legal process in any other manner
permitted by Law, (ii) consents to submit itself to the personal jurisdiction of the MD Courts in the event any dispute arises
out of this Agreement or the transactions contemplated by this Agreement, (iii) agrees that it will not attempt to deny or defeat
such personal jurisdiction by motion or other request for leave from any such MD Court and (iv) agrees that it will not bring
any Action relating to this Agreement or the transactions contemplated by this Agreement in any court other than the MD Courts.
Each of party hereto agrees that a final judgment in any Action shall be conclusive and may be enforced in other jurisdictions
by suit on the judgment or in any other manner provided by Law.
Section 9.12 WAIVER
OF JURY TRIAL. EACH OF THE PARTIES HERETO ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE OUT OF OR RELATING TO
THIS AGREEMENT (INCLUDING WITH RESPECT TO THE DEBT FINANCING) IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE
EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT SUCH
PARTY MAY HAVE TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE), DIRECTLY
OR INDIRECTLY, ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (INCLUDING WITH RESPECT TO
THE DEBT FINANCING), OR THE ACTIONS OF THE PARTIES HERETO IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT THEREOF.
EACH OF THE PARTIES HERETO CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (B)
EACH SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) EACH SUCH PARTY MAKES THIS WAIVER VOLUNTARILY,
AND (D) EACH SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS
IN THIS SECTION 9.12.
Section 9.13 Consents
and Approvals. For any matter under this Agreement requiring the consent or approval of any party to be valid and binding on
the parties hereto, such consent or approval must be in writing.
[Remainder of page intentionally left
blank; signature pages follow.]
IN WITNESS WHEREOF, the parties hereto have
caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written.
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VENTAS, INC. |
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By: |
/s/ Richard A. Schweinhart |
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Name: |
Richard A. Schweinhart |
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Title: |
Executive Vice President and Chief |
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Financial Officer |
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STRIPE OP, LP |
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By: |
STRIPE SUB, LLC, its general partner |
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By: |
VENTAS, INC., its sole member |
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By: |
/s/ Richard A. Schweinhart |
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Name: |
Richard A. Schweinhart |
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Title: |
Executive Vice President and Chief |
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Financial Officer |
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STRIPE SUB, LLC |
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By: |
VENTAS, INC., its sole member |
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By: |
/s/ Richard A. Schweinhart |
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Name: |
Richard A. Schweinhart |
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Title: |
Executive Vice President and Chief |
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Financial Officer |
IN WITNESS WHEREOF, the parties hereto have
caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written.
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AMERICAN REALTY CAPITAL HEALTHCARE TRUST, INC. |
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By: |
/s/ Thomas P. D’Arcy |
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Name: |
Thomas P. D’Arcy |
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Title: |
Chief Executive Officer |
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AMERICAN REALTY CAPITAL HEALTHCARE TRUST OPERATING PARTNERSHIP, L.P. |
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By: AMERICAN REALTY CAPITAL HEALTHCARE TRUST, INC., its general partner |
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By: |
/s/ Thomas P. D’Arcy |
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Name: |
Thomas P. D’Arcy |
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Title: |
Chief Executive Officer |
[Signature Page to Agreement and Plan
of Merger]
AMENDMENT NO. 1 TO
THIRD AMENDED AND RESTATED ADVISORY
AGEEMENT
This AMENDMENT NO.
1 TO THIRD AMENDED AND RESTATED ADVISORY AGREEMENT (this “Amendment”) is entered into as of June 1, 2014, by
and among American Realty Capital Healthcare Trust, Inc., a Maryland corporation (the “Company”), American Realty
Capital Healthcare Trust Operating Partnership, L.P., a Delaware limited partnership (the “OP”) and American
Realty Capital Healthcare Advisors, LLC, a Delaware limited liability company (the “Advisor”).
RECITALS
A. WHEREAS,
the parties hereto are party to that certain Third Amended and Restated Advisory Agreement, dated April 7, 2014 (the “Agreement”),
pursuant to which the day-to-day business and affairs of the Company are managed by the Advisor.
B. WHEREAS,
the Company and the OP have entered into that certain Agreement and Plan of Merger, dated as of June 1, 2014, by and among Ventas,
Inc., a Delaware corporation (“Parent”), Stripe Sub, LLC, a Delaware limited liability company and a direct
wholly owned subsidiary of Parent (“Merger Sub”), Stripe OP, LP, a Delaware limited partnership (the “OP
Merger Sub”), the Company and the OP (the “Merger Agreement”), pursuant to which, among other things,
the Company will be merged with and into Merger Sub, with Merger Sub being the surviving entity, and the OP Merger Sub will be
merged with and into the OP, with the OP being the surviving entity (the “Transaction”), upon the terms and
subject to the conditions set forth in the Merger Agreement.
C. WHEREAS,
Section 6.8 of the Merger Agreement requires the Company to terminate certain agreements, including the Agreement and the Advisor
has agreed to terminate these agreements without notice.
D. WHEREAS,
Section 17 of the Agreement provides that Agreement may be terminated upon sixty (60) days’ prior written notice.
E. WHEREAS,
in connection with the Merger Agreement, the Company entered into an agreement terminating the 2014 Multi-Year Outperformance Agreement
(the “OPP”) between the Company, the OP and the Advisor (the “OPP Amendment”).
F. WHEREAS,
pursuant to the OPP Amendment, any Award LTIP Units (as defined in the OPP) granted to the Advisor under the OPP will be automatically
cancelled and forfeited as of the Closing.
G. WHEREAS,
consistent with Section 6.8 of the Merger Agreement, and in consideration of the Advisor’s forfeiture of the Award LTIP Units,
termination of the Property Management and Leasing Agreement at Closing without the requisite 60 day notice, termination of the
Agreement at Closing without the requisite 60 day notice and the contribution of American Realty Capital Healthcare Special Limited
Partnership, LLC’s (the “SLP”) right to distributions from the OP as evidenced by the Listing Note Agreement
between the OP and the SLP dated April 7, 2014 (the “Listing Note”) to the OP, the OP will issue to the SLP
5,613,374 OP Units (as defined in the Listing Note).
H. WHEREAS,
(i) pursuant to Section 24 of the Agreement, the parties hereto desire to amend the Agreement to be effective concurrent with the
Closing.
AGREEMENT
In consideration of
the mutual agreements and covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
1. Amendment
of the Agreement.
(a) Section
1 of the Agreement is hereby amended by adding the following new definition in appropriate alphabetical order:
““Closing”
has the meaning set forth in the Agreement and Plan of Merger, dated as of June 1, 2014, by and among Ventas, Inc., a Delaware
corporation (“Parent”), Stripe Sub, LLC, a Delaware limited liability company, Stripe OP, LP, a Delaware limited
partnership, the Company and the OP (the “Merger Agreement”).”
(b) Section
17 of the Agreement is hereby amended and restated as follows:
“17. TERMINATION
BY THE PARTIES. This Agreement may be terminated upon sixty (60) days’ prior written notice (a) by the Independent Directors
of the Company or the Advisor, without Cause and without penalty, (b) by the Advisor for Good Reason, or (c) by the Advisor upon
a Change of Control; provided, that termination of this Agreement with Cause shall be upon forty-five (45) days’
prior written notice. Notwithstanding the foregoing, this Agreement shall terminate automatically and immediately, without notice
and without the need for further action by any party, immediately prior to, and contingent upon, the Closing. From and after the
termination of this Agreement, and contingent upon the Closing, the Advisor hereby automatically, and without the need for further
action by any party, irrevocably and unconditionally releases, waives and relinquishes any rights or claims, whether accrued,
absolute, contingent or otherwise, it may have against the Operating Partnership, the Company, Parent
and any of their successors or Affiliates (other than claims pursuant to Section 21 of this Agreement). The provisions of Sections
15 and 20 through 31 (inclusive) of this Agreement shall survive any expiration or earlier
termination of this Agreement.”
2. Effective
Time. This Amendment is effective as of the date hereof. If the Merger Agreement is terminated in accordance with its terms
without a Closing (as defined in the Merger Agreement), this Amendment shall automatically terminate, with no further action necessary
by any party, and be of no further force or effect.
3. Miscellaneous.
(a) Limited
Effect. Except as otherwise specifically set forth in this Amendment, all other terms and conditions of the Agreement shall
remain in full force and effect.
(b) Entire
Agreement. The Agreement and this Amendment supersede all prior agreements between the parties with respect to the subject
matter thereof and constitute a complete and exclusive statement of the terms of the agreement between the parties with respect
to the subject matter thereof. In the event of any conflict between the terms of the Agreement and this Amendment, this Amendment
shall control.
(c) Governing
Law. This Agreement will be governed by the internal laws of the State of New York.
(d) Construction.
The parties have participated jointly in the drafting of this Amendment, and each party was represented by counsel in the negotiation
of this Amendment. In the event an ambiguity or question of intent or interpretation arises, this Amendment shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue
of the authorship of any of the provisions of this Amendment. The parties agree that if any provision of this Amendment is found
to be invalid or unenforceable, it will not affect the validity or enforceability of any other provision.
(e) Waiver
of Legal Conflicts. Each of the parties hereto acknowledges and agrees that, at their request, Proskauer Rose LLP acted as
counsel to all such parties in connection with this Amendment. Accordingly, each of the parties agrees to, and does, waive any
conflict of interest which may be deemed to arise as the result of such representation and agrees not to seek to disqualify or
otherwise prevent Proskauer Rose LLP from representing the other parties hereto (or any other clients of Proskauer Rose LLP) in
any matters by reason of its work on, or representation of, such party in connection with this Amendment or its possession of confidential
information relating to such party. Proskauer Rose LLP shall be entitled to rely upon this Section 3(e) as a third party
beneficiary hereof.
(f) Counterparts;
Facsimile. This Amendment may be executed in one or more counterparts, each of which shall be deemed an original and all of
which, taken together, shall constitute one and the same instrument. Original signatures hereto may be delivered by facsimile which
shall be deemed originals.
(g) Definitions.
Capitalized terms used but not defined herein have the meanings ascribed to them in the Agreement.
(h) Third
Party Beneficiary; Amendment. Parent is hereby made an express third party beneficiary of this Amendment. The Agreement shall
not be further amended or modified, and this Amendment shall not be rescinded, further amended or otherwise modified, without Parent’s
written consent.
*****
IN WITNESS WHEREOF,
the parties have executed and delivered this Amendment as of the date first written above.
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AMERICAN REALTY CAPITAL HEALTHCARE TRUST, INC. |
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By: |
/s/ Thomas P. D’Arcy |
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Name: Thomas P. D’Arcy |
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Title: Chief Executive Officer |
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AMERICAN REALTY CAPITAL HEALTHCARE TRUST OPERATING PARTNERSHIP, L.P. |
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By: AMERICAN REALTY CAPITAL HEALTHCARE TRUST, INC., |
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Its general partner |
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By: |
/s/ Thomas P. D’Arcy |
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Name: Thomas P. D’Arcy |
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Title: Chief Executive Officer |
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AMERICAN REALTY CAPITAL HEALTHCARE ADVISORS, LLC |
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By: AMERICAN REALTY CAPITAL HEALTHCARE SPECIAL LIMITED PARTNERSHIP, LLC, |
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Its Member |
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By: |
AMERICAN REALTY CAPITAL V, LLC, |
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Its Managing Member |
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By: |
/s/ Nicholas S. Schorsch |
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Name: Nicholas S. Schorsch |
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Title: Authorized Signatory |
Signature Page to Amendment No. 1 to
Third Amended and Restated Advisory Agreement
AMENDMENT NO. 1 TO
PROPERTY
Management and Leasing AGEEMENT
This AMENDMENT NO.
1 TO Property Management and Leasing AGREEMENT (this “Amendment”)
is entered into as of June 1, 2014, by and among American Realty Capital Healthcare Trust, Inc., a Maryland corporation (the “Company”),
American Realty Capital Healthcare Trust Operating Partnership, L.P., a Delaware limited partnership (the “Company OP”)
and American Realty Capital Healthcare Properties, LLC, a Delaware limited liability company (the “Manager”).
RECITALS
A. WHEREAS,
the Company, the Company OP and the Manager are party to that certain Property Management and Leasing Agreement, dated as of February
18, 2011 (the “Management Agreement”), pursuant to which the real estate properties of the Company and the Company
OP are managed by the Manager.
B. WHEREAS,
the Company and the Company OP have entered into that certain Agreement and Plan of Merger, dated as of June 1, 2014, by and among
Ventas, Inc., a Delaware corporation (“Parent”), Stripe Sub, LLC, a Delaware limited liability company and a
direct wholly owned subsidiary of Parent (“Merger Sub”), Stripe OP, LP, a Delaware limited partnership (the
“OP Merger Sub”), the Company and the Company OP (the “Merger Agreement”), pursuant to which,
among other things, the Company will be merged with and into Merger Sub, with Merger Sub being the surviving entity, and the OP
Merger Sub will be merged with and into the Company OP, with the Company OP being the surviving entity (the “Merger”),
upon the terms and subject to the conditions set forth in the Merger Agreement.
C. WHEREAS,
Section 6.8 of the Merger Agreement requires the Company to terminate certain agreements, including the Management Agreement and
the Manager has agreed to terminate these agreements without notice.
D. WHEREAS,
Section 6.1(a) of the Management Agreement provides that the Management Agreement automatically renews
unless either party provides sixty (60) days’ prior written notice of intention to terminate.
E. WHEREAS,
in connection with the Merger Agreement, the Company entered into an agreement terminating the 2014 Multi-Year Outperformance Agreement
(the “OPP”) between the Company, the OP and American Realty Capital Healthcare Advisor, LLC (the “Advisor”)
(such agreement, the “OPP Amendment”).
F. WHEREAS,
pursuant to the OPP Amendment, any Award LTIP Units (as defined in the OPP) granted to the Advisor under the OPP will be automatically
cancelled and forfeited as of the Closing.
G. WHEREAS,
consistent with Section 6.8 of the Merger Agreement, and in consideration of the Advisor’s forfeiture of the Award LTIP Units,
termination of the Advisory Agreement at Closing without the requisite 60 day notice, termination of the Management Agreement at
Closing without the requisite 60 day notice and the contribution of American Realty Capital Healthcare Special Limited Partnership,
LLC’s (the “SLP”) right to distributions from the OP as evidenced by the Listing Note Agreement between the OP
and the SLP dated April 7, 2014 (the “Listing Note”) to the OP, the OP will issue to the SLP 5,613,374
OP Units (as defined in the Listing Note).
H. WHEREAS,
pursuant to Section 7.5 of the Management Agreement, the parties hereto desire to amend the Management Agreement to be effective
concurrent with the Closing.
AGREEMENT
In consideration of
the mutual agreements and covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
1. Amendment
of the Management Agreement.
(a) Article
I of the Management Agreement is hereby amended by adding the following new definition in appropriate alphabetical order:
““Closing”
has the meaning set forth in the Agreement and Plan of Merger, dated as of June 1, 2014, by and among Ventas, Inc. (“Parent”),
a Delaware corporation, Stripe Sub, LLC, a Delaware limited liability company, Stripe OP, LP, a Delaware limited partnership, the
Company and the OP (the “Merger Agreement”).”
(b) Section
6.1of the Management Agreement is hereby amended by deleting the final sentence of Section 6.1 and adding the following section
6(d) to immediately follow section 6(c):
“
and (d) Immediately prior to the Closing, automatically, without notice
and without the need for further action by any party, and contingent on the occurrence of the Closing. Upon termination, the obligations
of the parties hereto shall cease; provided, however, that the Manager shall comply with the provisions hereof applicable in the
event of termination; provided, further, however, that if this Management Agreement terminates pursuant to clauses (b) or (c) of
this Section 6.1, the Owner shall have other remedies as may be available at law or in equity. From and after the termination of
this Management Agreement, and contingent upon the Closing, the Manager hereby automatically, and without the need for further
action by any party, irrevocably and unconditionally releases, waives and relinquishes any rights or claims, whether accrued,
absolute, contingent or otherwise, it may have against the OP, the Company, Parent and any of their
successors or Affiliates (other than claims pursuant to Section 5.4 of this Management Agreement). The provisions of Sections
5.4, 6.1, 6,2, and Article VII of this Management Agreement shall survive any expiration or earlier termination of this Management
Agreement.”
2. Effective
Time. This Amendment is effective as of the date hereof. If the Merger Agreement is terminated in accordance with its terms
without a Closing (as defined in the Merger Agreement), this Amendment shall automatically terminate, with no further action necessary
by any party, and be of no further force or effect.
3. Miscellaneous.
(a) Limited
Effect. Except as otherwise specifically set forth in this Amendment, all other terms and conditions of the Management Agreement
shall remain in full force and effect.
(b) Entire
Agreement. The Management Agreement and this Amendment supersede all prior agreements between the parties with respect to the
subject matter thereof and constitute a complete and exclusive statement of the terms of the agreement between the parties with
respect to the subject matter thereof. In the event of any conflict between the terms of the Management Agreement and this Amendment,
this Amendment shall control.
(c) Governing
Law. This Amendment will be governed by the internal laws of the State of New York.
(d) Construction.
The parties have participated jointly in the drafting of this Amendment, and each party was represented by counsel in the negotiation
of this Amendment. In the event an ambiguity or question of intent or interpretation arises, this Amendment shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue
of the authorship of any of the provisions of this Amendment. The parties agree that if any provision of this Amendment is found
to be invalid or unenforceable, it will not affect the validity or enforceability of any other provision.
(e) Waiver
of Legal Conflicts. Each of the parties hereto acknowledges and agrees that, at their request, Proskauer Rose LLP acted as
counsel to all such parties in connection with this Amendment. Accordingly, each of the parties agrees to, and does, waive any
conflict of interest which may be deemed to arise as the result of such representation and agrees not to seek to disqualify or
otherwise prevent Proskauer Rose LLP from representing the other parties hereto (or any other clients of Proskauer Rose LLP) in
any matters by reason of its work on, or representation of, such party in connection with this Amendment or its possession of confidential
information relating to such party. Proskauer Rose LLP shall be entitled to rely upon this Section 3(e) as a third party
beneficiary hereof.
(f) Counterparts;
Facsimile. This Amendment may be executed in one or more counterparts, each of which shall be deemed an original and all of
which, taken together, shall constitute one and the same instrument. Original signatures hereto may be delivered by facsimile which
shall be deemed originals.
(g) Definitions.
Capitalized terms used but not defined herein have the meanings ascribed to them in the Management Agreement.
(h) Third
Party Beneficiary; Amendments. Parent is hereby made an express third party beneficiary of this Amendment. The Management Agreement
shall not be further amended or modified, and this Amendment shall not be rescinded, further amended or otherwise modified, without
Parent’s written consent.
*****
IN WITNESS WHEREOF,
the parties have executed and delivered this Amendment as of the date first written above.
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AMERICAN REALTY CAPITAL HEALTHCARE TRUST, INC. |
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By: |
/s/ Thomas P. D’Arcy |
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Name: Thomas P. D’Arcy |
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Title: Chief Executive Officer |
Signature Page to Amendment No. 1 to
Property Management and Leasing Agreement
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AMERICAN REALTY CAPITAL HEALTHCARE TRUST OPERATING PARTNERSHIP. L.P. |
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By: AMERICAN REALTY CAPITAL HEALTHCARE TRUST, INC., |
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Its general partner |
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By: |
/s/ Thomas P. D’Arcy |
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Name: Thomas P. D’Arcy |
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Title: Chief Executive Officer |
Signature Page to Amendment No. 1 to
Property Management and Leasing Agreement
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AMERICAN REALTY CAPITAL HEALTHCARE PROPERTIES, LLC |
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By: |
AMERICAN REALTY CAPITAL HEALTHCARE |
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SPECIAL LIMITED PARTNERSHIP, LLC, |
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Its Member |
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By: |
AMERICAN REALTY CAPITAL V, LLC, |
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Its managing member |
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By: |
/s/ Nicholas S. Schorsch |
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Name: Nicholas S. Schorsch |
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Title: Authorized Signatory |
Signature Page to Amendment No. 1 to
Property Management and Leasing Agreement
AGREEMENT TERMINATING THE
AMERICAN REALTY CAPITAL HEALTHCARE TRUST,
INC.
2014 ADVISOR MULTI-YEAR OUTPERFORMANCE AGREEMENT
This AGREEMENT TERMINATING THE AMERICAN
REALTY CAPITAL HEALTHCARE TRUST, INC. 2014 ADVISOR MULTI-YEAR OUTPERFORMANCE AGREEMENT, dated as of June 1, 2014 (this “Agreement”),
is entered into by and among American Realty Capital Healthcare Trust, Inc. (the “Company”), American Realty
Capital Healthcare Trust Operating Partnership, L.P. (the “Partnership”), and American Realty Capital Healthcare
Advisors LLC (the “Advisor”).
WHEREAS, the Company, the Partnership and
the Advisor are party to that certain American Realty Capital Healthcare Trust, Inc. 2014 Multi-Year Outperformance Agreement,
dated as of April 7, 2014 (the “OPP Agreement”) (capitalized terms used but not defined herein will have the
respective meanings set forth for them in the OPP Agreement);
WHEREAS, the Company and the Partnership
are entering into that certain Agreement and Plan of Merger, dated as of the date hereof, by and among Ventas, Inc., a Delaware
corporation (“Parent”), Stripe Sub, LLC, a Delaware limited liability company and a direct wholly owned subsidiary
of Parent (“Merger Sub”), Stripe OP, LP, a Delaware limited partnership (“OP Merger Sub”),
the Company and the Partnership (the “Merger Agreement”); and
WHEREAS, the parties wish to terminate the
OPP Agreement contingent on the consummation of the transactions contemplated under the Merger Agreement.
NOW, THEREFORE, in consideration of the
premises and covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, hereby agree to the following:
1. Effective
as of immediately prior to the Effective Time (as defined in the Merger Agreement), and contingent on the occurrence of the Effective
Time, the parties hereby agree that the OPP Agreement shall be terminated and of no further force or effect, automatically and
without notice and without the need for further action by any party. The Advisor acknowledges and agrees that from and after the
Effective Time it will have no right to any Award LTIP Units, as well as no right to earn any additional Award LTIP Units or other
amounts pursuant to the OPP Agreement. From and after the termination of the OPP Agreement, and contingent upon the Effective Time
(as defined in the Merger Agreement), the Advisor hereby automatically, and without the need for further action by any party, irrevocably
and unconditionally releases, waives and relinquishes any rights or claims, whether accrued, absolute, contingent or otherwise,
it may have against the Partnership, the Company, Parent and any of their successors or Affiliates.
2. In
the event the Effective Time has not occurred as of March 15, 2015 and as of such date the Merger Agreement has not been terminated,
the definition of First Valuation Date in the OPP Agreement and for all other purposes shall be amended, effective as of the March
15, 2015, without the need for further action by any party, such that “First Valuation Date” shall mean June 30, 2015.
3. The
parties agree that if any provision of this Agreement is found to be invalid or unenforceable, it will not affect the validity
or enforceability of any other provision. This Agreement shall be governed by the laws of the State of Delaware, without regard
to the choice of law principles thereof.
4. This
Agreement is effective as of the date hereof. Except as expressly provided herein, this Agreement shall automatically terminate
and be of no further force and effect if the Merger Agreement terminates in accordance with its terms without the Effective Time
occurring thereunder.
5. This
Agreement supersede all prior agreements between the parties with respect to the subject matter thereof and constitute a complete
and exclusive statement of the terms of the agreement between the parties with respect to the subject matter thereof. In the event
of any conflict between the terms of the OPP Agreement and this Agreement, this Agreement shall control.
6. This
Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which, taken together,
shall constitute one and the same instrument. Original signatures hereto may be delivered by facsimile which shall be deemed originals.
7. Parent
is hereby made an express third party beneficiary of this Agreement.
8. Prior
to the Effective Time or, if earlier, the termination of the Merger Agreement in accordance with its terms without the consummation
of the transactions contemplated thereunder, the OPP Agreement shall not be further amended or modified, and this Agreement shall
not be rescinded, further amended or otherwise modified, without Parent’s written consent.
[Signature page follows]
IN WITNESS WHEREOF, the parties hereto have
duly executed this Amendment as of the date first above written.
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AMERICAN REALTY CAPITAL HEALTHCARE TRUST, INC. |
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By: |
/s/ Thomas P. D’Arcy |
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Name: Thomas P. D’Arcy |
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Title: Chief Executive Officer |
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AMERICAN REALTY CAPITAL HEALTHCARE TRUST OPERATING PARTNERSHIP, L.P. |
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By: American Realty Capital New York Healthcare Trust, Inc., its general partner |
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By: |
/s/ Thomas P. D’Arcy |
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Name: Thomas P. D’Arcy |
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Title: Chief Executive Officer |
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AMERICAN REALTY CAPITAL HEALTHCARE ADVISORS, LLC |
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By: American Realty Capital Special Limited Partnership, LLC, its Member |
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By: American Realty Capital V, LLC, its Managing Member |
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By: |
/s/ Nicholas S. Schorsch |
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Name: Nicholas S. Schorsch |
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Title: Authorized Signatory |
Signature Page to OPP Amendment
AMENDMENT NO. 1 TO
LISTING NOTE AGEEMENT
This AMENDMENT NO.
1 TO LISTING NOTE AGREEMENT (this “Amendment”) is entered into as of June 1, 2014 by and among American Realty
Capital Healthcare Trust Operating Partnership L.P., a Delaware limited partnership (the “OP”) and American
Realty Capital Healthcare Special Limited Partnership, LLC, a Delaware limited liability company (the “SLP”).
RECITALS
A. WHEREAS,
the parties hereto are party to that certain Listing Note Agreement, dated April 7, 2014 (the “Agreement”),
pursuant to which the OP agreed to make certain distributions to the SLP in connection with the listing of American Realty Capital
Healthcare Trust, Inc. (the “Company”) on the NASDAQ Global Select Market.
B. WHEREAS,
the Company and the OP have entered into that certain Agreement and Plan of Merger, dated as of June 1, 2014, by and among Ventas,
Inc., a Delaware corporation (“Parent”), Stripe Sub, LLC, a Delaware limited liability company and a direct
wholly owned subsidiary of Parent (“Merger Sub”), Stripe OP, LP, a Delaware limited partnership (the “OP
Merger Sub”), the Company and the OP (the “Merger Agreement”), pursuant to which, among other things,
the Company will be merged with and into Merger Sub, with Merger Sub being the surviving entity, and the OP Merger Sub will be
merged with and into the OP, with the OP being the surviving entity (the “Transaction”), upon the terms and
subject to the conditions set forth in the Merger Agreement.
C. WHEREAS,
Section 6.8 of the Merger Agreement requires the Company to terminate certain agreements, including the Agreement and the Advisor
has agreed to terminate these agreements without notice.
D. WHEREAS,
in connection with the Merger Agreement, the Company entered into an agreement terminating the 2014 Multi-Year Outperformance Agreement
(the “OPP”) between the Company, the OP and American Realty Capital Healthcare Advisor, LLC (the “Advisor”)
(such agreement, the “OPP Amendment”).
E. WHEREAS,
pursuant to the OPP Amendment, any Award LTIP Units (as defined in the OPP) granted to the Advisor under the OPP will be automatically
cancelled and forfeited as of the Closing.
F. WHEREAS,
consistent with Section 6.8 of the Merger Agreement, and in consideration of the Advisor’s forfeiture of the Award LTIP Units,
termination of the Advisory Agreement at Closing without the requisite 60 day notice, termination of the Management Agreement at
Closing without the requisite 60 day notice and the contribution of the SLP’s right to distributions from the OP as evidenced
by the Agreement to the OP, the OP will issue to the SLP 5,613,374 OP Units (as defined in
the Agreement).
NOW THEREFORE, in consideration
of the mutual agreements and covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
1. Amendment
of the Agreement.
(a) Section
2 of the Agreement is hereby amended by deleting it in its entirety and substituting the following:
“(a) The
Partnership hereby agrees to distribute to the SLP with respect to its Special Limited Partner Interest an aggregate amount equal
to the difference between (i) 15% of the amount, if any, referred to herein as the “Listing Amount,” by which (a) the
sum of (I) the Market Value of all issued and outstanding shares of Common Stock plus (II) the sum of all distributions paid by
the REIT to its stockholders prior to Listing, exceeds (b) the sum of (I) the total Gross Proceeds in all Offerings plus (II) the
total amount of cash that, if distributed to the stockholders who purchased shares of Common Stock in an Offering, would have provided
such stockholders a Priority Return on the Gross Proceeds raised in all such Offerings minus (ii) any distributions received by
the SLP pursuant to Section 5.02(b) of the OP Agreement prior to the Listing Date. The parties hereto understand that the Listing
Amount is not determinable until such time as identified in the definition of Market Value. Notwithstanding anything herein to
the contrary, in accordance with Section 736 of the Code, this Listing Note shall be disregarded for applicable income tax purposes
and the SLP shall continue to be treated as a partner of the Partnership in respect of its Special Limited Partner Interest for
such purposes until the Partnership has satisfied all of its obligations under this Listing Note. Without limiting the foregoing,
there shall be no other obligations to pay or accrue any other amounts (including interest) with respect to the Listing Note, other
than the Listing Amount; provided, that any cash or property paid to the Special Limited Partner with respect to such interest
shall be reported to the Special Limited Partner on Internal Revenue Service Schedule K-1 to Form 1065 (or such successor schedule
or form).
(b) Notwithstanding
Section 2(a) above or anything to the contrary contained in this Listing Note, immediately prior to, and contingent upon, the Closing,
the SLP shall be treated as having contributed its right to distributions from the Partnership pursuant to its Special Limited
Partner Interest in the Partnership, the amount of which distributions are evidenced by the Listing Note, to the Partnership in
exchange for 5,613,374 OP Units in a transaction intended to qualify as a contribution of
property pursuant to Section 721 of the Code, and such contribution shall cause the capital accounts of the partners of the Partnership
to be “booked-up” in accordance with Treasury Regulations Sections 1.704-1(b)(2)(iv)(f) and (g), to the extent possible,
as of immediately prior to the Partnership Merger Effective Time (as defined in the Agreement and Plan of Merger referenced in
Section 11 hereof) which “book-up” shall be allocated to the partners in accordance with the allocations provisions
of the OP Agreement. Notwithstanding anything to the contrary contained in this Listing Note, the distribution of 5,613,374
OP Units to the SLP provided for in this Section 2(b) shall be in full and complete satisfaction of the Partnership’s obligations
to the SLP under this Listing Note, and no other distributions shall be declared, set aside, made or paid, in any form whatsoever,
pursuant to Section 2(a), Section 3, Section 4, or any other provision of this Listing Note, prior to the termination of the Merger
Agreement in accordance with its terms.”
(b) Section
11 of the Agreement is hereby amended by adding the following new definition in appropriate alphabetical order:
““Closing”
has the meaning set forth in the Agreement and Plan of Merger, dated as of June 1, 2014, by and among Ventas, Inc., a Delaware
corporation (“Parent”), Stripe Sub, LLC, a Delaware limited liability company, Stripe OP, LP, a Delaware limited
partnership, the REIT and the OP (the “Merger Agreement”).”
(c) Section
12 of the Agreement is hereby amended by inserting the following new clause (t):
“(t) This
Listing Note shall terminate immediately and automatically, without notice and without the need for further action by any party,
upon receipt by the SLP of the distribution provided for in Section 2(b) hereof. From and after the termination of this Listing
Note, and contingent upon the Closing, the SLP hereby automatically, and without the need for further action by any party, irrevocably
and unconditionally releases, waives and relinquishes any rights or claims, whether accrued, absolute, contingent or otherwise,
against the Partnership, the REIT, Parent and any of their successors or Affiliates. The provisions of this Section 12(t) shall
survive termination of this Listing Note.”
2. Effective
Time. This Amendment is effective as of the date hereof. If the Merger Agreement is terminated in accordance with its terms
without a Closing (as defined in the Merger Agreement), this Amendment shall automatically terminate, with no further action necessary
by any party, and be of no further force or effect.
3. Miscellaneous.
(a) Limited
Effect. Except as otherwise specifically set forth in this Amendment, all other terms and conditions of the Agreement shall
remain in full force and effect.
(b) Entire
Agreement. The Agreement and this Amendment supersede all prior agreements between the parties with respect to the subject
matter thereof and constitute a complete and exclusive statement of the terms of the agreement between the parties with respect
to the subject matter thereof. In the event of any conflict between the terms of the Agreement and this Amendment, this Amendment
shall control.
(c) Governing
Law. This Agreement will be governed by the internal laws of the State of New York.
(d) Construction.
The parties have participated jointly in the drafting of this Amendment, and each party was represented by counsel in the negotiation
of this Amendment. In the event an ambiguity or question of intent or interpretation arises, this Amendment shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue
of the authorship of any of the provisions of this Amendment. The parties agree that if any provision of this Amendment is found
to be invalid or unenforceable, it will not affect the validity or enforceability of any other provision.
(e) Waiver
of Legal Conflicts. Each of the parties hereto acknowledges and agrees that, at their request, Proskauer Rose LLP acted as
counsel to all such parties in connection with this Amendment. Accordingly, each of the parties agrees to, and does, waive any
conflict of interest which may be deemed to arise as the result of such representation and agrees not to seek to disqualify or
otherwise prevent Proskauer Rose LLP from representing the other parties hereto (or any other clients of Proskauer Rose LLP) in
any matters by reason of its work on, or representation of, such party in connection with this Amendment or its possession of confidential
information relating to such party. Proskauer Rose LLP shall be entitled to rely upon this Section 3(e) as a third party
beneficiary hereof.
(f) Counterparts;
Facsimile. This Amendment may be executed in one or more counterparts, each of which shall be deemed an original and all of
which, taken together, shall constitute one and the same instrument. Original signatures hereto may be delivered by facsimile which
shall be deemed originals.
(g) Definitions.
Capitalized terms used but not defined herein have the meanings ascribed to them in the Agreement.
(h) Third
Party Beneficiary; Amendment. Parent is hereby made an express third party beneficiary of this Amendment. The Agreement shall
not be further amended or modified, and this Amendment shall not be rescinded, further amended or otherwise modified, without Parent’s
written consent.
*****
IN WITNESS WHEREOF,
the parties have executed and delivered this Amendment as of the date first written above.
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AMERICAN REALTY CAPITAL HEALTHCARE TRUST OPERATING PARTNERSHIP, L.P. |
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By: AMERICAN REALTY CAPITAL HEALTHCARE TRUST, INC., |
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Its general partner |
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By: |
/s/ Thomas P. D’Arcy |
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Name: Thomas P. D’Arcy |
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Title: Chief Executive Officer |
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AMERICAN REALTY CAPITAL HEALTHCARE SPECIAL LIMITED PARTNERSHIP, LLC, |
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Its Member |
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By: AMERICAN REALTY CAPITAL V, LLC, |
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Its Managing Member |
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By: |
/s/ Nicholas S. Schorsch |
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Name: Nicholas S. Schorsch |
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Title: Authorized Signatory |
Signature Page to Amendment No. 1 to
Listing Note Agreement
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