<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________
SCHEDULE 13D
Under the Securities Exchange Act of 1934
____________________
BROOKDALE LIVING COMMUNITIES, INC.
(Name of Issuer)
Common Stock, par value $0.01 per share
(Title of Class of Securities)
112462 10 6
(CUSIP Number)
Michael W. Reschke
77 West Wacker Drive
Suite 3900
Chicago, IL 60601
(312) 917-1500
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
With a copy to:
Wayne D. Boberg, Esq.
Winston & Strawn
35 West Wacker Drive
Chicago, IL 60601
(312) 558-5600
May 7, 1997
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box: [_]
<PAGE>
SCHEDULE 13D
- -----------------------
CUSIP NO. 112462 10 6
- -----------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Michael W. Reschke
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
2 (a) [_]
(b) [_]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS
4
Not Applicable
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
5 TO ITEMS 2(d) or 2(e) [_]
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
United States of America
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF
0
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
OWNED BY 4,203,043
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING
0
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
4,203,043
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
May be deemed to share beneficial ownership of the 1,382,410 shares of
Common Stock, par value $0.01 per share ("Common Stock"), directly owned
by The Prime Group, Inc., the 320,633 shares of Common Stock directly
owned by Prime Group Limited Partnership and the 2,500,000 shares of
Common Stock directly owned by Prime Group VI, L.P.
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
12
[_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
May be deemed to share beneficial ownership of (i) the approximate 19.27%
equity interest in the Issuer directly owned by The Prime Group, Inc.,
(ii) the approximate 4.47% equity interest in the Issuer directly owned by
Prime Group Limited Partnership and (iii) the approximate 34.84% equity
interest in the Issuer directly owned by Prime Group VI, L.P.
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON
14
IN
- ------------------------------------------------------------------------------
2
<PAGE>
SCHEDULE 13D
- -----------------------
CUSIP NO. 112462 10 6
- -----------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
The Prime Group, Inc.
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
2 (a) [_]
(b) [_]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS
4
00
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [_]
5
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Illinois, United States of America
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF
1,382,410
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
OWNED BY 0
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING
1,382,410
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
0
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
1,382,410 shares of Common Stock, par value $0.01 per share
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
12
[_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
Approximate 19.27% equity interest in the Issuer
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON
14
CO
- ------------------------------------------------------------------------------
3
<PAGE>
SCHEDULE 13D
- -----------------------
CUSIP NO. 112462 10 6
- -----------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Prime Group VI, L.P.
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
2 (a) [_]
(b) [_]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS
4
00
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
5 TO ITEMS 2(d) or 2(e) [_]
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Illinois, United States of America
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF 2,500,000
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
0
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING 2,500,000
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
0
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
2,500,000 shares of Common Stock, par value $0.01 per share
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
12
[_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
Approximate 34.84% equity interest in the Issuer
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON
14
PN
- ------------------------------------------------------------------------------
4
<PAGE>
SCHEDULE 13D
- -----------------------
CUSIP NO. 112462 10 6
- -----------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
PGLP, Inc.
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
2 (a) [_]
(b) [_]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS
4
Not Applicable
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
5 TO ITEMS 2(d) or 2(e) [_]
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Illinois, United States of America
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF
0
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
OWNED BY 2,500,000
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING 0
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
2,500,000
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
May be deemed to share beneficial ownership of the 2,500,000 shares of
Common Stock, par value $0.01 per share, directly owned by Prime
Group VI, L.P.
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
12
[_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
May be deemed to share beneficial ownership of the approximate 34.84%
equity interest in the Issuer directly owned by Prime Group VI, L.P.
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON
14
CO
- ------------------------------------------------------------------------------
5
<PAGE>
Item 1. Security and Issuer.
This Statement relates to shares of Common Stock, par value $0.01
per share ("Common Stock"), of Brookdale Living Communities, Inc., a Delaware
corporation (the "Company"). The principal executive offices of the Company are
located at 77 West Wacker Drive, Chicago, Illinois 60601.
Item 2. Identity and Background.
(a) and (f) This Statement is filed by each of Michael W.
Reschke, an individual and a citizen of the United States of America
("Reschke"), The Prime Group, Inc., an Illinois corporation ("PGI"), Prime Group
VI, L.P., an Illinois limited partnership ("PG-VI"), and PGLP, Inc., an Illinois
corporation ("PGLPI").
Reschke owns an approximate 42.2% equity interest in PGI and an
approximate 42.2% equity interest in PGLPI, which is the managing general
partner of, with a 1% interest in, PG-VI.
(b)(i) The business address of each of Reschke, PGI, PG-VI and
PGLPI is:
77 West Wacker Drive
Suite 3900
Chicago, Illinois 60601
(ii) Unless otherwise indicated in paragraph (c)(v) of this
Item 2, the business address of each person listed in paragraph (c)(v) of this
Item 2 is:
77 West Wacker Drive
Suite 3900
Chicago, Illinois 60601
(c)(i) Reschke is the Chairman, President and Chief Executive
Officer of PGI, the President and a member of the Board of Directors of PGLPI,
the Chairman of the Board of Trustees of Prime Group Realty Trust, the Chairman
of the Board of Directors of each of Brookdale Living Communities, Inc. and
Prime Retail, Inc. and a member of the Board of Directors of Ambassador
Apartments, Inc.
(ii) The principal business of PGI is the acquisition,
development, finance, construction, leasing, marketing, renovation and property
management of office and industrial properties.
(iii) The principal business of PG-VI is the ownership,
development and management of, and investment in, directly or indirectly, real
estate.
(iv) The principal business of PGLPI is the ownership,
development and management of, and investment in, directly or indirectly, real
estate.
(v) The following table sets forth the name and the
principal occupation or employment of each director and executive officer
(except Reschke (see paragraph (c)(i) of this Item 2)) of PGI and PGLPI.
<TABLE>
<CAPTION>
Name Present Principal Occupation or Employment
- ---- ------------------------------------------
<S> <C>
Richard S. Curto................ Executive Vice President of PGI; Vice President of PGLPI
Donald H. Faloon................ Executive Vice President/Office Division of PGI
Jeffrey A. Patterson............ Executive Vice President of PGI; Vice President and
Assistant Secretary of PGLPI
Robert J. Rudnik (A)(B)......... Executive Vice President/General Counsel and Secretary of PGI;
Vice President and Secretary of PGLPI
Gary J. Skoien.................. Executive Vice President of PG; Vice President of PGLPI
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Name Present Principal Occupation or Employment
- ---- ------------------------------------------
<S> <C>
Steven R. Baron.................. Senior Vice President of PGI
Ray R. Grinvalds (A)............. Senior Vice President/Asset and Development Management of PGI; Vice
President and Treasurer of PGLPI
James T. Horn (A)................ Senior Vice President/Assistant General Counsel of PGI; Vice President and
Assistant Secretary of PGLPI
Rux B. Currin.................... Vice President/Office Division of PGI
Mark K. Cynkar................... Vice President/Chief Financial Officer of PGI
Bohdan P. Hirniak................ Vice President/Land Development Division of PGI
Warren H. John (A)(B)............ Vice President of PGI; vice President and Assistant Secretary of PGLPI
Robert E. Lemke.................. Vice President/Single Family Housing of PGI
James F. Runnion................. Vice President/Property Management/Office Division of PGI
Christopher J. Sultz............. Vice President/Asset Management/Industrial Division of PGI; Vice President of
PGLPI
James F. Hoffman................. Assistant Secretary of PGI
Glenn D. Reschke (A)............. Executive Vice President/Development of Prime Retail, Inc.
c/o The Prime Group, Inc.
100 East Pratt Street
Baltimore, MD 21202
Edward J. John (A)............... Orthodontist
1420 N. Arlington Heights Rd.
Arlington Heights, IL 60004
- ---------------
(A) Director of PGI
(B) Director of PGLPI
</TABLE>
All of the executive officers and directors of PGI and PGLPI
are citizens of the United States of America.
(d) and (e) During the last five years, none of Reschke, PGI,
PG-VI or PGLPI or any of the directors or executive officers of PGI or PGLPI (i)
has been convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors) or (ii) was a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal or
state securities laws or finding any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
Pursuant to a Formation Agreement, dated as of May 7, 1997, by
among the Company, PGI, PGLP, Brookdale Holdings, Inc. and Mark J. Schulte (the
"Formation Agreement"), and in connection with the consummation of the Company's
initial public offering of Common Stock on May 7, 1997, PGI and certain of its
affiliates contributed the assets and operations of PGI's senior and assisted
living division to the Company in exchange for the receipt by PGI and Prime
Group Limited Partnership, and Illinois limited partnership ("PGLP"), of
1,382,410 and 320,633 shares of Common Stock, respectively, and the assumption
by the Company of certain indebtedness of PGI's senior and assisted living
division in the aggregate amount of $65.0 million.
7
<PAGE>
Pursuant to a Credit Agreement, dated as of May 7, 1997, by and among
PG-VI and Healthcare Realty Trust Incorporated ("HRTI") (the "Credit
Agreement"), in connection with the consummation of the Company's initial public
offering of Common Stock on May 7, 1997, PG-VI obtained a loan in the aggregate
amount of $18.0 million (the "HRTI Loan") which was used to finance a portion of
PG-VI's May 7, 1997 purchase of 2,500,000 shares of Common Stock at a purchase
price of $10.695 per share. The balance of the purchase price for such shares,
approximately $8.74 million, was contributed or advanced to PG-VI by its
partners. The HRTI Loan by its terms matures on February 1, 1998, subject to an
extension at PG-VI's option to May 7, 1998. It is expected that the HRTI Loan
will be refinanced on or prior to its maturity date, and that any such
replacement loan facility will be secured by a pledge of all or some of the
Common Stock presently securing the repayment of the HRTI Loan.
Each of the Formation Agreement and the Credit Agreement are
identified hereto as Exhibits I and II hereto, respectively, and incorporated
herein by reference.
Item 4. Purpose of Transaction.
PGI and PGLP acquired the shares of Common Stock owned by such
entities in order to maintain a significant investment in the Company following
the consummation of the Company's initial public offering. PG-VI purchased the
shares of Common Stock owned by it for investment purposes and to facilitate the
formation of the Company.
On May 7, 1997, the Company granted to Reschke, as Chairman of the
Board of the Company, options to acquire 100,000 shares of Common Stock. The
options vest, subject to the satisfaction of certain conditions, at the rate of
25% per year over the next four years commencing on the first anniversary of
their date of grant and will have a term of 10 years. The exercise price of the
options is the initial public offering price of $11.50 per share.
Except as set forth in this Statement, none of Reschke, PGI, PG-VI or
PGLPI has any current plans or proposals which relate to or would result in the
types of transactions set forth in paragraphs (a) through (j) of this Item 4.
Item 5. Interest in Securities of the Issuer.
(a) PGI directly beneficially owns 1,382,410 of the 4,203,043 shares
of Common Stock to which this Statement relates, which number of shares
constitutes approximately 19.27% of the total outstanding shares of the
Company's Common Stock. PGLP beneficially owns 320,633 of the 4,203,043 shares
of Common Stock to which this Statement relates, which number of shares
constitutes approximately 4.47% of the total outstanding shares of the Company's
Common Stock. PG-VI beneficially owns 2,500,000 of the 4,203,043 shares of
Common Stock to which this Statement relates, which number of shares constitutes
approximately 34.84% of the total outstanding shares of the Company's Common
Stock. By virtue of his ability to control each of PGI, PGLP and PG-VI, Reschke
may be deemed to share beneficial ownership of the 1,382,410, 320,633 and
2,500,000 shares of Common Stock directly owned by PGI, PGLP and PG-VI,
respectively. By virtue of its ability to control PG-VI, PGLPI may be deemed to
share beneficial ownership of the 2,500,000 shares of Common Stock directly
owned by PG-VI.
(b) Each of PGI, PGLP and PG-VI has the sole power to direct the vote
of the 1,382,410, 320,633 and 2,500,000 shares of Common Stock directly owned by
PGI, PGLP and PG-VI, respectively. Reschke may be deemed to share the power to
direct the vote of the 1,382,410, 320,633 and 2,500,000 shares of Common Stock
directly owned by PGI, PGLP and PG-VI, respectively, because Reschke has the
ability to control each of PGI, PGLP and PG-VI. PGLPI may be deemed to share
the power to direct the vote of the 2,500,000 shares of Common Stock directly
owned by PG-VI because PGLPI is the managing general partner of PG-VI.
(c) None of Reschke, PGI, PGLP or PG-VI, nor, to the best of their
knowledge, any of the executive officers or directors of PGI or PGLPI, has
effected any transaction in securities of the Company during the past 60 days.
(d) Except as set forth in this Statement, no person is known to have
the right to receive or the power to direct the receipt of dividends from, or,
other than HRTI pursuant to the terms and conditions of the Credit Agreement,
the proceeds from the sale of, securities held by Reschke, PGI, PGLP or PG-VI
except for Reschke, PGI, PGLP, PG-VI or PGLPI.
8
<PAGE>
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer.
Pursuant to the terms and conditions of a Registration Rights
Agreement, dated as of May 7, 1997, by and among the Company, PGI, PGLP and PG-
VI (the "Registration Rights Agreement"), the Company granted demand and
incidental registration rights to PGI, PGLP and PG-VI for the registration of
shares of Common Stock owned by PGI, PGLP and PG-VI under the Securities Act of
1933, as amended. Under the Registration Rights Agreement, three demand
registrations are permitted during the first five years following the initial
public offering of the Common Stock and one registration per year each year
thereafter until PGI, PGLP and PG-VI collectively own less than 10% of the
outstanding Common Stock. The Company will pay the fees and expenses of the
demand registrations and the incidental registrations, while PGI, PGLP and PG-VI
will pay all underwriting discounts and commissions. These registration rights
are subject to certain conditions and limitations, including the right of
underwriters to limit the number of shares owned by PGI, PGLP and PG-VI included
in such registration.
Pursuant to the terms and conditions of the Credit Agreement, each of
PG-VI, PGI, PGLP and Mark J. Schulte pledged, pursuant to separate Pledge and
Security Agreements, each dated as of May 7, 1997 (a form of which is attached
hereto as Exhibit IV and incorporated herein by reference), the 2,500,000 shares
of Common Stock purchased by PG-VI, together with 1,369,910, 320,633 and 296,957
shares of Common Stock acquired by PGI, PGLP and Mr. Schulte, respectively,
pursuant to the Formation Agreement, in order to secure, in the case of PG-VI,
its obligations under the Credit Agreement, and in order to secure the
respective obligations of each of PGI, PGLP and Mr. Schulte under separate
Guaranties, each dated as of May 7, 1997 (a form of which is attached hereto as
Exhibit V and incorporated herein by reference), made in favor of HRTI. PG-VI,
PGI, PGLP and Mr. Schulte retain voting control of such pledged Common Stock
unless and until HRTI were to foreclose on such Common Stock because of an event
of default under the Credit Agreement.
Pursuant to the terms and conditions of a Stock Option and Deposit
Agreement, dated as of May 7, 1997, by and between PGI and Darryl W. Copeland,
Jr. (the "Copeland Stock Option Agreement"), Mr. Copeland received an option,
subject to a one year vesting period, to purchase 100,000 shares of Common Stock
from PGI at a purchase price of $0.01 per share. In the event the employment of
Mr. Copeland is terminated by the Company for any reason or in the event Mr.
Copeland voluntarily terminates his employment with the Company due to a "change
of control" of the Company and a material diminution of his duties and
responsibilities or compensation prior to the expiration of the vesting period,
the option immediately vests.
Pursuant to the terms and conditions of a Stock Purchase Agreement and
Agreement Concerning Option Shares, dated as of May 7, 1997, by and among PGI,
PG-VI and Darryl W. Copeland, Jr. (the "Stock Purchase Agreement"), PG-VI agreed
to sell to Mr. Copeland 25,000 shares of Common Stock (the "Purchased Shares")
for an aggregate purchase price of $272,722.50. The purchase and sale of the
Purchased Shares shall occur no later than May 8, 2000. In the event the
purchase and sale of the Purchased Shares does not occur on or before May 8,
2000, Mr. Copeland's right to purchase the Purchased Shares and PG-VI's
obligation to sell the Purchased Shares automatically terminate. Mr. Copeland
has no voting rights as a stockholder with respect to the Purchased Shares until
the closing of the purchase and sale of the Purchased Shares.
Pursuant to the terms and conditions of a Stock Option Agreement,
dated as of May 7, 1997, by and between PGI and Blackacre Bridge Capital L.L.C.,
a Delaware limited liability company ("Blackacre") (the "Blackacre Stock Option
Agreement"), PGI granted to Blackacre an option to purchase 12,500 shares of
Common Stock at a price per share equal to the lesser of $12.00 or the average
of all closing prices of the Common Stock from the date of the consummation of
the Company's initial public offering to that date which is six months after the
date of the consummation of the Company's initial public offering. The term of
the option shall continue in effect until May 7, 2000. Blackacre has no rights
as a stockholder with respect to such shares until the date of the sale of such
shares upon the exercise of such option.
Each of the Registration Rights Agreement, the Copeland Stock Option
Agreement, the Stock Purchase Agreement and the Blackacre Stock Option Agreement
are identified as Exhibits III, VI, VII and VIII hereto, respectively, and
incorporated herein by reference.
9
<PAGE>
Item 7. Material to be Filed as Exhibits.
Exhibit I Formation Agreement, dated as of May 7, 1997, by and
among the Company, PGI, PGLP, Brookdale Holdings, Inc.
and Mark J. Schulte, as filed with the Securities and
Exchange Commission on August 14, 1997 as Exhibit 10.1
to the Company's Form 10-Q (Commission File No. 0-
22253) and incorporated herein by reference
Exhibit II Credit Agreement, dated as of May 7, 1997, by and
between HRTI and PG-VI
Exhibit III Registration Rights Agreement, dated as of May 7,
1997, by and among the Company, PGI, PGLP and PG-VI,
as filed with the Securities and Exchange Commission
on August 14, 1997 as Exhibit 10.3 to the Company's
Form 10-Q (Commission File No. 0-22253) and
incorporated herein by reference
Exhibit IV Form of Pledge and Security Agreement
Exhibit V Form of Guaranty
Exhibit VI Stock Option and Deposit Agreement, dated as of May 7,
1997, by and between Darryl W. Copeland, Jr. and PGI,
as filed with the Securities and Exchange Commission
on August 14, 1997 as Exhibit 10.42 to the Company's
Form 10-Q (Commission File No. 0-22253) and
incorporated herein by reference
Exhibit VII Stock Purchase Agreement and Agreement Concerning
Option Shares, dated as of May 7, 1997, by and among
Darryl W. Copeland, Jr., PGI and PG-VI, as filed with
the Securities and Exchange Commission on August 14,
1997 as Exhibit 10.43 to the Company's Form 10-Q
(Commission File No. 0-22253) and incorporated herein
by reference
Exhibit VIII Stock Option Agreement, dated as of May 7, 1997, by
and between PGI and Blackacre
Exhibit IX Joint Acquisition Statement pursuant to Rule 13-
d(f)(1) of the Securities Exchange Act of 1934, as
amended, by Reschke, PGI, PG-VI and PGLPI
10
<PAGE>
SIGNATURE
---------
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Statement is true, complete and
correct.
/ s / Michael W. Reschke
----------------------------------------------
Michael W. Reschke
Dated: September 22, 1997
<PAGE>
SIGNATURE
---------
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Statement is true, complete and
correct.
THE PRIME GROUP, INC.
By: / s / Michael W. Reschke
-----------------------------------------------
Name: Michael W. Reschke
Title: President
Dated: September 22, 1997
<PAGE>
SIGNATURE
---------
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Statement is true, complete and
correct.
PRIME GROUP VI, L.P.
By: PGLP, Inc.
Managing General Partner
By: /s/ Michael W. Reschke
--------------------------------------
Name: Michael W. Reschke
Title: President
Dated: September 22, 1997
<PAGE>
SIGNATURE
---------
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Statement is true, complete and
correct.
PGLP, INC.
By: /s/ Michael W. Reschke
-----------------------------------------------
Name: Michael W. Reschke
Title: President
Dated: September 22, 1997
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
Exhibit I Formation Agreement, dated as of May 7, 1997, by and among
the Company, PGI, PGLP, Brookdale Holdings, Inc. and Mark J.
Schulte, as filed with the Securities and Exchange Commission
on August 14, 1997 as Exhibit 10.1 to the Company's Form 10-Q
(Commission File No. 0-22253) and incorporated herein by
reference
Exhibit II Credit Agreement, dated as of May 7, 1997, by and between
HRTI and PG-VI
Exhibit III Registration Rights Agreement, dated as of May 7, 1997, by
and among the Company, PGI, PGLP and PG-VI, as filed with the
Securities and Exchange Commission on August 14, 1997 as
Exhibit 10.3 to the Company's Form 10-Q (Commission File No.
0-22253) and incorporated herein by reference
Exhibit IV Form of Pledge and Security Agreement
Exhibit V Form of Guaranty
Exhibit VI Stock Option and Deposit Agreement, dated as of May 7, 1997,
by and between Darryl W. Copeland, Jr. and PGI, as filed with
the Securities and Exchange Commission on August 14, 1997 as
Exhibit 10.42 to the Company's Form 10-Q (Commission File No.
0-22253) and incorporated herein by reference
Exhibit VII Stock Purchase Agreement and Agreement Concerning Option
Shares, dated as of May 7, 1997, by and among Darryl W.
Copeland, Jr., PGI and PG-VI, as filed with the Securities
and Exchange Commission on August 14, 1997 as Exhibit 10.43
to the Company's Form 10-Q (Commission File No. 0-22253) and
incorporated herein by reference
Exhibit VIII Stock Option Agreement, dated as of May 7, 1997, by
and between PGI and Blackacre
Exhibit IX Joint Acquisition Statement pursuant to Rule 13-d(f)(1) of
the Securities Exchange Act of 1934, as amended, by Reschke,
PGI, PG-VI and PGLPI
<PAGE>
EXHIBIT II
- --------------------------------------------------------------------------------
CREDIT AGREEMENT
dated as of May 7, 1997
PRIME GROUP VI, L.P.,
as Borrower,
and
HEALTHCARE REALTY TRUST INCORPORATED,
as Lender
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Section 1. Definitions.............................................. 1
1.1 Certain Defined Terms.......................... 1
1.2 Interpretation................................. 6
Section 2. Loan..................................................... 7
2.1 The Loan....................................... 7
2.2 Note........................................... 7
2.3 Prepayment of Loan............................. 7
2.4 Facility Fees.................................. 7
Section 3. Payments of Principal and Interest....................... 7
3.1 Repayment of Loan.............................. 7
3.2 Interest....................................... 8
3.3 Certain Additional Obligations................. 8
Section 4. Payments................................................. 8
Section 5. Representations and Warranties........................... 9
5.1 Corporate Existence............................ 9
5.2 Litigation..................................... 9
5.3 No Breach...................................... 9
5.4 Partnership Action............................. 9
5.5 Approvals...................................... 10
5.6 Taxes.......................................... 10
5.7 Subsidiaries................................... 10
5.8 Pledged Stock.................................. 10
5.9 Brookdale Documents............................ 10
5.10 Solvency....................................... 10
5.11 Interest Rate.................................. 10
Section 6. Covenants of the Borrower................................ 10
6.1 Information.................................... 11
6.2 Litigation..................................... 11
6.3 Corporate Existence, Etc....................... 11
6.4 Prohibition of Fundamental Changes............. 11
6.5 Limitation on Liens............................ 11
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
6.6 Indebtedness................................... 12
6.7 Investments.................................... 13
6.8 Use of Proceeds................................ 13
6.9 Modifications of Certain Documents............. 13
Section 7. Events of Default........................................ 13
Section 8. Miscellaneous............................................ 15
8.1 Waiver......................................... 15
8.2 Notices........................................ 16
8.3 Expenses....................................... 16
8.4 Amendments..................................... 16
8.5 Successors and Assigns......................... 16
8.6 Survival....................................... 16
8.7 Captions....................................... 17
8.8 Counterparts................................... 17
8.9 GOVERNING LAW.................................. 17
8.10 Non-Recourse................................... 17
</TABLE>
iii
<PAGE>
CREDIT AGREEMENT
THIS CREDIT AGREEMENT dated as of May 7, 1997 (as amended, restated,
modified or supplemented from time to time, this "Agreement") is by and between
PRIME GROUP VI, L.P., a limited partnership duly organized and validly existing
under the laws of the State of Illinois (the "Borrower"), and HEALTHCARE REALTY
TRUST INCORPORATED, a real estate investment trust duly organized and validly
existing under the laws of the State of Maryland (the "Lender").
RECITALS:
--------
A. The Borrower has requested that the Lender extend credit to the
Borrower in an aggregate principal amount equal to $18,000,000.
B. To induce the Lender to extend such credit, the Borrower and the
Lender propose to enter into this Agreement pursuant to which the Lender will
make a loan to the Borrower, and the Borrower will agree to execute and deliver
security documents providing for security interests and liens to be granted by
the Borrower on certain shares of common stock of Brookdale Living Communities,
Inc., a Delaware corporation ("Brookdale"), owned by the Borrower and certain
rights of the Borrower under related agreements as collateral security for the
obligations of the Borrower to the Lender hereunder.
NOW, THEREFORE, the parties hereto hereby agree as follows:
Section 1. Definitions.
-----------
1.1 Certain Defined Terms. As used herein, the following terms shall
---------------------
have the following meanings:
"Affiliate" means, as to any Person, any other Person which directly
---------
or indirectly controls, or is under common control with, or is controlled by,
such Person. As used in this definition, "control" (including, with its
-------
correlative meanings, "controlled by", and "under common control with") means
------------- -------------------------
possession, directly or indirectly, of power to direct or cause the direction of
management or policies (whether through ownership of securities or partnership
or other ownership interests, by contract or otherwise); provided that, in any
event, any Person which owns directly or indirectly 50% or more of the
securities having ordinary voting power for the election of directors or other
governing body of a corporation or 50% or more of the partnership or other
ownership interests of any other Person (other than as a limited partner of such
other Person) will be deemed to control such corporation or other Person.
<PAGE>
"Basic Documents" means, collectively, this Agreement, the Note and
---------------
the Security Documents.
"Borrower" shall have the meaning assigned to such term in the
--------
introductory paragraph of this Agreement.
"Borrower Security Agreement" means the Pledge and Security Agreement
---------------------------
dated as of the date hereof between the Borrower and the Lender, as amended,
restated, modified or supplemented from time to time in accordance with the
terms thereof.
"Brookdale By-Laws" means the Amended and Restated By-Laws of
-----------------
Brookdale, adopted as of May 7, 1997, as may be further amended or modified from
time to time.
"Brookdale Charter" means the Restated Certificate of Incorporation of
-----------------
Brookdale, filed with the Secretary of State of the State of Delaware on March
21, 1997, as may be further amended or modified from time to time.
"Brookdale Documents" means, collectively, the Brookdale Charter, the
-------------------
Brookdale By-Laws, the Voting Agreement, the Lock-Up Agreement, the Registration
Rights Agreement, the Stock Option and Deposit Agreement dated as of May 7, 1997
between Darryl W. Copeland, Jr. ("Copeland") and PGI and the Stock Purchase
Agreement and Agreement Concerning Option Shares dated as of May 7, 1997 among
Copeland, PGI and the Borrower.
"Brookdale Shares" means shares of the common stock, par value $.01
----------------
per share, of Brookdale.
"Business Day" means any day, excluding Saturday, Sunday and any day
------------
which shall be a legal holiday or a day on which banking institutions are
authorized or permitted by law or other government action to be closed in the
State of Tennessee or the State of Illinois.
"Code" means the Internal Revenue Code of 1986 and the regulations
----
promulgated and rulings issued thereunder.
"Collateral" means any collateral pledged to the Lender pursuant to
----------
the Security Documents, and any additional collateral pledged by Borrower to
secure the Obligations.
"Default" means any event, act or condition which, with notice,
-------
expiration of any applicable grace period, or both, would become an Event of
Default.
"Dollars" means lawful money of the United States of America.
-------
"Event of Default" shall have the meaning assigned to such term in
----------------
Section 7.
- ---------
2
<PAGE>
"Facility Fees" means the fees to be paid by the Borrower to the
-------------
Lender in accordance with Section 2.4.
-----------
"GAAP" means generally accepted accounting principles in the United
----
States.
"Governmental Authorities" means all federal, state, county, city,
------------------------
local and municipal governments and all agencies, boards, commissions, bureaus,
departments, courts, authorities, officials and officers thereof.
"Guarantees" means, collectively, the Guarantees dated as of the date
----------
hereof, made by each of PGI, Prime Group II, L.P., an Illinois limited
partnership, Prime International, Inc., an Illinois corporation, PGLP, Inc., an
Illinois corporation, PGLP, and Schulte (each, a "Guarantor" and collectively,
the "Guarantors"), respectively, in favor of the Lender in connection with the
Loan.
"Indebtedness" means, as to any Person (without duplication): (a)
------------
indebtedness created, issued or incurred by such Person for borrowed money
(whether by loan or the issuance and sale of debt securities); (b) obligations
of such Person to pay the deferred purchase or acquisition price of property or
services, other than trade accounts payable (other than for borrowed money),
arising, and accrued expenses incurred, in the ordinary course of business and
paid in accordance with customary trade terms; (c) indebtedness of others
secured by a Lien on the property of such Person, whether or not the respective
indebtedness so secured has been assumed by such Person (but, for any Person
other than the Borrower, only if such indebtedness is recourse indebtedness);
(d) obligations of such Person in respect of letters of credit or similar
instruments issued or accepted by banks and other financial institutions for the
account of such Person; (e) capital lease obligations of such Person; and (f)
indebtedness of others guaranteed by such Person.
"Investment" in any Person means: (a) the acquisition (whether for
----------
cash, property, services or securities or otherwise) of capital stock, bonds,
notes, debentures, partnership or other ownership interests or other securities
of such Person; and (b) any deposit with, or advance, loan or other extension of
or credit to, such Person or guarantee of, or other contingent obligation with
respect to, Indebtedness or other liability of such Person and (without
duplication) any amount committed to be advanced, lent or extended to such
Person.
"Lender" shall have the meaning ascribed to that term in the
------
introductory paragraph of this Agreement.
"Lien" means with respect to any asset, any mortgage, lien, pledge,
----
charge, security interest or encumbrance of any kind in respect of such asset.
For purposes of this Agreement, the Borrower shall be deemed to own subject to a
Lien any asset which it has acquired or holds subject to the interest of a
vendor or lessor under any conditional sale agreement, capital lease or other
title retention agreement relating to such asset.
3
<PAGE>
"Loan" means the loan provided for by Section 2.1.
---- -----------
"Loan Amount" means $18,000,000.
-----------
"Lock-Up Agreement" means the Lock-Up Agreement dated as of May 7,
-----------------
1997 by and among PGI, PGLP and Friedman, Billings, Ramsey & Co., Inc., as
representative of the underwriters identified therein, as amended, restated,
modified or supplemented from time to time in accordance with the terms thereof.
"Maturity Date" means February 1, 1998 or such later date elected by
-------------
the Borrower in accordance with Section 3.1.
"Note" means the promissory Note provided for by Section 2.2.
---- -----------
"Obligations" means, as at any date of determination thereof, the sum
-----------
of the following (determined without duplication): (i) the principal amount of
the Loan outstanding hereunder, plus (ii) accrued and unpaid interest on the
Loan, plus (iii) all the other outstanding obligations under this Agreement or
any other Basic Document (including, without limitation, the Borrower's
obligations under Section 3.3).
-----------
"Permitted Investments":
---------------------
(a) an account that is maintained by a depositary institution or trust
company incorporated under the laws of the United States of America or any
state thereof and subject to supervision and examination by federal or
state banking authorities, so long as at all times the commercial paper,
certificates of deposit or other short-term debt obligations of such
depository institution or trust company have a rating of either not less
than A-1 by Standard & Poor's or not less than P-1 by Moody's;
(b) demand and time deposits in, certificates of deposits of, or
bankers, acceptances of, in each case maturing in not more than 180 days
from the date of purchase, any depository institution or trust company
incorporated under the laws of the United States of America or any state
thereof and subject to supervision and examination by federal or state
banking authorities, so long as at the time of such investment or
contractual commitment providing for such investment the commercial paper,
certificates of deposit or other short-term debt obligations of such
depository institution or trust company have a rating of either not less
than A-1 by Standard & Poor's or not less than P-1 by Moody's;
(c) commercial paper having remaining maturities of not more than 180
days of any corporation incorporated under the laws of the United States or
any state thereof which on the date of acquisition has been rated either
not less than A-1 by Standard & Poor's or not less than P-1 by Moody's;
4
<PAGE>
(d) U.S. Treasury obligations maturing not more than six months from
the date of acquisition;
(e) repurchase agreements on U.S. Treasury obligations maturing not
more than six months from the date of acquisition, provided that the
unsecured obligations of the party agreeing to repurchase such obligations
are at the time rated either not less than A-1 by Standard & Poor's or not
less than P-1 by Moody's; and
(f) other obligations or securities that are approved by the Lender
and the Borrower.
"Person" means any individual, corporation, company, voluntary
------
association, partnership, limited liability company, joint venture, trust,
unincorporated organization or Governmental Authority.
"PGI" means The Prime Group, Inc., an Illinois corporation.
---
"PGI Security Agreement" means the Pledge and Security Agreement dated
----------------------
as of the date hereof between PGI and the Lender, as amended, restated, modified
or supplemented from time to time in accordance with the terms thereof.
"PGLP" means Prime Group Limited Partnership, an Illinois limited
----
partnership.
"PGLP Security Agreement" means the Pledge and Security Agreement
-----------------------
dated as of the date hereof between PGLP and the Lender, as amended, restated,
modified or supplemented from time to time in accordance with the terms thereof.
"Pledged Stock" means those Brookdale Shares pledged as Collateral
-------------
from time to time by the Borrower pursuant to the Borrower Security Agreement.
"Post-Default Rate" means a rate equal to 12.25% per annum.
-----------------
"Registration Rights Agreement" means the Registration Rights
-----------------------------
Agreement dated as of May 7, 1997 among Brookdale, PGI and PGLP, as amended,
restated, modified or supplemented from time to time in accordance with the
terms thereof.
"Schulte" means Mark J. Schulte.
-------
"Schulte Security Agreement" means the Pledge and Security Agreement
--------------------------
dated as of the date hereof between Schulte and the Lender, as amended,
restated, modified or supplemented from time to time in accordance with the
terms thereof.
5
<PAGE>
"Security Agreements" means, collectively, (i) the Borrower Security
-------------------
Agreement, (ii) the PGI Security Agreement, (iii) the PGLP Security Agreement
and (iv) the Schulte Security Agreement.
"Security Documents" means, collectively, the Guarantees, the Security
------------------
Agreements and all Uniform Commercial Code financing statements required by this
Agreement and by the Security Agreements.
"Solvent", when used with respect to any Person, means that at the
-------
time of determination: (i) the fair market value (i.e., the value of the
consideration obtainable in a sale of assets in the open market, assuming a sale
by a willing seller to a willing purchaser dealing at arm's length and arranged
in an orderly manner over a reasonable period of time, each having reasonable
knowledge of the nature and characteristics of such assets, neither being under
any compulsion to act, determined in good faith) of its assets is in excess of
the total amount of its liabilities (including, without limitation, probable
contingent liabilities); (ii) the present fair saleable value of its assets is
greater than its probable liability on its existing debts as such debts become
absolute and matured; (iii) it is then able and expects to be able to pay its
debts as they mature; and (iv) it has capital sufficient to carry on its
business as conducted and as proposed to be conducted.
"Specified Subsidiary" means any corporation, association or other
--------------------
business entity formed for the purpose of earning income not qualified as "rents
from real property" under applicable provisions of the Code, in which the Lender
owns substantially all of the economic interest but less than 10% of the voting
interests, and the remaining economic and voting interests are subject to
restrictions requiring that ownership of such interests be held by officers,
directors or employees of the Lender.
"Stock Offering" means the offering of common stock of Brookdale
--------------
described in its final prospectus dated May 1, 1997.
"Subsidiary" means any corporation of which at least a majority of the
----------
outstanding shares of stock having by the terms thereof ordinary voting power to
elect a majority of the board of directors of such corporation (irrespective of
whether or not at the time stock of any other class or classes of such
corporation shall have or might have voting power by reason of the happening of
any contingency) is at the time directly or indirectly owned or controlled by
the Borrower, or any partnership or joint venture controlled by the Borrower and
of which at least a majority of the outstanding equity interests are at the
time, directly or indirectly, owned by the Borrower, other than as a limited
partner.
"Voting Agreement" means the Voting Agreement dated as of May 7, 1997
----------------
among Brookdale, the Borrower, PGI and PGLP, as amended, restated, modified or
supplemented from time to time in accordance with the terms thereof.
6
<PAGE>
1.2 Interpretation. Unless otherwise expressly provided or unless
--------------
the context requires otherwise, (a) all references in this Agreement to Sections
shall mean and refer to Sections of this Agreement; (b) all references to
statutes and related regulations shall include all amendments of the same and
any successor or replacement statutes and regulations; (c) words using the
singular or plural number also shall include the plural and singular number,
respectively; (d) references to "hereof", "herein", "hereby" and similar terms
shall refer to this entire Agreement; and (e) references to any Person shall be
deemed to mean and include the successors and permitted assigns of such Person
(or, in the case of a Governmental Authority, Persons succeeding to the relevant
functions of such Person).
Section 2. Loan.
----
2.1 The Loan. The Lender agrees, on the terms of this Agreement, to
--------
make a Loan to the Borrower in Dollars in the principal amount equal to the Loan
Amount, by not later than 1:00 p.m. New York City time on the date hereof, in
immediately available funds, to an account of the Borrower in the United States
designated by the Borrower.
2.2 Note. The Loan made by the Lender shall be evidenced by a single
----
promissory note of the Borrower dated the date hereof, payable to the Lender in
a principal amount equal to the Loan Amount. Each payment made on account of
the principal thereof shall be recorded by the Lender on its books and endorsed
by the Lender on the schedule attached to the Note or any continuation thereof.
2.3 Prepayment of Loan. The Borrower shall have the right at any
------------------
time and from time to time to prepay the Loan, in whole or in part, at its
option, without premium or penalty; provided, that the Borrower shall give the
Lender at least 2 Business Days prior written notice of such prepayment.
2.4 Facility Fees.
-------------
(a) The Borrower agrees to pay to the Lender, on the date hereof, a
non-refundable facility fee equal to two percent (2.0%) of the Loan Amount.
(b) The Borrower also agrees to pay to the Lender, in arrears, on each
of June 30, 1997, September 30, 1997, December 31, 1997 and, if the Borrower
elects to extend the Maturity Date in accordance with Section 3.1 to a date on
-----------
or after February 1, 1998, March 31, 1998, an additional non-refundable facility
fee equal to one percent (1.0%) of the principal balance of the Loan outstanding
on such respective dates. Each such facility fee shall be deemed to be fully
earned for the period ending on such date and shall not be deemed to relate to
any other period.
7
<PAGE>
Section 3. Payments of Principal and Interest.
----------------------------------
3.1 Repayment of Loan. The Borrower will pay to the Lender the
-----------------
outstanding principal balance of the Loan on the Maturity Date or such earlier
day as the Loan shall become due and payable pursuant to the terms of this
Agreement; provided, however, that the Borrower may, in its sole discretion,
upon not less than three (3) days' prior written notice to the Lender, elect to
extend the Maturity Date to any date on or prior to the one year anniversary of
the date hereof. All payments received by the Lender shall first be applied to
pay accrued and unpaid interest pursuant to Section 3.2 and the balance shall be
-----------
applied to repay the outstanding principal balance of the Loan.
3.2 Interest. The Borrower will pay to the Lender interest on the
--------
unpaid principal amount of the Loan in arrears on the first Business Day of each
month, beginning on June 1, 1997, and on the date of each payment or prepayment
of principal (but only on the principal amount so paid or prepaid), at a per
annum rate equal to 10.25%. Notwithstanding the foregoing, the Borrower will
pay to the Lender interest at the Post-Default Rate on the principal of the
Loan, and (to the fullest extent permitted by law) on interest and any other
amount payable by the Borrower hereunder or under the Note, which shall not be
paid in full when due (whether at stated maturity, by acceleration or
otherwise), for the period from and including the due date thereof to but
excluding the date the same is paid in full. Interest payable at the Post-
Default Rate shall be payable from time to time on demand. Interest shall be
computed on the basis of a year of 360 days and actual days elapsed.
3.3 Certain Additional Obligations. The Borrower will pay to the
------------------------------
Lender, within thirty (30) days after the Borrower's receipt from the Lender of
a written request therefor, any and all federal income taxes computed at the
highest marginal federal income tax rate applicable to a Specified Subsidiary on
any gross income accrued by it with respect to the Loan for any period after
February 1, 1998; provided, however, that (A) the Borrower will not be obligated
-------- -------
to pay any such taxes if the Loan is paid in full on or prior to February 1,
1998; and (B) in no event (unless an Event of Default has occurred) will the
Borrower be obligated to pay more than (i) $185,000 of any such taxes
attributable to the interest income accrued by such Specified Subsidiary on the
Loan for the period from and including February 2, 1998 to the one year
anniversary of the date hereof or (ii) $72,000 of any such taxes attributable to
the Facility Fee paid to such Specified Subsidiary on March 31, 1998, if
applicable. The Lender agrees that, upon request by the Borrower, it will
promptly provide to the Borrower a calculation of the amount of taxes for which
it is to be indemnified by the Borrower hereunder.
Section 4. Payments.
--------
(a) Except to the extent otherwise provided herein, all payments of
principal, interest, fees and other amounts to be made by the Borrower under
this Agreement and the Note shall be made in Dollars, in immediately available
funds, without deduction, set-off or counterclaim, to the Lender (at any account
specified in writing by the Lender to the Borrower) not later than 1:00 p.m. New
York City time on the date on which such payment shall become due (each such
payment made after such time on such due date to be deemed to have been made on
the next succeeding Business Day).
8
<PAGE>
(b) If the due date of any payment under this Agreement or the Note
would otherwise fall on a day which is not a Business Day, such date shall be
extended to the next succeeding Business Day and interest shall be payable for
any principal so extended for the period of such extension.
(c) Notwithstanding the foregoing, all unpaid principal and interest
on the Loan shall be repaid in full on the Maturity Date.
Section 5. Representations and Warranties. The Borrower represents
------------------------------
and warrants to the Lender that:
5.1 Corporate Existence. The Borrower: (a) is a limited partnership
-------------------
duly organized, validly existing and in good standing under the laws of the
State of Illinois; (b) has all requisite partnership power, and has all material
governmental licenses, authorizations, consents and approvals necessary to own
its assets and carry on its business as now being or as proposed to be
conducted; and (c) is qualified to do business and is in good standing in all
jurisdictions in which the nature of the business conducted by it makes such
qualification necessary and where failure so to qualify could reasonably be
expected to have a material adverse effect on the financial condition,
operations, business or prospects taken as a whole of the Borrower.
5.2 Litigation. There is no legal or arbitral proceeding by or
----------
before any Governmental Authority, now pending or (to the knowledge of the
Borrower) threatened, against the Borrower with respect to which an order
adverse to the Borrower is reasonably likely and which, if adversely determined,
could reasonably be expected to have a material adverse effect on the financial
condition, operations, business or prospects of the Borrower.
5.3 No Breach. None of the execution and delivery by the Borrower of
---------
any of the Basic Documents to which the Borrower is a party, the consummation of
the transactions therein contemplated or compliance with the terms and
provisions thereof will conflict with or result in a breach of, or require any
consent (except such as has been obtained) under, or any applicable law or
regulation (including, without limitation, Regulation T promulgated by the
Federal Reserve System), or any order, writ, injunction or decree of any
Governmental Authority or any Brookdale Document, or any material agreement or
instrument to which the Borrower is a party or by which it is bound or to which
it is subject, or constitute a default under any such agreement or instrument,
or (except for the Liens created pursuant to or contemplated by this Agreement
or the Security Documents) result in the creation or imposition of any Lien upon
any of the assets of the Borrower pursuant to the terms of any such agreement or
instrument.
5.4 Partnership Action. The Borrower has all necessary partnership
------------------
power and authority to execute, deliver and perform its obligations under each
of the Basic Documents to which the Borrower is a party; the execution, delivery
and performance by the Borrower of each of the Basic Documents to which the
Borrower is a party have been duly authorized by all necessary
9
<PAGE>
partnership action on its part; and this Agreement and each of the other Basic
Documents to which the Borrower is a party has been duly and validly executed
and delivered by the Borrower and constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles.
5.5 Approvals. No authorizations, approvals or consents of, and no
---------
filings or registrations with, any Governmental Authority are necessary for the
execution, delivery or performance by the Borrower of the Basic Documents to
which the Borrower is a party or for the validity or enforceability thereof,
except for Uniform Commercial Code filings in respect of the Liens created
pursuant to the Security Documents.
5.6 Taxes. The Borrower has filed all United States Federal income
-----
tax returns and all other material tax returns which are required to be filed by
it and has paid all taxes due pursuant to such returns.
5.7 Subsidiaries. The Borrower has no Subsidiaries. The Pledged
------------
Stock represents the only Investment held by the Borrower in any other Person.
5.8 Pledged Stock. The Borrower is the registered owner of the
-------------
Pledged Stock free and clear of all Liens (other than the Liens created by the
Borrower Security Agreement and the Brookdale Documents), and has pledged under
the Borrower Security Agreement all Brookdale Shares owned by it.
5.9 Brookdale Documents. The Borrower has furnished to the Lender a
-------------------
true and complete copy of each Brookdale Document as in effect as of the date
hereof; such Brookdale Documents are in full force and effect; such Brookdale
Documents (other than the Brookdale By-Laws and the Brookdale Charter) are valid
and binding on each of the Borrower's Affiliates that are party thereto and, to
the best of Borrower's knowledge, on each of the other parties thereto; and
neither Borrower or any of its Affiliates, nor to the best of Borrower's
knowledge, any other party to any Brookdale Document, is in default thereunder.
5.10 Solvency. After giving effect to the Loan, the disbursement of
--------
the proceeds of the Loan in accordance with Section 6.8 and the other
-----------
transactions contemplated by the Stock Offering and the Basic Documents to occur
on the date hereof, the Borrower is Solvent on the date hereof.
5.11 Interest Rate. The interest rate and the Facility Fees
-------------
applicable to the obligations of the Borrower under this Agreement and the Note
do not violate any law, rule or regulation of the State of Illinois prescribing
a maximum rate of interest.
10
<PAGE>
Section 6. Covenants of the Borrower. The Borrower agrees that,
-------------------------
until payment in full of the Obligations:
6.1 Information. The Borrower shall deliver, or shall use its good
-----------
faith efforts to cause to be delivered, to the Lender from time to time copies
of each document filed by Brookdale with the Securities and Exchange Commission
under the Securities and Exchange Act of 1934, as amended, each other document
sent to Brookdale's stockholders generally and such other information regarding
the business, affairs or financial condition of the Borrower, Brookdale or the
Brookdale Shares as the Lender may reasonably request.
6.2 Litigation. The Borrower will promptly give to the Lender notice
----------
of all legal or arbitral proceedings by or before any Governmental Authority,
and any material development in respect of such legal or other proceedings,
affecting the Borrower, except proceedings which are not reasonably likely to be
determined adversely to the Borrower or which, if determined adversely to the
Borrower, could not reasonably be expected to have a material adverse effect on
the financial condition, operations, business or prospects of the Borrower.
6.3 Corporate Existence, Etc. The Borrower will (a) preserve and
------------------------
maintain its existence and all of its material rights, privileges and
franchises; (b) comply with the requirements of all applicable laws, rules,
regulations and orders of Governmental Authorities if failure to comply with
such requirements could reasonably be expected to materially and adversely
affect the financial condition, operations, business or prospects of the
Borrower; (c) pay and discharge all taxes, assessments and governmental charges
or levies imposed on it or on its income or profits or on any of its property
prior to the date on which penalties attach thereto, except for any such tax,
assessment, charge or levy the payment of which is being contested in good faith
and by proper proceedings and against which adequate reserves are being
maintained; and (d) permit representatives of the Lender, upon 24 hours notice
during normal business hours, to examine, copy and make extracts from its books
and records, to inspect its properties and to discuss its business and affairs
with its officers, all to the extent reasonably requested by the Lender.
6.4 Prohibition of Fundamental Changes. The Borrower will not enter
----------------------------------
into any transaction of merger or consolidation or amalgamation, or liquidate,
wind-up or dissolve itself (or suffer any liquidation or dissolution). The
Borrower will not convey, sell, lease, transfer or otherwise dispose of, in one
transaction or a series of transactions, all or a substantial part of its
business or assets, whether now owned or hereafter acquired (including, without
limitation, Pledged Stock prior to any release thereof) without the prior
written consent of the Lender.
6.5 Limitation on Liens. The Borrower will not create, incur, assume
-------------------
or suffer to exist any Lien upon any of its property, assets or revenues,
whether now owned or hereafter acquired, except:
11
<PAGE>
(a) Liens created pursuant to (or otherwise permitted under or
contemplated by) this Agreement or the Security Documents;
(b) Liens imposed by any Governmental Authority for taxes, assessments
or charges not yet due or which are being contested in good faith and by
appropriate proceedings and adequate reserves with respect thereto are
maintained on the books of the Borrower, in accordance with GAAP;
(c) carriers', warehousemen's, mechanics', materialmen's, repairmen's
or other like Liens arising in the ordinary course of business which are not
overdue for a period of more than 60 days or which are being contested in good
faith and by appropriate proceedings;
(d) pledges or deposits under worker's compensation, unemployment
insurance and other social security legislation;
(e) deposits to secure the performance of bids, trade contracts (other
than for borrowed money), leases, statutory obligations, surety and appeal
bonds, performance bonds and other obligations of a like nature incurred in the
ordinary course of business;
(f) Liens imposed wrongfully by, or by mistake or error on the part
of, a non-Affiliate of the Borrower and without the consent of the Borrower
which have not attached for a period of over 60 days and are being contested in
good faith and by appropriate proceedings; provided, however, that, if, during
the first 60 day period of attachment, the liens are being so contested,
Borrower shall have an additional 60 days thereafter to remove same;
(g) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business and encumbrances
consisting of zoning restrictions, easements, licenses, restrictions on the use
of property or minor imperfections in title thereto which, in the aggregate, are
not material in amount, and which do not in any case materially detract from the
value of the property subject thereto or interfere with the ordinary conduct of
the business of Borrower;
(h) Liens created by the Brookdale Documents; and
(i) other Liens incurred in the ordinary course of business which, in
the aggregate, are not material in amount and which do not in any case
materially detract from the value of the property subject thereto or interfere
with the ordinary conduct of the business of Borrower.
6.6 Indebtedness. The Borrower will not create, incur or suffer to
------------
exist any Indebtedness, except (i) Indebtedness to the Lender hereunder, (ii)
Indebtedness incurred in the ordinary course of business which is not, in the
aggregate, material in amount, (iii) Indebtedness the proceeds of which are
applied by the Borrower to the purchase of Brookdale Shares pursuant to the
Stock Offering, (iv) Indebtedness to Affiliates of the Borrower which is
incurred by the Borrower to
12
<PAGE>
pay amounts due to the Lender under the Basic Documents and (v) Indebtedness
that is subordinated to all of the Obligations.
6.7 Investments. The Borrower will not make or permit to remain
-----------
outstanding any Investments, except:
(a) operating deposit accounts with banks;
(b) Permitted Investments; and
(c) Investments in Brookdale Shares.
6.8 Use of Proceeds. The Borrower will use the proceeds of the Loan
---------------
hereunder solely for the payment of the purchase price of Brookdale Shares to be
sold to the Borrower pursuant to the Stock Offering and the payment of all
reasonable fees, costs and expenses incurred in connection with such purchase
and the transactions contemplated by the Basic Documents (including the Facility
Fees).
6.9 Modifications of Certain Documents. The Borrower will not send
----------------------------------
any notice under, or request, or consent to, any modification, supplement or
waiver of any of the provisions of Brookdale Documents in a manner which
adversely affects the interests of the Borrower or the Lender without the prior
written consent of the Lender.
Section 7. Events of Default. If one or more of the following events
-----------------
(herein called "Events of Default") shall occur and be continuing:
(a) the Borrower shall fail to make payment of (i) the principal
amount of the Loan when due, or (ii) any interest on the Loan or any Facility
Fee, in any case, within three (3) Business Days after the same shall become
due, or (iii) any other amount payable by it hereunder within ten (10) Business
Days after the Borrower's receipt from the Lender of written notice of the
failure to pay such amount; or
(b) a default (after the receipt of notice and the expiration of all
applicable cure periods) shall have occurred with respect to any Indebtedness in
excess of $5,000,000 of Brookdale, any Guarantor (other than Schulte) or the
Borrower (after the receipt of notice and the expiration of all applicable cure
periods); or
(c) any representation, warranty or certification made in any Basic
Document by the Borrower or any Guarantor shall prove to have been false or
misleading, as of the time made or furnished; provided, however, that (i) with
respect to that portion of the representations and warranties set forth in
Section 5.6 ("Taxes") hereof and Section 2.12 ("Taxes") of the Guarantees (other
- -----------
than the Guarantee by Schulte) that provides that the Borrower or the Guarantor,
as the case
13
<PAGE>
may be, "has paid all taxes due pursuant to such returns", no Event of Default
shall be deemed to exist unless the failure to pay such taxes could reasonably
be expected to have a material adverse effect on the financial condition,
operations, business or prospects of the Borrower or such Guarantor, as the case
may be, or its ability to perform its obligations under this Agreement or such
Guarantee, as the case may be, (ii) with respect to the enforceability
representations and warranties set forth in Section 5.4 hereof, Section 2.9 of
-----------
the Guarantees (other than the Guarantee by Schulte), Section 2.8 of the
Guarantee by Schulte and Section 5.1(v) of the Security Agreements, an Event of
Default shall be deemed to exist only to the extent that the Lender's rights and
remedies under any such Basic Document, taken in their entirety, are inadequate
for the practical realization of the benefits and/or security intended to be
provided thereby and (iii) with respect to the representation and warranty set
forth in clause (iii) of Section 2.7 of the Guarantees (other than the Guarantee
by Schulte), no Event of Default shall be deemed to exist unless any such
representation and warranty is false or misleading in any material respect; or
(d) the Borrower or any Guarantor shall default in the performance of
any of its material obligations in any Basic Document to which it is a party and
such default shall continue unremedied for a period of thirty (30) days after
written notice thereof to the Borrower or any such Guarantor by the Lender
unless the Borrower or any such Guarantor is diligently attempting to cure such
default and, in any event, such default is remedied by no later than the 90th
day after written notice thereof to the Borrower or any such Guarantor by the
Lender; or
(e) PGLP, Inc., PGLP, PGI and Affiliates of the foregoing shall,
collectively, cease to own, directly or indirectly, 100% of the partnership
interests in the Borrower;
(f) Brookdale, any Guarantor (other than Schulte) or the Borrower
shall admit in writing its inability to, or be generally unable to, pay its
debts as such debts become due, or shall be in default (after the receipt of
notice and the expiration of all applicable cure periods) with respect to
Indebtedness in excess of $5,000,000; or
(g) Brookdale, any Guarantor (other than Schulte) or the Borrower
shall (i) apply for or consent to the appointment of, or the taking of
possession by, a receiver, custodian, trustee or liquidator of itself or of all
or a substantial part of its property, (ii) make a general assignment for the
benefit of its creditors, (iii) commence a voluntarily case under the U.S.
Bankruptcy Code (or any similar state statute), (iv) file a petition seeking to
take advantage of any other law relating to bankruptcy, insolvency,
reorganization, winding-up, or composition or readjustment of debts, or (v) take
any corporate or other action for the purpose of effecting any of the foregoing;
or
(h) a proceeding or case shall be commenced, without the application
or consent of Brookdale, any Guarantor (other than Schulte) or the Borrower, in
any court of competent jurisdiction, seeking (i) its liquidation,
reorganization, dissolution or winding-up, or the composition or readjustment of
its debts, (ii) the appointment of a trustee, receiver, custodian, liquidator or
the like of Brookdale, any Guarantor (other than Schulte) or the Borrower or of
all or any substantial part
14
<PAGE>
of its respective assets, or (iii) similar relief in respect of Brookdale, any
Guarantor (other than Schulte) or the Borrower under any law relating to
bankruptcy, insolvency, reorganization, winding-up, or composition or adjustment
of debts, and such proceeding or case shall continue undismissed, or an order,
judgment or decree approving or ordering any of the foregoing shall be entered
and continue unstayed and in effect, in any case, for a period of 60 or more
days; or an order for relief against Brookdale, any Guarantor (other than
Schulte) or the Borrower shall be entered in an involuntary case under the U.S.
Bankruptcy Code (or any similar state statute); or
(i) a final judgment or judgments for the payment of money in excess
of $5,000,000 in the aggregate (to the extent not covered by insurance) shall be
rendered by a court or courts against Brookdale, any Guarantor (other than
Schulte) or the Borrower and the same shall not be discharged (or provision
shall not be made for such discharge) or a stay of execution thereof shall not
be procured within 90 days from the date of entry thereof and the Borrower shall
not, within said period of 90 days, or such longer period during which execution
of the same shall have been stayed, appeal therefrom and cause the execution
thereof to be stayed during such appeal; or
(j) except for expiration in accordance with its terms, any of the
Security Documents shall be terminated or shall cease to be in full force and
effect, for whatever reason (other than due to the action or inaction of the
Lender) without the consent of the Lender; or
(k) Brookdale Shares shall cease to be listed on a nationally
recognized stock exchange or quoted on NASDAQ-NMS;
THEREUPON: (i) in the case of an Event of Default (other than one referred to in
clause (g) or (h) of this Section 7 with respect to the Borrower), the Lender
---------
may, by notice to the Borrower, declare the principal amount then outstanding
of, and the accrued interest on, the Loan and all other amounts payable by the
Borrower hereunder and under the Note to be forthwith due and payable, whereupon
such amounts shall be immediately due and payable without presentment, demand,
protest or other formalities of any kind, all of which are hereby expressly
waived by the Borrower to the extent permitted by applicable law; and (ii) in
the case of the occurrence of an Event of Default referred to in clause (g) or
(h) of this Section 7 with respect to the Borrower, the principal amount then
---------
outstanding of, and the accrued interest on, the Loan and all other amounts
payable by the Borrower hereunder and under the Note shall automatically become
immediately due and payable without presentment, demand, protest or other
formalities of any kind, all of which are hereby expressly waived by the
Borrower.
Section 8. Miscellaneous.
-------------
8.1 Waiver. No failure on the part of the Lender to exercise and no
------
delay in exercising, and no course of dealing with respect to, any right, power
or privilege under this Agreement or the Note or any Security Document shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, power or privilege under this Agreement, the Note or any
15
<PAGE>
Security Document preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The remedies provided herein are
cumulative and not exclusive of any remedies provided by law.
8.2 Notices. All notices and other communications provided for
-------
herein and under the Security Documents (including, without limitation, any
modifications of, or waivers or consents under, this Agreement) shall be given
or made by telecopy, or in writing and telecopied (with confirmation), mailed,
sent by overnight courier or delivered to the intended recipient at the "Address
for Notices" specified below its name on the signature pages hereof (below the
name of the Borrower); or, as to any party, at such other address as shall be
designated by such party in a notice to each other party. Except as otherwise
provided in this Agreement, all such communications shall be deemed to have been
duly given when transmitted by telecopier (with confirmation of receipt), or
personally delivered or, in the case of a mailed or couriered notice, upon
receipt, in each case given or addressed as aforesaid.
8.3 Expenses. The Borrower agrees to reimburse the Lender for
--------
paying: (a) all reasonable out-of-pocket costs and expenses of the Lender
(including reasonable fees and disbursements of counsel for the Lender) actually
incurred in connection with (i) the negotiation, preparation, execution and
delivery of this Agreement and the other Basic Documents and the making of the
Loan hereunder (including the termination thereof or the release of Collateral
thereunder), and (ii) any amendment, modification or waiver of any of the terms
of this Agreement or any of the other Basic Documents; (b) all reasonable costs
and expenses of the Lender (including reasonable counsels' fees) in connection
with any Default and any enforcement or collection proceedings resulting
therefrom; and (c) all transfer, stamp, documentary or other similar taxes,
assessments or charges levied by any Governmental Authority in respect of this
Agreement or any of the other Basic Documents or any other document referred to
herein or therein and all reasonable costs, expenses, taxes, assessments and
other charges incurred in connection with any filing, registration, recording or
perfection of any security interest contemplated by this Agreement or any other
Basic Document or any document referred to herein or therein.
8.4 Amendments. Except as otherwise expressly provided in this
----------
Agreement, any provision of this Agreement may be amended or modified only by an
instrument in writing signed by the Borrower and the Lender.
8.5 Successors and Assigns. This Agreement shall be binding upon and
----------------------
inure to the benefit of the parties hereto and their respective successors and
permitted assigns. Neither the Borrower nor the Lender may assign its rights or
obligations hereunder or under the other Basic Documents without the prior
written consent of the other party; provided, however, that the Lender may at
any time assign all (but not less than all) of its rights and obligations under
the Basic Documents to a Specified Subsidiary, without the consent of the
Borrower.
16
<PAGE>
8.6 Survival. Each representation and warranty made hereunder shall
--------
survive the making of the Loan.
8.7 Captions. The table of contents and section headings appearing
--------
herein are included solely for convenience of reference and are not intended to
affect the interpretation of any provision of this Agreement.
8.8 Counterparts. This Agreement may be executed in counterparts,
------------
all of which when taken together shall constitute one and the same instrument
and either of the parties hereto may execute this Agreement by signing any such
counterpart.
8.9 GOVERNING LAW.
-------------
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF ILLINOIS (EXCLUSIVE OF ANY RULES AS TO CONFLICT OF
LAWS).
(b) Under no circumstances shall the aggregate amount paid or agreed
to be paid hereunder by the Borrower exceed the highest lawful rate permitted
under applicable usury law (the "Maximum Rate") and the payment obligations of
the Borrower under this Agreement are hereby limited accordingly. If under any
circumstances the aggregate amounts paid under this Agreement shall include
amounts which by law are deemed interest and which would exceed the Maximum
Rate, the Borrower and the Lender stipulate that payment and collection of such
excess amounts shall have been and will be deemed to have been the result of a
mistake on the part of both the Borrower and the Lender, and the party receiving
such excess payments shall promptly credit such excess (to the extent only of
such interest payments in excess of the Maximum Rate) against the future lawful
interest to be paid on the Loan and then against the unpaid principal amount of
the Loan and any portion of such excess payments not capable of being so
credited shall be refunded to the Borrower.
8.1 Non-Recourse. Anything contained herein, in the Note or in any
------------
other Basic Document to the contrary notwithstanding, no recourse shall be had
for the Obligations against any partner, agent, director, officer, or employee
of the Borrower. It is understood that the preceding sentence shall not (A)
apply to the obligations of the Guarantors set forth in the Guarantees and (B)
in the event of any malfeasance, such as fraud, misappropriation of funds or
intentional material misrepresentation, estop the Lender from instituting or
prosecuting a legal action or proceeding or otherwise making a claim against the
Person or Persons committing such malfeasance.
[signature page follows]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Credit
Agreement to be duly executed as of the date first written above.
BORROWER:
PRIME GROUP VI, L.P.
By: PGLP, INC.,
its Managing General Partner
By: /s/ Richard S. Curto
---------------------------
Name: Richard S. Curto
--------------------------
Title: Vice President
-------------------------
Address for Notices:
c/o The Prime Group, Inc.
77 West Wacker Drive, Suite 3900
Chicago, Illinois 60601
Telecopier No.: (312) 917-1151
Telephone No.: (312) 917-4201
Attention: Michael W. Reschke
with a copy to:
The Prime Group, Inc.
77 West Wacker Drive, Suite 3900
Chicago, Illinois 60601
Telecopier No.: (312) 917-1684
Telephone No.: (312) 917-4234
Attn: Robert J. Rudnik, Esq.
and to:
Brookdale Living Communities, Inc.
77 West Wacker Drive, Suite 3900
Chicago, Illinois 60601
Telecopier No.: (312) 917-0460
Telephone No.: (312) 917-4258
Attn: Mark J. Schulte
and to:
Winston & Strawn
35 West Wacker Drive
Chicago, Illinois 60601
18
<PAGE>
Telecopier No.: (312) 558-5700
Telephone No.: (312) 558-5600
Attn: Wayne D. Boberg, Esq.
LENDER:
HEALTHCARE REALTY TRUST INCORPORATED
By: /s/ Roger O. West
-----------------------------
Name: Roger O. West
----------------------------
Title: Exec. Vice President
---------------------------
Address for Notices:
Healthcare Realty Trust Incorporated
3310 West End Street
Suite 400
Nashville, Tennessee 37203
Telecopier No.: 615-269-8122
Telephone No.: 615-269-8175
Attention: Roger O. West, Esq.
<PAGE>
EXHIBIT IV
----------
FORM OF
-------
PLEDGE AND SECURITY AGREEMENT
-----------------------------
THIS PLEDGE AND SECURITY AGREEMENT dated as of _________ is between
__________ (the "Pledgor"), and Healthcare Realty Trust Incorporated, a Maryland
real estate investment trust with its principal place of business and chief
executive office at 3310 West End Street, Suite 400, Nashville, Tennessee 37203
(the "Secured Party").
RECITALS:
--------
A. Prime Group VI, L.P., an Illinois limited partnership (the
"Borrower") and affiliate of the Pledgor, and the Secured Party are parties to
that certain Credit Agreement dated as of the date hereof (as amended, restated,
modified or supplemented from time to time, the "Credit Agreement"), pursuant to
which the Secured Party has made a loan to the Borrower in the principal amount
of $18,000,000.00.
B. It is a condition precedent to the Secured Party making such loan
to the Borrower under the Credit Agreement that the Pledgor concurrently
herewith executes and delivers a certain Guaranty dated as of the date hereof in
favor of the Secured Party (as amended, restated, modified or supplemented from
time to time, the "Guaranty").
C. It is a further condition precedent to the Secured Party making
such loan to the Borrower under the Credit Agreement that the Pledgor executes
and delivers this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. Capitalized terms used herein, and not
-----------
otherwise defined herein, shall have the respective meanings specified in the
Credit Agreement.
<PAGE>
"Agreement" shall mean this Pledge and Security Agreement, as amended,
restated, modified or supplemented from time to time.
"Bankruptcy Code" shall mean Title 11 of the United States Code
entitled "Bankruptcy" as now or hereafter in effect, or any successor thereto.
"Borrower" shall mean Prime Group VI, L.P., an Illinois limited
partnership.
"Brookdale" shall mean Brookdale Living Communities, Inc., a Delaware
corporation.
"Brookdale Shares" shall mean the common stock, par value $0.01 per
share, of Brookdale.
"Collateral" shall have the meaning assigned to such term in Section
-------
3.1 of this Agreement.
- ---
"Distributions" shall have the meaning assigned to such term in
Section 3.1(iii) of this Agreement.
- ----------------
"Federal Securities Laws" shall have the meaning ascribed to such term
in Section 5.7 of this Agreement.
------------
"Pledged Stock" shall mean that number of Brookdale Shares set forth
on Schedule A attached hereto which are pledged hereunder to the Secured Party
----------
as collateral security for the Loan.
"UCC" shall mean the Uniform Commercial Code as the same may from time
to time be in effect in the State of Illinois or any other applicable
jurisdiction.
Section 1.2 Principles of Construction. All references to articles
--------------------------
and sections are to articles and sections in this Agreement unless otherwise
specified. Unless otherwise specified, 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.
-2-
<PAGE>
ARTICLE II
OBLIGATIONS SECURED
Section 2.1 Obligations Secured. This Agreement is made by the
-------------------
Pledgor for the benefit of the Secured Party to secure the payment or
performance in full when due, whether at stated maturity, by required
prepayment, declaration, acceleration, demand or otherwise of the Guaranteed
Obligations (as defined in the Guaranty) and its obligations hereunder (the
"Secured Obligations"), including, without limitation, obligations that would
be owed by the Borrower to the Secured Party under any Basic Document but for
the fact that they are not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving the Borrower under any applicable
bankruptcy, reorganization, moratorium or similar law, ordinance, regulation,
rule, order, writ, injunction, or decree of any tribunal, or under principles of
equity affecting the enforcement of creditors' rights generally.
ARTICLE III
GRANT OF SECURITY INTEREST
Section 3.1 Collateral Assignment, Pledge and Grant of Security
---------------------------------------------------
Interest. To secure the payment and performance of all the Secured Obligations,
- --------
the Pledgor does hereby collaterally assign, convey, mortgage, pledge,
hypothecate and transfer, and does hereby grant a continuing security interest
in, all of the Pledgor's rights, title and interest in the following, whether
now existing or hereafter from time to time acquired (collectively, the
"Collateral") to, and for the benefit of, the Secured Party:
(i) the Pledged Stock;
(ii) all payments due or to become due to the Pledgor after
the date hereof arising out of, as a result of or in connection with the
Pledged Stock, whether as dividends or distributions of stock, cash or
property or otherwise (collectively, the "Distributions"), and all of the
Pledgor's rights arising out of, as a result of or in connection with the
Pledged Stock, whether now existing or hereafter arising or acquired, to
exercise all voting, consensual and other powers of ownership pertaining to
the Pledged Stock (including, without limitation, to make determinations,
to exercise any election (including, without limitation, election of
remedies) or option, to give or receive any notice, consent, amendment,
waiver or approval), together with full power and authority to demand,
receive, enforce, collect or give receipt for any of the foregoing, to
enforce or execute any checks or other instruments or orders, to file any
claims and to take any action which, in the reasonable
-3-
<PAGE>
opinion of the Secured Party, may be necessary or advisable in connection
with any of the foregoing;
(iii) all rights and interests of Pledgor, relating to the
Pledged Stock, under the Registration Rights Agreement; and
(iv) all proceeds of any and all of the foregoing and all
increases, substitutions, replacements, additions and accessions thereto.
Section 3.2 Delivery of Collateral and Related Evidence. On the
-------------------------------------------
date hereof, the Pledgor has delivered to the Secured Party certificates
representing the Pledged Stock, together with an undated stock power covering
such certificates, duly executed in blank.
Section 3.3 Distributions. Unless an Event of Default shall have
-------------
occurred and be continuing, the Pledgor shall be entitled to receive all
Distributions (other than any liquidating, or partially liquidating,
Distributions) that are paid on the Pledged Stock by Brookdale.
Section 3.4 Voting Power. Unless an Event of Default shall have
-------------
occurred and be continuing, the Pledgor shall be entitled to exercise all
voting, consensual and other powers of ownership pertaining to the Pledged Stock
(including, without limitation, to make determinations, to exercise any election
or option, to give or receive any notice, consent, amendment, waiver or
approval); provided, however, that no vote shall be cast nor any approval,
consent, waiver or ratification given, nor any power pertaining to the Pledged
Stock exercised, nor any other action taken, which would violate or be
inconsistent with the terms of this Agreement or any of the other Basic
Documents, or which would have the effect of materially impairing the position
or interests of the Secured Party, or could reasonably be expected to have a
material adverse effect on the ability of the Pledgor to perform its obligations
hereunder or under any other Basic Document.
Section 3.5 No Assumption. Notwithstanding any of the foregoing,
-------------
whether or not an Event of Default shall have occurred, and whether or not the
Secured Party elects to foreclose or otherwise realize on its security interest
in the Collateral as set forth herein or exercise any of its rights under this
Agreement or any of the other Basic Documents or otherwise, neither this
Agreement, receipt by the Secured Party of any Distributions, the foreclosure or
other realization by the Secured Party of the security interest in the
Collateral nor any exercise by the Secured Party of any of its rights under this
Agreement or the other Basic Documents or otherwise, shall in any way be deemed
to obligate the Secured Party to assume any of the Pledgor's obligations,
duties, expenses or liabilities with respect to the Collateral or any agreement
relating thereto, and in the event of any such foreclosure, realization or other
exercise of rights, the Pledgor shall remain bound and obligated to perform such
obligations and the Secured Party shall not be deemed to have assumed any of
such obligations. Notwithstanding anything to the contrary herein, the Secured
Party agrees that, upon any
-4-
<PAGE>
foreclosure or other realization by the Secured Party of the security interest
in the Collateral or any exercise by the Secured Party of any of its rights
under this Agreement or the other Basic Documents or otherwise, the Secured
Party shall be subject in all respects to the terms and conditions of the
Brookdale Documents.
Section 3.6 Securities Laws. Nothing herein is intended, or shall
---------------
be interpreted, to require or permit any sale of the Collateral in violation of
the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, or any rule or regulation of the United States Securities and Exchange
Commission or any state "blue sky" laws.
ARTICLE IV
REMEDIES
Section 4.1 Remedies. Upon the occurrence and during the
--------
continuance of an Event of Default, the Secured Party may declare all Secured
Obligations to be, whereupon the same shall become, forthwith due and payable
without presentment, demand, protest or other notice (except in the case of
notice which is expressly required to be given hereunder or under the other
Basic Documents), all of which are hereby waived by the Pledgor to the extent
permitted by applicable law, and the Secured Party may exercise all the rights,
powers and remedies vested in it (whether vested in it by this Agreement or any
other Basic Document or by law) for the protection and enforcement of its rights
in respect of the Collateral, including, without limitation, the following
rights, which the Pledgor hereby agrees to be commercially reasonable:
(i) to receive directly all amounts payable in respect of
the Collateral;
(ii) to transfer all or any part of the Pledged Stock into
the Secured Party's name or the name of its nominee(s) or designee(s);
(iii) subject to the terms and conditions of the Brookdale
Documents, to vote all or any part of the Pledged Stock (whether or not
transferred into the name of the Secured Party) and give all consents,
waivers and ratifications in respect of the Collateral and otherwise act
with respect thereto as though it were the outright owner thereof; and
(iv) subject to the terms and conditions of the Brookdale
Documents, at any time or from time to time, to sell, assign and deliver,
or grant options to purchase, all or any part of the Collateral, or any
interest therein, at any public or private sale, without demand of
performance, advertisement or notice of intention to sell (or of the time
or place of sale or adjournment thereof) or to redeem or otherwise (all of
which are, to the extent
-5-
<PAGE>
permitted by applicable law, hereby waived by the Pledgor), for cash or
credit or for other property, for immediate or future delivery without any
assumption of credit risk, and for such price or prices and on such terms
as the Secured Party in its absolute discretion may determine. The Pledgor
hereby waives and releases to the fullest extent permitted by applicable
law any right or equity of redemption with respect to the Collateral,
whether before or after sale hereunder, and all rights, if any, of
marshalling the Collateral and any other security for the Secured
Obligations or otherwise. At any such sale, unless prohibited by applicable
law, the Secured Party may bid for and purchase all or any part of the
Collateral so sold free from any such right or equity of redemption. To the
fullest extent permitted by applicable law, the Secured Party shall not be
liable for failure to collect or realize upon any or all of the Collateral
or for any delay in so doing nor shall it be under any obligation to take
any action whatsoever with regard thereto.
Section 4.2 Sale. The Secured Party shall not be obligated to make
----
any sale of Collateral regardless of notice of sale having been given. The
Secured Party may adjourn any public or private sale from time to time and such
sale may be made at the time and place to which it was so adjourned. The
Pledgor agrees that to the extent notice of any such sale or an adjournment
thereof is required by law (notwithstanding the waiver of such notice herein)
and the applicable statutes do not specify the minimum notice period required,
the Secured Party need not give more than ten (10) days' notice of the time and
place of any public sale or of the time after which a private sale may take
place and that such notice is reasonable notification of such matters.
Section 4.3 Appointment of Attorney-in-Fact. The Pledgor hereby
-------------------------------
appoints the Secured Party, effective upon an Event of Default (but only for so
long as such Event of Default is continuing), as the Pledgor's attorney-in-fact,
with full power of substitution for the purposes specified in, or contemplated
by, this Agreement. Such appointment is irrevocable and coupled with an
interest. As attorney-in-fact, the Secured Party may (in addition to the
actions specified in other provisions of this Agreement), in the name, place and
stead of the Pledgor, make and execute all conveyances, assignments and
transfers of the Collateral sold pursuant hereto, and the Pledgor hereby
ratifies and confirms all that the Secured Party, as attorney-in-fact, shall do
by virtue hereof. Nevertheless, the Pledgor shall, if so requested by the
Secured Party, ratify and confirm any sale or sales by executing and delivering
to the Secured Party, or to such purchaser or purchasers, all such instruments
as may, in the reasonable judgment of the Secured Party, be advisable for the
purpose.
Section 4.4 Limitation of Secured Party's Liability. The Secured
---------------------------------------
Party shall incur no liability as a result of the manner or terms of sale of the
Collateral, or any part thereof, at any public or private sale conducted during
the continuance of an Event of Default in a manner and on terms that are
commercially reasonable. The Pledgor hereby waives, to the fullest extent
permitted by applicable law, any claims against the Secured Party arising by
reason of the fact that the price at which the Collateral, or any part thereof,
may have been sold at a private sale was less than the price
-6-
<PAGE>
which might have been obtained at public sale or was less than the aggregate
amount of the Secured Obligations, even if the Secured Party accepts the first
offer received which the Secured Party in good faith deems to be commercially
reasonable under the circumstances and does not offer the Collateral to more
than one offeree. To the extent permitted by applicable law, the Pledgor shall
have the burden of proving that any such sale of the Collateral was conducted in
a commercially unreasonable manner.
Section 4.5 Waiver of Rights. The Pledgor hereby waives to the
----------------
fullest extent permitted by applicable law: (i) presentment, demand, protest or
any notice (except in the case of notice which is expressly required to be given
under this Agreement or the other Basic Documents) of any kind in connection
with this Agreement, the other Basic Documents and the Collateral; (ii) notice
in connection with the Secured Party's retention, taking possession or
disposition of any of the Collateral, including, without limitation, any and all
prior notice for any prejudgment remedy or remedies; (iii) all claims, damages
and demands occasioned by such retention, taking of possession or disposition;
(iv) all other requirements as to the time, place and terms of sale or other
requirements with respect to the enforcement of the Secured Party's rights
hereunder; and (v) all rights, if any, of redemption, appraisal, valuation,
marshalling, stay, extension or moratorium now or hereafter in force under any
applicable law in order to prevent or delay the enforcement of this Agreement or
any of the other Basic Documents or the absolute sale of the Collateral or any
portion thereof.
Section 4.6 Recourse. Anything contained herein, in the Note or in
--------
any other Basic Document to the contrary notwithstanding, no recourse shall be
had for the Secured Obligations against any shareholder, agent, director,
officer, or employee of the Pledgor. It is understood that the preceding
sentence shall not (A) apply to the obligations of the Guarantors set forth in
the Guarantees, and (B) in the event of any malfeasance, such as fraud,
misappropriation of funds or intentional material misrepresentation, estop the
Secured Party from instituting or prosecuting a legal action or proceeding or
otherwise making a claim against the Person committing such malfeasance.
Section 4.7 Securities Restrictions. In view of the Pledgor's
-----------------------
position in relation to Brookdale, or because of other present or future
circumstances, a question may arise under the Securities Act of 1933, as
amended, as now or hereafter in effect, or any similar statute hereafter enacted
analogous in purpose or effect (such Act and any such similar statute as from
time to time in effect being hereinafter called, the "Federal Securities Laws")
with respect to any disposition of the Collateral permitted hereunder. Each of
the Pledgor and the Secured Party understands that compliance with the Federal
Securities Laws may very strictly limit the course of the Secured Party's
conduct if the Secured Party were to attempt to dispose of all or any part of
the Collateral and may also limit the extent to which or the manner in which any
subsequent transferee of any Collateral may dispose of the same. Similarly,
there may be other legal restrictions or limitations affecting the Secured Party
in any attempt to dispose of all or any part of the Collateral under applicable
"blue sky" or other state securities laws or similar laws analogous in purpose
or effect. The Pledgor and the
-7-
<PAGE>
Secured Party acknowledge that some or all of the shares of the Pledged Stock
are "restricted securities" (within the meaning of Rule 144 under the Federal
Securities Laws). Accordingly, the Pledgor agrees that if the Secured Party is
entitled hereunder to sell Collateral, (i) the Secured Party shall be entitled,
subject to the Federal Securities Laws, to place all or any part of such
Collateral for private placement by an investment banking firm or other
financial institution, that any such investment banking firm or other financial
institution may purchase all or any part of such Collateral for its own account,
and that the Secured Party shall be entitled to place all or any part of such
Collateral privately with a purchaser or purchasers who shall represent and
agree that such Collateral is being purchased for its or their own account and
not with a view to the distribution thereof within the meaning of the Federal
Securities Laws, notwithstanding the existence of a public or private market for
any unrestricted shares of common stock of Brookdale (the "Registered Shares")
upon which the quotations or sales prices may exceed the price at which the
Secured Party sells Pledged Stock, and (ii) the Secured Party shall have the
right, but not the obligation, to register, or cause the registration of, the
Pledged Stock under the Registration Rights Agreement (to the extent permitted
by the Registration Rights Agreement) and/or otherwise cause the Pledged Stock
to be sold or placed in a public or private sale.
Section 4.8 Application of Proceeds. The proceeds of any
-----------------------
Distributions received by the Secured Party during the continuation of an Event
of Default, and the proceeds of any collection, recovery, receipt,
appropriation, realization or sale pursuant to this Agreement shall be applied
as follows, without duplication:
First, to the costs and expenses actually incurred in connection
-----
therewith (including, without limitation, reasonable attorneys' fees and
disbursements, court costs and other expenses);
Second, to the payment of any and all Secured Obligations then due and
------
owing; and
Third, after the payment of all Secured Obligations then outstanding,
-----
any surplus then remaining shall be paid to the Pledgor.
Section 4.9 Remedies Cumulative. No right, power or remedy herein
-------------------
or in the other Basic Documents conferred upon or reserved to the Secured Party
is intended to be exclusive of any other right, power or remedy; every such
right, power and remedy shall, to the extent permitted by law, be cumulative and
in addition to every other right, power and remedy given hereunder, under the
other Basic Documents or now or hereafter existing at law or in equity or
otherwise; and the assertion or employment of any such right, power or remedy
shall not prevent the concurrent assertion or employment of any other such
right, power or remedy. No delay by or failure of the Secured Party, to
exercise any such right, power or remedy following the occurrence of an Event of
Default shall impair any such right, power or remedy or be construed to be a
waiver of such Event of Default or an acquiescence therein, and every such
right, power and remedy may be
-8-
<PAGE>
exercised from time to time, and as often as shall be deemed expedient, by the
Secured Party. In case the Secured Party shall have instituted any action or
proceeding to enforce any such right, power or remedy by foreclosure, sale,
entry or otherwise, and such proceeding shall have been discontinued or
abandoned for any reason or shall have been determined adversely to the Secured
Party, then and in every such case the Pledgor and the Secured Party shall be
restored to their former positions and rights hereunder with respect to the
Collateral and all rights, powers and remedies of the Secured Party shall
continue as if no such action or proceeding had been instituted.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Section 5.1 Representations and Warranties of the Pledgor. In
---------------------------------------------
order to induce the Secured Party to enter into this Agreement, the Pledgor
represents and warrants to the Secured Party as follows:
(i) the Pledgor is the legal, record and beneficial owner
of the Pledged Stock, subject to no Lien other than the Liens created by
this Agreement and the terms and conditions of the Brookdale Documents;
(ii) the Pledgor has full corporate power, authority and
legal right to execute and deliver this Agreement and the other Basic
Documents to which it is a party and to pledge the Collateral to the
Secured Party pursuant to this Agreement;
(iii) this Agreement creates, in favor of the Secured Party
and as security for the Secured Obligations, a valid, enforceable and (so
long as the Secured Party maintains possession of the Pledged Stock)
perfected Lien on all of the Collateral, subject to no Lien in favor of any
other Person but subject to the terms and conditions of the Brookdale
Documents;
(iv) no consent, filing, recording or registration is
required to perfect the Lien purported to be created by this Agreement,
except as have been obtained and/or effected;
(v) each of this Agreement and the other Basic Documents to
which the Pledgor is a party constitutes its legal, valid and binding
obligation enforceable against it in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement
of creditors' rights generally and by general equitable principles; and
-9-
<PAGE>
(vi) the Pledgor's principal place of business and chief
executive office is at the address as set forth in the introductory
paragraph of this Agreement.
ARTICLE VI
COVENANTS
Section 6.1 Covenants of the Pledgor. In order to induce the
------------------------
Secured Party to enter into this Agreement, the Pledgor covenants and agrees as
follows:
(i) the Pledgor will defend the Secured Party's right,
title, claim of possession and Lien in and to the Collateral against the
claims and demands of all Persons, subject in all events to the applicable
terms and conditions of the Brookdale Documents;
(ii) the Pledgor will not create or permit to exist any Lien
on the Collateral (other than the Lien created by this Agreement and the
Basic Documents) and will pay and discharge all Liens, charges, claims,
taxes and other governmental charges, and all contractual obligations
requiring the payment of money, before such become overdue, that may affect
the Collateral or any portion thereof, unless (but only to the extent that)
(a) such payment is being contested in good faith and in accordance with
law, and (b) the failure to make such payment cannot result in the loss of
the Collateral or any portion thereof;
(iii) upon demand by the Secured Party, the Pledgor shall
pay, or cause to be paid, all reasonable fees and expenses actually
incurred by the Secured Party in connection with the preparation and
negotiation of the Basic Documents, the amendment or modification of the
Basic Documents and the prosecution or defense of any action or proceeding
or other litigation affecting or relating to the Basic Documents
(including, without limitation, reasonable attorneys' fees and
disbursements); and any amounts so paid shall be secured by this Agreement;
(iv) the Pledgor agrees that it will join with the Secured
Party in executing and, at its own expense, file and refile under the UCC
such financing statements, continuation statements and other documents in
such offices as the Secured Party may reasonably deem necessary or
desirable and wherever required or permitted by law in order to perfect and
preserve the Secured Party's first priority perfected security interest in
the Collateral and hereby authorizes the Secured Party to file financing
statements and amendments thereto relative to all or any part of the
Collateral without the signature of the Pledgor where permitted by law, and
agrees to do such further acts and things and to make, execute and deliver
to the Secured Party such additional conveyances, assignments, agreements,
-10-
<PAGE>
instruments and financing statements as the Secured Party may reasonably
require or deem advisable to carry into effect the purposes of this
Agreement or to further assure and confirm unto the Secured Party its
rights, powers and remedies hereunder, and if the Pledgor shall fail to
execute any such additional conveyances, assignments, agreements,
instruments or financing statements, the Secured Party, as attorney-in-fact
for the Pledgor, may in the name, place and stead of the Pledgor, make,
execute and deliver any of the foregoing; provided, however, that none of
the foregoing shall relieve the Pledgor of its responsibility for such
filings and perfection;
(v) upon demand by the Secured Party, the Pledgor shall
furnish to the Secured Party such proof or evidence as the Secured Party
may reasonably request from time to time with respect to (a) the continuing
correctness of the representations and warranties set forth herein as of
the date made, (b) compliance with and performance by the Pledgor of the
covenants contained herein, and (c) such other matters with respect to the
transactions contemplated hereby as the Secured Party shall reasonably
request;
(vi) the Pledgor shall promptly, upon becoming aware
thereof, notify the Secured Party in writing of any condition or event that
constitutes a Default or an Event of Default;
(vii) the Pledgor shall notify the Secured Party in writing
within not more than 30 days following the date the Pledgor changes its
principal place of business or chief executive office, which notice shall
set forth the full and complete new address of the principal place of
business or chief executive office of the Pledgor; and
(viii) except as permitted under the Credit Agreement and
except as provided in the Brookdale Documents, the Pledgor will not,
directly or indirectly, sell, convey, transfer, assign, encumber or
otherwise dispose of, grant rights with respect to, or mortgage or create a
security interest in any of the Collateral (or any associated options,
rights or interests).
ARTICLE VII
MISCELLANEOUS
Section 7.1 Duties of the Secured Party. (a) The Secured Party
---------------------------
shall be obligated to perform such duties and only such duties as specifically
are set forth in this Agreement and no implied covenants or obligations shall be
read into this Agreement against the Secured Party.
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<PAGE>
(b) The Secured Party may consult with counsel, and any
advice or written opinion of such counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
to be taken by it, in the absence of bad faith on its part, in reliance on such
advice or opinion.
(c) Any corporation into which the Secured Party may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which it shall be a party, or any corporation
succeeding to its business, shall succeed to all rights, obligations and
immunities hereunder without the execution or filing of any document or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding.
(d) No provision of this Agreement shall require the
Secured Party to advance, expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties hereunder or in the
exercise of any of its rights and powers hereunder.
Section 7.2 Notices. All notices and other communications provided
-------
for herein (including, without limitation, any modifications of, or waivers or
consents under, this Agreement) shall be given or made by telecopy, or in
writing and telecopied (with confirmation), mailed, sent by overnight courier or
delivered to the intended recipient at the address specified below; or, as to
any party, at such other address as shall be designated by such party in a
notice to each other party. Except as otherwise provided in this Agreement, all
such communications shall be deemed to have been duly given when transmitted by
telecopier (with confirmation of receipt), or personally delivered or, in the
case of a mailed or couriered notice, upon receipt, in each case given or
addressed as aforesaid. The giving of any notice required hereunder may be
waived in writing by the party entitled to receive such notice.
If to the Secured Party, at:
Healthcare Realty Trust Incorporated
3310 West End Street
Suite 400
Nashville, Tennessee 37203
Attention: Roger O. West, Esq.
Telecopy Number: (615) 269-8122
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<PAGE>
With a copy to:
Waller Lansden Dortch & Davis
Nashville City Center
511 Union Street
Suite 2100
Nashville, Tennessee 37219-1760
Attention: Theodore W. Lenz, Esq.
Telecopy Number: (615) 244-6804
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<PAGE>
If to the Pledgor, at:
With a copy to:
The Prime Group, Inc.
77 W. Wacker Drive, Suite 3900
Chicago, Illinois 60601
Attention: Michael W. Reschke
Telecopy Number: (312) 917-1151
With a copy to:
Winston & Strawn
35 W. Wacker Drive
Chicago, Illinois 60601
Attention: Wayne D. Boberg, Esq.
Telecopy Number: (312) 558-5700
Section 7.3 Severability. Any provision of this Agreement which is
------------
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction or invalidate any other
provision of this Agreement in such or any other jurisdiction.
Section 7.4 Separate Counterparts. This Agreement may be executed
---------------------
by the parties hereto in counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
Section 7.5 Successors and Assigns. Neither the Pledgor nor the
----------------------
Secured Party may assign its rights or obligations hereunder without the prior
written consent of the other party. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns; provided, however, that the Secured Party may at any
-------- -------
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<PAGE>
time assign all (but not less than all) of its rights and obligations hereunder
to a Specified Subsidiary, without the consent of the Pledgor.
Section 7.6 Amendments and Waivers. This Agreement may be amended,
----------------------
and compliance with any provision hereof may be waived, but only in a written
instrument signed by the Pledgor and the Secured Party.
Section 7.7 Headings. The headings of the sections herein are for
--------
convenience of reference only and shall not define or limit any of the terms or
provisions hereof.
SECTION 7.8 GOVERNING LAW. THE TERMS OF THIS AGREEMENT SHALL BE
-------------
GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF ILLINOIS (EXCLUSIVE OF ANY RULES AS TO CONFLICT OF LAWS).
Section 7.9 References to Other Documents. All defined terms used
-----------------------------
in this Agreement which refer to other documents shall be deemed to refer to
such other documents as they may be amended from time to time, provided such
documents were not amended in breach of a covenant contained in this Agreement
or any of the other Basic Documents.
Section 7.10 Indemnity. The Pledgor shall indemnify the Secured
---------
Party (including its directors, officers, employees and agents) and hold it (and
them) harmless from and against any and all losses, liability, penalties,
actions, suits, judgments, demands, damages, costs and expenses, including
reasonable attorneys' fees and expenses, arising out of or in connection with
the failure by the Pledgor to perform its obligations under this Agreement,
unless arising from the gross negligence, bad faith or willful misconduct of the
Secured Party or the Person seeking indemnification. This indemnity shall
survive the termination of this Agreement.
Section 7.11 Termination. At such time as the Secured Obligations
-----------
have been paid in full, this Agreement shall terminate and the Secured Party, at
the request and expense of the Pledgor, will execute and deliver to the Pledgor
instruments prepared by the Pledgor (including UCC-3 termination statements)
acknowledging the termination of this Agreement, and will duly assign, transfer
and deliver to the Pledgor (without recourse and without any representation or
warranty, other than a representation that the Collateral is free from any Liens
attributable to the Secured Party) such of the Collateral as may be in
possession of the Secured Party and has not theretofore been sold or otherwise
applied or released pursuant to this Agreement.
[signature page follows]
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<PAGE>
IN WITNESS WHEREOF, this Pledge and Security Agreement has been duly
signed and delivered as of the date first written above.
By:___________________________________
Name:_________________________________
Title:________________________________
HEALTHCARE REALTY TRUST INCORPORATED
By:___________________________________
Name:_________________________________
Title:________________________________
<PAGE>
SCHEDULE A
Pledged Stock
-------------
<PAGE>
EXHIBIT V
---------
FORM OF GUARANTY
----------------
THIS GUARANTY dated as of _____________ is by ________________________
(the "Guarantor"), in favor of Healthcare Realty Trust Incorporated, a Maryland
real estate investment trust (the "Lender").
RECITALS:
--------
A. Prime Group VI, L.P., an Illinois limited partnership (the
"Borrower"), has entered into a Credit Agreement dated as of the date hereof (as
at any time amended, restated, modified or supplemented, the "Credit
Agreement"), with the Lender, pursuant to which the Lender has agreed to make a
certain Loan (as defined in the Credit Agreement) to the Borrower.
B. The Guarantor is a partner of the Borrower.
C. The Guarantor is to receive Brookdale Shares (as defined in the
Credit Agreement) in connection with the Stock Offering (as defined in the
Credit Agreement) and the Borrower's obtaining of the Loan is a condition
precedent to the consummation of the Stock Offering.
D. The Guarantor will derive economic benefits from the making of
the Loan to the Borrower by the Lender.
E. In connection with the making of the Loan under the Credit
Agreement, and as a condition precedent thereto, the Lender is requiring that
the Guarantor shall have executed and delivered this Guaranty.
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, and to induce the Lender to provide the Loan under the
Credit Agreement, it is agreed as follows:
SECTION 1. DEFINITIONS. Capitalized terms used herein shall have
-----------
the meanings assigned to them in the Credit Agreement, unless the context
otherwise requires or unless otherwise defined herein. References to this
"Guaranty" shall mean this Guaranty, including all amendments, modifications and
supplements, and shall refer to this Guaranty as the same may be in effect at
the time such reference becomes operative.
SECTION 2. GUARANTY.
--------
2.1 Guaranty. The Guarantor hereby guarantees to the Lender, and its
--------
successors and assigns, the prompt payment in full when due (whether at stated
maturity, by acceleration or
<PAGE>
otherwise) of the principal of and interest on the Loan made by the Lender to,
and the Note held by the Lender of, the Borrower and all other amounts from time
to time owing to the Lender by the Borrower under the Credit Agreement, the Note
and any of the other Basic Documents (such obligations being herein collectively
referred to as, the "Guaranteed Obligations"). The Guarantor hereby further
agrees that, if the Borrower shall fail to pay in full when due (whether at
stated maturity, by acceleration or otherwise) any of the Guaranteed
Obligations, the Guarantor will promptly pay the same, without any demand or
notice whatsoever, and that in the case of any extension of time of payment or
renewal of any of the Guaranteed Obligations, the same will be promptly paid in
full when due (whether at extended maturity, by acceleration or otherwise) in
accordance with the terms of such extension or renewal.
2.2 Obligations Unconditional. The obligations of the Guarantor
-------------------------
under Section 2.1 hereof are absolute and unconditional, irrespective of the
value, genuineness, validity, regularity or enforceability of the Credit
Agreement, the Note or any other Basic Document, or any substitution, release or
exchange of any other guarantee of or security for any of the Guaranteed
Obligations, and, to the fullest extent permitted by applicable law,
irrespective of any other circumstance whatsoever which might otherwise
constitute a legal or equitable discharge or defense of a surety or guarantor,
it being the intent of this Section 2.2 that the obligations of the Guarantor
hereunder shall be absolute and unconditional, under any and all circumstances.
Without limiting the generality of the foregoing, it is agreed that the
occurrence of any one or more of the following shall not affect the liability of
the Guarantor under this Guaranty:
(i) at any time or from time to time, without notice to the
Guarantor, the time for any performance of or compliance with any of the
Guaranteed Obligations shall be extended, or such performance or compliance
shall be waived;
(ii) the performance (other than full performance or payment
of the Guaranteed Obligations) or non-performance of any of the acts
mentioned in any of the provisions of the Credit Agreement or the Note or
any other agreement or instrument referred to herein or therein;
(iii) the maturity of any of the Guaranteed Obligations shall
be accelerated, or any of the Guaranteed Obligations shall be modified,
supplemented or amended in any respect, or any right under the Credit
Agreement or the Note or any other agreement or instrument referred to
herein or therein shall be waived or any other guarantee of any of the
Guaranteed Obligations or any security therefor shall be released or
exchanged in whole or in part or otherwise dealt with; or
(iv) any lien or security interest granted to, or in favor of,
the Lender as security for any of the Guaranteed Obligations shall fail to
be perfected.
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<PAGE>
The Guarantor hereby expressly waives, to the extent permitted by applicable
law, diligence, presentment, demand of payment, protest and all notices
whatsoever, and any requirement that the Lender exhaust any right, power or
remedy or proceed against the Borrower under the Credit Agreement or the Note or
any other agreement or instrument referred to herein or therein, or against any
other Person under this Guaranty or any other guarantee of, or security for, any
of the Guaranteed Obligations. Guarantor represents, warrants and agrees that,
as of the date of this Guaranty, its obligations under this Guaranty are not
subject to any offsets or defenses, of any kind, against the Lender. Guarantor
further agrees that its obligations under this Guaranty shall not be subject to
any counterclaims, offsets or defenses.
2.3 Reinstatement. The obligations of the Guarantor under this
-------------
Guaranty shall be automatically reinstated if and to the extent that, for any
reason, any payment by or on behalf of the Borrower in respect of the Guaranteed
Obligations is rescinded or must be otherwise restored by any holder of any of
the Guaranteed Obligations, whether as a result of any proceedings in bankruptcy
or reorganization or otherwise, and the Guarantor agrees that it will indemnify
the Lender on demand for all reasonable out-of-pocket costs and expenses
(including, without limitation, reasonable fees of counsel) actually incurred by
the Lender in connection with such rescission or restoration.
2.4 Subrogation. The Guarantor hereby agrees that until the payment
-----------
and satisfaction in full of all Guaranteed Obligations, it shall not exercise
any right or remedy arising by reason of any performance by it of its guarantee
hereunder, whether by subrogation or otherwise, against the Borrower or any
other guarantor of any of the Guaranteed Obligations or any security for any of
the Guaranteed Obligations.
2.5 Remedies. The Guarantor agrees that, as between the Guarantor
--------
and the Lender, the obligations of the Borrower under the Credit Agreement and
the Note may be declared to be forthwith due and payable as provided in Section
7 of the Credit Agreement (and shall be deemed to have become automatically due
and payable in the circumstances provided in said Section 7) for purposes of
Section 2.1 hereof, notwithstanding any stay, injunction or other prohibition
preventing such declaration (or such obligations from becoming automatically due
and payable) as against the Borrower and that, in the event of such declaration
(or such obligations being deemed to have become automatically due and payable),
such obligations (whether or not due and payable by the Borrower) shall
forthwith become due and payable by the Guarantor for purposes of said Section
2.1. If the Lender shall bring an action to enforce this Guaranty, the
prevailing party in such action shall be entitled to recover reasonable out-of-
pocket costs and attorney fees incurred in such action, including but not
limited to costs and fees incurred in connection with any provisional remedies,
appeal, confirmation or execution after judgment.
2.6 Continuing Guarantee. The guarantee provided in this Guaranty is
--------------------
a continuing guarantee, and shall apply to all Guaranteed Obligations whenever
arising.
-3-
<PAGE>
2.7 Corporate Existence. Guarantor (i) is a corporation duly
--------------------
organized, validly existing and in good standing under the laws of the state of
its organization; (ii) is duly qualified to do business and is in good standing
under the laws of each jurisdiction where its ownership or lease of property or
the conduct of its business requires such qualification (except for
jurisdictions in which such failure so to qualify or to be in good standing
would not have a materially adverse effect on (A) the business, operations,
prospects or financial condition of the Guarantor, (B) Guarantor's ability to
pay the Guaranteed Obligations in accordance with the terms hereof, or (C) the
Collateral (as defined in the Pledge and Security Agreement referred to in
Section 2.13 hereof), Lender's Liens on the Collateral or the priority of any
such Lien) and (iii) has the requisite corporate power and authority and the
legal right to own, pledge, mortgage and operate its properties, to lease the
property it operates under lease, and to conduct its business as now, heretofore
and proposed to be conducted.
2.8 Executive Offices. Guarantor's executive office and principal
-----------------
place of business are the same as set forth in Section 3.4 hereof (with respect
to notices).
2.9 Corporate Power; Authorization; Enforceable Obligations. The
-------------------------------------------------------
execution, delivery and performance of this Guaranty by the Guarantor are within
Guarantor's corporate powers, have been duly authorized by all necessary or
proper corporate action, are not in contravention of any provision of
Guarantor's articles of incorporation or by-laws, will not violate any law or
regulation, or any order or decree of any court or governmental instrumentality
to which the Guarantor is subject or by which the Guarantor is bound, will not
conflict with or result in the breach of, or constitute a default under, any
material indenture, mortgage, deed of trust, lease, agreement or other material
instrument to which the Guarantor is a party or by which the Guarantor or any of
its property is bound, will not result in the creation or imposition of any Lien
upon any of the property of the Guarantor. This Guaranty has been duly executed
and delivered on behalf of the Guarantor, and constitutes a legal, valid and
binding obligation of the Guarantor, enforceable against the Guarantor in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally or by general equity
principles.
2.10 Litigation. There is no legal or arbitral proceeding by or
----------
before any Governmental Authority, now pending or (to the knowledge of the
Guarantor) threatened, against the Guarantor with respect to which an order
adverse to the Guarantor is reasonably likely and which, if adversely
determined, could reasonably be expected to have a material adverse effect on
the financial condition, operations, business or prospects of the Guarantor.
2.11 Approvals. No authorizations, approvals or consents of, and no
---------
filings or registrations with, any Governmental Authority are necessary for the
execution, delivery or performance by the Guarantor of the Basic Documents to
which the Guarantor is a party or for the validity or enforceability thereof,
except for Uniform Commercial Code filings in respect of the Liens created
pursuant to the Guarantor's Security Documents.
-4-
<PAGE>
2.12 Taxes. The Guarantor has filed all United States Federal income
-----
tax returns and all other material tax returns which are required to be filed by
it and has paid all taxes due pursuant to such returns.
2.13 Solvency. After giving effect to the Loan, the disbursement of
--------
the proceeds of the Loan in accordance with Section 6.8 of the Credit Agreement
and the other transactions contemplated by the Stock Offering and the Basic
Documents to occur on the date hereof, the Guarantor is Solvent on the date
hereof.
2.14 Information. The Guarantor shall deliver to the Lender from time
-----------
to time such information regarding the business, affairs or financial condition
of the Guarantor as the Lender may reasonably request.
2.15 Notice of Litigation. The Guarantor will promptly give to the
--------------------
Lender notice of all legal or arbitral proceedings by or before any Governmental
Authority, and any material development in respect of such legal or other
proceedings, affecting the Guarantor, except proceedings which are not
reasonably likely to be determined adversely to the Guarantor or which, if
determined adversely to the Guarantor, could not reasonably be expected to have
a material adverse effect on the financial condition, operations, business or
prospects of the Guarantor.
2.16 Maintenance of Corporate Existence. The Guarantor will preserve
----------------------------------
and maintain its existence.
2.17 Modifications of Brookdale Documents. The Guarantor will not
------------------------------------
send any notice under, or request, or consent to, any modification, supplement
or waiver of any of the provisions of the Brookdale Documents in a manner which
adversely affects the interests of the Borrower or the Lender without the prior
written consent of the Lender.
2.18 Benefit of Guaranty. The provisions of this Guaranty are for the
-------------------
benefit of the Lender and its successors and assigns, and nothing herein
contained shall impair, as between the Borrower and the Lender, the obligations
of Borrower under the Basic Documents.
2.19 Further Assurances. The Guarantor agrees, upon the written
------------------
request of the Lender, to execute and deliver to the Lender, from time to time,
any additional instruments or documents reasonably considered necessary by the
Lender to cause this Guaranty to remain valid and effective in accordance with
its terms.
2.20 Payments Free And Clear Of Taxes. All payments required to be
--------------------------------
made by the Guarantor hereunder shall be made to the Lender, free and clear of,
and without deduction for, any and all present and future taxes, withholdings,
levies, duties, and other governmental charges, excluding such income and
franchise taxes of the United States and any political subdivision thereof
-5-
<PAGE>
which would otherwise have been payable by Lender if Borrower had paid the
Guaranteed Obligations to Lender in accordance with the terms of the Basic
Documents.
2.21 Secured Guarantee. The guarantee provided in this Guaranty and
-----------------
the performance of the Guarantor's obligations hereunder are secured by the
Guarantor's pledge of, and grant of security interest in, the Collateral (as
defined in the Pledge and Security Agreement) pursuant to that certain Pledge
and Security Agreement dated as of the date hereof between the Guarantor and the
Lender (the "Pledge and Security Agreement").
SECTION 3. MISCELLANEOUS.
-------------
3.1 Entire Agreement; Amendments. This Guaranty, together with the
----------------------------
other Basic Documents, constitutes the entire agreement between the parties with
respect to the subject matter hereof and supersedes all prior agreements
relating to a guaranty of the loan under the Basic Documents and/or the
Guaranteed Obligations and may not be amended or supplemented except by a
writing signed by the Guarantor and the Lender.
3.2 Headings. The headings in this Guaranty are for convenience of
--------
reference only and are not part of the substance of this Guaranty.
3.3 Severability. In the event that any one or more of the
------------
provisions contained in this Guaranty shall be determined to be invalid, illegal
or unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision or provisions in every other respect and
the remaining provisions of this Guaranty shall not be in any way impaired.
3.4 Notices. All notices and other communications provided for
-------
herein (including, without limitation, any modifications of, or waivers or
consents under, this Guaranty) shall be given or made by telecopy, or in writing
and telecopied (with confirmation), mailed, sent by overnight courier or
delivered to the intended recipient at the address specified below; or, as to
any party, at such other address as shall be designated by such party in a
notice to each other party. Except as otherwise provided in this Guaranty, all
such communications shall be deemed to have been duly given when transmitted by
telecopier (with confirmation of receipt), or personally delivered or, in the
case of a mailed or couriered notice, upon receipt, in each case given or
addressed as aforesaid. The giving of any notice required hereunder may be
waived in writing by the party entitled to receive such notice.
-6-
<PAGE>
If to the Lender, at:
Healthcare Realty Trust Incorporated
3310 West End Street
Suite 400
Nashville, Tennessee 37203
Attention: Roger O. West, Esq.
Telecopy Number: (615) 269-8122
With a copy to:
Waller Lansden Dortch & Davis
Nashville City Center
511 Union Street
Suite 2100
Nashville, Tennessee 37219-1760
Attention: Theodore W. Lenz, Esq.
Telecopy Number: (615) 244-6804
If to the Guarantor, at:
With a copy to:
The Prime Group, Inc.
77 W. Wacker Drive, Suite 3900
Chicago, Illinois 60601
Attention: Robert J. Rudnik, Esq.
Telecopy Number: (312) 917-1684
With a copy to:
Winston & Strawn
35 W. Wacker Drive
Chicago, Illinois 60601
Attention: Wayne D. Boberg, Esq.
Telecopy Number: (312) 558-5700
-7-
<PAGE>
3.5 Successors and Assigns. This Agreement shall be binding upon and
----------------------
inure to the benefit of the parties hereto and their respective successors and
permitted assigns. Neither the Guarantor nor the Lender may assign its rights
or obligations hereunder without the prior written consent of the other party;
provided, however, that the Lender may at any time assign all (but not less than
all) of its rights and obligations hereunder to a Specified Subsidiary, without
the consent of the Guarantor.
3.6 Non-Waiver. The failure of the Lender to enforce any right or
----------
remedy hereunder, or promptly to enforce any such right or remedy, shall not
constitute a waiver thereof, nor give rise to any estoppel against the Lender,
nor excuse the Guarantor from its obligations hereunder. Any waiver of any such
right or remedy by the Lender must be in writing and signed by the Lender.
3.7 Termination. This Guaranty shall terminate and be of no further
-----------
force or effect at such time as the Guaranteed Obligations shall be paid in
full. Upon payment in full of the Guaranteed Obligations, the Lender shall
deliver to the Guarantor such documents as the Guarantor may reasonably request
to evidence termination of this Guaranty.
3.8 GOVERNING LAW. THE TERMS OF THIS GUARANTY SHALL BE GOVERNED BY,
-------------
AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
ILLINOIS (EXCLUSIVE OF ANY RULES AS TO CONFLICT OF LAWS).
3.9 Counterparts. This Guaranty may be executed in counterparts
------------
which shall individually and collectively constitute one agreement.
3.10 Non-Recourse. Anything contained herein, in the Note or in any
------------
other Basic Document to the contrary notwithstanding, no recourse shall be had
for the Guaranteed Obligations against any shareholder, agent, director, officer
or employee of the Guarantor. It is understood that the preceding sentence
shall not (A) apply to the obligations of the Guarantor set forth in this
Guaranty and (B) in the event of any malfeasance, such as fraud,
misappropriation of funds or intentional material misrepresentation, estop the
Lender from instituting or prosecuting a legal action or proceeding or otherwise
making a claim against the Person or Persons committing such malfeasance.
[signature page follows]
-8-
<PAGE>
IN WITNESS WHEREOF, the Guarantor has executed and delivered this
Guaranty as of the date first written above.
By: ____________________________
Name: _________________________
Title: _________________________
Accepted and acknowledged by:
HEALTHCARE REALTY TRUST INCORPORATED
By: ___________________________
Name: _________________________
Title: ________________________
-9-
<PAGE>
Exhibit VIII
------------
STOCK OPTION AGREEMENT
----------------------
THIS STOCK OPTION AGREEMENT (this "Agreement") dated as of May 7, 1997 is
between The Prime Group, Inc., a corporation duly organized and validly
existing under the laws of the State of Illinois (the "Shareholder"), and
Blackacre Bridge Capital L.L.C., a Delaware limited liability company (the
"Purchaser").
WHEREAS, as of the date hereof (the "IPO Date"), Brookdale Living
Communities, Inc., a Delaware corporation ("Brookdale"), has completed an
initial public offering of its Common Stock, $0.01 par value per share ("Common
Stock"), at an initial public offering price of $11.50 per share (the "IPO
Price");
WHEREAS, the Purchaser has issued a standby commitment (the "Commitment")
to the Shareholder pursuant to that certain standby commitment letter of the
Purchaser dated May 5, 1997 (the "Commitment Letter") to make a certain loan to
finance the purchase by the Shareholder (or an affiliate of the Shareholder) of
certain shares of the Common Stock issued and sold by Brookdale in the IPO; and
WHEREAS, as a condition to issuing the Commitment to the Shareholder, the
Purchaser has required that the Shareholder grant to the Purchaser an option to
purchase certain shares of Brookdale's Common Stock as set forth herein;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, and to induce the Purchaser to issue the Commitment to
the Shareholder, it is agreed as follows:
<PAGE>
Section 1. Definitions. Capitalized terms used but not otherwise defined
herein shall have the meanings given to such terms in the form of Credit
Agreement attached to the Commitment Letter.
Section 2. Grant of Option. The Shareholder hereby grants to the
Purchaser an option (the "Option") to purchase 12,500 shares (the "Option
Shares") of Common Stock at a price per share equal to the lesser of the $12.00
or the arithmatic average of all closing prices of the Common Stock from the IPO
Date to that date which is six months after the IPO Date (the "Purchase Price").
Section 3. Term. The term of the Option will begin on the date hereof and
shall continue in effect until May 7, 2000.
Section 4. Exercise of Option.
(a) Upon the terms and conditions of this Agreement, the Purchaser may
exercise the Option, in whole but not in part, at any time prior to the
expiration thereof.
(b) The respective obligations of the Purchaser and the Shareholder to
consummate the sale of any of the Option Shares upon the exercise of the Option
shall be subject to each of the following conditions precedent: (i) there shall
be no proceeding pending before any court or governmental agent or
instrumentality to, or any preliminary or permanent injunction in effect which
would, prohibit or prevent consummation of the sale of the Option Shares to be
sold to the Purchaser; (ii) all applicable waiting periods under statutes,
regulations or rules applicable to the acquisition of the Option Shares to be
acquired by the Purchaser shall have expired or been terminated; (iii) the
representations and warranties contained herein shall be true and correct as of
-2-
<PAGE>
the Closing (as defined herein); and (iv) any required approvals or exemptions
under federal, state or foreign law shall have been obtained.
(c) In the event the Purchaser wishes to exercise the Option, the Purchaser
shall send a written notice to the Shareholder specifying the total number of
Option Shares the Purchaser intends to purchase pursuant to Section 2 hereof,
the place at which such purchase shall occur and a date not earlier than ten
business days from the date such notice is given for the closing of such
purchase (the "Closing").
Section 5. Closing. At the Closing:
(a) The Purchaser will make payment to the Shareholder of the aggregate
price for the Option Shares so purchased by delivery of immediately available
funds in lawful money of the United States in an amount equal to the product
obtained by multiplying the applicable Purchase Price by the number of Option
Shares to be purchased.
(b) Simultaneously with receipt of such payment, the Shareholder will
deliver or cause to be delivered to the Purchaser a stock certificate or
certificates representing the number of Option Shares so purchased, with stock
powers duly executed in blank.
Section 6. Representations and Warranties of the Shareholder. The
Shareholder hereby represents and warrants to the Purchaser as follows:
(i) the Shareholder is the legal, record and beneficial owner of
the Option Shares, subject to no Lien, but subject to the terms and
conditions of the Brookdale Documents;
(ii) the Shareholder has full corporate power, authority and
legal right to execute and deliver this Agreement;
-3-
<PAGE>
(iii) this Agreement constitutes a legal, valid and binding
obligation of the Shareholder enforceable against it in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by general equitable
principles;
(iv) neither the execution and delivery by the Shareholder of this
Agreement, nor, subject to the Purchaser's compliance with applicable
federal and state securities laws with respect to the Purchaser's purchase
of any of the Option Shares, the consummation of the transactions herein
contemplated or compliance with the terms and provisions hereof will
conflict with or result in a breach of, or require any consent (except such
as has been obtained) under, any applicable law or regulation, or any
order, writ, injunction or decree of any Governmental Authority or any
Brookdale Document, or any material agreement or instrument to which the
Shareholder is a party or by which it is bound or to which it is subject,
or constitute a default under any such agreement or instrument, or result
in the creation or imposition of any Lien upon any of the assets of the
Shareholder pursuant to the terms of any such agreement or instrument; and
(v) Upon payment for the Option Shares pursuant to the Option, the
Purchaser will acquire good, legal and marketable title to the Option
Shares, free and clear of all claims, liens, charges or encumbrances not
created by or through the Purchaser, but subject to the terms and
provisions of the Brookdale Documents.
Section 7. Representations and Warranties of the Purchaser. The
Purchaser hereby represents and warrants to the Shareholder as follows:
-4-
<PAGE>
(a) Acknowledgment. The Purchaser acknowledges that it has been
offered an opportunity to solicit information with respect to the business,
affairs and financial condition of Brookdale, and that the Purchaser is capable
of evaluating the merits of its decision whether or not to purchase the Option
Shares pursuant to this Agreement.
(b) Authority Relative to this Agreement.
(i) the Purchaser has full limited liability company power,
authority and legal right to execute and deliver this Agreement; and
(ii) this Agreement constitutes a legal, valid and binding
obligation of the Purchaser enforceable against it in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by general equitable
principles.
(c) No Distribution. The Purchaser understands that the Shareholder
is an "affiliate" (as defined in the Act (as hereinafter defined)) of Brookdale
and that any sale of the Option Shares (or any of them) to the Purchaser
pursuant to this Agreement will not have been registered under the Securities
Act of 1933, as amended (the "Act"), or the equivalent securities laws of any
state. The Purchaser agrees that it will acquire the Option Shares for its own
account only and will not sell any Option Shares unless such sale is registered
under the Act or unless an exemption from the registration thereof is available.
Section 8. Purchase and Sale of Option Shares. During the term of
the Option, the Shareholder shall not, directly or indirectly, sell, transfer,
tender, pledge, hypothecate or
-5-
<PAGE>
encumber any of the Option Shares; provided, however, that during such period
the Shareholder may sell the Option Shares pursuant to the Option.
Section 9. Notices. All notices and other communications provided for
herein (including, without limitation, any modifications of, or consents under,
this Agreement) shall be given or made by telecopy, or in writing and telecopied
(with confirmation), mailed, sent by overnight courier or delivered to the
intended recipient at the address specified below; or, as to any party, at such
other address as shall be designated by such party in a notice to each other
party. Except as otherwise provided in this Agreement, all such communications
shall be deemed to have been duly given when transmitted by telecopier (with
confirmation of receipt), or personally delivered or, in the case of a mailed or
couriered notice, upon receipt, in each case given or addressed as aforesaid.
The giving of any notice required hereunder may be waived in writing by the
party entitled to receive such notice.
If to the Purchaser, at:
Blackacre Bridge Capital L.L.C.
450 Park Avenue
New York, New York 10022
Attention: J.B. Citrin
Telecopy Number: (212) 758-5305
With a copy to:
Thacher Profitt & Wood
Two World Trade Center
New York, New York 10048
Attention: Lawrence Swenson
Telecopy Number: (212) 912-7751
-6-
<PAGE>
If to the Shareholder, at:
The Prime Group, Inc.
77 W. Wacker Drive, Suite 3900
Chicago, Illinois 60601
Attention: Michael W. Reschke
Telecopy Number: (312) 917-1511
With a copy to:
The Prime Group, Inc.
77 W. Wacker Drive, Suite 3900
Chicago, Illinois 60601
Attention: Robert J. Rudnik, Esq.
Telecopy Number: (312) 917-1684
With a copy to:
Winston & Strawn
35 W. Wacker Drive
Chicago, Illinois 60601
Attention: Wayne D. Boberg, Esq.
Telecopy Number: (312) 558-5700
Section 10. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction or invalidate any other
provision of this Agreement in such or any other jurisdiction.
Section 11. Separate Counterparts. This Agreement may be executed by
the parties hereto in counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute but
one and the same instrument.
-7-
<PAGE>
Section 12. Successors and Assigns. Neither the Shareholder nor the
Purchaser may assign its rights or obligations hereunder without the prior
written consent of the other party. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns.
Section 13. Amendments and Waivers. This Agreement may be amended, and
compliance with any provision hereof may be waived, but only in a written
instrument signed by the Shareholder and the Purchaser.
Section 14. Headings. The headings of the sections herein are for
convenience of reference only and shall not define or limit any of the terms or
provisions hereof.
Section 15. GOVERNING LAW. THE TERMS OF THIS AGREEMENT SHALL BE GOVERNED
BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF ILLINOIS (EXCLUSIVE OF ANY RULES AS TO CONFLICT OF LAWS).
Section 16. References to Other Documents. All defined terms used in this
Agreement which refer to other documents shall be deemed to refer to such other
documents as they may be amended from time to time, provided such documents were
not amended in breach of a covenant contained in this Agreement or any such
other document.
Section 17. No Rights as a Shareholder. The Purchaser shall have no rights
as a shareholder with respect to the Option Shares until the date of the sale of
the Option Shares upon the exercise of the Option. No adjustment will be made
for dividends or other distributions or rights for which the record date is
prior to the date of such issuance.
[signature page follows]
-8-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement to be
effective as of the date first set forth above.
PURCHASER:
BLACKACRE BRIDGE CAPITAL L.L.C.
By: /s/ Jeffrey B. Citrin
-----------------------------------
Name: Jeffrey B. Citrin
---------------------------------
Title:
--------------------------------
SHAREHOLDER:
THE PRIME GROUP, INC.
By: /s/ Richard S. Curto
----------------------------------
Name: Richard S. Curto
--------------------------------
Its: Executive Vice President
---------------------------------
-9-
<PAGE>
EXHIBIT IX
----------
JOINT ACQUISITION STATEMENT
PURSUANT TO RULE 13d-1(f)(1)
The undersigned acknowledge and agree that the foregoing statement on
Schedule 13D is filed on behalf of each of the undersigned and that all
subsequent amendments to this statement on Schedule 13D shall be filed on
behalf of each of the undersigned without the necessity of filing additional
joint acquisition statements. The undersigned acknowledge that each shall be
responsible for the timely filing of such amendments, and for the completeness
and accuracy of the information concerning him or it contained therein, but
shall not be responsible for the completeness and accuracy of the information
concerning the other, except to the extent that he or it knows or has reason to
believe that such information is inaccurate.
Dated: September 22, 1997
/s/ Michael W. Reschke
-------------------------------------------
Michael W. Reschke
THE PRIME GROUP, INC.
By: /s/ Michael W. Reschke
---------------------------------------
Name: Michael W. Reschke
Title: President
PRIME GROUP VI, L.P.
By: PGLP, Inc.
Managing General Partner
By: /s/ Michael W. Reschke
------------------------------
Name: Michael W. Reschke
Title: President
PGLP, INC.
By: /s/ Michael W. Reschke
------------------------------------
Name: Michael W. Reschke
Title: President
