<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934, for the Quarterly Period Ended March 31, 1997.
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934, for the Transition Period From to .
-------- --------
Commission File Number 0-22253
-------------------
BROOKDALE LIVING COMMUNITIES, INC.
- --------------------------------------------------------------------------------
(exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 36-4103821
- --------------------------------------- -------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
77 W. Wacker Drive
Suite 3900
Chicago, IL 60601
- ---------------------------------------- -------------------------------------
(Address of principal executive offices) (Zip Code)
</TABLE>
(312) 456-0239
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
NOT APPLICABLE
- --------------------------------------------------------------------------------
(Former name, former address, or former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes No X
---- ----
Indicate the number of shares outstanding of each of the issuer's classes of
Common Stock, as of the latest practicable date.
As of June 16, 1997, 7,175,000 shares of the registrant's Common Stock, $.01 par
value per share, were outstanding.
<PAGE>
Brookdale Living Communities, Inc.
Form 10-Q
INDEX
-----
<TABLE>
<CAPTION>
PART I: FINANCIAL INFORMATION Page
----
<S> <C>
Item 1. Financial Statements
Balance Sheets of Brookdale Living Communities, Inc. as of March 31, 1997
and December 31, 1996. 1
Notes to Balance Sheets of Brookdale Living Communities, Inc. 2
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations 4
PART II: OTHER INFORMATION
Item 1. Legal Proceedings 6
Item 2. Changes in Securities 6
Item 3. Defaults Upon Senior Securities 6
Item 4. Submission of Matters to a Vote of Security Holders 6
Item 5. Other Information 6
Item 6. Exhibits and Reports on Form 8-K 6
Signatures 7
</TABLE>
<PAGE>
PART I: FINANCIAL INFORMATION
Financial Information
- ---------------------
Item 1: Financial Statements
BROOKDALE LIVING COMMUNITIES, INC.
BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
March 31, 1997 December 31, 1996
-------------- -----------------
<S> <C> <C>
ASSETS:
Cash........................................... $ 1,000 $ 1,000
Deferred offering costs........................ 3,540,000 2,580,000
---------- ----------
Total assets................................... $3,541,000 $2,581,000
========== ==========
LIABILITIES AND STOCKHOLDER'S EQUITY:
Due to affiliate............................... $3,540,000 $2,580,000
---------- ----------
Total liabilities.............................. 3,540,000 2,580,000
Stockholder's equity:
Common Stock, $.01 par value per share,
100 shares authorized, issued and outstanding.. 1 1
Additional paid-in capital..................... 999 999
---------- ----------
Total stockholder's equity..................... 1,000 1,000
---------- ----------
Total liabilities and stockholder's equity..... $3,541,000 $2,581,000
========== ==========
</TABLE>
See accompanying notes.
<PAGE>
BROOKDALE LIVING COMMUNITIES, INC.
NOTES TO BALANCE SHEETS
1. Organization
Brookdale Living Communities, Inc. (the "Company") was incorporated in
Delaware under the Delaware General Corporation Law on September 4, 1996. The
Company was formed in order to consolidate and expand the senior and assisted
living property ownership interests and operations of The Prime Group, Inc. and
certain of its affiliates (collectively, "PGI"). In connection with an initial
public offering (the "Offering"), more fully described in the Registration
Statement and Prospectus, in the form it became effective on May 1, 1997, the
Company sold 4.5 million shares of its common stock to the public and PGI
contributed its senior and assisted living property ownership interests and
operations in exchange for 2.0 million shares of Common Stock of the Company.
The Company provides senior and assisted living services to the elderly
through its facilities located in urban and suburban areas of major metropolitan
markets. The Company's objective is to allow its residents to age in place by
providing them with a continuum of senior and assisted living services. By
providing residents a range of service options as their needs change, the
Company seeks to achieve a greater continuity of care. In addition to studio,
one-bedroom and two-bedroom units, the Company provides all residents with basic
services, such as meal service, 24-hour emergency response, housekeeping,
concierge services, transportation and recreational activities. For residents
who require additional supplemental care services, the Company provides
assistance with certain activities of daily living.
2. Deferred Costs
As of March 31, 1997, PGI incurred approximately $3,540,000 of legal,
accounting and related costs on behalf of the Company in connection with the
Offering, which costs have been presented as deferred offering costs on the
accompanying balance sheets. These costs, in addition to offering costs incurred
after March 31, 1997 through the date of the Offering, were deducted from the
gross proceeds of the Offering to the Company.
3. Use of Estimates
The preparation of the accompanying balance sheets in accordance with
generally accepted accounting principles requires management to make estimates
and assumptions that affect amounts reported in the balance sheets and
accompanying notes. Actual results could differ from such estimates.
4. Subsequent Events
On May 7, 1997 the Company completed its Offering of 4.5 million shares of
Common Stock at $11.50 per share, resulting in net cash proceeds of
approximately $43.8 million (net of underwriting discounts and commissions and
offering costs) and began operating its senior and assisted living properties.
The Company used approximately $21.1 million of the net proceeds from the
offering
2
<PAGE>
BROOKDALE LIVING COMMUNITIES, INC.
NOTES TO BALANCE SHEETS (CONTINUED)
to fund the acquisition of two facilities. Approximately $6.8 million of such
net proceeds was used to reimburse PGI for earnest monies previously paid by PGI
in connection with a leased facility, the acquisition of third party interests
in two properties in which PGI also had interests and proposed acquisitions of
development sites. In addition, approximately $1.6 million of such net proceeds
was used to fund a statutory escrow deposit relating to one of the Company's
facilities, $11.0 million of such net proceeds was used to fund a cash
collateral deposit related to credit enhancement on $65.0 million of tax-exempt
bonds relating to two of the Company's facilities and approximately $1.2 million
of net proceeds was used to pay fees and transaction costs related to such
credit enhancement. On June 2, 1997, the underwriters of the Offering exercised
their option to purchase an additional 675,000 shares of the Company's Common
Stock at $11.50 per share, less underwriting discounts and commissions,
resulting in additional net cash proceeds from the Offering of approximately
$7.2 million. The remaining net cash proceeds from the Offering will be used for
future acquisitions and developments of senior and assisted living facilities
and for working capital and general corporate purposes. For further discussion,
see Management Discussion and Analysis below.
3
<PAGE>
Item 2: Management's Discussion and Analysis of Financial Condition and Results
of Operations
Overview:
- --------
The Company had no operations prior to May 7, 1997, the date on which the
Offering (as hereinafter defined) was completed. See "Liquidity and Capital
Resources." Since May 7, 1997, the Company has operated ten senior and assisted
living facilities containing a total of 2,168 units. Four of such facilities
are owned by the Company, four facilities are leased by the Company from a third
party and two facilities are managed by the Company pursuant to management
contracts. The Company's senior and assisted living facilities offer residents
a supportive, "home-like" setting and assistance with certain activities of
daily living. By providing residents a range of service options as their needs
change, the Company seeks to achieve greater continuity of care, enabling
seniors to age in place and thereby maintain their residency for a longer time
period. The ability to allow residents to age in place is beneficial to the
Company's residents as well as their families who are burdened with care option
decisions for their elderly relatives.
The Company currently plans to acquire or lease approximately three to five
facilities per year containing an aggregate of approximately 600 to 1,000 units,
and to commence development of at least two new facilities per year containing
approximately 200 units each in urban and suburban areas of major metropolitan
markets. The Company anticipates that it will use a combination of net proceeds
from the Offering, additional equity financing and debt financing, lease
transactions and cash generated from operations to fund this development
activity. In order to achieve its growth plans, the Company will be required to
obtain a substantial amount of additional financing. To the extent available,
the Company intends to use long-term, tax-exempt bonds to finance the
acquisition and renovation of existing facilities and the development of new
facilities. The Company has no existing commitments for additional financing.
There can be no assurance that future financing or lease transactions will be
available as needed or on terms acceptable to the Company. A lack of funds may
require the Company to delay all or some of its acquisition plans and
development projects.
The Company will derive its revenues from resident fees and management
fees. Resident fees typically are paid monthly by residents, their families or
other responsible parties. The Company will also derive management services
income from the two facilities that it manages. Resident fees and management
fees are recognized as revenues when services are provided.
The Company will classify its operating expenses into the following
categories: (i) facility operating expenses, which include lease payments,
labor, food, marketing and other direct facility expenses and real estate taxes;
(ii) general and administrative expenses, which primarily include corporate
headquarters and other overhead costs; and (iii) depreciation and amortization.
Results of Operations:
- ---------------------
The Company had no operations prior to May 7, 1997, the date on which the
Offering was completed.
4
<PAGE>
Liquidity and Capital Resources:
- -------------------------------
On May 7, 1997, the Company completed its initial public offering (the
"Offering") of 4,500,000 shares of Common Stock, $.01 par value per share, at
$11.50 per share. The proceeds from such Offering, net of related underwriting
and offering costs, totaled approximately $43.8 million. Concurrent with the
completion of the Offering, The Prime Group, Inc. and certain of its affiliates
(collectively "PGI") contributed their senior and assisted living property
ownership interests and operations to the Company in exchange for 2,000,000
shares of the Common Stock of the Company.
Simultaneously with the completion of the Offering, the Company used
approximately $21.1 million of the net proceeds from the offering to fund the
acquisition of two facilities. Approximately $6.8 million of such net proceeds
was used to reimburse PGI for earnest monies previously paid by PGI in
connection with a leased facility, the acquisition of third party interests in
two properties in which PGI also had interests and proposed acquisitions of
development sites. In addition, approximately $1.6 million of such net proceeds
was used to fund a statutory escrow deposit relating to one of the Company's
facilities, $11.0 million of such net proceeds was used to fund an interest
bearing cash collateral deposit and approximately $1.2 million was used to pay
fees and transaction costs related to credit enhancement on $65.0 million of
tax-exempt bonds relating to two of the Company's facilities.
On June 2, 1997, the underwriters of the Offering exercised their option to
purchase 675,000 shares of the Company's Common Stock at $11.50 per share, less
underwriting discounts and commissions. The option was granted to cover over-
allotments arising in connection with the Offering. The Company received net
proceeds from the Offering of approximately $7.2 million from the sale of these
additional shares. These funds, along with the remaining net proceeds from the
Offering, after giving effect to the transactions described above, will be used
to finance a portion of future acquisitions and developments of senior and
assisted living facilities and for working capital and general corporate
purposes. Pending such uses, the Company intends to invest available cash in
short-term, interest bearing securities or certificates of deposit.
5
<PAGE>
PART II: OTHER INFORMATION
Other Information:
- -----------------
Item 1. Legal Proceedings.
No material developments with respect to legal proceedings
occurred during the period covered by this quarterly report.
Item 2. Changes in Securities.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
Exhibit Number Description
-------------- -----------
3.1 Restated Certificate of Incorporation of the Company
3.2 Amended and Restated By-laws of the Company
4.1 Form of certificate representing Common Stock of the
Company, as filed with the Securities and Exchange
Commission on March 17, 1997 as Exhibit 4.1 to
Amendment No. 4 to the Company's Registration
Statement on Form S-1 (Registration No. 333-12259)
and incorporated herein by reference
10.1 Form of Stock Incentive Plan, as filed with the
Securities and Exchange Commission on March 17, 1997
as Exhibit 10.14 to Amendment No. 4 to the Company's
Registration Statement on Form S-1 (Registration No.
333-12259) and incorporated herein by reference
27.1 Financial Data Schedule
(b) Reports on Form 8-K:
The Registrant filed no reports on Form 8-K during the quarter ended
March 31, 1997.
6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BROOKDALE LIVING COMMUNITIES, INC.
Date: June 16, 1997 /s/ Mark J. Schulte
-------------------------- ---------------------
Mark J. Schulte
President and
Chief Executive Officer
Date: June 16, 1997 /s/ Craig G. Walczyk
-------------------------- ---------------------
Craig G. Walczyk
Vice President -
Chief Financial Officer
7
<PAGE>
EXHIBIT 3.1
RESTATED CERTIFICATE OF INCORPORATION
OF
BROOKDALE LIVING COMMUNITIES, INC.
Brookdale Living Communities, Inc., a corporation organized and
existing under the laws of the State of Delaware (the "Corporation"), does
hereby certify:
FIRST: That the present name of the Corporation is Brookdale Living
Communities, Inc. and its original Certificate of Incorporation was filed with
the Secretary of State of the State of Delaware on September 4, 1996 (the
"Original Certificate of Incorporation").
SECOND: That, by written consent in lieu of a meeting of the Board of
Directors of said Corporation pursuant to Section 141(f) of the General
Corporation Law of the State of Delaware (the "Delaware General Corporation
Law"), resolutions were duly adopted setting forth a proposed restated
certificate of incorporation of said Corporation (the "Restated Certificate of
Incorporation") and recommending that such Restated Certificate of Incorporation
be approved by the sole stockholder of said Corporation.
THIRD: That thereafter, by written consent in lieu of a special
meeting of the sole stockholder of the Corporation pursuant to Section 228(a) of
the Delaware General Corporation Law, the sole stockholder of the Corporation
adopted a resolution approving the Restated Certificate of Incorporation.
FOURTH: That this Restated Certificate of Incorporation restates and
amends the Original Certificate of Incorporation, and has been duly adopted in
accordance with Sections 242 and 245 of the Delaware General Corporation Law.
FIFTH: That the text of the Original Certificate of Incorporation is
hereby restated and amended to read in its entirety as follows:
ARTICLE 1
NAME
The name of this corporation is BROOKDALE LIVING COMMUNITIES, INC.
(the "Corporation").
ARTICLE 2
REGISTERED OFFICE AND AGENT
The address of the Corporation's registered office in the State of
Delaware is 1209 Orange Street, in the City of Wilmington,
<PAGE>
County of New Castle, State of Delaware 19801. The name of its registered agent
at such address is The Corporation Trust Company.
ARTICLE 3
PURPOSE AND POWERS
The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware (as amended, restated, supplemented or otherwise
modified from time to time, the "Delaware General Corporation Law"). The
Corporation shall have all power necessary or convenient to the conduct,
promotion or attainment of such acts and activities.
ARTICLE 4
CAPITAL STOCK
4.1 AUTHORIZED SHARES.
The total number of shares of all classes of capital stock that the
Corporation shall have authority to issue is 95,000,000 of which 75,000,000
shares shall be Common Stock, having a par value of $0.01 per share ("Common
Stock"), and 20,000,000 shares shall be Preferred Stock, having a par value of
$0.01 per share ("Preferred Stock").
4.2 COMMON STOCK.
4.2.1 Relative Rights. The Common Stock shall be subject to
all of the rights, privileges, preferences and priorities of the Preferred Stock
as set forth in the certificate(s) of designations filed to establish the
respective classes or series of Preferred Stock. Each share of Common Stock
shall have the same relative rights as and be identical in all respects to all
the other shares of Common Stock.
4.2.2 Dividends. Whenever there shall have been paid, or
declared and set aside for payment, to the holders of shares of any class of
capital stock having preference over the Common Stock as to the payment of
dividends, the full amount of dividends and of sinking fund or retirement
payments, if any, to which such holders are respectively entitled in preference
to the Common Stock, then dividends may be paid on the Common Stock and on any
class or series of capital stock entitled to participate therewith as to
dividends, out of any assets legally available for the payment of dividends
thereon, but only when and as declared by the Board of Directors of the
Corporation.
4.2.3 Dissolution, Liquidation, or Winding Up. In the event
of any dissolution, liquidation, or winding up of the Corporation, whether
voluntary or involuntary, the holders of the Common Stock, and holders of any
class or series of capital stock
-2-
<PAGE>
entitled to participate therewith, in whole or in part, as to the distribution
of assets in such event, shall become entitled to participate in the
distribution of any assets of the Corporation remaining after the Corporation
shall have paid, or provided for payment of, all debts and liabilities of the
Corporation and after the Corporation shall have paid, or set aside for payment,
to the holders of any class of capital stock having preference over the Common
Stock in the event of dissolution, liquidation, or winding up of the Corporation
the full preferential amounts (if any) to which they are entitled.
4.2.4 Voting Rights. Each holder of shares of Common Stock
shall be entitled to attend all special and annual meetings of the stockholders
of the Corporation and, share for share and without regard to class, together
with the holders of all other classes of capital stock entitled to attend such
meetings and to vote (except any class or series of capital stock having special
voting rights), to cast one vote for each outstanding share of Common Stock so
held upon any matter or thing (including, without limitation, the election of
one or more directors) properly considered and acted upon by the stockholders.
4.3 PREFERRED STOCK.
The Board of Directors is authorized, subject to limitations
prescribed by the Delaware General Corporation Law and the provisions of this
Restated Certificate of Incorporation, to provide, by resolution or resolutions
from time to time and by filing a certificate(s) pursuant to the Delaware
General Corporation Law, for the issuance of the shares of Preferred Stock in
one or more classes or series, to establish from time to time the number of
shares to be included in each such class or series, to fix the voting powers,
designations, preferences and relative participating, optional, or other special
rights of the shares of each such class or series and to fix the qualifications,
limitations, or restrictions thereof. Each share of each such class or series
of Preferred Stock shall have the same relative rights as and be identical in
all respects to all other shares of the same class or series.
ARTICLE 5
BOARD OF DIRECTORS
5.1 NUMBER; ELECTION; AND CLASSIFICATION.
The number of directors of the Corporation shall be not less than two
nor more than eleven, the exact number of directors to be fixed from time to
time by or in the manner provided in the By-laws of the Corporation. The Board
of Directors of the Corporation shall be divided into three classes, each class
consisting of approximately one-third of the total number of directors. The
term of office of each class shall be three years
-3-
<PAGE>
and shall expire in successive years at the time of the annual meeting of
stockholders; provided, however, that the terms of the Class I and Class II
directors listed below shall be one year and two years, respectively. The
initial classes of directors are as follows:
Class I (terms of office expiring at the 1998 annual meeting of
stockholders) -- Michael W. Reschke and Bruce L. Gewertz;
Class II (terms of office expiring at the 1999 annual meeting of
stockholders) -- Darryl W. Copeland, Jr. and Darryl W. Hartley-Leonard; and
Class III (terms of office expiring at the 2000 annual meeting of
stockholders) -- Mark J. Schulte, Wayne D. Boberg and Daniel J. Hennessy.
At each annual meeting of stockholders, the successors to the class of directors
whose term shall then expire shall be elected to hold office for a term expiring
at the third succeeding annual meeting and until their successors shall be
elected and qualified. Unless and except to the extent that the By-laws of the
Corporation shall otherwise require, the election of directors of the
Corporation need not be by written ballot.
Any vacancy occurring in the Board of Directors, including any vacancy
created by an increase in the number of directors, shall be filled for the
unexpired term by the vote of a majority of the directors then in office,
whether or not a quorum, or by a sole remaining director, and any director so
chosen shall hold office for the remainder of the full term of the class in
which the new directorship was created or the vacancy occurred and until such
director's successor shall have been elected and qualified. No director may be
removed except for cause and then only by an affirmative vote of the holders of
at least a majority of the outstanding shares of capital stock of the
Corporation entitled to vote thereon at a duly constituted meeting of
stockholders called for such purpose. At least thirty days prior to such
meeting of stockholders, written notice shall be sent to the director or
directors whose removal shall be considered at such meeting.
5.2 MANAGEMENT OF BUSINESS AND AFFAIRS OF THE CORPORATION.
The business and affairs of the Corporation shall be managed by or
under the direction of the Board of Directors.
-4-
<PAGE>
5.3 LIMITATION OF LIABILITY.
No director of the Corporation shall be liable to the Corporation or
its stockholders for monetary damages for breach of fiduciary duty as a
director, provided that this provision shall not eliminate or limit the
liability of a director (a) for any breach of the director's duty of loyalty to
the Corporation or its stockholders, (b) for acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law, (c) under
Section 174 of the Delaware General Corporation Law, or (d) for any transaction
from which the director derived an improper personal benefit. Any repeal or
modification of this Article 5.3 shall be prospective only and shall not
adversely affect any right or protection of, or any limitation on the liability
of, a director of the Corporation existing at, or arising out of facts or
incidents occurring prior to, the effective date of such repeal or modification.
ARTICLE 6
COMPROMISE OR ARRANGEMENT
Whenever a compromise or arrangement is proposed between the
Corporation and its creditors or any class of them and/or between the
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of the Corporation or any creditor or stockholder thereof, or on the
application of any receiver or receivers appointed for the Corporation under the
provisions of Section 291 of the Delaware General Corporation Law or on the
application of trustees in dissolution or of any receiver or receivers appointed
for the Corporation under the provisions of Section 279 of the Delaware General
Corporation Law order a meeting of the creditors or class of creditors, and/or
of the stockholders or class of stockholders of the Corporation, as the case may
be, to be summoned in such manner as the said court directs. If a majority in
number representing three-fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of the
Corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of the Corporation as a consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of the Corporation, as the case may be,
and also on the Corporation.
ARTICLE 7
AMENDMENT OF BY-LAWS
The Board of Directors or the stockholders may from time to time
adopt, amend or repeal the By-laws of the Corporation. Such action by the Board
of Directors shall require the affirmative
-5-
<PAGE>
vote of at least two-thirds of the directors then in office at a duly
constituted meeting of the Board of Directors called for such purpose. Such
action by the stockholders shall require the affirmative vote of the holders of
at least two-thirds of the outstanding shares of capital stock of the
Corporation entitled to vote thereon at a duly constituted meeting of
stockholders called for such purpose.
ARTICLE 8
RESERVATION OF RIGHT TO AMEND
RESTATED CERTIFICATE OF INCORPORATION
The Corporation reserves the right at any time, and from time to time,
to amend, alter, change, or repeal any provision contained in this Restated
Certificate of Incorporation, and other provisions authorized by the laws of the
State of Delaware at the time in force may be added or inserted, in the manner
now or hereafter prescribed by law; and all rights, preferences, and privileges
of any nature conferred upon stockholders, directors, or any other persons by
and pursuant to this Restated Certificate of Incorporation in its present form
or as hereafter amended are granted subject to the rights reserved in this
Article 8.
ARTICLE 9
STOCKHOLDER MATTERS
9.1 CONSENT IN LIEU OF MEETING.
Any action required or permitted to be taken by the stockholders of
the Corporation must be effected at a duly called annual or special meeting of
such holders and may not be effected by any consent in writing by such holders,
unless such consent is unanimous.
9.2 CALL OF SPECIAL MEETINGS.
Special meetings of the stockholders, for any purpose or purposes,
unless otherwise prescribed by statute, may be called by the Board of Directors,
the Chairman of the Board, the Chief Executive Officer or the President of the
Corporation, and shall be called by the Chief Executive Officer, the President
or the Secretary of the Corporation at the request in writing of stockholders
possessing at least twenty-five percent of the voting power of the issued and
outstanding voting stock of the Corporation entitled to vote generally for the
election of directors. Such request shall include a statement of the purpose or
purposes of the proposed meeting.
-6-
<PAGE>
ARTICLE 10
AMENDMENT OF RESTATED CERTIFICATE OF INCORPORATION
Except as set forth in this Article 10 or as otherwise specifically
required by law, no amendment of any provision of this Restated Certificate of
Incorporation shall be made unless such amendment has been first proposed by the
Board of Directors of the Corporation upon the affirmative vote of at least two-
thirds of the directors then in office at a duly constituted meeting of the
Board of Directors called for such purpose and thereafter approved by
stockholders of the Corporation by the affirmative vote of the holders of at
least a majority of the outstanding shares of capital stock of the Corporation
entitled to vote thereon; provided, however, if such amendment is to the
provisions set forth in this clause of Article 10 or in Articles 4.1 (insofar as
relating to the decrease of the authorized number of shares of Preferred Stock),
4.3, 5, 7, or 9 hereof, such amendment must be approved by the affirmative vote
of the holders of at least two-thirds of the outstanding shares of capital stock
of the Corporation entitled to vote thereon rather than a majority of such
shares.
IN WITNESS WHEREOF, Brookdale Living Communities, Inc. has caused this
Restated Certificate of Incorporation to be signed by its duly authorized
officer, as of the 21st day of March, 1997.
BROOKDALE LIVING COMMUNITIES, INC.
By: /s/ Craig G. Walczyk
---------------------
Name: Craig G. Walczyk
Title: Vice President-Chief Financial
Officer and Secretary
-7-
<PAGE>
EXHIBIT 3.2
AMENDED AND RESTATED BY-LAWS
OF
BROOKDALE LIVING COMMUNITIES, INC.
ARTICLE 1
OFFICES
1.1 REGISTERED OFFICE.
The initial registered office of the Corporation shall be in
Wilmington, Delaware, and the initial registered agent in charge thereof shall
be The Corporation Trust Company, located at 1209 Orange Street, in the City of
Wilmington, County of New Castle, State of Delaware 19801.
1.2 OTHER OFFICES.
The Corporation may also have offices at such other places, both
within and without the State of Delaware, as the Board of Directors may from
time to time determine or as may be necessary or useful in connection with the
business of the Corporation.
ARTICLE 2
MEETINGS OF STOCKHOLDERS
2.1 PLACE OF MEETINGS.
All meetings of the stockholders shall be held at such place as may be
fixed from time to time by the Board of Directors, the Chairman of the Board,
the Chief Executive Officer or the President.
2.2 ANNUAL MEETINGS.
The Corporation shall hold annual meetings of stockholders, commencing
with the year 1998, on such date and at such time as shall be designated from
time to time by the Board of Directors, the Chairman of the Board, the Chief
Executive Officer or the President, at which stockholders shall elect successors
to that class of directors whose terms shall have expired and transact such
other business as may properly be brought before the meeting.
2.3 SPECIAL MEETINGS.
Special meetings of the stockholders, for any purpose or purposes,
unless otherwise prescribed by statute, may be called by the Board of Directors,
the Chairman of the Board, the Chief Executive Officer or the President of the
Corporation, and shall be called by the Chief Executive Officer, the President
or the
<PAGE>
Secretary of the Corporation at the request in writing of stockholders
possessing at least twenty-five percent of the voting power of the issued and
outstanding voting stock of the Corporation entitled to vote generally for the
election of directors. Such request shall include a statement of the purpose or
purposes of the proposed meeting.
2.4 NOTICE OF MEETINGS.
Notice of any meeting of stockholders, stating the place, date and
hour of the meeting, and (if it is a special meeting) the purpose or purposes
for which the meeting is called, shall be given to each stockholder entitled to
vote at such meeting not less than ten nor more than sixty days before the date
of the meeting (except to the extent that such notice is waived or is not
required as provided in the General Corporation Law of the State of Delaware (as
amended, restated, supplemented or otherwise modified from time to time, the
"Delaware General Corporation Law") or these By-laws). Such notice shall be
given in accordance with, and shall be deemed effective as set forth in, Section
222 (or any successor section) of the Delaware General Corporation Law.
2.5 WAIVER OF NOTICE.
Whenever the giving of any notice is required by statute, the Restated
Certificate of Incorporation of the Corporation (which shall include any
amendments thereto and shall be hereinafter referred to as so amended as the
"Certificate of Incorporation") or these By-laws, a waiver thereof, in writing
and delivered to the Corporation, signed by the person or persons entitled to
said notice, whether before or after the event as to which such notice is
required, shall be deemed equivalent to notice. Attendance of a stockholder at
a meeting shall constitute a waiver of notice (a) of such meeting, except when
the stockholder objects at the beginning of the meeting to holding the meeting
or transacting business at the meeting, and (b) (if it is a special meeting) of
consideration of a particular matter at the meeting that is not within the
purpose or purposes described in the meeting notice, except when the stockholder
objects at the beginning of the meeting or at the time the matter is first
discussed to considering the matter at the meeting.
2.6 BUSINESS AT SPECIAL MEETINGS.
Business transacted at any special meeting of stockholders shall be
limited to the purposes stated in the notice (except to the extent that such
notice is waived or is not required as provided in the Delaware General
Corporation Law or these By-laws).
-2-
<PAGE>
2.7 LIST OF STOCKHOLDERS.
At least ten days before every meeting of stockholders, the officer
who has charge of the stock ledger of the Corporation shall make a list of all
stockholders entitled to vote at the meeting, arranged in alphabetical order and
showing the address of each stockholder and the number of shares registered in
the name of each stockholder. Such list shall be open to the examination of any
stockholder for any purpose germane to the meeting, during ordinary business
hours, for a period of at least ten days prior to the meeting, either at a place
in the city where the meeting is to be held, which place is to be specified in
the notice of the meeting, or, if not so specified, at the place where the
meeting is to be held. Such list shall also, for the duration of the meeting,
be produced and kept open to the examination of any stockholder who is present
at the time and place of the meeting.
2.8 QUORUM AT MEETINGS.
Stockholders may take action on a matter at a meeting only if a quorum
exists with respect to that matter. Except as otherwise provided by statute or
by the Certificate of Incorporation, the holders of a majority of the shares
entitled to vote at the meeting, and who are present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business. Where a separate vote by a class or classes is
required, the holders of a majority of the outstanding shares of such class or
classes, who are present in person or represented by proxy, shall constitute a
quorum entitled to take action on that matter. Once a share is represented for
any purpose at a meeting (other than solely to object (a) to holding the meeting
or transacting business at the meeting, or (b) (if it is a special meeting) to
consideration of a particular matter at the meeting that is not within the
purpose or purposes described in the meeting notice), it is deemed present for
quorum purposes for the remainder of the meeting and for any adjournment of that
meeting unless a new record date is or must be set for the adjourned meeting.
The holders of a majority of the voting shares represented at a meeting, whether
or not a quorum is present, may adjourn such meeting from time to time.
2.9 VOTING AND PROXIES.
Unless otherwise provided in the Delaware General Corporation Law or
in the Certificate of Incorporation, and subject to the other provisions of
these By-laws, each stockholder shall be entitled to one vote on each matter, in
person or by proxy, for each share of the Corporation's capital stock that has
voting power and that is held by such stockholder. No proxy shall be voted or
acted upon after three years from its date, unless the proxy provides for a
longer period. A duly executed appointment of proxy shall be irrevocable if the
appointment form states that it is
-3-
<PAGE>
irrevocable and if, and only as long as, it is coupled with an interest
sufficient in law to support an irrevocable power.
2.10 REQUIRED VOTE.
When a quorum is present at any meeting of stockholders, all matters
shall be determined, adopted and approved by the affirmative vote (which need
not be by ballot) of the holders of a majority of the shares present in person
or represented by proxy at the meeting and entitled to vote with respect to the
matter, unless the proposed action is one upon which, by express provision of
the Delaware General Corporation Law, the Certificate of Incorporation or these
By-laws, a different vote is specified and required, in which case such express
provision shall govern and control the decision of such question. Where a
separate vote by a class or classes is required, the affirmative vote of the
holders of a majority of the shares of such class or classes present in person
or represented by proxy at the meeting shall be the act of such class, unless
the proposed action is one upon which, by express provision of the Delaware
General Corporation Law, the Certificate of Incorporation or these By-laws, a
different vote is specified and required, in which case such express provision
shall govern and control the decision of such question. Notwithstanding the
foregoing, directors shall be elected by a plurality of the votes of the shares
present in person or represented by proxy at the meeting and entitled to vote on
the election of directors.
2.11 ACTION WITHOUT A MEETING.
Any action required or permitted to be taken by the stockholders of
the Corporation must be effected at a duly called annual or special meeting of
such stockholders and may not be effected by any consent in writing by such
stockholders, unless such consent is unanimous.
2.12 BUSINESS AT ANNUAL MEETING.
At an annual meeting of the stockholders, only such business shall be
conducted as shall have been properly brought before the meeting. To be
properly brought before an annual meeting, business must be (a) specified in the
notice of meeting (or any supplement thereto) given by or at the direction of
the Board of Directors, (b) otherwise properly brought before the meeting by or
at the direction of the Board of Directors, or (c) otherwise properly brought
before the meeting by a stockholder. For business to be properly brought before
an annual meeting by a stockholder, a stockholder must have given timely notice
thereof in writing to the Secretary of the Corporation.
To be timely, a stockholder's notice must be delivered to or mailed
and received at the principal executive offices of the Corporation not less than
sixty days prior to the meeting;
-4-
<PAGE>
provided, however, that in the event that less than seventy-five days' notice or
prior public disclosure of the date of the meeting is given or made to
stockholders, notice by the stockholder to be timely must be so received not
later than the close of business on the fifteenth day following the day on which
such notice of the date of the annual meeting was mailed or such public
disclosure was made. A stockholder's notice to the Secretary shall set forth as
to each matter the stockholder proposes to bring before the annual meeting (a) a
brief description of the business desired to be brought before the annual
meeting and the reasons for conducting such business at the annual meeting, (b)
the name and address, as they appear on the Corporation's books, of the
stockholder proposing such business, (c) the class and number of shares of the
Corporation's capital stock which are beneficially owned by the stockholder, and
(d) any material interest of the stockholder in such business. No later than
the tenth day following the date of receipt of a stockholder notice pursuant to
this Section 2.12, the Chairman of the Board or the Secretary of the Corporation
shall, if the facts warrant, determine and notify in writing the stockholder
submitting such notice that such notice was not made in accordance with the time
limits and/or other procedures prescribed by these By-laws. If no such
notification is mailed to such stockholder within such ten-day period, such
stockholder notice containing a matter of business shall be deemed to have been
made in accordance with the provisions of this Section 2.12. Notwithstanding
anything in these By-laws to the contrary, no business shall be conducted at an
annual meeting except in accordance with the procedures set forth in this
Section 2.12.
ARTICLE 3
DIRECTORS
3.1 POWERS.
The business and affairs of the Corporation shall be managed by or
under the direction of the Board of Directors, which may exercise all such
powers of the Corporation and do all such lawful acts and things, subject to any
limitation set forth in the Certificate of Incorporation or as otherwise may be
provided in the Delaware General Corporation Law. The Board of Directors shall
annually elect a Chairman of the Board from among its members and shall
designate, when present, the Chairman of the Board, the Chief Executive Officer
or the President to preside at its meetings. If none of the Chairman of the
Board, the Chief Executive Officer or the President is present, the Board of
Directors may designate another officer to preside at such meeting. Any one or
more of the Chairman of the Board, the Chief Executive Officer and the President
may be the same person. The Board of Directors may also annually elect one or
more Vice Chairmen from among its members, with such duties as the Board of
Directors shall from time to time prescribe.
-5-
<PAGE>
3.2 NUMBER, CLASSES, ELECTION AND TERM OF OFFICE.
As of the closing of the Corporation's initial public offering of
equity securities under the Securities Act of 1933, as amended, the total number
of directors which shall constitute the entire Board of Directors shall be
seven. The term "entire Board of Directors" as used herein shall mean the total
number of directors constituting the entire Board of Directors irrespective of
the number of directors then in office or vacancies. Thereafter, the total
number of directors constituting the entire Board of Directors shall be
determined by resolution of the Board of Directors passed by the affirmative
vote of at least two-thirds of the directors then in office, provided that such
number shall be consistent with the minimum and maximum numbers of directors set
forth in the Certificate of Incorporation. The Board of Directors shall be
divided into three classes, each class consisting of approximately one-third of
the total number of directors, as provided in the Certificate of Incorporation.
At the 1998 annual meeting of stockholders and at each subsequent annual meeting
of stockholders, directors elected to succeed those whose terms are expiring
shall be elected for a term of office to expire at the third succeeding annual
meeting of stockholders and when their respective successors are duly elected
and qualified. Directors shall be elected at annual meetings of the
stockholders, except as provided in Section 3.3 hereof, and each director
elected shall hold office until his successor is elected and qualified or until
his earlier death, resignation or removal. Directors need not be stockholders.
3.3 VACANCIES.
Vacancies, and newly created directorships resulting from any increase
in the authorized number of any class of directors which in each case are
elected at an annual meeting of the stockholders by every class of stockholders
having the right to vote as a single class, may be filled by a majority of the
directors then in office, although fewer than a quorum, or by a sole remaining
director. Whenever the holders of any class or classes of capital stock or
series thereof are entitled to elect one or more directors by the provisions of
the Certificate of Incorporation, vacancies and newly created directorships of
such class or classes or series may be filled by a majority of the directors
elected by such class or classes or series thereof then in office, or by the
sole remaining director so elected. Each director so chosen shall hold office
until the next election of the class for which such director shall have been
chosen, and until such director's successor is elected and qualified, or until
the director's earlier death, resignation or removal. In the event that one or
more directors resigns from the Board of Directors, effective at a future date,
a majority of the directors then in office, including those who have so
resigned, shall have power to fill such vacancy or vacancies, the vote thereon
to take effect
-6-
<PAGE>
when such resignation or resignations shall become effective, and each director
so chosen shall hold office until the next election of the class for which such
director shall have been chosen, and until such director's successor is elected
and qualified, or until the director's earlier death, resignation or removal.
3.4 MEETINGS.
3.4.1 Regular Meetings. Regular meetings of the Board of
Directors may be held without notice at such time and at such place as shall
from time to time be determined by the Board of Directors.
3.4.2 Special Meetings. Special meetings of the Board of
Directors may be called by the Chairman of the Board, the Chief Executive
Officer or the President on one day's notice to each director, either personally
or by telephone, express delivery service (so that the scheduled delivery date
of the notice is at least one day in advance of the meeting), telegram or
facsimile transmission, and on five days' notice by mail (effective upon deposit
of such notice in the mail). The notice need not describe the purpose of a
special meeting.
3.4.3 Telephone Meetings. Members of the Board of Directors may
participate in a meeting of the Board of Directors by any communication by means
of which all participating directors can simultaneously hear each other during
the meeting. A director participating in a meeting by this means is deemed to be
present in person at the meeting.
3.4.4 Action Without Meeting. Any action required or permitted
to be taken at any meeting of the Board of Directors may be taken without a
meeting if the action is taken by all members of the Board. The action must be
evidenced by one or more written consents describing the action taken, signed by
each director, and delivered to the Corporation for inclusion in the minute
book.
3.4.5 Waiver of Notice of Meeting. A director may waive any
notice required by statute, the Certificate of Incorporation or these By-laws
before or after the date and time stated in the notice. Except as set forth
below, the waiver must be in writing, signed by the director entitled to the
notice, and delivered to the Corporation for inclusion in the minute book.
Notwithstanding the foregoing, a director's attendance at or participation in a
meeting waives any required notice to the director of the meeting unless the
director at the beginning of the meeting objects to holding the meeting or
transacting business at the meeting and does not thereafter vote for or assent
to action taken at the meeting.
-7-
<PAGE>
3.5 QUORUM AND VOTE AT MEETINGS.
At all meetings of the Board, a quorum of the Board of Directors
consists of the presence of a majority of the total number of directors
constituting the entire Board of Directors. The affirmative vote of a majority
of the directors present at any meeting at which there is a quorum shall be the
act of the Board of Directors, except as may be otherwise specifically provided
by statute, the Certificate of Incorporation or these By-laws.
3.6 COMMITTEES OF DIRECTORS.
The Board of Directors may by resolution designate one or more
committees, each committee to consist of one or more of the directors of the
Corporation. The Board may designate one or more directors as alternate members
of any committee, who may replace any absent or disqualified member at any
meeting of the committee. If a member of a committee shall be absent from any
meeting, or disqualified from voting thereat, the remaining member or members
present and not disqualified from voting, whether or not such member or members
constitute a quorum, may, by unanimous vote, appoint another member of the Board
of Directors to act at the meeting in the place of such absent or disqualified
member. Any such committee, to the extent provided in the resolution of the
Board of Directors, shall have and may exercise all the powers and authority of
the Board of Directors in the management of the business and affairs of the
Corporation, and may authorize the seal of the Corporation to be affixed to all
papers which may require it; but no such committee shall have the power or
authority in reference to amending the Certificate of Incorporation (except that
a committee may, to the extent authorized in the resolution or resolutions
providing for the issuance of shares of capital stock adopted by the Board of
Directors pursuant to Section 151(a) of the Delaware General Corporation Law,
fix the designations and any of the preferences or rights of such shares
relating to dividends, redemption, dissolution, any distribution of assets of
the Corporation or the conversion into, or the exchange of such shares for,
shares of any other class or classes or any other series of the same or any
other class or classes of capital stock of the Corporation or fix the number of
shares of any series of capital stock or authorize the increase or decrease of
any shares of any series), adopting an agreement of merger or consolidation
pursuant to Sections 251, 252, 257, 258, 263 or 264 of the Delaware General
Corporation Law, recommending to the stockholders the sale, lease or exchange of
all or substantially all of the Corporation's property and assets, recommending
to the stockholders a dissolution of the Corporation or a revocation of a
dissolution, or amending these By-laws; and unless the resolution or
resolutions, these By-laws or the Certificate of Incorporation expressly so
provide, no such committee shall have the power or authority to declare a
dividend, to authorize the issuance of capital stock, or to adopt a certificate
of ownership and merger pursuant to Section 253 of
-8-
<PAGE>
the Delaware General Corporation Law. Such committee or committees shall have
such name or names as may be determined from time to time by resolution adopted
by the Board of Directors. Unless otherwise specified in the resolution of the
Board of Directors designating the committee, at all meetings of each such
committee of directors, a majority of the members of the committee shall
constitute a quorum for the transaction of business, and the affirmative vote of
a majority of the members of the committee present at any meeting at which there
is a quorum shall be the act of the committee. Each committee shall keep
regular minutes of its meetings and report the same to the Board of Directors,
when required.
3.7 COMPENSATION OF DIRECTORS.
The Board of Directors shall have the authority to fix the
compensation of directors. No such payment shall preclude any director from
serving the Corporation in any other capacity and receiving compensation
therefor.
3.8 NOMINEES.
Only persons who are nominated in accordance with the procedures set
forth in this Section 3.8 shall be eligible for election as directors.
Nominations of persons for election to the Board of Directors of the Corporation
may be made at a meeting of stockholders by or at the direction of the Board of
Directors or by any stockholder of the Corporation entitled to vote for the
election of directors at the meeting who complies with notice procedures set
forth in this Section 3.8. Such nominations, other than those made by or at the
direction of the Board of Directors, shall be made pursuant to timely notice in
writing to the Secretary of the Corporation. To be timely, a stockholder notice
shall be delivered to or mailed and received at the principal executive office
of the Corporation not less than sixty days prior to the meeting; provided,
however, that in the event that less than seventy-five days' notice or prior
public disclosure of the date of the meeting is given or made to stockholders,
notice by the stockholder to be timely must be so received not later than the
close of business on the fifteenth day following the day on which such notice of
the date of the meeting was mailed or such public disclosure was made. Such
stockholder's notice shall set forth (a) as to each person whom the stockholder
proposes to nominate for election or re-election as a director, (i) the name,
age, business address, and residence address of such person, (ii) the principal
occupation or employment of such person, (iii) the class and number of shares of
the Corporation's capital stock which are beneficially owned by such person, and
(iv) any other information relating to such person that is required to be
disclosed in solicitations of proxies for election of directors, or is otherwise
required in each case pursuant to Regulation 14A under the Securities Exchange
Act of 1934, as amended (including, without limitation, such person's
-9-
<PAGE>
written consent to be named in the proxy statement as a nominee and to serving
as a director if elected), and (b) as to the stockholder giving the notice, (i)
the name and address, as they appear on the Corporation's books, of such
stockholder, and (ii) the class and number of shares of the Corporation's
capital stock which are beneficially owned by such stockholder. At the request
of the Board of Directors, any person nominated by the Board of Directors for
election as a director shall furnish to the Secretary of the Corporation that
information required to be set forth in the stockholder's notice of nomination
which pertains to the nominee. No later than the tenth day following the date of
receipt of a stockholder nomination submitted pursuant to this Section 3.8, the
Chairman of the Board or the Secretary of the Corporation shall, if the facts
warrant, determine and notify in writing the stockholder making such nomination
that such nomination was not made in accordance with the time limits and/or
other procedures described by these By-laws. If no such notification is mailed
to such stockholder within such ten-day period, such nomination shall be deemed
to have been made in accordance with the provisions of this Section 3.8. No
person shall be eligible for election as a director of the Corporation unless
nominated in accordance with the procedures set forth in this Section 3.8.
ARTICLE 4
OFFICERS
4.1 POSITIONS.
The officers of the Corporation shall be a Chairman of the Board, a
Chief Executive Officer, a President, a Chief Financial Officer and a Secretary,
and such other officers as the Board of Directors from time to time may appoint,
including one or more Vice Chairmen, a Chief Operating Officer, Executive Vice
Presidents, a General Counsel, Senior Vice Presidents, Vice Presidents, a
Controller, Assistant Secretaries and Assistant Controllers. Each such officer
shall exercise such powers and perform such duties as shall be set forth below
and such other powers and duties as from time to time may be specified by the
Board of Directors or by an officer(s) authorized by these By-laws or the Board
of Directors to prescribe the duties of such other officers. Any number of
offices may be held by the same person, except that in no event shall the
President and the Secretary be the same person. Each of the Chairman of the
Board, the Chief Executive Officer, the President, the Chief Financial Officer,
the Chief Operating Officer, and/or any Executive Vice President or Senior Vice
President may execute bonds, mortgages and other documents under the seal of the
Corporation, except where required or permitted by law to be otherwise executed
and except where the authorization therefor shall be expressly delegated by the
Board of Directors to some other officer or agent of the Corporation.
-10-
<PAGE>
4.2 CHAIRMAN OF THE BOARD.
The Chairman of the Board shall supervise and direct the Chief
Executive Officer and the President, subject to the control of the Board of
Directors. The Chairman of the Board shall preside at all meetings of the
stockholders and of the Board of Directors. The Chairman of the Board may sign,
with the Secretary or any other officer of the Corporation authorized by the
Board of Directors, certificates for shares of the Corporation, and deeds,
mortgages, bonds, contracts, or other instruments which the Board of Directors
has authorized to be executed, except in cases where the signing and execution
thereof shall be expressly delegated by the Board of Directors or by these By-
laws to some other officer or agent of the Corporation, or shall be required by
law to be otherwise signed or executed; and, in general, shall perform all
duties incident to the office of a chairman of the board of a corporation,
including those duties customarily performed by persons occupying such office,
and shall perform such other duties as, from time to time, may be assigned to
him or her by the Board of Directors.
4.3 CHIEF EXECUTIVE OFFICER.
The Chief Executive Officer shall be the principal executive officer
of the Corporation and, subject to the control of the Board of Directors, shall
in general supervise the business and affairs of the Corporation. The Chief
Executive Officer shall report directly to the Chairman of the Board. The Chief
Executive Officer shall, in the absence of the Chairman of the Board, preside at
all meetings of the stockholders and of the Board of Directors. The Chief
Executive Officer may sign, with the Secretary or any other officer of the
Corporation authorized by the Board of Directors, certificates for shares of the
Corporation and deeds, mortgages, bonds, contracts, or other instruments which
the Board of Directors has authorized to be executed, except in cases where the
signing and execution thereof shall be expressly delegated by the Board of
Directors or by these By-laws to some other officer or agent of the Corporation,
or shall be required by law to be otherwise signed or executed; and, in general,
shall perform all duties incident to the office of a chief executive officer of
a corporation, including those duties customarily performed by persons occupying
such office, and shall perform such other duties as, from time to time, may be
assigned to him or her by the Board of Directors or the Chairman of the Board.
4.4 PRESIDENT.
The President shall, with the Chief Executive Officer of the
Corporation and subject to the control of the Board of Directors, in general
supervise the business operations of the Corporation. The President shall
report directly to the Chairman of the Board or, if so directed by the Board of
Directors or the Chairman of the Board, the Chief Executive Officer. The
President
-11-
<PAGE>
shall, in the absence of the Chairman of the Board and the Chief Executive
Officer, preside at all meetings of the stockholders and of the Board of
Directors. In the absence of the Chief Executive Officer or in the event of a
failure or refusal to act of the Chief Executive Officer, the President shall
perform the duties of the Chief Executive Officer, and when so acting shall have
all the powers of, and be subject to all the restrictions upon, the Chief
Executive Officer. The President may sign, with the Secretary or any other
officer of the Corporation authorized by the Board of Directors, certificates
for shares of the Corporation and deeds, mortgages, bonds, contracts, or other
instruments which the Board of Directors has authorized to be executed, except
in cases where the signing and execution thereof shall be expressly delegated by
the Board of Directors or by these By-laws to some other officer or agent of the
Corporation, or shall be required by law to be otherwise signed or executed;
and, in general, shall perform all duties incident to the office of a president
of a corporation, including those duties customarily performed by persons
occupying such office, and shall perform such other duties as, from time to
time, may be assigned to him or her by the Board of Directors.
4.5 CHIEF FINANCIAL OFFICER.
The Chief Financial Officer of the Corporation, subject to the
direction of the Chief Executive Officer and the President, shall have general
charge and supervision of the financial affairs of the Corporation, including
budgetary, accounting and statistical methods, and shall approve payment, or
designate others serving under him to approve for payment, of all vouchers and
warrants for disbursements of funds, and, in general, shall perform such other
duties as are incident to the office of a chief financial officer of a
corporation, including those duties customarily performed by persons occupying
such office, and shall perform such other duties as, from time to time, may be
assigned to him or her by the Board of Directors, the Chief Executive Officer or
the President.
4.6 CHIEF OPERATING OFFICER.
The Chief Operating Officer of the Corporation shall have general
charge and supervision of the day-to-day operations of the Corporation, subject
to the direction of the Chief Executive Officer and the President and the
authority of the Board of Directors, and, in general, shall perform such other
duties as are incident to the office of a chief operating officer of a
corporation, including those duties customarily performed by persons occupying
such office, and shall perform such other duties as, from time to time, may be
assigned to him or her by the Board of Directors, the Chief Executive Officer or
the President.
-12-
<PAGE>
4.7 GENERAL COUNSEL.
The General Counsel of the Corporation shall be responsible for
supervising the legal affairs of the Corporation, and, in general, shall perform
such other duties as are incident to the office of a general counsel of a
corporation, including those duties customarily performed by persons occupying
such office, and shall perform such other duties as, from time to time, may be
assigned to him or her by the Board of Directors, the Chief Executive Officer or
the President.
4.8 VICE PRESIDENT.
In the absence of the Chief Executive Officer and the President or in
the event of a failure or refusal to act of the Chief Executive Officer and the
President, the Vice President (or, in the event there be more than one Vice
President, the Vice Presidents in the order designated (e.g., first, the
Executive Vice Presidents in the order of their seniority, second, the Senior
Vice Presidents in the order of their seniority, and, third, the Vice Presidents
in the order of their seniority) shall perform the duties of the Chief Executive
Officer and the President, and when so acting shall have all the powers of, and
be subject to all the restrictions upon, the Chief Executive Officer and the
President. The Vice President or Vice Presidents, in general, shall perform such
other duties as are incident to the office of a vice president of a corporation,
including those duties customarily performed by persons occupying such office,
and shall perform such other duties as, from time to time, may be assigned to
him or her or them by the Board of Directors, the Chief Executive Officer or the
President. The Board of Directors may designate one or more Vice Presidents as
Executive Vice Presidents or Senior Vice Presidents.
4.9 SECRETARY.
The Secretary, or an Assistant Secretary, shall attend all meetings of
the Board of Directors and all meetings of the stockholders, and shall record
all the proceedings of the meetings of the stockholders and of the Board of
Directors in a book to be kept for that purpose, and shall perform like duties
for the standing committees, when required. The Secretary shall (a) keep the
minutes of the proceedings of the stockholders and of the Board of Directors in
one or more books provided for that purpose, (b) see that all notices are duly
given in accordance with the provisions of these By-laws or as required by law,
(c) be custodian of the corporate records and the corporate seal of the
Corporation and see that such seal, to the extent necessary, is affixed to all
documents the execution of which on behalf of the Corporation is duly
authorized, (d) when requested or required, authenticate any records of the
Corporation, (e) keep a register of the post office address of each stockholder
which shall be furnished to the secretary by such stockholder, (f) sign with the
Chairman of the
-13-
<PAGE>
Board, the Chief Executive Officer, the President or a Vice-President
certificates for shares of the Corporation, the issuance of which shall have
been authorized by resolution of the Board of Directors, (g) have general charge
of the stock transfer books of the Corporation, and (h) in general perform all
duties incident to the office of a secretary of a corporation, including those
duties customarily performed by persons holding such office, and shall perform
such other duties as, from time to time, may be assigned to him or her by the
Board of Directors, the Chief Executive Officer or the President.
4.10 ASSISTANT SECRETARY.
The Assistant Secretary, or if there be more than one, the Assistant
Secretaries in the order determined by the Board of Directors (or if there shall
have been no such determination, then in the order of their election), shall, in
the absence of the Secretary or in the event of the Secretary's inability or
refusal to act or when requested by the Chairman of the Board, the Chief
Executive Officer, the President, the Chief Financial Officer, the Chief
Operating Officer, any Executive Vice President or the Secretary, perform the
duties and exercise the powers of the Secretary, and, in general, shall perform
all duties as are incident to the office of an assistant secretary of a
corporation, including those duties customarily performed by persons holding
such office, and shall perform such other duties as, from time to time, may be
assigned to him or her or them by the Board of Directors, the Chief Executive
Officer, the President, the Chief Financial Officer, the Chief Operating
Officer, any Executive Vice President or the Secretary. An Assistant Secretary
may or may not be an officer, as determined by the Board of Directors.
4.11 CONTROLLER.
The Controller shall have responsibility for the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation, and shall
deposit all moneys and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the Board of
Directors, the Chief Executive Officer or the President. The Controller shall
also render to the Chief Executive Officer, the President, the Chief Financial
Officer and the Chief Operating Officer, upon request, and to the Board of
Directors, at its regular meetings, or when the Board of Directors so requires,
an account of all financial transactions and of the financial condition of the
Corporation and, in general, shall perform such duties as are incident to the
office of a controller of a corporation, including those customarily performed
by persons occupying such office, and shall perform all other duties as, from
time to time, may be assigned to him or her by the Board of Directors, the Chief
-14-
<PAGE>
Executive Officer, the President, the Chief Financial Officer, the Chief
Operating Officer or any Executive Vice President.
4.12 ASSISTANT CONTROLLER.
The Assistant Controller, or if there shall be more than one, the
Assistant Controllers in the order determined by the Board of Directors (or if
there shall have been no such determination, then in the order of their
election), shall, in the absence of the Controller or in the event of the
Controller's inability or refusal to act, perform the duties and exercise the
powers of the Controller, and, in general, shall perform all duties as are
incident to the office of an assistant controller of a corporation, including
those duties customarily performed by persons occupying such office, and shall
perform such other duties as, from time to time, may be assigned to him or her
or them by the Board of Directors, the Chief Executive Officer, the President,
the Chief Financial Officer, the Chief Operating Officer, any Executive Vice
President or the Controller. An Assistant Controller may or may not be an
officer, as determined by the Board of Directors.
4.13 TERM OF OFFICE.
The officers of the Corporation shall hold office until their
successors are chosen and qualified or until their earlier death, resignation or
removal. Any officer may resign at any time upon written notice to the
Corporation. Any officer elected or appointed by the Board of Directors may be
removed at any time, with or without cause, by the affirmative vote of a
majority of the entire Board of Directors.
4.14 COMPENSATION.
The compensation of officers of the Corporation shall be fixed by the
Board of Directors or by any officer(s) authorized by the Board of Directors to
prescribe the compensation of such other officers.
4.15 FIDELITY BONDS.
The Corporation may secure the fidelity of any or all of its officers
or agents by bond or otherwise.
-15-
<PAGE>
ARTICLE 5
CAPITAL STOCK
5.1 CERTIFICATES OF STOCK; UNCERTIFICATED SHARES.
The shares of the Corporation shall be represented by certificates,
provided that the Board of Directors may provide by resolution that some or all
of any or all classes or series of the Corporation's capital stock shall be
uncertificated shares. Any such resolution shall not apply to shares
represented by a certificate until such certificate is surrendered to the
Corporation. Notwithstanding the adoption of such a resolution by the Board of
Directors, every holder of capital stock represented by certificates, and upon
request every holder of uncertificated shares, shall be entitled to have a
certificate (representing the number of shares registered in certificate form)
signed in the name of the Corporation by the Chairman of the Board, the Chief
Executive Officer, the President and the Secretary of the Corporation. Any or
all the signatures on the certificate may be by facsimile. In case any officer,
transfer agent or registrar whose signature or facsimile signature appears on a
certificate shall have ceased to be such officer, transfer agent or registrar
before such certificate is issued, it may be issued by the Corporation with the
same effect as if such person were such officer, transfer agent or registrar at
the date of issue.
5.2 LOST CERTIFICATES.
The Board of Directors, the Chairman of the Board, the Chief Executive
Officer, the President or the Secretary may direct a new certificate of stock to
be issued in place of any certificate theretofore issued by the Corporation and
alleged to have been lost, stolen or destroyed, upon the making of an affidavit
of that fact by the person claiming that the certificate of stock has been lost,
stolen or destroyed. When authorizing such issuance of a new certificate, the
Board of Directors or any such officer may, as a condition precedent to the
issuance thereof, require the owner of such lost, stolen or destroyed
certificate or certificates, or such owner's legal representative, to advertise
the same in such manner as the Board of Directors or such officer shall require
and/or to give the Corporation a bond or indemnity, in such sum or on such terms
and conditions as the Board of Directors or such officer may direct, as
indemnity against any claim that may be made against the Corporation on account
of the certificate alleged to have been lost, stolen or destroyed or on account
of the issuance of such new certificate or uncertificated shares.
-16-
<PAGE>
5.3 RECORD DATE.
5.3.1 Actions by Stockholders. In order that the Corporation may
determine the stockholders entitled to notice of or to vote at any meeting of
stockholders, the Board of Directors may fix a record date, which record date
shall not precede the date upon which the resolution fixing the record date is
adopted by the Board of Directors, and which record date shall not be more than
sixty days nor less than ten days before the date of such meeting. If no record
date is fixed by the Board of Directors, the record date for determining
stockholders entitled to notice of or to vote at a meeting of stockholders shall
be the close of business on the day next preceding the day on which notice is
given, or, if notice is waived, at the close of business on the day next
preceding the day on which the meeting is held. A determination of stockholders
of record entitled to notice of or to vote at a meeting of stockholders shall
apply to any adjournment of the meeting, unless the Board of Directors fixes a
new record date for the adjourned meeting.
In order that the Corporation may determine the stockholders
entitled to consent to corporate action in writing without a meeting, the Board
of Directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the Board of
Directors, and which record date shall not be more than ten days after the date
upon which the resolution fixing the record date is adopted by the Board of
Directors. If no record date has been fixed by the Board of Directors, the
record date for determining stockholders entitled to consent to corporate action
in writing without a meeting, when no prior action by the Board of Directors is
required by the Delaware General Corporation Law, shall be the first date on
which a signed written consent setting forth the action taken or proposed to be
taken is delivered to the Corporation in the manner prescribed by Section 213(b)
of the Delaware General Corporation Law. If no record date has been fixed by the
Board of Directors and prior action by the Board of Directors is required by the
Delaware General Corporation Law, the record date for determining stockholders
entitled to consent to corporate action in writing without a meeting shall be at
the close of business on the day on which the Board of Directors adopts the
resolution taking such prior action.
5.3.2 Payments. In order that the Corporation may determine the
stockholders entitled to receive payment of any dividend or other distribution
or allotment of any rights or the stockholders entitled to exercise any rights
in respect of any change, conversion or exchange of capital stock, or for the
purpose of any other lawful action, the Board of Directors may fix a record
date, which record date shall not precede the date upon which the resolution
fixing the record date is adopted, and which record date shall be not more than
sixty days prior to such payment,
-17-
<PAGE>
distribution, allotment or other action. If no record date is fixed, the record
date for determining stockholders for any such purpose shall be at the close of
business on the day on which the Board of Directors adopts the resolution
relating thereto.
5.4 STOCKHOLDERS OF RECORD.
The Corporation shall be entitled to recognize the exclusive right of
a person registered on its books as the owner of shares to receive dividends, to
receive notifications, to vote as such owner, and to exercise all the rights and
powers of an owner. The Corporation shall not be bound to recognize any
equitable or other claim to or interest in such share or shares on the part of
any other person, whether or not it shall have express or other notice thereof,
except as otherwise may be provided by the Delaware General Corporation Law.
ARTICLE 6
INDEMNIFICATION
6.1 AUTHORIZATION OF INDEMNIFICATION.
Each person who was or is a party or is threatened to be made a party
to or is involved in any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative and whether
by or in the right of the Corporation or otherwise (a "proceeding"), by reason
of the fact that he or she, or a person of whom he or he is the legal
representative, is or was a director or officer of the Corporation or is or was
serving at the request of the Corporation as a director, officer, employee,
partner (limited or general) or agent of another corporation or of a
partnership, joint venture, limited liability company, trust or other
enterprise, including service with respect to an employee benefit plan, shall be
(and shall be deemed to have a contractual right to be) indemnified and held
harmless by the Corporation (and any successor to the Corporation by merger or
otherwise) to the fullest extent authorized by, and subject to the conditions
and (except as provided herein) procedures set forth in, the Delaware General
Corporation Law, as the same exists or may hereafter be amended (but any such
amendment shall not be deemed to limit or prohibit the rights of indemnification
hereunder for past acts or omissions of any such person insofar as such
amendment limits or prohibits the indemnification rights that said law permitted
the Corporation to provide prior to such amendment), against all expenses,
liabilities and losses (including attorneys' fees, judgments, fines, ERISA taxes
or penalties and amounts paid or to be paid in settlement) reasonably incurred
or suffered by such person in connection therewith; provided, however, that the
Corporation shall indemnify any such person seeking indemnification in
connection with a proceeding (or part thereof) initiated by such person (except
for a suit or action pursuant to Section 6.2 hereof) only if such
-18-
<PAGE>
proceeding (or part thereof) was authorized by the Board of Directors of the
Corporation. Persons who are not directors or officers of the Corporation may
be similarly indemnified in respect of such service to the extent authorized at
any time by the Board of Directors of the Corporation. The indemnification
conferred in this Section 6.1 also shall include the right to be paid by the
Corporation (and such successor) the expenses (including attorneys' fees)
incurred in the defense of or other involvement in any such proceeding in
advance of its final disposition; provided, however, that, if and to the extent
the Delaware General Corporation Law requires, the payment of such expenses
(including attorneys' fees) incurred by a director or officer in advance of the
final disposition of a proceeding shall be made only upon delivery to the
Corporation of an undertaking by or on behalf of such director or officer to
repay all amounts so paid in advance if it shall ultimately be determined that
such director or officer is not entitled to be indemnified under this Section
6.1 or otherwise; and provided further, that, such expenses incurred by other
employees and agents may be so paid in advance upon such terms and conditions,
if any, as the Board of Directors deems appropriate.
6.2 RIGHT OF CLAIMANT TO BRING ACTION AGAINST THE CORPORATION.
If a claim under Section 6.1 hereof is not paid in full by the
Corporation within sixty days after a written claim has been received by the
Corporation, the claimant may at any time thereafter bring an action against the
Corporation to recover the unpaid amount of the claim and, if successful in
whole or in part, the claimant shall be entitled to be paid also the expense of
prosecuting such action. It shall be a defense to any such action (other than
an action brought to enforce a claim for expenses incurred in connection with
any proceeding in advance of its final disposition where the required
undertaking, if any is required, has been tendered to the Corporation) that the
claimant has not met the standards of conduct which make it permissible under
the Delaware General Corporation Law for the Corporation to indemnify the
claimant for the amount claimed or is otherwise not entitled to indemnification
under Section 6.1, but the burden of providing such defense shall be on the
Corporation. The failure of the Corporation (in the manner provided under the
Delaware General Corporation Law) to have made a determination prior to or after
the commencement of such action that indemnification of the claimant is proper
in the circumstances because he or she has met the applicable standard of
conduct set forth in the Delaware General Corporation Law shall not be a defense
to the action or create a presumption that the claimant has not met the
applicable standard of conduct. Unless otherwise specified in an agreement with
the claimant, an actual determination by the Corporation (in the manner provided
under the Delaware General Corporation Law) after the commencement of such
action that the claimant has not met such applicable standard of conduct shall
not be a defense to the
-19-
<PAGE>
action, but shall create a presumption that the claimant has not met the
applicable standard of conduct.
6.3 NON-EXCLUSIVITY.
The rights to indemnification and advance payment of expenses provided
by Section 6.1 hereof shall not be deemed exclusive of any other rights to which
those seeking indemnification and advance payment of expenses may be entitled
under any by-law, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his or her official capacity and as to action in
another capacity while holding such office.
6.4 SURVIVAL OF INDEMNIFICATION.
The indemnification and advance payment of expenses and rights thereto
provided by, or granted pursuant to, Section 6.1 hereof shall, unless otherwise
provided when authorized or ratified, continue as to a person who has ceased to
be a director, officer, employee, partner or agent and shall inure to the
benefit of the personal representatives, heirs, executors and administrators of
such person.
6.5 INSURANCE.
The Corporation shall have power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee, partner (limited or general) or agent of another
corporation or of a partnership, joint venture, limited liability company, trust
or other enterprise, against any liability asserted against such person or
incurred by such person in any such capacity, or arising out of such person's
status as such, and related expenses, whether or not the Corporation would have
the power to indemnify such person against such liability under the provisions
of the Delaware General Corporation Law.
ARTICLE 7
GENERAL PROVISIONS
7.1 INSPECTION OF BOOKS AND RECORDS.
Any stockholder, in person or by attorney or other agent, shall, upon
written demand under oath stating the purpose thereof, have the right during the
usual hours for business to inspect for any proper purpose the Corporation's
stock ledger, a list of its stockholders, and its other books and records, and
to make copies or extracts therefrom. A proper purpose shall mean a purpose
reasonably related to such person's interest as a stockholder. In every
instance where an attorney or other agent shall be the person
-20-
<PAGE>
who seeks the right to inspection, the demand under oath shall be accompanied by
a power of attorney or such other writing which authorizes the attorney or other
agent to so act on behalf of the stockholder. The demand under oath shall be
directed to the Corporation at its registered office or at its principal place
of business.
7.2 DIVIDENDS.
The Board of Directors may declare dividends upon the capital stock of
the Corporation, subject to the provisions of the Certificate of Incorporation
and the laws of the State of Delaware.
7.3 RESERVES.
The directors of the Corporation may set apart, out of the funds of
the Corporation available for dividends, a reserve or reserves for any proper
purpose and may abolish any such reserve.
7.4 EXECUTION OF INSTRUMENTS.
All checks, drafts or other orders for the payment of money, and
promissory notes of the Corporation shall be signed by such officer or officers
or such other person or persons as the Board of Directors may from time to time
designate.
7.5 FISCAL YEAR.
The fiscal year of the Corporation shall be fixed by resolution of the
Board of Directors.
7.6 SEAL.
The corporate seal may be used by causing it or a facsimile thereof to
be impressed or affixed or otherwise reproduced.
7.7 PRONOUNS.
As used herein, all pronouns and any variations thereof shall be
deemed to refer to the masculine, feminine, neuter, singular or plural, as the
identity of the person or entity may require.
7.8 AMENDMENTS.
The Board of Directors or the stockholders may from time to time
adopt, amend or repeal these By-laws of the Corporation. Such action by the
Board of Directors shall require the affirmative vote of at least two-thirds of
the directors then in office at a duly constituted meeting of the Board of
Directors called for such purpose. Such action by the stockholders shall
require the
-21-
<PAGE>
affirmative vote of the holders of at least two-thirds of the outstanding shares
of capital stock of the Corporation entitled to vote thereon at a duly
constituted meeting of stockholders called for such purpose.
-22-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 1,000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,000
<PP&E> 3,540,000<F1>
<DEPRECIATION> 0
<TOTAL-ASSETS> 3,541,000
<CURRENT-LIABILITIES> 3,540,000<F2>
<BONDS> 0
0
0
<COMMON> 1
<OTHER-SE> 999<F3>
<TOTAL-LIABILITY-AND-EQUITY> 3,541,000
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1> Amount consists of $3,540,000 in deferred costs related to initial public
offering
<F2> Amount consists of $3,540,000 due to an affiliate of Brookdale Living
Communities, Inc.
<F3> Amount represents additional paid-in capital on common stock
</FN>
</TABLE>
