<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 15, 1997
REGISTRATION NO. 333-41191
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- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
AMENDMENT
NO. 4
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
BROOKDALE LIVING COMMUNITIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
---------------
DELAWARE 8361 36-4103821
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NUMBER)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
---------------
77 WEST WACKER DRIVE, SUITE 4800
CHICAGO, ILLINOIS 60601
(312) 977-3700
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
---------------
MARK J. SCHULTE
PRESIDENT AND CHIEF EXECUTIVE OFFICER
BROOKDALE LIVING COMMUNITIES, INC.
77 WEST WACKER DRIVE, SUITE 4800
CHICAGO, ILLINOIS 60601
(312) 977-3700
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPIES TO:
WAYNE D. BOBERG, ESQ. J. VAUGHAN CURTIS, ESQ.
LOREN A. WEIL, ESQ. KIMBERLY A. KNIGHT, ESQ.
WINSTON & STRAWN ALSTON & BIRD LLP
35 WEST WACKER DRIVE 1201 WEST PEACHTREE STREET
CHICAGO, ILLINOIS 60601 ATLANTA, GEORGIA 30309
(312) 558-5600 (404) 881-7000
---------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: As soon as practicable after the effective date of this Registration
Statement.
---------------
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
---------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
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<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the various costs and expenses in connection
with the issuance and distribution of the securities being registered hereby,
other than underwriting discounts and commissions. The Company will bear all
of such expenses. All amounts are estimated except for the Securities and
Exchange Commission ("SEC") registration fee, the National Association of
Securities Dealers, Inc. ("NASD") filing fee and the Nasdaq National Market
listing fee.
<TABLE>
<S> <C>
SEC registration fee............................................ $ 17,808
NASD filing fee................................................. 6,377
Nasdaq National Market listing fee.............................. 17,500
Blue sky fees and expenses (including attorneys' fees and
expenses)...................................................... 5,000
Accounting fees and expenses.................................... 175,000
Legal fees and expenses......................................... 175,000
Printing and engraving expenses................................. 200,000
Transfer agent and registrar's fees............................. 500
Miscellaneous................................................... 2,815
--------
Total....................................................... $600,000
========
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Under Section 145 of the General Corporation Law of the State of Delaware
("Section 145"), a corporation may indemnify its directors, officers,
employees and agents and its former directors, officers, employees and agents
and those who serve, at the corporation's request, in such capacities with
another enterprise, against expenses (including attorneys' fees), as well as
judgments, fines and settlements in non-derivative lawsuits, actually and
reasonably incurred in connection with the defense of any action, suit or
proceeding in which they or any of them were or are made parties or are
threatened to be made parties by reason of their serving or having served in
such capacity. Section 145 provides, however, that such person must have acted
in good faith and in a manner he or she reasonably believed to be in (or not
opposed to) the best interests of the corporation, and, in the case of a
criminal action, such person must have had no reasonable cause to believe his
or her conduct was unlawful. In addition, Section 145 does not permit
indemnification in an action or suit by or in the right of the corporation,
where such person has been adjudged liable to the corporation, unless, and
only to the extent that, a court determines that such person fairly and
reasonably is entitled to indemnity for expenses the court deems proper in
light of liability adjudication. Indemnity is mandatory to the extent a claim,
issue or matter has been successfully defended.
The Company's Amended and Restated By-laws (the "By-laws") provide for
mandatory indemnification of directors and officers generally to the same
extent authorized by Section 145. Under the By-laws, the Company shall advance
expenses incurred by an officer or director in defending any such action if
the director or officer undertakes to repay such amount if it is determined
that he or she is not entitled to indemnification.
The Company maintains directors' and officers' liability insurance.
The Company has also entered into indemnification agreements with each of
the Company's directors and certain of its officers. The indemnification
agreements require, among other things, that the Company indemnify such
directors and officers to the fullest extent permitted by law, and advance to
such directors and officers all related expenses, subject to reimbursement if
it is subsequently determined that indemnification is not permitted. The
Company also must indemnify and advance all expenses incurred by such
directors and officers seeking to
II-1
<PAGE>
enforce their rights under the indemnification agreements and cover such
directors and officers under the Company's directors' and officers' liability
insurance.
The Company's Restated Certificate of Incorporation provides that the
Company's directors will not be personally liable to the Company or its
stockholders for monetary damages resulting from breaches of their fiduciary
duty as directors, except (a) for any breach of the directors' duty of loyalty
to the Company 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 General Corporation Law of the State of Delaware,
which makes directors liable for unlawful payments of dividends or unlawful
stock repurchases or redemptions, or (d) for transactions from which directors
derive improper personal benefit.
The Underwriting Agreement provides for indemnification by the Underwriters
of the directors, officers and controlling persons of the Company against
certain liabilities, including liabilities under the Securities Act of 1933,
as amended (the "Securities Act"), under certain circumstances.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
The following sets forth certain information as to all securities sold by
the Company within the last three years that were not registered under the
Securities Act. As to all such transactions, an exemption is claimed under
Section 4(2) of the Securities Act.
On September 4, 1996, the Company issued 100 shares of Common Stock to
Michael W. Reschke for $10.00 per share, or an aggregate purchase price of
$1,000. This Common Stock was purchased solely for investment purposes to
facilitate the organization of the Company. On May 7, 1997, upon completion of
the IPO, all of the shares so acquired by Mr. Reschke were redeemed by the
Company for an aggregate redemption price of $1,000.
On May 7, 1997, simultaneously with the completion of the IPO, the Company
issued 2,157,500 shares of Common Stock to PGI in exchange for all of the
capital stock of BLC, its interests in the Heritage and the Devonshire
facilities and the operations relating to its senior and assisted living
division and 342,500 shares of Common Stock to Mark J. Schulte in exchange for
his interests in PGI's senior and assisted living division.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
1.1 Form of Underwriting Agreement
3.1 Restated Certificate of Incorporation of the Company, as filed
with the Securities and Exchange Commission on June 16, 1997
as Exhibit 3.1 to the Company's Form 10-Q (File No. 0-22253)
and incorporated herein by reference
3.2 Amended and Restated By-laws of the Company, as filed with the
Securities and Exchange Commission on June 16, 1997 as Exhibit
3.2 to the Company's Form 10-Q (File No. 0-22253) and incorpo-
rated herein by reference
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 10.14 to the Company's Registration State-
ment on Form S-1 (Registration No. 333-12259) and incorporated
herein by reference
5.1 Opinion of Winston & Strawn regarding legality of shares being
registered
10.1 Formation Agreement dated as of May 7, 1997 by and among the
Company, PGI 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 (File No. 0-22253) and incorporated
herein by reference
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
10.2 Space Sharing Agreement dated as of May 7, 1997 by and between
the Company and PGI, as filed with the Securities and Exchange
Commission on August 14, 1997 as Exhibit 10.2 to the Company's
Form 10-Q (File No. 0-22253) and incorporated herein by refer-
ence
10.3 Registration Rights Agreement dated as of May 7, 1997 by and
between the Company and PGI, as filed with the Securities and
Exchange Commission on August 14, 1997 as Exhibit 10.3 to the
Company's Form 10-Q (File No. 0-22253) and incorporated herein
by reference
10.4 Voting Agreement dated as of May 7, 1997 by and among the Com-
pany and PGI, as filed with the Securities and Exchange Com-
mission on August 14, 1997 as Exhibit 10.4 to the Company's
Form 10-Q (File No. 0-22253) and incorporated herein by refer-
ence
10.5 Non-Compete Agreement dated as of May 7, 1997 by and among the
Company, PGI and Michael W. Reschke, as filed with the Securi-
ties and Exchange Commission on August 14, 1997 as Exhibit
10.5 to the Company's Form 10-Q (File No. 0-22253) and incor-
porated herein by reference
10.6 Subscription Agreement dated September 4, 1996 by and between
the Company and Michael W. Reschke, as filed with the Securi-
ties and Exchange Commission on September 18, 1996 as Exhibit
10.6 to the Company's Registration Statement on Form S-1 (File
No.
333-12259) and incorporated herein by reference
10.7 Employment Agreement dated as of May 7, 1997 by and between
the Company and Michael W. Reschke, as filed with the Securi-
ties and Exchange Commission on August 14, 1997 as Exhibit
10.6 to the Company's Form 10-Q (File No. 0-22253) and incor-
porated herein by reference
10.8 Employment Agreement dated as of May 7, 1997 by and between
the Company and Mark J. Schulte, as filed with the Securities
and Exchange Commission on August 14, 1997 as Exhibit 10.7 to
the Company's Form 10-Q (File No. 0-22253) and incorporated
herein by reference
10.9 Employment Agreement dated as of May 7, 1997 by and between
the Company and Darryl W. Copeland, Jr., as filed with the Se-
curities and Exchange Commission on August 14, 1997 as Exhibit
10.8 to the Company's Form 10-Q (File No. 0-22253) and incor-
porated herein by reference
10.10 Employment Agreement dated as of May 7, 1997 by and between
the Company and Matthew F. Whitlock, as filed with the
Securities and Exchange Commission on August 14, 1997 as
Exhibit 10.9 to the Company's Form 10-Q (File No. 0-22253) and
incorporated herein by reference
10.11 Employment Agreement dated as of May 7, 1997 by and between
the Company and Mark J. Iuppenlatz, as filed with the Securi-
ties and Exchange Commission on August 14, 1997 as Exhibit
10.10 to the Company's Form 10-Q (File No. 0-22253) and incor-
porated herein by reference
10.12 Management Agreement dated as of May 7, 1997 by and between
Brookdale Living Communities of Texas, Inc. and The Island on
Lake Travis, Ltd., as filed with the Securities and Exchange
Commission on August 14, 1997 as Exhibit 10.11 to the
Company's Form 10-Q (File No. 0-22253) and incorporated herein
by reference
10.13 Submanagement Agreement dated as of May 7, 1997 by and between
Brookdale Living Communities of Minnesota, Inc. and Kenwood
Associates Limited Partnership, as filed with the Securities
and Exchange Commission on August 14, 1997 as Exhibit 10.12 to
the Company's Form 10-Q (File No. 0-22253) and incorporated
herein by reference
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
10.14 Brookdale Living Communities, Inc. Stock Incentive Plan
10.15 Form of Indemnification Agreement, as filed with the Securi-
ties and Exchange Commission on March 17, 1997 as Exhibit
10.15 to Amendment No. 4 to Registration Statement on Form S-1
(Registration No. 333-12259) and incorporated herein by refer-
ence
10.16 Amended and Restated Partnership Agreement of River Oaks Part-
ners dated as of May 7, 1997 by and between Brookdale Hold-
ings, Inc. and the Company, as filed with the Securities and
Exchange Commission on August 14, 1997 as Exhibit 10.14 to the
Company's Form 10-Q (File No. 0-22253) and incorporated herein
by reference
10.17 Amended and Restated Agreement of Limited Partnership of The
Ponds of Pembroke Limited Partnership dated as of May 7, 1997
by and between Brookdale Holdings, Inc. and the Company, as
filed with the Securities and Exchange Commission on August
14, 1997 as Exhibit 10.15 to the Company's Form 10-Q (File No.
0-22253) and incorporated herein by reference
10.18 Real Estate Purchase Agreement dated as of September 16, 1996
by and between PGI and Gables at Brighton Associates, as filed
with the Securities and Exchange Commission on September 18,
1996 as Exhibit 10.21 to the Company's Registration Statement
on Form S-1 (Registration No. 333-12259) and incorporated
herein by reference
10.19 Real Estate Purchase Agreement dated as of September 16, 1996
by and between PGI and Edina Park Plaza Associates Limited
Partnership, as filed with the Securities and Exchange Commis-
sion on September 18, 1996 as Exhibit 10.22 to the Company's
Registration Statement on Form S-1 (Registration No. 333-
12259) and incorporated herein by reference
10.20 Real Estate Purchase Agreement dated as of September 16, 1996
by and between PGI and East Mesa Senior Living Limited Part-
nership, as filed with the Securities and Exchange Commission
on September 18, 1996 as Exhibit 10.23 to the Company's Regis-
tration Statement on Form S-1 (Registration No. 333-12259) and
incorporated herein by reference
10.21 Real Estate Purchase Agreement dated as of September 16, 1996
by and between PGI and Hawthorn Lakes Associates, as filed
with the Securities and Exchange Commission on September 18,
1996 as Exhibit 10.24 to the Company's Registration Statement
on Form S-1 (Registration No. 333-12259) and incorporated
herein by reference
10.22 Letter Agreement dated September 17, 1996 by and among PGI,
KILICO Realty Corporation and Kemper Investors Life Insurance
Company, as filed with the Securities and Exchange Commission
on September 18, 1996 as Exhibit 10.25 to the Company's Regis-
tration Statement on Form S-1 (Registration No. 333-12259) and
incorporated herein by reference
10.23 First Amendment dated December 20, 1996 to Letter Agreement
dated September 17, 1996 by and among PGI, KILICO Realty Cor-
poration and Kemper Investors Life Insurance Company, as filed
with the Securities and Exchange Commission on March 4, 1997
as Exhibit 10.24 to Amendment No. 3 to the Company's Registra-
tion Statement on Form S-1 (Registration No. 333-12259) and
incorporated herein by reference
10.24 Second Amendment dated April 3, 1997 to Letter Agreement dated
September 17, 1996 by and among PGI, KILICO Realty Corporation
and Kemper Investors Life Insurance Company, as filed with the
Securities and Exchange Commission on April 8, 1997 as Exhibit
10.35 to Amendment No. 6 to the Company's Registration State-
ment on Form S-1 (Registration No. 333-12259) and incorporated
herein by reference
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
10.25 Third Amendment dated April 9, 1997 to Letter Agreement dated
September 17, 1996 by and among PGI, KILICO Realty Corporation
and Kemper Investors Life Insurance Company, as filed with the
Securities and Exchange Commission on April 16, 1997 as Ex-
hibit 10.36 to Amendment No. 6 to the Company's Registration
Statement on Form S-1 (Registration No. 333-12259) and incor-
porated herein by reference
10.26 Purchase and Sale Agreement dated as of February 20, 1997 by
and between the Company and Park Place General Partnership, as
filed with the Securities and Exchange Commission on March 4,
1997 as Exhibit 10.25 to Amendment No. 3 to the Company's Reg-
istration Statement on Form S-1 (Registration No. 333-12259)
and incorporated herein by reference
10.27 Purchase and Sale Agreement dated as of February 20, 1997 by
and between the Company and Park Place II, L.L.C., as filed
with the Securities and Exchange Commission on March 4, 1997
as Exhibit 10.26 to Amendment No. 3 to the Company's Registra-
tion Statement on Form S-1 (Registration No. 333-12259) and
incorporated herein by reference
10.28 Master Lease Agreement dated as of December 27, 1996 by and
between Health and Retirement Properties Trust, as landlord,
and BLC Property, Inc., as tenant, as filed with the Securi-
ties and Exchange Commission on March 4, 1997 as Exhibit 10.27
to Amendment No. 3 to the Company's Registration Statement on
Form S-1 (Registration No. 333-12259) and incorporated herein
by reference
10.29 Sublease Agreement dated as of December 27, 1996 by and be-
tween BLC Property, Inc., as sublandlord, and Brookdale Living
Communities of Arizona, Inc., as subtenant, as filed with the
Securities and Exchange Commission on March 4, 1997 as Exhibit
10.28 to Amendment No. 3 to the Company's Registration State-
ment on Form S-1 (Registration No. 333-12259) and incorporated
herein by reference
10.30 Sublease Agreement dated as of December 27, 1996 by and be-
tween BLC Property, Inc., as sublandlord, and Brookdale Living
Communities of Arizona, Inc., as subtenant, as filed with the
Securities and Exchange Commission on March 4, 1997 as Exhibit
10.29 to Amendment No. 3 to the Company's Registration State-
ment on Form S-1 (Registration No. 333-12259) and incorporated
herein by reference
10.31 Sublease Agreement dated as of December 27, 1996 by and be-
tween BLC Property, Inc., as sublandlord, and Brookdale Living
Communities of Illinois, Inc., as subtenant, as filed with the
Securities and Exchange Commission on March 4, 1997 as Exhibit
10.31 to Amendment No. 3 to the Company's Registration State-
ment on Form S-1 (Registration No. 333-12259) and incorporated
herein by reference
10.32 Real Estate Purchase Agreement dated as of February 24, 1997
by and between PGI and Firstar DuPage Bank Trust No. 3612
dated December 4, 1989, Firstar DuPage Bank Trust No. 3625
dated February 22, 1990, West Suburban Bank Trust No. 1975
dated December 13, 1978 and the direct and indirect beneficia-
ries thereof, as filed with the Securities and Exchange Com-
mission on March 4, 1997 as Exhibit 10.32 to Amendment No. 3
to the Company's Registration Statement on Form S-1 (Registra-
tion No. 333-12259) and incorporated herein by reference
10.33 Real Estate Purchase Agreement dated as of February 14, 1997
by and between PGI and AC Properties, L.L.C., as filed with
the Securities and Exchange Commission on March 4, 1997 as Ex-
hibit 10.33 to Amendment No. 3 to the Company's Registration
Statement on Form S-1 (Registration No. 333-12259) and incor-
porated herein by reference
10.34 Contract for Sale dated February 21, 1997 by and between PGI
and VG Office Partnership '95, Ltd. as filed with the Securi-
ties and Exchange Commission on March 4, 1997 as Exhibit 10.34
to Amendment No. 3 to the Company's Registration Statement on
Form S-1 (Registration No. 333-12259) and incorporated herein
by reference
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
10.35 First Amendment dated as of February 21, 1997 to Contract for
Sale dated February 21, 1997 by and between PGI and VG Office
Partnership '95, Ltd., as filed with the Securities and Exchange
Commission on March 4, 1997 as Exhibit 10.35 to Amendment No. 3
to the Company's Registration Statement on Form S-1 (Registra-
tion No. 333-12259) and incorporated herein by reference
10.36 Purchase and Sale Agreement dated as of June 11, 1997 by and be-
tween Gables at Farmington Associates and the Company, as filed
with the Securities and Exchange Commission on August 14, 1997
as Exhibit 10.34 to the Company's Form 10-Q (File No. 0-22253)
and incorporated herein by reference
10.37 First Amendment to Purchase and Sale Agreement dated as of July
3, 1997 by and between Gables at Farmington Associates and the
Company, as filed with the Securities and Exchange Commission on
August 14, 1997 as Exhibit 10.35 to the Company's Form 10-Q
(File No. 0-22253) and incorporated herein by reference
10.38 Second Amendment to Purchase and Sale Agreement dated as of July
16, 1997 by and between Gables at Farmington Associates and the
Company, as filed with the Securities and Exchange Commission on
August 14, 1997 as Exhibit 10.36 to the Company's Form 10-Q
(File No. 0-22253) and incorporated herein by reference
10.39 Third Amendment to Purchase and Sale Agreement dated as of July
23, 1997 by and between Gables at Farmington Associates and the
Company, as filed with the Securities and Exchange Commission on
August 14, 1997 as Exhibit 10.37 to the Company's Form 10-Q
(File No. 0-22253) and incorporated herein by reference
10.40 Fourth Amendment to Purchase and Sale Agreement dated as of July
30, 1997 by and between Gables at Farmington Associates and the
Company, as filed with the Securities and Exchange Commission on
August 14, 1997 as Exhibit 10.38 to the Company's Form 10-Q
(File No. 0-22253) and incorporated herein by reference
10.41 Fifth Amendment to Purchase and Sale Agreement dated as of Au-
gust 5, 1997 by and between Gables at Farmington Associates and
the Company, as filed with the Securities and Exchange Commis-
sion on August 14, 1997 as Exhibit 10.39 to the Company's Form
10-Q (File No. 0-22253) and incorporated herein by reference
10.42 Sixth Amendment to Purchase and Sale Agreement dated as of Au-
gust 8, 1997 by and between Gables at Farmington Associates and
the Company, as filed with the Securities and Exchange Commis-
sion on August 14, 1997 as Exhibit 10.40 to the Company's Form
10-Q (File No. 0-22253) and incorporated herein by reference
10.43 First Amendment to Master Lease Agreement and Incidental Docu-
ments dated as of May 7, 1997 by and among Health and Retirement
Properties Trust, BLC Property, Inc., Brookdale Living Communi-
ties of Washington, Inc., Brookdale Living Communities of Arizo-
na, Inc., Brookdale Living Communities of Illinois, Inc.,
Brookdale Living Communities of New York, Inc., the Company, The
Prime Group, Inc., Prime International, Inc., PGLP, Inc., Prime
Group Limited Partnership and Prime Group II, as filed with the
Securities and Exchange Commission on August 14, 1997 as Exhibit
10.41 to the Company's Form 10-Q (File No. 0-22253) and incorpo-
rated herein by reference
10.44 Stock Option and Deposit Agreement dated as of May 7, 1997 by
and between Darryl W. Copeland, Jr. and The Prime Group, Inc.,
as filed with the Securities and Exchange Commission on August
14, 1997 as Exhibit 10.42 to the Company's Form 10-Q (File No.
0-22253) and incorporated herein by reference
</TABLE>
II-6
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
10.45 Stock Purchase Agreement and Agreement Concerning Option Shares
dated as of May 7, 1997 by and among The Prime Group, Inc.,
Prime Group VI, L.P. and Darryl W. Copeland, Jr., as filed with
the Securities and Exchange Commission on August 14, 1997 as Ex-
hibit 10.43 to the Company's Form 10-Q (File No. 0-22253) and
incorporated herein by reference
10.46 Real Estate Purchase and Sale Agreement dated as of July 29,
1997 by and between the Company and The Classic of West Palm
Beach Limited Partnership, as filed with the Securities and Ex-
change Commission on November 14, 1997 as Exhibit 10.1 to the
Company's Form 10-Q (File No. 0-22253) and incorporated herein
by reference
10.47 Lease Agreement dated as of September 25, 1997 by and between
the Company and 77 West Wacker Limited Partnership, as filed
with the Securities and Exchange Commission on November 14, 1997
as Exhibit 10.2 to the Company's Form 10-Q (File No. 0-22253)
and incorporated herein by reference
10.48 Agreement for Purchase and Sale dated as of December 4, 1997 by
and between Lincoln Harbor Village, L.P. and the Company
10.49 Assignment and Assumption of Contract for Sale dated as of Octo-
ber 1, 1997 by and between the Company and Brookdale Living Com-
munities of Michigan, Inc.
10.50 Assignment and Assumption of Contract for Sale dated as of Sep-
tember 3, 1997 by and between the Company and BLC of Texas-II,
L.P.
10.51 Real Estate Purchase Agreement dated as of October 10, 1997 by
and between Anvil Investments, LLC and the Company
10.52 Real Estate Purchase and Sale Agreement dated as of October 1,
1997 between Brendenwood MRC Limited Partnership and the Company
10.53 First Amendment to Real Estate Purchase and Sale Agreement dated
as of November 22, 1997 by and between Brendenwood MRC Limited
Partnership and the Company
10.54 First Amendment to Real Estate Purchase and Sale Agreement dated
as of November 18, 1997 by and between The Classic at West Palm
Beach Limited Partnership and the Company
10.55 Loan Agreement dated as of October 22, 1997 by and between the
Company and LaSalle National Bank
10.56 First Amendment to Loan Agreement and Documents dated as of De-
cember 1, 1997
between the Company and LaSalle National Bank
10.57 Lease dated as of November 21, 1997 between Brookdale Living
Communities of Connecticut, Inc. and The Gables Business Trust
10.58 Second Amendment to Loan Agreement and Documents dated as of De-
cember 11, 1997 between the Company and LaSalle National Bank
21.1 Subsidiaries of the Company
23.1+ Consent of Ernst & Young LLP
23.2 Consent of Winston & Strawn (to be included in opinion filed as
Exhibit 5.1)
24.1+ Powers of attorney (included on signature page included in Part
II of the initial filing)
27.1+ Financial Data Schedule
</TABLE>
- ---------------------
+Previously filed.
II-7
<PAGE>
(b) FINANCIAL STATEMENT SCHEDULES.
Financial Statement Schedules have been omitted because the information
required to be set forth therein is not applicable or is shown in the
financial statements or notes thereto.
ITEM 17. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the Company
pursuant to the foregoing provisions, or otherwise, the Company has been
advised that in the opinion of the Commission such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Company of expenses incurred or
paid by a director, officer or controlling person of the Company in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, the Company will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.
The undersigned Company hereby further undertakes that:
(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the Company pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-8
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE COMPANY HAS
DULY CAUSED THIS AMENDMENT TO REGISTRATION STATEMENT TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF CHICAGO,
STATE OF ILLINOIS, ON THE 15TH DAY OF DECEMBER, 1997.
Brookdale Living Communities, Inc.
/s/ Craig G. Walczyk
By___________________________________
Craig G. Walczyk
Vice President--Chief Financial
Officer
----------------
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW ON DECEMBER 15, 1997 BY THE
FOLLOWING PERSONS IN THE CAPACITIES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
Michael W. Reschke* Chairman of the Board, Director
___________________________________________
Michael W. Reschke
Mark J. Schulte* President and Chief Executive Officer
___________________________________________ (principal executive officer), Director
Mark J. Schulte
/s/ Craig G. Walczyk Vice President--Chief Financial Officer
___________________________________________ (principal financial officer)
Craig G. Walczyk
Sheryl A. Wolf* Controller (principal accounting officer)
___________________________________________
Sheryl A. Wolf
Darryl W. Copeland, Jr.* Executive Vice President, Director
___________________________________________
Darryl W. Copeland, Jr.
Wayne D. Boberg* Director
___________________________________________
Wayne D. Boberg
Bruce L. Gewertz* Director
___________________________________________
Bruce L. Gewertz
Darryl W. Hartley-Leonard* Director
___________________________________________
Darryl W. Hartley-Leonard
Daniel J. Hennessy* Director
___________________________________________
Daniel J. Hennessy
</TABLE>
/s/ Craig G. Walczyk
*By__________________________________
Craig G. Walczyk, Attorney-in-
Fact
II-9
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DOCUMENT DESCRIPTION NUMBER
------- -------------------- ------
<C> <S> <C>
1.1 Form of Underwriting Agreement
3.1 Restated Certificate of Incorporation of the Company, as
filed with the Securities and Exchange Commission on June
16, 1997 as Exhibit 3.1 to the Company's Form 10-Q (File
No. 0-22253) and incorporated herein by reference
3.2 Amended and Restated By-laws of the Company, as filed with
the Securities and Exchange Commission on June 16, 1997 as
Exhibit 3.2 to the Company's Form 10-Q (File No. 0-22253)
and incorporated herein by reference
4.1 Form of certificate representing Common Stock of the Compa-
ny, as filed with the Securities and Exchange Commission on
March 17, 1997 as Exhibit 10.14 to the Company's Registra-
tion Statement on Form S-1 (Registration No. 333-12259) and
incorporated herein by reference
5.1 Opinion of Winston & Strawn regarding legality of shares
being registered
10.1 Formation Agreement dated as of May 7, 1997 by and among
the Company, PGI and Mark J. Schulte, as filed with the Se-
curities and Exchange Commission on August 14, 1997 as Ex-
hibit 10.1 to the Company's Form 10-Q (File No. 0-22253)
and incorporated herein by reference
10.2 Space Sharing Agreement dated as of May 7, 1997 by and be-
tween the Company and PGI, as filed with the Securities and
Exchange Commission on August 14, 1997 as Exhibit 10.2 to
the Company's Form 10-Q (File No. 0-22253) and incorporated
herein by reference
10.3 Registration Rights Agreement dated as of May 7, 1997 by
and between the Company and PGI, as filed with the Securi-
ties and Exchange Commission on August 14, 1997 as Exhibit
10.3 to the Company's Form 10-Q (File No. 0-22253) and in-
corporated herein by reference
10.4 Voting Agreement dated as of May 7, 1997 by and among the
Company and PGI, as filed with the Securities and Exchange
Commission on August 14, 1997 as Exhibit 10.4 to the
Company's Form 10-Q (File No. 0-22253) and incorporated
herein by reference
10.5 Non-Compete Agreement dated as of May 7, 1997 by and among
the Company, PGI and Michael W. Reschke, as filed with the
Securities and Exchange Commission on August 14, 1997 as
Exhibit 10.5 to the Company's Form 10-Q (File No. 0-22253)
and incorporated herein by reference
10.6 Subscription Agreement dated September 4, 1996 by and be-
tween the Company and Michael W. Reschke, as filed with the
Securities and Exchange Commission on September 18, 1996 as
Exhibit 10.6 to the Company's Registration Statement on
Form S-1 (File No. 333-12259) and incorporated herein by
reference
10.7 Employment Agreement dated as of May 7, 1997 by and between
the Company and Michael W. Reschke, as filed with the Secu-
rities and Exchange Commission on August 14, 1997 as Ex-
hibit 10.6 to the Company's Form 10-Q (File No. 0-22253)
and incorporated herein by reference
10.8 Employment Agreement dated as of May 7, 1997 by and between
the Company and Mark J. Schulte, as filed with the Securi-
ties and Exchange Commission on August 14, 1997 as Exhibit
10.7 to the Company's Form 10-Q (File No. 0-22253) and in-
corporated herein by reference
10.9 Employment Agreement dated as of May 7, 1997 by and between
the Company and Darryl W. Copeland, Jr., as filed with the
Securities and Exchange Commission on August 14, 1997 as
Exhibit 10.8 to the Company's Form 10-Q (File No. 0-22253)
and incorporated herein by reference
</TABLE>
II-10
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DOCUMENT DESCRIPTION NUMBER
------- -------------------- ------
<C> <S> <C>
10.10 Employment Agreement dated as of May 7, 1997 by and between
the Company and Matthew F. Whitlock, as filed with the Se-
curities and Exchange Commission on August 14, 1997 as Ex-
hibit 10.9 to the Company's Form 10-Q (File No. 0-22253)
and incorporated herein by reference
10.11 Employment Agreement dated as of May 7, 1997 by and between
the Company and Mark J. Iuppenlatz, as filed with the Secu-
rities and Exchange Commission on August 14, 1997 as Ex-
hibit 10.10 to the Company's Form 10-Q (File No. 0-22253)
and incorporated herein by reference
10.12 Management Agreement dated as of May 7, 1997 by and between
Brookdale Living Communities of Texas, Inc. and The Island
on Lake Travis, Ltd., as filed with the Securities and Ex-
change Commission on August 14, 1997 as Exhibit 10.11 to
the Company's Form 10-Q (File No. 0-22253) and incorporated
herein by reference
10.13 Submanagement Agreement dated as of May 7, 1997 by and be-
tween Brookdale Living Communities of Minnesota, Inc. and
Kenwood Associates Limited Partnership, as filed with the
Securities and Exchange Commission on August 14, 1997 as
Exhibit 10.12 to the Company's Form 10-Q (File No. 0-22253)
and incorporated herein by reference
10.14 Brookdale Living Communities, Inc. Stock Incentive Plan
10.15 Form of Indemnification Agreement, as filed with the Secu-
rities and Exchange Commission on March 17, 1997 as Exhibit
10.15 to Amendment No. 4 to Registration Statement on Form
S-1 (Registration No. 333-12259) and incorporated herein by
reference
10.16 Amended and Restated Partnership Agreement of River Oaks
Partners dated as of May 7, 1997 by and between Brookdale
Holdings, Inc. and the Company, as filed with the Securi-
ties and Exchange Commission on August 14, 1997 as Exhibit
10.14 to the Company's Form 10-Q (File No. 0-22253) and in-
corporated herein by reference
10.17 Amended and Restated Agreement of Limited Partnership of
The Ponds of Pembroke Limited Partnership dated as of May
7, 1997 by and between Brookdale Holdings, Inc. and the
Company, as filed with the Securities and Exchange Commis-
sion on August 14, 1997 as Exhibit 10.15 to the Company's
Form 10-Q (File No. 0-22253) and incorporated herein by
reference
10.18 Real Estate Purchase Agreement dated as of September 16,
1996 by and between PGI and Gables at Brighton Associates,
as filed with the Securities and Exchange Commission on
September 18, 1996 as Exhibit 10.21 to the Company's Regis-
tration Statement on Form S-1 (Registration No. 333-12259)
and incorporated herein by reference
10.19 Real Estate Purchase Agreement dated as of September 16,
1996 by and between PGI and Edina Park Plaza Associates
Limited Partnership, as filed with the Securities and Ex-
change Commission on September 18, 1996 as Exhibit 10.22 to
the Company's Registration Statement on Form S-1 (Registra-
tion No. 333-12259) and incorporated herein by reference
10.20 Real Estate Purchase Agreement dated as of September 16,
1996 by and between PGI and East Mesa Senior Living Limited
Partnership, as filed with the Securities and Exchange Com-
mission on September 18, 1996 as Exhibit 10.23 to the
Company's Registration Statement on Form S-1 (Registration
No. 333-12259) and incorporated herein by reference
10.21 Real Estate Purchase Agreement dated as of September 16,
1996 by and between PGI and Hawthorn Lakes Associates, as
filed with the Securities and Exchange Commission on Sep-
tember 18, 1996 as Exhibit 10.24 to the Company's Registra-
tion Statement on Form S-1 (Registration No. 333-12259) and
incorporated herein by reference
</TABLE>
II-11
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DOCUMENT DESCRIPTION NUMBER
------- -------------------- ------
<C> <S> <C>
10.22 Letter Agreement dated September 17, 1996 by and among PGI,
KILICO Realty Corporation and Kemper Investors Life Insur-
ance Company, as filed with the Securities and Exchange
Commission on September 18, 1996 as Exhibit 10.25 to the
Company's Registration Statement on Form S-1 (Registration
No. 333-12259) and incorporated herein by reference
10.23 First Amendment dated December 20, 1996 to Letter Agreement
dated September 17, 1996 by and among PGI, KILICO Realty
Corporation and Kemper Investors Life Insurance Company, as
filed with the Securities and Exchange Commission on March
4, 1997 as Exhibit 10.24 to Amendment No. 3 to the
Company's Registration Statement on Form S-1 (Registration
No. 333-12259) and incorporated herein by reference
10.24 Second Amendment dated April 3, 1997 to Letter Agreement
dated September 17, 1996 by and among PGI, KILICO Realty
Corporation and Kemper Investors Life Insurance Company, as
filed with the Securities and Exchange Commission on April
8, 1997 as Exhibit 10.35 to Amendment No. 6 to the
Company's Registration Statement on Form S-1 (Registration
No. 333-12259) and incorporated herein by reference
10.25 Third Amendment dated April 9, 1997 to Letter Agreement
dated September 17, 1996 by and among PGI, KILICO Realty
Corporation and Kemper Investors Life Insurance Company, as
filed with the Securities and Exchange Commission on April
16, 1997 as Exhibit 10.36 to Amendment No. 6 to the
Company's Registration Statement on Form S-1 (Registration
No. 333-12259) and incorporated herein by reference
10.26 Purchase and Sale Agreement dated as of February 20, 1997
by and between the Company and Park Place General Partner-
ship, as filed with the Securities and Exchange Commission
on March 4, 1997 as Exhibit 10.25 to Amendment No. 3 to the
Company's Registration Statement on Form S-1 (Registration
No. 333-12259) and incorporated herein by reference
10.27 Purchase and Sale Agreement dated as of February 20, 1997
by and between the Company and Park Place II, L.L.C., as
filed with the Securities and Exchange Commission on March
4, 1997 as Exhibit 10.26 to Amendment No. 3 to the
Company's Registration Statement on Form S-1 (Registration
No. 333-12259) and incorporated herein by reference
10.28 Master Lease Agreement dated as of December 27, 1996 by and
between Health and Retirement Properties Trust, as land-
lord, and BLC Property, Inc., as tenant, as filed with the
Securities and Exchange Commission on March 4, 1997 as Ex-
hibit 10.27 to Amendment No. 3 to the Company's Registra-
tion Statement on Form S-1 (Registration No. 333-12259) and
incorporated herein by reference
10.29 Sublease Agreement dated as of December 27, 1996 by and be-
tween BLC Property, Inc., as sublandlord, and Brookdale
Living Communities of Arizona, Inc., as subtenant, as filed
with the Securities and Exchange Commission on March 4,
1997 as Exhibit 10.28 to Amendment No. 3 to the Company's
Registration Statement on Form S-1 (Registration No. 333-
12259) and incorporated herein by reference
10.30 Sublease Agreement dated as of December 27, 1996 by and be-
tween BLC Property, Inc., as sublandlord, and Brookdale
Living Communities of Arizona, Inc., as subtenant, as filed
with the Securities and Exchange Commission on March 4,
1997 as Exhibit 10.29 to Amendment No. 3 to the Company's
Registration Statement on Form S-1 (Registration No. 333-
12259) and incorporated herein by reference
10.31 Sublease Agreement dated as of December 27, 1996 by and be-
tween BLC Property, Inc., as sublandlord, and Brookdale
Living Communities of Illinois, Inc., as subtenant, as
filed with the Securities and Exchange Commission on March
4, 1997 as Exhibit 10.31 to Amendment No. 3 to the
Company's Registration Statement on Form S-1 (Registration
No. 333-12259) and incorporated herein by reference
</TABLE>
II-12
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DOCUMENT DESCRIPTION NUMBER
------- -------------------- ------
<C> <S> <C>
10.32 Real Estate Purchase Agreement dated as of February 24,
1997 by and between PGI and Firstar DuPage Bank Trust No.
3612 dated December 4, 1989, Firstar DuPage Bank Trust No.
3625 dated February 22, 1990, West Suburban Bank Trust No.
1975 dated December 13, 1978 and the direct and indirect
beneficiaries thereof, as filed with the Securities and Ex-
change Commission on March 4, 1997 as Exhibit 10.32 to
Amendment No. 3 to the Company's Registration Statement on
Form S-1 (Registration No. 333-12259) and incorporated
herein by reference
10.33 Real Estate Purchase Agreement dated as of February 14,
1997 by and between PGI and AC Properties, L.L.C., as filed
with the Securities and Exchange Commission on March 4,
1997 as Exhibit 10.33 to Amendment No. 3 to the Company's
Registration Statement on Form S-1 (Registration No. 333-
12259) and incorporated herein by reference
10.34 Contract for Sale dated February 21, 1997 by and between
PGI and VG Office Partnership '95, Ltd. as filed with the
Securities and Exchange Commission on March 4, 1997 as Ex-
hibit 10.34 to Amendment No. 3 to the Company's Registra-
tion Statement on Form S-1 (Registration No. 333-12259) and
incorporated herein by reference
10.35 First Amendment dated as of February 21, 1997 to Contract
for Sale dated February 21, 1997 by and between PGI and VG
Office Partnership '95, Ltd., as filed with the Securities
and Exchange Commission on March 4, 1997 as Exhibit 10.35
to Amendment No. 3 to the Company's Registration Statement
on Form S-1 (Registration No. 333-12259) and incorporated
herein by reference
10.36 Purchase and Sale Agreement dated as of June 11, 1997 by
and between Gables at Farmington Associates and the Compa-
ny, as filed with the Securities and Exchange Commission on
August 14, 1997 as Exhibit 10.34 to the Company's Form 10-Q
(File No. 0-22253) and incorporated herein by reference
10.37 First Amendment to Purchase and Sale Agreement dated as of
July 3, 1997 by and between Gables at Farmington Associates
and the Company, as filed with the Securities and Exchange
Commission on August 14, 1997 as Exhibit 10.35 to the
Company's Form 10-Q (File No. 0-22253) and incorporated
herein by reference
10.38 Second Amendment to Purchase and Sale Agreement dated as of
July 16, 1997 by and between Gables at Farmington Associ-
ates and the Company, as filed with the Securities and Ex-
change Commission on August 14, 1997 as Exhibit 10.36 to
the Company's Form 10-Q (File No. 0-22253) and incorporated
herein by reference
10.39 Third Amendment to Purchase and Sale Agreement dated as of
July 23, 1997 by and between Gables at Farmington Associ-
ates and the Company, as filed with the Securities and Ex-
change Commission on August 14, 1997 as Exhibit 10.37 to
the Company's Form 10-Q (File No. 0-22253) and incorporated
herein by reference
10.40 Fourth Amendment to Purchase and Sale Agreement dated as of
July 30, 1997 by and between Gables at Farmington Associ-
ates and the Company, as filed with the Securities and Ex-
change Commission on August 14, 1997 as Exhibit 10.38 to
the Company's Form 10-Q (File No. 0-22253) and incorporated
herein by reference
10.41 Fifth Amendment to Purchase and Sale Agreement dated as of
August 5, 1997 by and between Gables at Farmington Associ-
ates and the Company, as filed with the Securities and Ex-
change Commission on August 14, 1997 as Exhibit 10.39 to
the Company's Form 10-Q (File No. 0-22253) and incorporated
herein by reference
</TABLE>
II-13
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DOCUMENT DESCRIPTION NUMBER
------- -------------------- ------
<C> <S> <C>
10.42 Sixth Amendment to Purchase and Sale Agreement dated as of
August 8, 1997 by and between Gables at Farmington Associ-
ates and the Company, as filed with the Securities and Ex-
change Commission on August 14, 1997 as Exhibit 10.40 to
the Company's Form 10-Q (File No. 0-22253) and incorporated
herein by reference
10.43 First Amendment to Master Lease Agreement and Incidental
Documents dated as of May 7, 1997 by and among Health and
Retirement Properties Trust, BLC Property, Inc., Brookdale
Living Communities of Washington, Inc., Brookdale Living
Communities of Arizona, Inc., Brookdale Living Communities
of Illinois, Inc., Brookdale Living Communities of New
York, Inc., the Company, The Prime Group, Inc., Prime In-
ternational, Inc., PGLP, Inc., Prime Group Limited Partner-
ship and Prime Group II, as filed with the Securities and
Exchange Commission on August 14, 1997 as Exhibit 10.41 to
the Company's Form 10-Q (File No. 0-22253) and incorporated
herein by reference
10.44 Stock Option and Deposit Agreement dated as of May 7, 1997
by and between Darryl W. Copeland, Jr. and The Prime Group,
Inc., as filed with the Securities and Exchange Commission
on August 14, 1997 as Exhibit 10.42 to the Company's Form
10-Q (File No. 0-22253) and incorporated herein by refer-
ence
10.45 Stock Purchase Agreement and Agreement Concerning Option
Shares dated as of May 7, 1997 by and among The Prime
Group, Inc., Prime Group VI, L.P. and Darryl W. Copeland,
Jr., as filed with the Securities and Exchange Commission
on August 14, 1997 as Exhibit 10.43 to the Company's Form
10-Q (File No. 0-22253) and incorporated herein by refer-
ence
10.46 Real Estate Purchase and Sale Agreement dated as of July
29, 1997 by and between the Company and The Classic of West
Palm Beach Limited Partnership, as filed with the Securi-
ties and Exchange Commission on November 14, 1997 as Ex-
hibit 10.1 to the Company's Form 10-Q (File No. 0-22253)
and incorporated herein by reference
10.47 Lease Agreement dated as of September 25, 1997 by and be-
tween the Company and 77 West Wacker Limited Partnership,
as filed with the Securities and Exchange Commission on No-
vember 14, 1997 as Exhibit 10.2 to the Company's Form 10-Q
(File No. 0-22253) and incorporated herein by reference
10.48 Agreement for Purchase and Sale dated as of December 4,
1997 by and between Lincoln Harbor Village, L.P. and the
Company
10.49 Assignment and Assumption of Contract for Sale dated as of
October 1, 1997 by and between the Company and Brookdale
Living Communities of Michigan, Inc.
10.50 Assignment and Assumption of Contract for Sale dated as of
September 3, 1997 by and between the Company and BLC of
Texas-II, L.P.
10.51 Real Estate Purchase Agreement dated as of October 10, 1997
by and between Anvil Investments, LLC and the Company
10.52 Real Estate Purchase and Sale Agreement dated as of October
1, 1997 between Brendenwood MRC Limited Partnership and the
Company
10.53 First Amendment to Real Estate Purchase and Sale Agreement
dated as of November 22, 1997 by and between Brendenwood
MRC Limited Partnership and the Company
10.54 First Amendment to Real Estate Purchase and Sale Agreement
dated as of November 18, 1997 by and between The Classic at
West Palm Beach Limited Partnership and the Company
</TABLE>
II-14
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DOCUMENT DESCRIPTION NUMBER
------- -------------------- ------
<C> <S> <C>
10.55 Loan Agreement dated as of October 22, 1997 by and between
the Company and LaSalle National Bank
10.56 First Amendment to Loan Agreement and Documents dated as of
December 1, 1997
between the Company and LaSalle National Bank
10.57 Lease dated as of November 21, 1997 between Brookdale Liv-
ing Communities of
Connecticut, Inc. and The Gables Business Trust
10.58 Second Amendment to Loan Agreement and Documents dated as
of December 11, 1997 between the Company and LaSalle Na-
tional Bank
21.1 Subsidiaries of the Company
23.1+ Consent of Ernst & Young LLP
23.2 Consent of Winston & Strawn (included in opinion filed as
Exhibit 5.1)
24.1+ Powers of attorney (included on signature page included in
Part II of the initial filing)
27.1+ Financial Data Schedule
</TABLE>
- ---------------------
+Previously filed.
II-15
<PAGE>
EXHIBIT 1.1
BROOKDALE LIVING COMMUNITIES, INC.
(a Delaware corporation)
2,000,000 Shares
Common Stock
(Par Value $0.01 Per Share)
UNDERWRITING AGREEMENT
----------------------
December ___,1997
FRIEDMAN, BILLINGS, RAMSEY & CO., INC.,
COWEN & COMPANY
As Representatives of the Several Underwriters
c/o Friedman, Billings, Ramsey & Co., Inc.
1001 Nineteenth Street North
Arlington, Virginia 22209
Ladies and Gentlemen:
Brookdale Living Communities, Inc., a Delaware corporation (the
"Company"), confirms its agreement with Friedman, Billings, Ramsey & Co., Inc.
and Cowen & Company (collectively, the "Representatives") and the underwriters
listed on Schedule A attached hereto (collectively, the "Underwriters," which
term shall also include any underwriter substituted as provided in Section 9
hereof), for whom the Representatives are acting as representatives, subject to
the terms and conditions stated herein, with respect to the sale by the Company
to the Underwriters, acting severally and not jointly, of 2,000,000 shares (the
"Firm Shares") of the Company's Common Stock, par value $0.01 per share (the
"Common Stock"), and with respect to the grant by the Company to the
Underwriters of the option described in Section 2(b) hereof to purchase all or
any part of an additional 300,000 shares of Common Stock (the "Option Shares")
to cover over-allotments. The Firm Shares and the Option Shares are
collectively hereinafter called the "Shares." For purposes hereof and of the
representations and warranties contained herein, the operations of the Company
are deemed to include the operations of the senior housing division of The Prime
Group, Inc., an Illinois corporation and a stockholder of the Company ("Prime"),
on and before May 7, 1997.
Prior to the purchase and public offering of the Shares by the
Underwriters, the Company and the Representatives, acting on behalf of the
Underwriters, shall enter into an agreement substantially in the form of Exhibit
A hereto (the "Pricing Agreement"). The Pricing Agreement may take the form of
an exchange of any standard form of written telecommunication between the
Company and the Representative and shall specify such applicable information as
is indicated in Exhibit A hereto. The offering of the Shares will be governed
by this Agreement, as supplemented by the Pricing
<PAGE>
Agreement. From and after the date of the execution and delivery of the Pricing
Agreement, this Agreement shall be deemed to incorporate the Pricing Agreement.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (No. 333-41191) and a related
preliminary prospectus for the registration of the Shares under the Securities
Act of 1933, as amended (the "1933 Act"), and has filed such amendments thereto
and such amended preliminary prospectuses as may have been required to the date
hereof, and will file such additional amendments thereto and such amended
prospectuses as may hereafter be required. Such registration statement when it
becomes effective (as amended, if applicable) and the prospectus constituting a
part thereof (including in each case the information, if any, deemed to be a
part thereof pursuant to Rule 430A(b) of the rules and regulations under the
1933 Act (the "1933 Act Regulations")), as from time to time amended or
supplemented pursuant to the 1933 Act or otherwise, are hereinafter referred to
as the "Registration Statement" and the "Prospectus," respectively, except that
if any revised prospectus shall be provided to the Underwriters by the Company
for use in connection with the offering of the Shares which differs from the
Prospectus on file at the Commission at the time the Registration Statement
becomes effective (whether or not such revised prospectus is required to be
filed by the Company pursuant to Rule 424(b) of the 1933 Act Regulations), the
term "Prospectus" shall refer to such revised prospectus from and after the time
it is first provided to the Underwriters for such use.
The Company understands that the Underwriters propose to make a public
offering of the Shares as soon as the Representatives deem advisable after the
Registration Statement becomes effective and the Pricing Agreement has been
executed and delivered.
Section 1. Representations and Warranties of the Company.
(a) The Company represents and warrants to, and agrees with, each
Underwriter as of the date hereof and as of the date of the Pricing Agreement
(such later date being hereinafter referred to as the "Representation Date") as
follows:
(i) At the time the Registration Statement becomes effective and at
the Representation Date, the Registration Statement, if applicable, will comply
in all material respects with the requirements of the 1933 Act and the 1933 Act
Regulations and will not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading, and the Prospectus, at the Representation
Date (unless the term "Prospectus" refers to a prospectus that has been provided
to the Underwriters by the Company for use in connection with the offering of
the Shares which differs from the Prospectus on file at the Commission at the
time the Registration Statement becomes effective, in which case at the time it
is first provided to the Underwriters for such use) and at the Closing Time
referred to in Section 2(c) hereof, will comply in all material respects with
the
-2-
<PAGE>
requirements of the 1933 Act and the 1933 Act Regulations and will not contain
an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however,
that the representations and warranties in this subsection shall not apply to
statements in or omissions from the Registration Statement or Prospectus made in
reliance upon and in conformity with information contained in the first, second
and fourth paragraphs of the section of the Prospectus captioned "Underwriting."
(ii) The Registration Statement has become effective or will become
effective prior to execution of the Pricing Agreement and no stop order
suspending the effectiveness of the Registration Statement or any part thereof
has been issued and no proceeding for that purpose has been instituted or, to
the knowledge of the Company, threatened by the Commission or by the state
securities authority of any jurisdiction. No order preventing or suspending the
use of the Prospectus has been issued and no proceeding for that purpose has
been instituted or, to the knowledge of the Company, threatened by the
Commission or by the state securities authority of any jurisdiction.
(iii) Ernst & Young LLP, who have certified the financial statements
and financial statement schedules included in the Registration Statement, are
independent public accountants as required by the 1933 Act and the 1933 Act
Regulations.
(iv) The financial statements (including the notes thereto) included
in the Registration Statement and the Prospectus present fairly the financial
position of the respective entity or entities presented therein at the
respective dates indicated and the results of their operations for the
respective periods specified, and except as otherwise stated in the Registration
Statement, such financial statements have been prepared in conformity with
generally accepted accounting principles applied on a consistent basis. The
financial statement schedules included in the Registration Statement present
fairly the information required to be stated therein. The financial information
and data included in the Registration Statement and the Prospectus present
fairly the information included therein and have been prepared on a basis
consistent with that of the financial statements included in the Registration
Statement and the Prospectus and the books and records of the respective
entities presented therein. Other than the historical financial statements (and
schedules) included therein, no other historical or pro forma financial
statements (or schedules) are required by the 1933 Act or the 1933 Act
Regulations to be included in the Registration Statement. Except as reflected
or disclosed in the financial statements included in the Registration Statement
or otherwise set forth in the Prospectus, none of the Company or the
Subsidiaries (as hereinafter defined) are subject to any material indebtedness,
obligation, or liability, contingent or otherwise, known to the Company.
(v) All of the consolidated corporations and partnerships in which the
Company has a direct or indirect ownership interest are listed in Exhibit 21.1
to the Registration Statement (collectively, the "Subsidiaries"). The Company's
ownership,
-3-
<PAGE>
leasehold or management interest in each of the facilities listed in the
Prospectus under the caption "Business-Facilities" is owned, leased or managed
by the Company directly or indirectly through one or more such wholly-owned
Subsidiaries.
(vi) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus, except as otherwise stated therein,
(A) there has been no material adverse change in the condition, financial or
otherwise, or in the earnings, assets, or business affairs of the Company and
the Subsidiaries considered as a single enterprise, whether or not arising in
the ordinary course of business, (B) no material casualty loss or material
condemnation or other material adverse event has occurred with respect to any of
the Company's facilities, (C) there have been no acquisitions or other
transactions entered into by the Company or any Subsidiary that are material
with respect to such entities, considered as a single enterprise, or would
result in any inaccuracy in the representations contained in Section l(a)(iv)
above, (D) there has been no dividend or distribution of any kind declared,
paid, or made by the Company on any class of its capital stock, (E) there has
been no change in the capital stock of the Company or any Subsidiary, and (F)
there has been no increase in the indebtedness of the Company or any Subsidiary
that is material to such entities, considered as a single enterprise.
(vii) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of Delaware, with
the corporate power and authority to own its properties, conduct its business as
described in the Prospectus and to enter into and perform its obligations under
this Agreement. The Company has been duly qualified as a foreign corporation
for the transaction of business and is in good standing under the laws of each
other jurisdiction in which such qualification is required, whether by reason of
the ownership, leasing, or management of any properties or the conduct of any
other business, except where the failure to so qualify would not have a material
adverse effect on the condition, financial or otherwise, or the earnings, assets
or business affairs of the Company and the Subsidiaries considered as a single
enterprise.
(viii) Each Subsidiary that is a corporation (a "Corporate
Subsidiary") has been duly organized, is validly existing as a corporation in
good standing under the laws of the jurisdiction of its incorporation and has
the corporate power and authority to own, lease and operate its properties and
to conduct its business as described in the Prospectus, and is duly qualified
and is in good standing as a foreign corporation authorized to do business in
each jurisdiction in which the nature of its business or its ownership or
leasing of property requires such qualification, except where the failure to be
so qualified would not have a material adverse effect on the condition
(financial or otherwise), business, prospects, properties, net worth or results
of operations of the Company and the Subsidiaries, considered as a single
enterprise. All of the outstanding shares of capital stock of each Corporate
Subsidiary have been duly authorized and validly issued, are fully paid and
nonassessable, were issued and sold in compliance with
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all applicable federal and state securities laws, were not issued in violation
of or subject to any preemptive or similar rights, and are owned by the Company
directly, or indirectly through one of the other Subsidiaries, free and clear of
any security interest, claim, lien, encumbrance or adverse interest of any
nature, except (i) for those encumbrances disclosed in the Prospectus, (ii) for
interests or liens held by others as security for indebtedness of the Company or
any Subsidiary disclosed in the Prospectus and (iii) for transfer restrictions
under applicable federal and state securities and real estate syndication laws.
(ix) Each Subsidiary that is a general partnership or a limited
partnership (in each case, a "Partnership Subsidiary") has been duly organized
and is existing as a general partnership or limited partnership, as the case may
be, in good standing under the laws of its jurisdiction of organization and has
the partnership power and authority to own, lease and operate its properties and
to conduct its business as described in the Prospectus, and is duly qualified
and is in good standing (where applicable) as a foreign partnership authorized
to do business in each jurisdiction in which the nature of its business or its
ownership or leasing of property requires such qualification, except where the
failure to be so qualified would not have a material adverse effect on the
condition (financial or otherwise), business, prospects, properties, net worth
or results of operations of the Company and the Subsidiaries, considered as a
single enterprise. All outstanding partnership interests in the Partnership
Subsidiaries were issued and sold in compliance with the applicable partnership
or limited partnership agreements of such Partnership Subsidiaries and all
applicable federal and state securities laws, and the partnership interests
therein held directly or indirectly by the Company are owned free and clear of
any security interest, claim, lien, encumbrance or adverse interest of any
nature, except (i) for those encumbrances disclosed in the Prospectus, (ii) for
interests or liens held by others as security for indebtedness of the Company or
any Subsidiary disclosed in the Prospectus, (iii) to the extent provided in the
applicable partnership agreements of such Partnership Subsidiaries and (iv) for
transfer restrictions under applicable federal and state securities and real
estate syndication laws. To the knowledge of the Company, each partnership
agreement pursuant to which the Company or a Subsidiary holds a partnership
interest in a Partnership Subsidiary is in full force and effect and constitutes
the legal, valid and binding agreement of the parties thereto, enforceable
against such parties in accordance with the terms thereof, except as enforcement
thereof may be limited by bankruptcy, insolvency or other similar laws affecting
the enforcement of creditors' rights generally or by general equitable
principles. There has been no material breach of or default under, and no event
which with notice or lapse of time would constitute a material breach of or
default under, such partnership or limited partnership agreements by the Company
or any Subsidiary or, to the Company's knowledge, any other party to such
agreements.
(x) The Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued shares of Common Stock of the Company conform
in all material respects to all statements relating thereto contained in the
Prospectus. All such
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shares of Common Stock have been or will be duly and validly authorized and
issued, fully paid and non-assessable, and are not or will not be subject to
preemptive or other similar rights, and have been or will be offered and sold in
compliance with all applicable laws (including federal and state securities
laws). No shares of capital stock of the Company are reserved for any purpose
except in connection with the stock option plan of the Company as described in
the Prospectus. Except as described in the Prospectus, there are no outstanding
securities convertible into or exchangeable for any capital stock of the Company
and no outstanding options, rights (preemptive or otherwise) or warrants to
purchase or to subscribe for such shares or any other securities of the Company.
(xi) The Shares to be issued and sold by the Company to the Underwriters
hereunder have been duly and validly authorized for issuance and sale to the
Underwriters, and, when issued and delivered by the Company pursuant to this
Agreement against payment of the consideration set forth in the Pricing
Agreement, will be duly and validly issued and fully paid and non-assessable and
will be sold free and clear of any pledge, lien, security interest, encumbrance,
claim or equitable interest. The terms of the Shares conform to all statements
and descriptions related thereto contained in the Prospectus and comply with all
applicable legal requirements. The Shares conform to the provisions of the
Company's charter. The form of share certificate to be used to evidence the
Shares is in due and proper form and complies with all applicable legal
requirements. No preemptive right, co-sale right, tag along right,
registration right, right of first refusal or other similar right of
stockholders exists with respect to any of the Shares or the issuance and sale
thereof, other than those that have been expressly waived prior to the date
hereof and those that will automatically expire upon the consummation of the
transactions contemplated by this Agreement on the date of Closing. No further
consent, approval or authorization of any stockholder, the Board of Directors of
the Company, any court or governmental agency or body, or others is required for
the issuance and sale or transfer of the Shares except as may be required under
the federal securities laws or under any state or other securities, Blue Sky or
real estate syndication laws and except as may be required to be obtained by the
Underwriters. Except as disclosed in the Prospectus, there are no stockholders
agreements or voting agreements with respect to the Common Stock to which the
Company is a party or, except as disclosed in the Prospectus, to the knowledge
of the Company, between or among any of the Company's stockholders.
(xii) None of the Company or any Subsidiary is in violation of its
charter, by-laws, certificate of limited partnership, partnership agreement, or
other organizational document, as applicable. None of the Company or any
Subsidiary is in default in the performance or observance of any obligation,
agreement, covenant, or condition contained in any material contract, indenture,
mortgage, deed of trust, loan agreement or other material agreement or
instrument to which the Company or any Subsidiary is, or at the Closing Time
will be, a party or by which the Company or any Subsidiary is, or at the Closing
Time will be, bound or to which any of the property or assets of the Company or
any Subsidiary is, or at the Closing Time will be, subject,
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except where a default thereunder would not have a material adverse effect on
the condition, financial or otherwise, or the earnings, assets, or business
affairs of the Company and the Subsidiaries, considered as a single enterprise.
For purposes of this paragraph the phrase "material contract, indenture,
mortgage, deed of trust, loan agreement or other material agreement or
instrument" shall mean any contract, indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument that is required to be filed as an
exhibit to the Company's registration statement on Form S-1 pursuant to Section
601(b) of Regulation S-K under the 1933 Act Regulations ("Regulation S-K").
Neither the Company nor any of the Subsidiaries is in material violation of any
order, writ, injunction, judgment or decree of any court, government or
governmental agency or body, domestic or foreign, having jurisdiction over the
Company or any of the Subsidiaries or over any of their respective property.
(xiii) Except as described in the Prospectus, the Company or all
Subsidiaries have operated and currently operate their business in conformity
with all applicable laws, rules and regulations of each jurisdiction in which it
is conducting business, except where the failure to be so in compliance would
not have a material adverse effect on the condition (financial or otherwise),
business, prospects, properties, net worth or results of operations of the
Company and the Subsidiaries, considered as a single enterprise. The operations
of the Company and its Subsidiaries with respect to any real property currently
leased, owned or managed by the Company or any Subsidiary are in material
compliance with all federal, state and local laws, ordinances, rules and
regulations relating to occupational health and safety and the environment. The
Company and each of the Subsidiaries operates its business as described in the
Prospectus and has such permits, licenses, franchises and authorizations of
governmental or regulatory authorities ("permits"), including, without
limitation, under any applicable environmental laws and any applicable state
laws to furnish assisted living services as described under the heading
"Business - Services" on page 27 of the Prospectus, as are necessary to own,
lease and operate its respective properties and to conduct its business in the
manner described in the Prospectus, except where the failure to obtain any
required permit would not have a material adverse effect on the condition
(financial or otherwise), business, prospects, properties, net worth or results
of operations of the Company and the Subsidiaries, considered as a single
enterprise; the Company and each of the Subsidiaries has fulfilled and performed
all of its material obligations with respect to such permits and no event has
occurred which allows, or after notice or lapse of time would allow, revocation
or termination thereof or results in any other material impairment of the rights
of the holder of any such permit; and, except as described in the Prospectus,
such permits contain no restrictions that are materially burdensome to the
Company or any of the Subsidiaries. The Company and the Subsidiaries are not
aware of any existing or imminent matter which could reasonably be expected to
adversely impact the operations or business prospects of the Company and the
Subsidiaries, considered as a single enterprise, other than as disclosed in the
Prospectus.
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(xiv) This Agreement has been duly authorized, executed, and delivered
by the Company, and, assuming due authorization, execution, and delivery hereof
by the Representatives on behalf of the Underwriters, is a valid and binding
agreement of the Company, enforceable against the Company in accordance with its
terms; and at the Representation Date, the Pricing Agreement will have been duly
authorized, executed, and delivered by the Company and, assuming due
authorization, execution, and delivery thereof by the Representatives on behalf
of the Underwriters, will be a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms; provided that the
enforceability of this Agreement and the Pricing Agreement may be limited by
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
and to general principles of equity; provided further that the indemnification
provisions of this Agreement may be unenforceable under general principles of
equity or public policy.
(xv) The issuance and sale of the Firm Shares and the Option Shares by
the Company, the performance by the Company and the Subsidiaries of their
respective obligations under this Agreement, the Pricing Agreement, and the
consummation of the transactions herein and therein contemplated, including the
application of the net proceeds from the sale of the Firm Shares and the Option
Shares as described in the Prospectus will not (A) conflict with or result in a
breach or violation of any of the terms or provisions of, constitute a default
under, or result in the acceleration of the maturity of any indebtedness under,
any material contract, indenture, mortgage, deed of trust, loan agreement or
other material agreement or instrument to which the Company or any Subsidiary is
a party or by which the Company or any Subsidiary is bound or to which any of
the property or assets of the Company or any Subsidiary is subject, (B) result
in any violation of the provisions of the charter or by-laws or other
organizational documents, as the case may be, of the Company or any Subsidiary,
or any statute or any order, rule or regulation of any court or governmental
agency or body having jurisdiction over the Company or any Subsidiary or any of
their respective properties, or (C) result in the loss of tax-exempt status of
any tax-exempt bonds described in the Prospectus. For purposes of this
paragraph the phrase "material contract, indenture, mortgage, deed of trust,
loan agreement or other material agreement or instrument" shall mean any
contract, indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument that is required to be filed as an exhibit to the Company's
registration statement on Form S-1 pursuant to Section 601(b) of Regulation S-K.
(xvi) Except to the extent obtained prior to the Closing Time, no
consent, approval, authorization, order, registration or qualification of or
with any court or governmental agency or body or any other person is required
for the issue and sale of the Shares or the consummation by the Company and the
Subsidiaries of the transactions contemplated by this Agreement and the Pricing
Agreement except the registration under the 1933 Act of the Shares and such
consents, approvals, authorizations, registrations or qualifications as may be
required under state or foreign securities or Blue Sky laws in connection with
the purchase and distribution of the Shares by the Underwriters.
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(xvii) Other than as set forth or contemplated in the Prospectus,
there are no legal or governmental proceedings pending to which the Company or
any Subsidiary is a party or of which any property of the Company or any
Subsidiary is the subject which, (i) are required to be set forth in the
Registration Statement or (ii) if determined adversely to the Company or any
Subsidiary, would individually or in the aggregate be reasonably expected to
have a material adverse effect on the consolidated financial position,
stockholders' equity or results of operations of the Company and the
Subsidiaries, considered as a single enterprise and, to the best knowledge of
the Company, no such proceedings are threatened or contemplated by governmental
authorities or threatened by others.
(xviii) The Company and the Subsidiaries have good and marketable
title in fee simple to all real property and good and marketable title to all
personal property owned by them, as described in the Prospectus, in each case
free and clear of all liens, encumbrances and defects except such as are
described in the Prospectus or such as do not materially adversely affect the
value of such property and do not materially adversely interfere with the use
made and proposed to be made of such property by the Company and the
Subsidiaries; and any real property and buildings described in the Prospectus as
being held under lease by the Company or any Subsidiary are held by it under
valid, subsisting and enforceable leases with such exceptions as are not
material and do not materially adversely interfere with the use made and
proposed to be made of such property and buildings by the Company and the
Subsidiaries.
(xix) Assuming that the agreements to which the Company or any of
the Subsidiaries is a party described in the Registration Statement and
Prospectus have been duly authorized, executed and delivered by all parties
thereto (other than the Company or any affiliate of the Company), such
agreements are valid agreements, enforceable by the Company and the Subsidiaries
(as applicable), except as the enforcement thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting creditors' rights generally or by general equitable
principles and, to the Company's knowledge, the other contracting party or
parties thereto are not in material breach or material default under any of such
agreements.
(xx) Except as disclosed in the Prospectus, there are no consensual
encumbrances or restrictions on the ability of any Subsidiary (i) to pay any
dividends or make any distributions on the capital stock of any Subsidiary which
is a Corporate Subsidiary or the partnership interests of any Subsidiary which
is a Partnership Subsidiary or to pay any indebtedness owed to the Company or
any other Subsidiary, (ii) to make any loans or advances to, or investments in,
the Company or any other Subsidiary, or (iii) to transfer any of its properties
or assets to the Company or any other Subsidiary.
(xxi) The Company and the Subsidiaries maintain insurance with
insurers of recognized financial responsibility of the types and in the amounts
generally
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deemed adequate for their respective businesses and consistent with customary
insurance coverage maintained by similar companies in similar businesses,
including, but not limited to, insurance covering real and personal property
owned or leased by the Company or the Subsidiaries against theft, damage,
destruction, acts of vandalism and all other risks customarily insured against,
all of which insurance is in full force and effect.
(xxii) Neither the Company nor any of the Subsidiaries is, or after
giving effect to the issuance and sale of the Shares by the Company, will be (i)
an "investment company" or a company "controlled" by an "investment company"
within the meaning of the Investment Company Act of 1940, as amended (the
"Investment Company Act"), or (ii) a "holding company" or a "subsidiary company"
of a "registered holding company," as defined in the Public Utility Holding
Company Act of 1935, as amended.
(xxiii) Except as disclosed in the Prospectus, no holder of any
securities of the Company has any rights to require the Company to register any
securities of the Company under the 1933 Act.
(xxiv) Other than this Agreement and the Pricing Agreement, the
Company is not a party to any contract, agreement or understanding with any
person that would give rise to a valid claim against the Company for a brokerage
commission, finder's fee or like payment in connection with the sale of the
Shares.
(xxv) The Shares have been authorized for inclusion in the Nasdaq
National Market System, subject to official notice of issuance.
(xxvi) The Company has filed a registration statement pursuant to
Section 12(g) of the Exchange Act to register the Common Stock.
(xxvii) Except as disclosed in the Prospectus, there are no business
relationships or related party transactions required to be disclosed therein by
Item 404 of Regulation S-K.
(xxiii) The Company and each of the Subsidiaries maintains a system of
internal accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (iii) access to
assets is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(xxix) Neither the Company nor any of the Subsidiaries, nor to the
knowledge of the Company, any agent or other person acting on behalf of the
Company
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or any Subsidiary has, directly or indirectly, used any corporate funds for
unlawful contributions, gift, entertainment or other unlawful expenses related
to foreign or domestic political activity; made any unlawful payment to foreign
or domestic government officials or employees or to foreign or domestic
political parties or campaigns from corporate funds; failed to disclose fully
any contribution in violation of law; violated in any material respect any
provision of the Foreign Corrupt Practices Act of 1977, as amended; or made any
unlawful bribe, rebate, payoff, influence, kick-back or other unlawful payment.
(xxx) No statement, representation, warranty or covenant made by the
Company in any certificate or document required by this Agreement to be
delivered to the Underwriters was or will be, when made, inaccurate, untrue or
incorrect in any material respect.
(xxxi) Neither the Company nor any of its directors, officers or
controlling persons, has taken or will take, directly or indirectly, any action
resulting in a violation of Rule 102 of Regulation M under the Securities
Exchange Act of 1934, as amended (the "1934 Act"), or designed to cause or
result in or that has constituted or reasonably might be expected to constitute,
the stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Shares.
(xxxii) Neither the execution, delivery or performance of the
transactions contemplated by the Formation (as defined in the Company's
prospectus dated May 1, 1997) nor the consummation of the transactions
contemplated thereby nor the acquisition and/or net lease of The Gables at
Farmington, The Classic at West Palm Beach or The Brendenwood Retirement
Community] (collectively, the "Acquisitions") (i) required any consent,
approval, authorization or other order of, or registration or filing with, any
court, regulatory body, administrative agency or other governmental body, agency
or official which was not obtained or filed, (ii) conflicted with or constituted
a default under, the charter or by-laws, or other organizational documents, of
the Company or any of the Subsidiaries, (iii) except as disclosed in the
Prospectus, conflicted with or constituted a breach of or default under, any
material agreement, indenture, lease, or other instrument to which the Company
or any of the Subsidiaries is a party or by which any of them or any of their
respective properties may be bound, or violated any statute, law, regulation or
filing of judgment, injunction, order or decree applicable to the Company or any
of the Subsidiaries or any of the respective properties, or resulted in the
creation or imposition of any lien, charge or encumbrance upon any property or
assets of the Company or any of the Subsidiaries pursuant to the terms of any
agreement or instrument to which the Company or any of the Subsidiaries may be
bound or to which any of the property or assets of any of them is subject, in
each case described in clauses (i), (ii) and (iii) of this paragraph which,
individually or in the aggregate, would result in a material adverse change in
the condition (financial or otherwise), business, properties, prospects, net
worth or results of operations of the Company and the Subsidiaries, considered
as a single enterprise.
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(xxxv) The Company estimates that approximately 99.6% of its revenue
has been derived from private pay sources.
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Section 2. Sale and Delivery to Underwriters; Closing; Reservation of
Shares.
2(a) On the basis of the representations and warranties herein contained and
subject to the terms and conditions herein set forth, the Company agrees to sell
to the Underwriters the 2,000,000 Firm Shares in the aggregate, and each
Underwriter, severally and not jointly, agrees to purchase from the Company, at
the price per share set forth in the Pricing Agreement, the number of Firm
Shares set forth in Schedule A hereto opposite the name of such Underwriter
(except as otherwise provided in the Pricing Agreement), plus any additional
number of Firm Shares which such Underwriter may become obligated to purchase
pursuant to Section 9 hereof.
If the Company has elected not to rely upon Rule 430A under the 1933 Act
Regulations, the public offering price and the purchase price per share to be
paid by the Underwriters for the Shares have each been determined and set forth
in the Pricing Agreement, dated the date hereof, and an amendment to the
Registration Statement and the Prospectus reflecting such information will be
filed before the Registration Statement becomes effective.
If the Company has elected to rely upon Rule 430A under the 1933 Act
Regulations, the purchase price per share to be paid by the Underwriters for the
Shares shall be an amount equal to the public offering price, less an amount per
share to be determined by agreement between the Representatives and the Company.
The public offering price per share of the Shares shall be a fixed price to be
determined by agreement between the Representatives and the Company. The public
offering price and the purchase price, when so determined, shall be set forth in
the Pricing Agreement. In the event that such prices have not been agreed upon
and the Pricing Agreement has not been executed and delivered by all parties
thereto by the close of business on the fourth business day following the date
of this Agreement, this Agreement shall terminate forthwith, without liability
of any party to any other party hereunder other than pursuant to Section 6
hereof, unless otherwise agreed to by the Company and the Representative.
2(b) In addition, on the basis of the representations and warranties herein
contained and subject to the terms and conditions herein set forth, the Company
hereby grants an option to the Underwriters to purchase up to an additional
300,000 shares of Common Stock, as Option Shares, at the price per share set
forth in the Pricing Agreement. The option hereby granted will expire 30 days
after the date hereof (or, if the Company has elected to rely upon Rule 430A
under the 1933 Act Regulations, 30 days after the Representation Date) and may
be exercised in whole or in part from time to time only for the purpose of
covering over-allotments which may be made in connection with the offering and
distribution of the Firm Shares upon notice by the Representatives to the
Company setting forth the number of Option Shares as to which the Underwriters
are then exercising the option and the time, date and place of payment and
delivery for such Option Shares. Any such time and date of delivery (an "Option
Closing Date") shall be
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determined by the Representatives but shall not be later than seven full
business days after the exercise of said option, nor in any event prior to the
Closing Time (as hereinafter defined) unless otherwise agreed upon by the
Representatives and the Company. If the option is exercised as to all or any
portion of the Option Shares, the Option Shares shall be purchased by the
Underwriters, severally and not jointly, in proportion to their respective Firm
Share underwriting obligations as set forth in Schedule A hereto (except as may
be otherwise provided in the Pricing Agreement).
2(c) Payment of the purchase price for and delivery of certificates for the
Firm Shares (the "Closing") shall be made at the offices of Friedman, Billings,
Ramsey & Co., Inc., 1001 Nineteenth Street North, Arlington, Virginia, or at
such other place as shall be agreed upon by the Representatives and the Company,
at 10:00 a.m., Washington, D.C. time, on the third business day following the
date the Registration Statement becomes effective if the sale of the Shares is
priced before 4:30 p.m. Eastern time or on the fourth business day following the
date the Registration Statement becomes effective if the sale of the Shares is
priced after 4:30 p.m. Eastern time (or, if the Company has elected to rely upon
Rule 430A, the third business day after the Representation Date (or the fourth
business day after the Representation Date if the sale of the Shares is priced
after 4:30 p.m. Eastern time)), or such other time not later than 10 business
days after such date as shall be agreed upon by the Representatives and the
Company (such time and date of payment and delivery being herein called "Closing
Time"). In addition, in the event that any or all of the Option Shares are
purchased by the Underwriters, payment of the purchase price for and the
delivery of such Option Shares shall be made at the above-mentioned offices of
Friedman, Billings, Ramsey & Co., Inc., or at such other place as shall be
mutually agreed upon by the Representatives and the Company, on each Option
Closing Date as specified in the notice from the Representatives to the Company.
Payment shall be made to the Company by certified or official bank check or
checks in New York Clearing House or similar next day funds payable to the order
of the Company or, at the election of the Company made at the time of execution
of this Agreement, in same day funds, provided that the Company reimburses the
Underwriters for the additional cost of same day funds, in each case against
delivery to the Representatives for the respective accounts of the Underwriters
of certificates for the Shares to be purchased by the Underwriters. The
certificates for the Firm Shares and the Option Shares shall be in such
authorized denominations and registered in such names as the Representatives may
request in writing at least two business days before Closing Time or each Option
Closing Date, as the case may be. It is understood that each Underwriter has
authorized the Representatives, for its account, to accept delivery of, receipt
for, and make payment of the purchase price for, the Shares which it has agreed
to purchase. Friedman, Billings, Ramsey & Co., Inc., individually and not as a
Representative of the Underwriters, may (but shall not be obligated to) make
payment of the purchase price for the Shares to be purchased by any Underwriter
whose check has not been received by Closing Time, but such payment shall not
relieve such Underwriter from its obligations hereunder. The certificates for
the Firm Shares and the Option Shares will be made available for examination and
packaging by the Underwriters not later than 10:00 a.m., Washington,
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D.C. time, on the last business day prior to Closing Time or each Option Closing
Date, as the case may be.
Section 3. Covenants of the Company. The Company covenants with each
Underwriter as follows:
(i) The Company will (i) prepare the Prospectus in a form approved by the
Representatives and file such Prospectus pursuant to Rule 424(b) of the 1933 Act
Regulations not later than the Commission's close of business on the second
business day following the execution and delivery of this Agreement, or, if
applicable, such earlier time as may be required by Rule 430A(a)(3) of the 1933
Act Regulations; (ii) advise the Representatives, promptly after it receives
notice thereof, of the time when the Registration Statement, or any amendment
thereto, has been filed or becomes effective or any supplement to the Prospectus
or any amended Prospectus has been filed; (iii) advise the Representatives,
promptly after it receives notice thereof, of (A) the receipt of any comments
from the Commission, (B) the issuance by the Commission of any stop order or of
any order preventing or suspending the use of any preliminary prospectus or the
Prospectus, (C) the suspension of the qualification of the Shares for offering
or sale in any jurisdiction, (D) the initiation or threatening of any proceeding
for any such purpose, or (E) any request by the Commission for the amending or
supplementing of the Registration Statement or Prospectus or for additional
information; (iv) advise the Representatives promptly of the occurrence of any
event, during such period as a prospectus is required by law to be delivered in
connection with sales by an Underwriter or a dealer, which makes any statement
of a material fact made in the Registration Statement or the Prospectus untrue
or which requires the making of any additions to or changes in the Registration
Statement or the Prospectus in order to make any statement of a material fact
therein not misleading; and, (v) in the event of the issuance of any stop order
or any order preventing or suspending the use of any preliminary prospectus or
the Prospectus or suspending any such qualification, use promptly its best
efforts to obtain its withdrawal.
(ii) The Company will (i) give the Representatives notice of its
intention to prepare or file any amendment to the Registration Statement
(including any post-effective amendment) or any amendment or supplement to the
Prospectus (including any revised prospectus that the Company proposes for use
by the Underwriters in connection with the offering of the Shares that differs
from the prospectus on file at the Commission at the time the Registration
Statement becomes effective, whether or not such revised prospectus is required
to be filed pursuant to Rule 424(b) of the 1933 Act Regulations), (ii) furnish
the Underwriters with copies of any such amendments or supplements a reasonable
time prior to the proposed filing or use thereof, and (iii) not file any such
amendment or any supplement or use any such prospectus to which the
Representatives shall reasonably object promptly after reasonable notice
thereof.
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(iii) Promptly from time to time, the Company will take such action as
the Representatives may reasonably request to qualify the Shares for offering
and sale under the securities laws of such jurisdictions as the Representatives
may request and to comply with such laws so as to permit the continuance of
sales and dealings therein in such jurisdictions for as long as may be necessary
to complete the distribution of the Shares, provided that in connection
therewith the Company shall not be required to qualify as a foreign corporation
or to file a general consent to service of process in any jurisdiction.
(iv) The Company will furnish each Underwriter with copies of the
Prospectus in such quantities as such Underwriter may from time to time
reasonably request. If the delivery of a prospectus is required at any time
prior to the expiration of nine months after the time of issue of the Prospectus
in connection with the offering or sale of the Shares, and if at such time any
event shall have occurred as a result of which the Prospectus as then amended or
supplemented would include an untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made when such Prospectus
is delivered, not misleading, or, if for any other reason it shall be necessary
during such period to amend or supplement the Prospectus in order to comply with
the 1933 Act and the 1933 Act Regulations, the Company will notify the
Representatives and upon the Representatives' request will prepare and furnish
without charge to the Underwriters and to any dealer in securities as many
copies as the Underwriters may from time to time reasonably request of an
amended Prospectus or a supplement to the Prospectus which will correct such
statement or omission or effect such compliance. In case that the Underwriters
are required to deliver a prospectus in connection with sales of any of the
Shares at any time nine months or more after the time of issue of the
Prospectus, upon the Underwriters' request but at the Underwriters' expense, the
Company will prepare and deliver to the Underwriters as many copies as the
Underwriters may request of an amended or supplemented Prospectus complying with
Section 10(a)(3) of the 1933 Act.
(v) The Company will make generally available to its securityholders as
soon as practicable, but in any event not later than eighteen months after the
"effective date of the Registration Statement" (as defined in Rule 158(c) of the
1933 Act Regulations), an earnings statement of the Company and its subsidiaries
(which need not be audited) complying with Section 11(a) of the 1933 Act and the
1933 Act Regulations (including, at the option of the Company, Rule 158).
(vi) The Company will furnish to its stockholders, as soon as practicable
after the end of each fiscal year, an annual report (including a balance sheet
and statements of income, stockholders' equity and cash flow of the Company and
its consolidated subsidiaries certified by independent public accountants) and,
as soon as practicable after the end of each of the first three quarters of each
fiscal year,
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consolidated summary financial information of the Company and its subsidiaries
for such quarter in reasonable detail.
(vii) During a period of five years from the effective date of the
Registration Statement, the Company will furnish to the Representatives copies
of all reports or other communications (financial or other) furnished to its
stockholders, and deliver to the Representatives, as soon as they are available,
copies of any reports and financial statements furnished to or filed with the
Commission or any national securities exchange or quotation system on which any
class of securities of the Company is listed.
(viii) The Company will not invest, reinvest or otherwise use the
proceeds received by the Company from the sale of the Firm Shares or Option
Shares in such a manner, or take any action or omit to take any action, that
would cause the Company to become an "investment company" as that term is
defined in the Investment Company Act.
(ix) The Company will use the net proceeds of the sale of the Firm Shares
and Option Shares for the purposes described in the Prospectus under "Use of
Proceeds."
(x) The Company will take all action to ensure that the Common Stock
continues to be listed on the Nasdaq National Market or any national securities
exchange.
(xi) Except for the authorization of actions permitted to be taken by the
Underwriters as contemplated herein or in the Prospectus, the Company will not
(A) take, directly or indirectly, any action designed to cause or to result in,
or that might reasonably be expected to constitute, the stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of the Shares, or (B) for a period of 90 days following the
Representation Date: (i) sell, bid for or purchase the Shares or pay any person
any compensation for soliciting purchases of the Shares, or (ii) pay or agree to
pay to any person any compensation for soliciting another to purchase any other
securities of the Company.
(xii) During the period from the date of the Pricing Agreement until
ninety (90) days after the Closing Time, the Company will not, without the prior
written consent of Friedman, Billings, Ramsey & Co., directly or indirectly,
sell, offer to sell, grant any option for the sale of, or otherwise dispose of,
any Common Stock or shares of Common Stock or any other security convertible
into or exchangeable into or exercisable for Common Stock, other than (i) in
accordance with this Agreement, (ii) in connection with the Company's stock
option plan described in the Prospectus, or (iii) as otherwise contemplated in
the Prospectus.
(xiii) The Company shall use its best efforts to do and perform all
things required or necessary to be done and performed under this Agreement by
the Company
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prior to the Closing Time and to satisfy all conditions precedent on the
Company's part to the delivery of the Shares.
Section 4. Payments of Fees and Expenses. The Company covenants and
agrees with the Underwriters that (a) the Company will pay or cause to be paid
the following: (i) expenses incurred in connection with the printing and filing
of the Registration Statement as originally filed and of each amendment thereto,
(ii) expenses incurred in connection with the preparation, issuance and delivery
of the certificates for the Shares to the Underwriters, (iii) the fees and other
charges of the Company's counsel and accountants, (iv) expenses incurred in
connection with the qualification of the Shares under securities laws, including
filing fees and the reasonable fees and other charges of counsel for the
Underwriters in connection therewith and in connection with the preparation of
the Blue Sky Memorandum, (v) expenses incurred in connection with the printing
and delivery to the Underwriters of copies of the Registration Statement as
originally filed and of each amendment thereto, of the preliminary prospectuses,
and of the Prospectus and any amendments or supplements thereto, (vi) expenses
incurred in connection with the printing and delivery to the Underwriters of
copies of the Blue Sky Memorandum; (vii) the fee of the NASD, including the
reasonable fees and other charges of counsel for the Underwriters in connection
with the NASD's review of the terms of the proposed public offering of the
Shares and (viii) the fees and expenses incurred in connection with the listing
of the Common Stock on the Nasdaq National Market, including filing and listing
fees
Section 5. Conditions of Underwriters' Obligations. The obligations of
the Underwriters hereunder, as to the Shares to be delivered at the Closing Time
and each Option Closing Date, shall be subject to the condition that all
representations and warranties and other statements of the Company herein are,
at and as of the Closing Time and such Option Closing Date, true and correct in
all material respects, the condition that the Company shall have performed all
of its obligations hereunder theretofore to be performed, and the following
additional conditions:
5(a) The Registration Statement shall have become effective not later than
5:30 p.m. Eastern time on the first business day following the date hereof, no
stop order suspending the effectiveness of the Registration Statement or any
part thereof shall have been issued and no proceeding for that purpose shall
have been initiated or threatened by the Commission; and all requests for
additional information on the part of the Commission shall have been complied
with to the Representatives' reasonable satisfaction. If the Company has
elected to rely upon Rule 430A of the 1933 Act Regulations, the price of the
Shares and any price-related information previously omitted from the effective
Registration Statement pursuant to such Rule 430A shall have been transmitted to
the Commission for filing pursuant to Rule 424(b) of the 1933 Act Regulations
within the applicable time period prescribed for such filing by the 1933 Act
Regulations and in accordance with Section 3(a) hereof, or a post-effective
amendment providing such information shall have been promptly filed and declared
effective in accordance with the requirements of Rule 430A of the 1933 Act
Regulations.
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5(b) Winston & Strawn, counsel for the Company, shall have furnished to the
Representatives their written opinion, dated the Closing Time and such Option
Closing Date, in form and substance satisfactory to the Representatives, to the
effect that (except that the opinion set forth in paragraph 5(b)(xi), with
respect to the tax-exempt bonds relating to the Hawthorn Lakes facility, may be
given by Ballard, Spahr, Andrews & Ingersoll, special bond counsel for the
Company):
(i) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware and has the
corporate power and authority to own its properties and conduct its business as
described in the Prospectus.
(ii) Each of the Corporate Subsidiaries has been duly incorporated and is
validly existing as a corporation in good standing under the laws of its
jurisdiction of incorporation and has the corporate power and authority to own
its properties and conduct its business as described in the Prospectus.
(iii) Each Limited Partnership Subsidiary has been formed and is
validly existing under the laws of its jurisdiction of formation and has the
limited partnership power and authority to own its properties and conduct its
business as described in the Prospectus.
(iv) The authorized capital stock of the Company conforms as to legal
matters to the description thereof contained in the Prospectus; all of the
issued shares of capital stock of the Company as described in the Prospectus
have been duly and validly authorized and issued and are fully paid and
nonassessable; and the terms of such shares of capital stock conform in all
material respects to all statements and descriptions related thereto contained
in the Prospectus and comply with all applicable legal requirements.
(v) The Company and each of the Subsidiaries has been duly qualified as a
foreign corporation, limited partnership, or otherwise, as appropriate, for the
transaction of business and is in good standing (to the extent applicable) under
the laws of each other jurisdiction specified in such opinion (which shall
include each jurisdiction in which the Company or any Subsidiary owns, leases,
or manages properties, or conducts any other business, so as to require such
qualification, or is subject to no material liability or disability by reason of
failure to be so qualified in any such jurisdiction (such counsel being entitled
to rely in respect of the opinion in this clause in respect of matters of fact
upon certificates of officers of the Company and governmental authorities).
(vi) All of the outstanding shares of capital stock of each Corporate
Subsidiary have been duly and validly authorized and issued and are fully paid
and nonassessable, and are directly or indirectly owned by the Company, free and
clear of
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<PAGE>
any security interest, claim, lien, encumbrance or adverse interest of any
nature known to such counsel.
(vii) To such counsel's knowledge and other than as set forth in the
Prospectus, there are no legal or governmental proceedings, domestic or foreign,
pending to which the Company, any Subsidiary or any officer or director of the
Company or any subsidiary is a party or of which any property of the Company or
any Subsidiary is the subject which are required to be disclosed in the
Prospectus; and, to the best of such counsel's knowledge, no such proceedings
are threatened or contemplated by governmental authorities or threatened by
others.
(viii) This Agreement has been duly authorized, executed and
delivered by the Company. The Pricing Agreement has been duly authorized,
executed and delivered by the Company.
(ix) The issuance and sale of the Shares being delivered at the Closing
Time and such Option Closing Date by the Company, the performance by the Company
of its obligations under this Agreement and the Pricing Agreement, and the
consummation by the Company and the Subsidiaries, as applicable, of the
transactions herein and therein contemplated, including the application of the
net proceeds from the sale of the Shares as described in the Prospectus will not
(A) conflict with or result in a breach or violation of any of the terms or
provisions of, constitute a default under, or result in the acceleration of the
maturity of any indebtedness under, any material indenture, mortgage, deed of
trust or loan agreement known to such counsel or other material agreement or
instrument known to such counsel to which the Company or any Subsidiary is a
party or by which the Company or any Subsidiary is bound or to which any of the
property or assets of the Company or any Subsidiary is subject or (B) result in
any violation of the provisions of the certificate of incorporation or by-laws,
certificate of limited partnership, partnership agreement or other
organizational documents, as the case may be, of the Company or any Subsidiary,
or any statute or any order, rule or regulation known to such counsel of any
court or governmental agency or body having jurisdiction over the Company or any
Subsidiary or any of their respective properties.
(x) The Shares to be issued and sold by the Company to the Underwriters
hereunder have been duly and validly authorized for issuance and sale to the
Underwriters, and, when issued and delivered by the Company pursuant to this
Agreement against payment of the consideration set forth in the Pricing
Agreement, will be duly and validly issued and fully paid and non-assessable.
The issuance of the Shares is not subject to any preemptive or similar rights.
The terms of the Shares conform in all material respects to all statements and
descriptions related thereto contained in the Prospectus and comply with all
applicable legal requirements. The Shares conform to the provisions of the
Company's charter. The form of share certificate to be used to evidence the
Shares is in due and proper form and complies with all applicable legal
requirements.
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<PAGE>
(xi) The issuance and sale of the Shares being delivered at such Closing
Time or Option Closing Date by the Company, the performance by the Company of
its obligations under this Agreement and the Pricing Agreement, and the
consummation by the Company and the Subsidiaries, as applicable, of the
transactions herein and therein contemplated, including the application of the
proceeds from the sale of the Shares as described in the Prospectus will not
adversely affect the exclusion from gross income for federal tax purposes of the
interest on the bonds designated "tax-exempt bonds" in the Prospectus.
(xii) No consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body or other
person is required for the issuance and sale of the Shares by the Company or the
performance by the Company of its obligations under this Agreement and the
Pricing Agreement, and the consummation by the Company and the Subsidiaries, as
applicable, of the transactions herein and therein contemplated, except the
registration under the 1933 Act of the Shares and such consents, approvals,
authorizations, registrations or qualifications as have been obtained prior to
the Closing Time or may be required under state securities or Blue Sky laws in
connection with the purchase and distribution of the Shares by the Underwriters.
(xiii) The statements made under the captions "Risk Factors,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operation - Overview," "Business - Facilities," "Business - Hospital and Health
Care Network Affiliations," "Business - Acquisitions, Leases and Development,"
"Business -Government Regulation," "Management - Compensation of Directors;
Indemnification Agreements," "Management--Stock Incentive Plan," "Management-
Employment Agreements", "Certain Transactions," "Description of Capital Stock,"
and "Shares Eligible for Future Sale," in the Prospectus and Items 14 and 15 of
Part II of the Registration Statement, to the extent such statements constitute
a summary of the legal matters or documents referred to therein, are accurate in
all material respects and fairly present the information required to be shown
(it being understood that such counsel need express no opinion as to the
financial statements and related notes thereto and the other financial,
statistical and accounting data included in the Registration Statement or
Prospectus).
(xiv) The Company is not, and (assuming the application by the
Company of the net proceeds of the issue and sale of the Shares in the manner
described in the Prospectus under the caption "Use of Proceeds") after giving
effect to the issuance and sale of the Shares by the Company will not be, an
"investment company" or a company "controlled" by an "investment company" within
the meaning of the Investment Company Act.
(xv) The Registration Statement, as of the Effective Date, and the
Prospectus, as of its date, appeared on their face to be appropriately
responsive in all material respects to the requirements of the 1933 Act and the
1933 Act Regulations,
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except that (a) such counsel need express no opinion as to the financial
statements and related notes thereto and the other financial, statistical, and
accounting data included in the Registration Statement or the Prospectus, and
(b) such counsel need express no opinion or assurance as to the accuracy,
completeness or fairness of the statements contained in the Registration
Statement, except to the extent set forth in paragraph 5(b)(xiii) and the
paragraph immediately following paragraph 5(b)(xix).
(xvi) The Company and each of the Subsidiaries has such permits,
licenses, franchises and authorizations of governmental or regulatory
authorities ("permits"), including, without limitation, under any applicable
environmental laws, as are necessary to own, lease and operate its respective
properties and to conduct its business in the manner described in the Prospectus
except where the failure to obtain any required permit would not have a material
adverse effect on the condition (financial or otherwise), business, prospects,
properties, net worth or results of operations of the Company and the
Subsidiaries, considered as a single enterprise; to such counsel's knowledge
after due inquiry, the Company and each of the Subsidiaries has fulfilled and
performed all of its material obligations with respect to such permits and no
event has occurred which allows, or after notice or lapse of time would allow,
revocation or termination thereof or results in any other material impairment of
the rights of the holder of any such permit, subject in each case to such
qualification as may be set forth in the Prospectus; and, except as described in
the Prospectus, such permits contain no restrictions that are materially
burdensome to the Company or any of the Subsidiaries. Without limiting the
foregoing, each of the Company's facilities currently holds (or has pending a
renewal application for) the appropriate permit authorizing such facility to
furnish services as described under the heading "Business - Services" on page 27
of the Prospectus.
(xvii) To the knowledge of such counsel, there are no contracts or
documents of a character that are required to be described in the Prospectus or
filed as exhibits to or incorporated by reference into the Registration
Statement by the 1933 Act or the 1933 Act Regulations that have not been so
described or filed.
(xviii) The Formation (as such term is defined in the Company's
prospectus dated May 1, 1997) and the Acquisitions and each of the documents and
agreements executed and delivered by the Company, the Subsidiaries and Prime in
connection with the Formation and the Acquisitions have been duly authorized,
executed and delivered by the parties thereto, are the valid and binding
agreements of the parties thereto enforceable by the Company in accordance with
their terms (except as enforcement thereof may be limited by bankruptcy,
reorganization, insolvency, fraudulent conveyance or transfer, moratorium or
similar laws of general applicability relating to or affecting creditors' rights
and to general principles of equity).
In giving its opinion required by this Section 5(b), such counsel shall
additionally state that, although it has not independently verified and is not
passing upon and assumes
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no responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement or Prospectus (except to the extent set
forth in paragraph (xiii) above), no facts have come to the attention of such
counsel that cause such counsel to believe that (A) the Registration Statement
or any further amendment thereto at the time it became effective under the 1933
Act (but after giving effect to any modifications incorporated therein pursuant
to Rule 430A under the 1933 Act), contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading (it being understood
that such counsel need express no opinion as to the financial statements and
related notes thereto and the other financial, statistical, and accounting data
included in the Registration Statement or the Prospectus) or that (B) the
Prospectus or any further amendment or supplement thereto on the date it was
filed pursuant to the 1933 Act Regulations and as of the Closing Time or the
Option Closing Date, as the case may be, contained an untrue statement of a
material fact or omitted to state a material fact necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading (it being understood that such counsel need express no opinion as to
the financial statements and related notes thereto and the other financial,
statistical, and accounting data included in the Registration Statement or the
Prospectus).
In rendering such opinion, such counsel may state that they express no opinion
as to the laws of any jurisdiction other than the laws of the United States, the
general corporate law of Illinois and the general corporate law of Delaware.
5(c) Alston & Bird LLP, counsel for the Underwriters, shall have furnished to
the Representatives such opinion or opinions, dated the Closing Time and the
Option Closing Date, as the case may be, with respect to the incorporation of
the Company, this Agreement, the Pricing Agreement, the validity of the Shares
being delivered at the Closing Time and such Option Closing Date, as the case
may be, the Registration Statement, the Prospectus, and other related matters as
the Representatives may reasonably request, and such counsel shall have received
such papers and information as they may reasonably request to enable them to
pass upon such matters.
5(d) At the time of the execution of this Agreement and on the effective date
of any post-effective amendment to the Registration Statement and also at the
Closing Time and each Option Closing Date, Ernst & Young LLP shall have
furnished to the Representatives a letter or letters, dated the respective date
of delivery thereof, in form and substance satisfactory to the Representatives,
to the effect set forth in Annex I hereto and, if the Company has elected to
rely upon Rule 430A of the 1933 Act Regulations, to the further effect that they
have carried out procedures specified in paragraph (v) of Annex I with respect
to certain amounts, percentages, and financial information specified by the
Representatives and deemed to be part of the Registration Statement pursuant to
Rule 430A(b) and have found such amounts, percentages and financial information
to be in agreement with the records specified in such paragraph (v).
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5(e) The Registration Statement and the Prospectus shall contain all
statements that are required to be stated therein in accordance with the 1933
Act and the 1933 Act Regulations and shall conform in all material respects to
the requirements of the 1933 Act and the 1933 Act Regulations. Neither the
Registration Statement nor the Prospectus shall contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading.
5(f) No action, suit, or proceeding at law or in equity shall be pending or,
to the knowledge of the Company, be threatened against the Company or any
Subsidiary, that would be required to be described in the Prospectus other than
as described therein.
5(g) (A) Neither the Company nor any of its Subsidiaries shall have sustained
since the date of the latest audited financial statements included in the
Prospectus (i) any material adverse change, or any development involving a
prospective material adverse change, in the condition (financial or otherwise),
business, prospects, properties, net worth or results of operations, whether or
not arising in the ordinary course of business or (ii) any loss or interference
with its business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental action,
order or decree, otherwise than as set forth or contemplated in the Prospectus,
and (B) since the respective dates as of which information is given in the
Prospectus, there shall not have been any change in the capital stock or long-
term debt of the Company or any Subsidiary or any change, or any development
involving a prospective change, in or affecting the general affairs, management,
financial position, stockholders' equity or results of operations of the Company
and the Subsidiaries, otherwise than as set forth or contemplated in the
Prospectus, the effect of which, in any such case described in clause (A) or
(B), is in the Representatives' judgment so material and adverse as to make it
impracticable or inadvisable to proceed with the public offering or the delivery
of the Shares being delivered at the Closing Time or such Option Closing Date on
the terms and in the manner contemplated in the Prospectus.
5(h) On or after the date hereof there shall not have occurred any of the
following: (i) a suspension or material limitation of trading in securities
generally on either the Nasdaq National Market or any national stock exchange;
(ii) a general moratorium on commercial banking activities declared by either
Federal or District of Columbia authorities; or (iii) the outbreak or material
escalation of major hostilities involving the United States or the declaration
by the United States of a national emergency or war or any other calamity or
crisis or material adverse change in general economic, political or financial
conditions having an effect on the U.S. financial markets, if the effect of any
such event specified in this clause (iii), in the Representatives' judgment,
makes it impracticable or inadvisable to proceed with the public offering or the
delivery of the Shares being delivered at the Closing Time or such Option
Closing Date on the terms and in the manner contemplated by the Prospectus.
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5(i) The Shares to be sold by the Company at the Closing Time and such
Option Closing Date shall have been duly authorized for inclusion on the Nasdaq
National Market.
5(j) The Company shall have furnished or caused to be furnished to the
Representatives at the Closing Time and such Option Closing Date certificates of
officers of the Company satisfactory to the Underwriters as to the accuracy of
the representations and warranties of the Company herein at and as of such
Closing Time and Option Closing Date, as to the performance by the Company of
all of its obligations hereunder to be performed at or prior to such Closing
Time and Option Closing Date, as to the matters set forth in subsections (a) and
(e) through (g) of this Section and as to such other matters as the
Representatives may reasonably request.
If any condition specified in this Section 5 shall not have been fulfilled
when and as required to be fulfilled, this Agreement may be terminated by the
Underwriters by notice to the Company at any time at or prior to the Closing
Time, and such termination shall be without liability of any party to any other
party except as provided in Section 8 hereof.
Section 6. Indemnification.
6(a) The Company will indemnify and hold harmless each Underwriter and each
person, if any, who controls any Underwriter within the meaning of Section 15 of
the 1933 Act, against any losses, claims, damages, or liabilities to which any
Underwriter or such controlling person may become subject, under the 1933 Act or
otherwise, insofar as such losses, claims, damages, or liabilities (or actions
in respect thereof) arise out of or are based upon an untrue statement or
alleged untrue statement of a material fact contained in any preliminary
prospectus, the Registration Statement, or the Prospectus, or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse the
Underwriters and such controlling persons for any legal or other expenses
reasonably incurred by the Underwriters or such controlling persons in
connection with investigating or defending any such action or claim as such
expenses are incurred; provided, however, that (i) the Company shall not be
liable in any such case to the extent that any such loss, claim, damage, or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in the first, second or fourth
paragraph under the caption "Underwriting" in the Prospectus and (ii) such
indemnity with respect to any preliminary prospectus shall not inure to the
benefit of the Underwriters (or any person controlling the Underwriters) if the
person asserting any such loss, claim, damage or liability did not receive a
copy of the Prospectus (or the Prospectus as supplemented) at or prior to the
confirmation of the sale of Shares to such person in any case where such
delivery is required by the 1933 Act and the untrue statement or omission of a
material
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fact contained in such preliminary prospectus was corrected in the Prospectus
(or the Prospectus as supplemented).
6(b) Each Underwriter severally agrees to indemnify and hold harmless the
Company and each of the Company's directors, each officer of the Company who
signed the Registration Statement and each other person who controls the Company
within the meaning of the 1933 Act, against any losses, claims, damages, or
liabilities to which the Company or each such other person may become subject,
under the 1933 Act or otherwise, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
preliminary prospectus, the Registration Statement, or the Prospectus, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each case
to the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in the first, second
or fourth paragraph under the caption "Underwriting" in the Prospectus, and will
reimburse the Company or each such other person for any legal or other expenses
reasonably incurred by the Company or such other person in connection with
investigating or defending any such action or claim as such expenses are
incurred.
6(c) Promptly after receipt by an indemnified party under subsection 6(a) or
(b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party shall
not relieve it from any liability which it may have to any indemnified party
otherwise than under such subsection. In case any such action shall be brought
against any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified party (who shall not, except
with the consent of the indemnified party, be counsel to the indemnifying
party), and, after notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof, the indemnifying party shall
not be liable to such indemnified party under such subsection for any legal
expenses of other counsel or any other expenses, in each case subsequently
incurred by such indemnified party, in connection with the defense thereof other
than reasonable costs of investigation, unless such indemnified party reasonably
objects to such assumption on the ground that the named parties to any such
action (including any impleaded parties) include both such indemnified party and
an indemnifying party and such indemnified party reasonably believes that there
may be legal defenses available to it that are different from or in addition to
those available to such indemnifying party. In no event shall the indemnifying
parties be liable for fees and expenses of more than one counsel (in addition to
local counsel) separate from their own
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<PAGE>
counsel for all indemnified parties in connection with any one action or
separate but similar related actions in the same jurisdiction arising out of the
same general allegations or circumstances.
6(d) If the indemnification provided for in this Section 6 is unavailable to,
or insufficient to hold harmless, an indemnified party under subsection 6(a) or
(b) above in respect of any losses, claims, damages or liabilities (or actions
in respect thereof) referred to therein, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (or actions in respect thereof)
in such proportion as is appropriate to reflect the relative benefits received
by the Company on the one hand and the Underwriters on the other from the
offering of the Shares. If, however, the allocation provided by the immediately
preceding sentence is not permitted by applicable law or if the indemnified
party failed to give the notice required under subsection 6(c) above, then each
indemnifying party shall contribute to such amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Company on the one hand and
the Underwriters on the other in connection with the statements or omissions
which resulted in such losses, claims, damages or liabilities (or actions in
respect thereof), as well as any other relevant equitable considerations. The
relative benefits received by the Company on the one hand and the Underwriters
on the other shall be deemed to be in the same proportion as the total net
proceeds from the offering of the Shares purchased under this Agreement (before
deducting expenses) received by the Company bear to the total underwriting
discounts and commissions received by the Underwriters with respect to the
Shares purchased under this Agreement, in each case as set forth in the table on
the cover page of the Prospectus. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company on the one hand or the
Underwriters on the other and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Underwriters agree that it would not be just and equitable
if contributions pursuant to this subsection 6(d) were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this subsection 6(d). The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages or liabilities (or actions in respect thereof) referred to above in this
subsection 6(d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
subsection 6(d), no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Shares underwritten
by it and distributed to the public were offered to the public exceeds the
amount of any damages which such Underwriter has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent
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<PAGE>
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute pursuant to this
Section 6(d) are several in proportion to the respective number of shares
purchased by each of the Underwriters hereunder and not joint.
6(e) The obligations of the Company under this Section 6 shall be in addition
to any liability which the Company may otherwise have and shall extend, upon the
same terms and conditions, to each person, if any, who controls the Underwriters
within the meaning of the 1933 Act; and the obligations of the Underwriters
under this Section 6 shall be in addition to any liability which the
Underwriters may otherwise have and shall extend, upon the same terms and
conditions, to each officer and director of the Company (including any person
who, with his or her consent, is named in the Registration Statement as about to
become a director of the Company) and to each person, if any, who controls the
Company within the meaning of the 1933 Act.
6(f) The provisions of this Section 6 shall supersede the indemnification
provisions included in the letter agreement dated [November 26, 1997] between
Friedman, Billings, Ramsey & Co., Inc., on the one hand, and the Company, on the
other hand (the "Engagement Letter"), insofar, but only insofar, as such
indemnification provisions relate to any such loss, claim, damage or liability
that arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in any preliminary prospectus,
the Registration Statement or the Prospectus or any amendment or supplement
thereto. In all other respects, the provisions of the Engagement Letter shall
remain in full force and effect.
Section 7. Representations, Warranties and Agreements to Survive
Delivery. The respective indemnities, agreements, representations, warranties
and other statements of the Company and the Underwriters, as set forth in this
Agreement and the Pricing Agreement or made by or on behalf of them,
respectively, pursuant to this Agreement, shall remain in full force and effect,
regardless of any investigation (or any statement as to the results thereof)
made by or on behalf of the Underwriters or any controlling person of the
Underwriters, or the Company, or any officer or director or controlling person
of the Company, and shall survive delivery of and payment for the Shares.
Section 8. Termination of Agreement. The Underwriters may terminate this
Agreement, by notice to the Company, at any time at or prior to the Closing
Time, pursuant to Section 5.
Section 9. Default by One or More of the Underwriters. If one or more
of the Underwriters shall fail at Closing Time to purchase the Shares which it
or they are obligated to purchase under this Agreement and the Pricing Agreement
(the "Defaulted Shares"), the Representatives shall have the right, within 24
hours thereafter, to make
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<PAGE>
arrangements for one or more of the non-defaulting Underwriters, or any other
underwriters, to purchase all, but not less than all, of the Defaulted Shares in
such amounts as may be agreed upon and upon the terms herein set forth; if,
however, the Representatives shall not have completed such arrangements within
such 24-hour period, then:
(a) if the number of Defaulted Shares does not exceed ten percent (10%) of the
Shares, the non-defaulting Underwriters shall be obligated to purchase the full
amount thereof in the proportions that their respective underwriting obligations
hereunder bear to the underwriting obligations of all non-defaulting
Underwriters; or
(b) if the number of Defaulted Shares exceeds ten percent (10%) of the Shares,
this Agreement shall terminate without liability on the part of any non-
defaulting Underwriter.
No action taken pursuant to this Section 9 shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination of
this Agreement, the Representatives and the Company each shall have the right to
postpone the Closing Time for a period not exceeding seven days in order to
effect any required changes in the Registration Statement or Prospectus or in
any other documents or arrangements.
Section 10. Notices. All statements, requests, notices and agreements
hereunder shall be in writing, and, if to the Underwriters, shall be delivered
or sent by mail or facsimile transmission to Friedman, Billings, Ramsey & Co.,
Inc., 1001 Nineteenth Street North, Arlington, Virginia 22209, Attention: Eric
Billings (fax no. 703-312-9501); if to the Company, shall be delivered or sent
by mail or facsimile transmission to the address of the Company set forth in the
Registration Statement, Attention: Mark J. Schulte (fax no. 312-917-0460), with
a copy to Robert J. Rudnik, Esq. (fax no. 312-977-3701). Any such statements,
requests, notices or agreements shall take effect at the time of receipt
thereof.
Section 11. Parties. This Agreement and the Pricing Agreement shall be
binding upon, and inure solely to the benefit of, (i) the Underwriters and the
Company and (ii) to the extent provided in Sections 6 and 7 hereof, the officers
and directors of the Company and the Underwriters and each person who controls
the Company or the Underwriters, and their respective heirs, executors,
administrators, successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement or the Pricing Agreement.
No purchaser of any of the Shares from the Underwriters shall be deemed a
successor or assign merely by reason of such purchase.
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<PAGE>
Section 12. Time of Essence. Time shall be of the essence of this Agreement
and the Pricing Agreement. As used herein, the term "business day" shall mean
any day when the Commission's office in Washington, D.C. is open for business.
Section 13. Choice of Law. This Agreement and the Pricing Agreement shall be
governed by and construed in accordance with the internal laws of the State of
Illinois (without regard to conflict of laws provisions thereof).
Section 14. Counterparts. This Agreement may be executed by any one or more
of the parties hereto in any number of counterparts, each of which shall be
deemed to be an original, but all such counterparts shall together constitute
one and the same instrument.
If the foregoing is in accordance with your understanding, please sign and
return to us four counterparts hereof, and, upon such acceptance hereof by the
Representatives, this letter and such acceptance hereof shall constitute a
binding agreement between the Underwriters and the Company.
Very truly yours,
BROOKDALE LIVING COMMUNITIES, INC.
By:________________________
Name:
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
FRIEDMAN, BILLINGS, RAMSEY & CO., INC.
COWEN & COMPANY
As Representatives of the
Several Underwriters listed
on Schedule A attached hereto
By: Friedman, Billings, Ramsey & Co., Inc.
By:_________________________
Name:____________________
Title:_____________________
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<PAGE>
SCHEDULE A
Number of
Firm Shares
Underwriter to be Purchased
Friedman, Billings, Ramsey & Co., Inc.
Cowen & Company
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<PAGE>
ANNEX I
Pursuant to Section 5(d) of the Underwriting Agreement, the accountants shall
furnish letters to the Representatives to the effect that:
(i) They are independent certified public accountants with respect to the
Company and its subsidiaries within the meaning of the 1933 Act and the
applicable rules and regulations thereunder;
(ii) In their opinion, the financial statements and any supplemental
financial information and schedules audited (and, if applicable, and/or pro
forma financial information examined) by them and included in the Prospectus or
the Registration Statement comply as to form in all material respects with the
applicable accounting requirements of the 1933 Act and the related published
rules and regulations thereunder; and, if applicable, they have made a review in
accordance with standards established by the American Institute of Certified
Public Accountants of the unaudited consolidated interim financial statements as
indicated in their reports thereon, copies of which have been furnished to the
Underwriters;
(iii) The unaudited selected financial information with respect to the
consolidated results of operations and financial position of the Company for the
five most recent fiscal years included in the Prospectus agrees with the
corresponding amounts (after restatements where applicable) in the audited
consolidated financial statements for such five fiscal years for such fiscal
years;
(iv) On the basis of limited procedures, not constituting an audit in
accordance with generally accepted auditing standards, consisting of a reading
of the unaudited financial statements and other information referred to below, a
reading of the latest available interim financial statements of the Company and
its subsidiaries, inspection of the minute books of the Company and its
subsidiaries since the date of the latest audited financial statements included
in the Prospectus, inquiries of officials of the Company and its subsidiaries
responsible for financial and accounting matters and such other inquiries and
procedures as may be specified in such letter, nothing came to their attention
that caused them to believe that:
(A) the unaudited consolidated statements of income, consolidated
balance sheets and consolidated statements of cash flows included in the
Prospectus do not comply as to form in all material respects with the applicable
accounting requirements of the 1933 Act and the related published rules and
regulations thereunder, or are not in conformity with generally accepted
accounting principles applied on a basis substantially consistent with the basis
for the audited consolidated statements of income, consolidated balance sheets
and consolidated statements of cash flows included in the Prospectus;
(B) any other unaudited income statement data and balance sheet items
included in the Prospectus do not agree with the corresponding items in the
unaudited consolidated financial statements from which such data and items were
derived, and any such unaudited data and items were not determined on a basis
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<PAGE>
substantially consistent with the basis for the corresponding amounts in the
audited consolidated financial statements included in the Prospectus;
(C) the unaudited financial statements which were not included in the
Prospectus but from which were derived any unaudited condensed financial
statements referred to in Clause (A) and any unaudited income statement data and
balance sheet items included in the Prospectus and referred to in Clause (B)
were not determined on a basis substantially consistent with the basis for the
audited consolidated financial statements included in the Prospectus;
(D) as of a specified date not more than five days prior to the date
of such letter, there have been any changes in the consolidated capital stock
(other than issuances of capital stock upon exercise of options and stock
appreciation rights, upon earn-outs of performance shares and upon conversions
of convertible securities, in each case which were outstanding on the date of
the latest financial statements included in the Prospectus) or any increase in
the consolidated long-term debt of the Company and its subsidiaries, or any
decreases in consolidated net current assets or other items specified by the
Underwriters or any increases in any items specified by the Underwriters, in
each case as compared with amounts shown in the latest balance sheet included in
the Prospectus, except in each case for changes, increases or decreases which
the Prospectus discloses have occurred or may occur or which are described in
such letter; and
(E) for the period from the date of the latest financial statements
included in the Prospectus to the specified date referred to in Clause (D) there
were any decreases in consolidated net revenues or operating profit or the total
or per share amounts of consolidated net income or other items specified by the
Underwriters, or any increases in any items specified by the Underwriters, in
each case as compared with the comparable period of the preceding year and with
any other period of corresponding length specified by the Underwriters, except
in each case for decreases or increases which the Prospectus discloses have
occurred or may occur or which are described in such letter; and
(v) In addition to the audit referred to in their report(s) included in
the Prospectus and the limited procedures, inspection of minute books, inquiries
and other procedures referred to in paragraphs (iii) and (iv) above, they have
carried out certain specified procedures, not constituting an audit in
accordance with generally accepted auditing standards, with respect to certain
amounts, percentages and financial information specified by the Underwriters,
which are derived from the general accounting records of the Company and its
subsidiaries, which appear in the Prospectus, or in Part II of, or in exhibits
and schedules to, the Registration Statement specified by the Underwriters, and
have compared certain of such amounts, percentages and financial information
with the accounting records of the Company and its subsidiaries and have found
them to be in agreement.
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<PAGE>
EXHIBIT A
BROOKDALE LIVING COMMUNITIES, INC.
(a Delaware corporation)
2,000,000 Shares
Common Sock
(Par value $0.01 Per Share)
PRICING AGREEMENT
December __, 1997
FRIEDMAN, BILLINGS, RAMSEY & CO., INC.
COWEN & COMPANY
As Representatives of the Several Underwriters
c/o Friedman, Billings, Ramsey & Co., Inc.
1001 Nineteenth Street North
Arlington, Virginia 22209
Ladies and Gentlemen:
Reference is made to the Underwriting Agreement, dated December __, 1997 (the
"Underwriting Agreement"), relating to the purchase by Friedman, Billings,
Ramsey & Co., Inc. and those underwriters listed on Schedule A thereto
(collectively, the "Underwriters") of the Firm Shares and Option Shares (as each
such term is defined in the Underwriting Agreement (collectively, the
"Shares")), of Brookdale Living Communities, Inc. (the "Company").
Pursuant to Section 2 of the Underwriting Agreement, the Company agrees with
each Underwriter as follows:
1. The public offering price per share for the Shares determined as provided
in such Section 2, shall be $______________.
2. The purchase price per share for the Shares to be paid by the several
Underwriters shall be $_______, being an amount equal to the public offering
price set forth above less $________ per share.
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement between
the Underwriters and the Company in accordance with its terms.
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<PAGE>
Very truly yours,
BROOKDALE LIVING COMMUNITIES, INC.
By:________________________
Name:
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
FRIEDMAN, BILLINGS, RAMSEY & CO., INC.
COWEN & COMPANY
As Representatives of the
Several Underwriters listed
on Schedule A attached hereto
By: Friedman, Billings, Ramsey & Co., Inc.
By:__________________________
Name:
Title:
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<PAGE>
Exhibit 5.1
Winston & Strawn
35 West Wacker Drive
Chicago, Illinois 60601
December 15, 1997
Board of Directors
Brookdale Living Communities, Inc.
77 West Wacker Drive
Suite 4800
Chicago, IL 60601
Re: Brookdale Living Communities, Inc. -- Issuance of up to 2,300,000
Shares of Common Stock
Ladies and Gentlemen:
We have acted as counsel to Brookdale Living Communities, Inc., a
Delaware corporation (the "Company"), in connection with the preparation of a
Registration Statement on Form S-1 (File No. 333-41191) filed by the Company
with the Securities and Exchange Commission (the "Commission") on November 26,
1997 (together with all amendments thereto, the "Registration Statement"). The
Registration Statement relates to the registration under the Securities Act of
1933, as amended (the "Securities Act"), of up to 2,300,000 shares of the
Company's Common Stock, par value $0.01 per share (the "Common Stock"), all of
which shares are being sold by the Company. This opinion letter is being
delivered in accordance with the requirements of Item 601(b)(5) of Regulation S-
K promulgated under the Securities Act.
In connection with this opinion, we have examined and are familiar
with originals or copies, certified or otherwise identified to our satisfaction,
of (i) the Restated Certificate of Incorporation and the Amended and Restated
By-Laws of the Company, (ii) certain resolutions of the Board of Directors of
the Company relating to the offering of the Common Stock, (iii) the Registration
Statement and (iv) the proposed form of Underwriting Agreement by and between
Friedman, Billings, Ramsey & Co., Inc. and Cowen & Company, as representatives
of the several underwriters to be named therein, and the Company (the
"Underwriting Agreement"), filed as Exhibit 1.1 to the Registration Statement.
We have also examined such other agreements, instruments and documents and such
matters of law as we have deemed necessary or appropriate as a basis for the
opinion set forth below. In such examination, we have assumed the genuineness of
all signatures, the legal capacity
<PAGE>
Board of Directors
Brookdale Living Communities, Inc.
December 15, 1997
Page 2
of natural persons, the authenticity of all documents submitted to us as
originals, the conformity to original documents of all documents submitted to us
as certified or photostatic copies and the authenticity of the originals of such
latter documents. In making our examination of the documents executed or to be
executed by parties other than the Company, we have assumed that such parties
have the power, corporate or other, to enter into and perform all obligations
thereunder and we have also assumed the due authorization by all requisite
action, corporate or other, and execution and delivery by such parties of such
documents and the validity and binding effect thereof. As to any facts material
to this opinion which we did not independently establish or verify, we have
relied upon statements and representations of officers and other representatives
of the Company and others.
Based upon the foregoing and subject to the assumptions,
qualifications and limitations set forth herein, we are of the opinion that the
Common Stock has been duly authorized by the requisite corporate action on the
part of the Company and, following the execution and delivery by the Company of
the Underwriting Agreement, when issued and delivered pursuant to the terms of
the Underwriting Agreement, the Common Stock will be validly issued, fully paid
and nonassessable.
The foregoing opinion is limited to the General Corporation Law of the
State of Delaware. We express no opinion herein as to any other laws, statutes,
regulations or ordinances.
This opinion is rendered as of the date hereof and we undertake no,
and disclaim any, obligation to advise you of any changes in any matter set
forth herein, regardless of whether changes in such matters come to our
attention after the date hereof. This opinion is furnished to you solely for
your benefit in connection with the issuance of the Common Stock and is not to
be used, circulated, quoted or otherwise referred to for any other purpose
without our prior written consent.
We hereby consent to the reference to our firm under the heading
"Legal Matters" in the Prospectus forming a part of the Registration Statement
and to the filing of this opinion with the Commission as an exhibit to the
Registration Statement. In giving such consent, we do not concede that we are
"experts" within the
<PAGE>
Board of Directors
Brookdale Living Communities, Inc.
December 15, 1997
Page 3
meaning of the Securities Act or the rules and regulations thereunder or that
this consent is required by Section 7 of the Securities Act.
Very truly yours,
/s/ Winston & Strawn
WINSTON & STRAWN
<PAGE>
EXHIBIT 10.14
STOCK INCENTIVE PLAN
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C>
1. PURPOSE OF PLAN........................................................ 1
2. DEFINITIONS............................................................ 1
3. STOCK SUBJECT TO PLAN.................................................. 4
3.1 Stock Subject to Plan............................................. 5
3.2 Unexercised Options............................................... 5
3.3 Changes in Company Capitalization................................. 5
4. GRANTING OF OPTIONS.................................................... 5
4.1 Eligibility...................................................... 5
4.2 Incentive Stock Options.......................................... 6
4.3 Granting of Options.............................................. 6
4.4 Administration Of the Plan....................................... 7
5. TERMS OF OPTIONS....................................................... 8
5.1 Option Agreement................................................. 8
5.2 Vesting of Options............................................... 9
5.3 Option Exercise Price............................................ 9
5.4 Exercise Periods................................................. 9
5.5 Requirement of Continued Employment..............................11
5.6 Adjustments in Outstanding Options...............................11
5.7 Merger, Consolidation, Acquisition, Liquidation or Dissolution...12
5.8 No Right to Continued Employment.................................12
6. EXERCISE OF OPTIONS....................................................12
6.1 Person Eligible to Exercise......................................13
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
6.2 Partial Exercise................................................. 13
6.3 Manner of Exercise............................................... 13
6.4 Conditions to Issuance of Stock Certificates..................... 15
6.5 Rights as Stockholders........................................... 15
6.6 Transfer Restrictions............................................ 15
7. ADDITIONAL PROVISIONS.................................................. 16
7.1 Approval of Plan by Stockholders................................. 16
7.2 Nontransferability............................................... 16
7.3 Death or Disability of Optionee.................................. 16
7.4 Securities Act................................................... 17
7.5 Withholding of Tax............................................... 17
7.6 Termination and Amendment of Plan................................ 17
7.7 Duties of the Company............................................ 18
8. GENERAL PROVISIONS..................................................... 18
</TABLE>
ii
<PAGE>
SECTION 1. PURPOSE OF PLAN
The purpose of the Brookdale Living Communities, Inc. Stock Incentive Plan
(the "Plan") is to provide a means by which Brookdale Living Communities, Inc.
(the "Company") may attract and retain directors, executive officers and other
key employees with outstanding qualifications and consultants and advisers who
provide substantial and important services to the Company, by affording those
individuals with incentives to exert maximum efforts for the success of the
Company through opportunities to participate in the growth, development and
financial success of the Company.
SECTION 2. DEFINITIONS
Wherever the following capitalized terms are used in the Plan, they shall
have the following respective meanings:
2.1 "Board of Directors" means the Board of Directors of the Company.
2.2 "Change in Control" shall be deemed to have occurred if
(a) any "person" (as such term is used in Sections 13(d) and 14(d) of
the Exchange Act), other than a trustee or other fiduciary holding
securities under an employee benefit plan of the Company, a corporation
owned directly or indirectly by the stockholders of the Company in
substantially the same proportions as their ownership of the Common Stock,
Michael W. Reschke or The Prime Group, Inc. or any of their respective
affiliates, becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the Company
representing 50% or more of the total voting power represented by the
Company's then outstanding securities which vote generally in the election
of directors (referred to herein as "Voting Securities");
(b) during any period of two consecutive years, individuals who at the
beginning of such period constitute the Board of Directors and any new
directors whose election by the Board of Directors or nomination for
election by the Company's stockholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who either were
1
<PAGE>
directors at the beginning of the period or whose election or nomination
for election was previously so approved, cease for any reason to constitute
a majority of the Board of Directors;
(c) the stockholders of the Company approve a merger or consolidation
of the Company with any other corporation, other than a merger or
consolidation which would result in the Voting Securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into Voting Securities of the
surviving entity) more than 50% of the total voting power represented by
the Voting Securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation, or
(d) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by
the Company (in one transaction or a series of transactions) of all or
substantially all of the Company's assets.
2.3 "Code" means the Internal Revenue Code of 1986, as amended.
2.4 "Committee" means as specified in Section 4.4.
2.5 "Common Stock" means the Common Stock of the Company, par value $0.01
per share.
2.6 "Company" means Brookdale Living Communities, Inc., a Delaware
corporation. In addition, "Company" shall mean any corporation assuming, or
issuing new employee stock options in substitution for, Incentive Stock Options
outstanding under the Plan, in a transaction to which Section 424(a) of the Code
applies.
2.7 "Date of Grant" means the date as of which an Option has been granted
pursuant to the Plan.
2.8 "Disability" means, with respect to an individual, a physical or
mental condition resulting from any medically determinable physical or mental
impairment that renders such individual incapable of engaging in any substantial
gainful employment and that can be expected to result in death or that has
2
<PAGE>
lasted or can be expected to last for a continuous period of not less than four
consecutive months.
2.9 "Eligible Individual" means (i) any director, officer or key employee
of the Company or a Subsidiary, (ii) any officer or key employee of a
partnership in which the Company owns directly or indirectly at least 50% of the
capital or profits interest or (iii) any consultant or adviser whom the
Committee determines provides substantial and important service to the Company.
2.10 "Exchange Act" means the Securities Exchange Act of 1934, as amended.
2.11 "Fair Market Value" means the per share value of the Common Stock as
of a given date, determined as follows:
(a) If the Common Stock is listed or admitted for trading on the New
York Stock Exchange (or if not, on another national securities exchange
upon which the Common Stock is listed), the Fair Market Value of the Common
Stock is the closing quotation for such stock based on composite
transactions for the New York Stock Exchange (or if not listed on it, such
other national securities exchange) on the last trading day for such stock
prior to such given date.
(b) If the Common Stock is not traded on any national securities
exchange, but is quoted on the National Association of Securities Dealers,
Inc. Automated Quotation System (NASDAQ System) or any similar system of
automated dissemination of quotations of prices in common use, the Fair
Market Value of the Common Stock is the average of the last sales price (if
the stock is then listed as a national market issue under the NASDAQ
System) or the mean between the closing representative bid and asked prices
(in all other cases) for the stock on the last 5 trading days for such
stock preceding such given date as reported by the NASDAQ System (or such
similar quotation system).
(c) If neither clause (a) nor clause (b) of this Section 2.12 is
applicable, the Fair Market Value of the Common Stock is the fair market
value per share as of such valuation date,
3
<PAGE>
as determined by the Board of Directors in good faith and in accordance
with uniform principles consistently applied.
2.12 "Incentive Stock Option" means an Option which qualifies under Section
422 of the Code and which is designated as an Incentive Stock Option by the
Company or the Committee.
2.13 "Non-Qualified Option" means an Option which is not an Incentive Stock
Option and which is designated as a Non-Qualified Option by the Company or the
Committee.
2.14 "Option" means any Incentive Stock Option or Non-Qualified Option
granted under this Plan.
2.15 "Optionee" means an Eligible Individual to whom an Option is granted
under this Plan.
2.16 "Plan" means the Brookdale Living Communities, Inc. Stock Incentive
Plan, as it may be amended from time to time.
2.17 "Secretary" means the Secretary of the Company.
2.18 "Securities Act" means the Securities Act of 1933, as amended.
2.19 "Severance Date" means (i) as to an Eligible Individual who is an
employee of the Company, a Subsidiary or a Company-owned partnership, the date
the individual ceases to be so employed, (ii) as to an Eligible Individual who
is a director of the Company or a Subsidiary but not an employee described in
(i) next above, the date the individual ceases to be such a director, or (iii)
as to an Eligible Individual who is not included in (i) or (ii) above, the date
specified in the applicable Stock Option Agreement.
2.20 "Stock Option Agreement" means the agreement reflecting the terms and
conditions of an Option pursuant to Section 5.1.
2.21 "Subsidiary" means a subsidiary of the Company within the meaning of
Section 424(f) of the Code.
SECTION 3. STOCK SUBJECT TO PLAN
4
<PAGE>
3.1 Stock Subject to Plan
The stock subject to an Option shall be shares of the Company's Common
Stock. The aggregate number of such shares which may be issued upon exercise of
Options granted under Section 4 of the Plan shall not exceed 830,000, unless and
until a larger number shall have been approved by the Company's stockholders
pursuant to Section 7.6.
3.2 Unexercised Options
If any Option expires or is cancelled without having been fully
exercised, a new Option or Options for the number of shares of Common Stock that
would have been issued upon exercise of the unexercised portion of such Option
may be granted under this Plan, subject to the limitations of Section 3.1.
3.3 Changes in Company Capitalization
In the event that the outstanding shares of Common Stock are hereafter
changed into or exchanged for a different number or kind of shares or other
securities of the Company, or of another corporation, by reason of
reorganization, merger, consolidation, recapitalization, reclassification, or
the number of shares is increased or decreased by reason of a stock split, stock
dividend, combination of shares or any other increase or decrease in the number
of such shares of Common Stock effected without receipt of consideration by the
Company (provided, however, that conversion or exchange of any convertible or
exchangeable securities of the Company shall not be deemed to have been
"effected without receipt of consideration"), the Committee shall make
appropriate adjustments in the number and kind of shares for the purchase of
which Options may be granted, including adjustments of the limitations in
Section 3.1 and Section 4.1.
SECTION 4. GRANTING OF OPTIONS
4.1 Eligibility
The maximum number of shares of Common Stock that may be subject to
Options granted during any calendar year to any one Optionee shall not exceed
150,000. Options granted to an Eligible
5
<PAGE>
Individual who is an employee of the Company or a Subsidiary may be either
Incentive Stock Options or Non-Qualified Options. Options granted to any other
Eligible Individual may only be Non-Qualified Options.
4.2 Incentive Stock Options
No Incentive Stock Option shall be granted unless it qualifies as an
"incentive stock option" under Section 422 of the Code on the Date of Grant.
4.3 Granting of Options
(a) Subject to the availability of shares as provided under Sections
3.1 and 7.6, the Committee shall from time to time, in its absolute
discretion:
(i) Determine who are the Eligible Individuals and select from
among them those to be granted Options;
(ii) Determine the number of shares to be subject to such Options
granted to such selected individuals, and to the extent permitted by
the Code, determine whether such Options are to be Incentive Stock
Options or Non-Qualified Options; and
(iii) Determine the terms and conditions of such Options,
consistent with the Plan.
(b) Upon the selection of an individual to be granted an Option, the
Committee shall instruct the Secretary to issue such Option and may impose
such conditions on the grant of such Option as it deems appropriate.
Without limiting the generality of the preceding sentence, the Committee
may, in its discretion and on such terms as it deems appropriate, require
as a condition on the grant of an Option to an individual that the
individual surrender for cancellation some or all of the unexercised
Options which have been previously granted to him. An Option the grant of
which is conditioned upon such surrender may have an Option price lower (or
higher) than the Option price of the surrendered Option, may cover the same
(or a lesser or greater) number of shares as the
6
<PAGE>
surrendered Option, may contain such other terms as the Committee deems
appropriate and shall be exercisable in accordance with its terms, without
regard to the number of shares, price, Option period or any other term or
condition of the surrendered Option.
4.4 Administration Of the Plan
(a) The Plan shall be administered by the Compensation Committee of
the Board, or by any other Committee appointed by the Board, which
Committee (unless otherwise determined by the Board) shall satisfy the
"nonemployee director" requirements of Rule 16 b-3 under the Exchange Act
and the regulations of Rule 16b-3 under the Exchange Act and the "outside
director" provisions of Code Section 162(m), or any successor regulations
or provisions. The members of the Committee shall be appointed from time to
time by, and shall serve at the discretion of, the Board of Directors.
Committee members may resign by delivering written notice to the Secretary.
(b) Except as otherwise provided in the Plan and except as otherwise
expressly stated to the contrary in the Company's Articles of
Incorporation, Bylaws, or elsewhere, the Committee shall have the sole
discretionary authority (i) to select the Eligible Individuals who are to
be granted Options under the Plan, (ii) to determine the number of Options
to be granted to any Eligible Individual at any time, (iii) to authorize
the granting of Options, (iv) to impose such conditions and restrictions on
Options as it determines appropriate, (v) to interpret the Plan, (vi) to
prescribe, amend and rescind rules and regulations relating to the Plan,
and (vii) to take any other actions in connection with the Plan as it may
deem necessary or advisable for the administration of the Plan. The
determinations of the Committee on the matters referred to in this Section
4 shall be conclusive.
(c) A majority of the members of the Committee shall constitute a
quorum. All determinations of the Committee shall be made by a majority of
its members. Any decision or determination reduced to writing and signed by
all of the members of the Committee shall be fully effective as if it had
been made by a majority vote at a meeting duly called and held.
7
<PAGE>
(d) The Committee may delegate to one or more persons any of its
powers, other than its power to authorize the granting of Options, or
designate one or more persons to do or perform those matters to be done or
performed by the Committee, including administration of the Plan. Any
person or persons delegated or designated by the Committee shall be subject
to the same obligations and requirements imposed on the Committee and its
members under the Plan.
(e) Members of the Committee shall receive such compensation for their
services as members as may be determined by the Board of Directors. All
expenses and liabilities incurred by members of the Committee in connection
with the administration of the Plan shall be borne by the Company. The
Committee may employ attorneys, consultants, accountants, appraisers,
brokers or other persons. The Committee, the Company and the Board of
Directors shall be entitled to rely upon the advice, opinions or valuations
of any such persons. All elections taken and all interpretations and
determinations made by the Committee in good faith shall be final and
binding upon all Optionees, the Company and all other interested persons.
No member of the Committee shall be personally liable for any action,
determination or interpretation made in good faith with respect to the
Plan. Members of the Committee and each person or persons designated or
delegated by the Committee shall be entitled to indemnification by the
Company for any action or any failure to act in connection with services
performed by or on behalf of the Committee for the benefit of the Company
to the fullest extent provided or permitted by the Company's Articles of
Incorporation, Bylaws, any insurance policy or other agreement intended for
the benefit of the Committee, or by any applicable law.
SECTION 5. TERMS OF OPTIONS
5.1 Option Agreement
Each Option shall be evidenced by a written Stock Option Agreement,
which shall be executed by the Optionee and an authorized officer of the Company
and which shall indicate the Date of the Grant and contain such terms and
conditions as the Committee shall determine with respect to such Option,
consistent with the Plan. Stock Option Agreements evidencing Incentive Stock
Options shall contain such terms and conditions as may be necessary to
8
<PAGE>
qualify such Options as "incentive stock options" under Section 422 of the Code.
5.2 Vesting of Options
(a) Options granted under the Plan shall vest as determined by the
Committee and set forth in the respective Stock Option Agreement.
(b) Unless otherwise provided in the Stock Option Agreement, in the
event of a Change in Control on or before the Optionee's Severance Date,
each outstanding Option held by such Optionee to the extent not theretofore
vested shall fully vest as of the date of such Change in Control.
(c) Subject to the provisions of Section 7.3, Options which have been
granted but not yet vested under this Section 5.2 as of an Optionee's
Severance Date shall be forfeited unless otherwise provided in the Stock
Option Agreement.
5.3 Option Exercise Price
The exercise price per share for Options granted under the Plan shall
be set by the Committee; provided, however, that the price per share shall be
not less than 100% of the Fair Market Value of such share on the Date of Grant;
provided, further, that, in the case of an Incentive Stock Option, the price per
share shall not be less than 110% of the Fair Market Value of such share on the
Date of Grant in the case of an individual then owning (within the meaning of
Section 424(d) of the Code) more than 10% of the total combined voting power of
all classes of stock of the Company or any Subsidiary.
5.4 Exercise Periods
(a) No Option may be exercised in whole or in part until it has
vested, except as may be provided in Section 5.7.
(b) Subject to the provisions of Sections 5.4(c), 5.7 and 7.3, Options
shall become exercisable at such times and in such installments (which may
be cumulative) as the Committee shall provide in the terms of each
individual Stock Option Agreement; provided, however, that, by resolution
adopted after an Option is granted, the Committee may, on such terms and
conditions as it may determine to be appropriate and
9
<PAGE>
subject to Sections 5.4(c), 5.7 and 7.3, accelerate the time at which such
Option or any portion thereof may be exercised.
(c) To the extent that the aggregate Fair Market Value of stock with
respect to which Incentive Stock Options (within the meaning of Section 422
of the Code, but without regard to Section 422(d) of the Code) are
exercisable for the first time by an Optionee during any calendar year
(under the Plan and all other incentive stock option plans of the Company)
exceeds $100,000, such Options shall be treated as Non-Qualified Options.
The rule set forth in the preceding sentence shall be applied by taking
Options into account in the order in which they were granted. For purposes
of this Section 5.4(c), the Fair Market Value of Common Stock shall be
determined as of the time the Option with respect to such Common Stock is
granted.
(d) No Option may be exercised to any extent by anyone after the first
to occur of the following events:
(i) In the case of an Incentive Stock Option,
(A) the expiration of ten years from the Date of Grant; or
(B) in the case of an Optionee owning (within the meaning of
Section 424(d) of the Code), at the Date of Grant, more than
10% of the total combined voting power of all classes of
stock of the Company or any subsidiary of the Company, the
expiration of five years from the Date of Grant; or
(C) except in the case of any Optionee who is disabled
(within the meaning of Section 22(e)(3) of the Code), the
expiration of three months from the Optionee's Severance
Date unless either such Severance Date occurs due to such
Optionee's death or the Optionee dies within said three-
month period; or
(D) in the case of an Optionee who is disabled (within the
meaning of Section 22(e)(3) of the Code), the expiration of
one year from the Optionee's Severance Date unless either
such Severance Date occurs due to such Optionee's death
10
<PAGE>
or the Optionee dies within said one-year period; or
(E) the expiration of one year from the date of the
Optionee's death.
(ii) In the case of a Non-Qualified Option,
(A) the expiration of ten years from the Date of Grant; or
(B) the expiration of one year from the Optionee's
Severance Date unless the Optionee dies within said one-year
period; or
(C) the expiration of one year from the date of the
Optionee's death.
(e) Subject to the provisions of Section 5.4(d), the Committee shall
provide, in the terms of each individual Stock Option Agreement, when such
Option expires and becomes unexercisable.
5.5 Requirement of Continued Employment
An Option shall be forfeited if the Optionee's Severance Date occurs
within one year from the Date of Grant unless such Severance Date occurs due to
a Change in Control.
5.6 Adjustments in Outstanding Options
In the event that the outstanding shares of Common Stock subject to
Options are changed into or exchanged for a different number or kind of shares
of the Company or other securities of the Company by reason of merger,
consolidation, recapitalization, reclassification, or the number of shares is
increased or decreased by reason of a stock split-up, stock dividend,
combination of shares or any other increase or decrease in the number of such
shares of Common Stock effected without receipt of consideration by the Company
(provided, however, that conversion of any convertible securities of the Company
shall not be deemed to have been "effected without receipt of consideration"),
the Committee shall make appropriate adjustments in the number and kind of
shares as to which all outstanding Options, or portions thereof then
unexercised, shall be exercisable, to the end that after such event
11
<PAGE>
the Optionee's proportionate interest shall be maintained as before the
occurrence of such event. Such adjustment in an outstanding Option shall be made
without change in the total price applicable to the Option or the unexercised
portion of the Option (except for any change in the aggregate price resulting
from rounding-off of share quantities or prices) and with any necessary
corresponding adjustment in Option price per share; provided, however, that, in
the case of Incentive Stock Options, each such adjustment shall be made in such
manner as not to constitute a "modification" within the meaning of Section
424(h)(3) of the Code. Any such adjustment made by the Committee shall be final
and binding upon all Optionees, the Company and all other interested persons.
5.7 Merger, Consolidation, Acquisition, Liquidation or Dissolution
Notwithstanding the provisions of Section 5.6, in its absolute
discretion, and on such terms and condition as it deems appropriate, the
Committee may provide by the terms of any Option that such Option cannot be
exercised after the merger or consolidation of the Company with or into another
corporation, the acquisition by another corporation or person (excluding any
trustee or other fiduciary holding securities under an employee benefit plan of
the Company) of all or substantially all of the Company's assets or more than
50% of the Company's then outstanding voting stock, or the liquidation or
dissolution of the Company; and if the Committee so provides, it may, in its
absolute discretion and on such terms and conditions as it deems appropriate,
also provide, either by the terms of such Option or by a resolution adopted
prior to the occurrence of such merger, consolidation, acquisition, liquidation
or dissolution, that, for some period of time prior to such event, such Option
shall be exercisable to all shares covered thereby, notwithstanding anything to
the contrary in Section 5.4(a), Section 5.4(b) and/or any installment provisions
of such Option.
5.8 No Right to Continued Employment
Nothing in this Plan or in any Stock Option Agreement hereunder shall
confer upon any Optionee any right to continued employment or retention in
service or shall interfere with or restrict in any way the rights of the
Company, a Subsidiary or any other person to terminate or discharge any Optionee
at any time for any reason whatsoever.
SECTION 6. EXERCISE OF OPTIONS
12
<PAGE>
6.1 Person Eligible to Exercise
During the lifetime of the Optionee, only such Optionee may exercise
an Option (or any portion thereof) granted to such Optionee. After the death of
the Optionee, any exercisable portion of an Option may, prior to the time when
such portion becomes unexercisable under the Plan or the applicable Stock Option
Agreement, be exercised by the personal representative of such Optionee or by
any person empowered to do so under the deceased Optionee's will or under the
then applicable laws of descent and distribution.
6.2 Partial Exercise
At any time and from time to time prior to the time when any
exercisable Option or exercisable portion thereof becomes unexercisable under
the Plan or the applicable Stock Option Agreement, such Option or portion
thereof may be exercised in whole or in part; provided, however, that the
Company shall not be required to issue fractional shares and the Committee may,
by the terms of the Stock Option Agreement, require any partial exercise to be
with respect to a specified minimum number of shares.
6.3 Manner of Exercise
An exercisable Option, or any exercisable portion thereof, may be
exercised solely by delivery to the Secretary or his office of all of the
following prior to the time when such Option or such portion becomes
unexercisable under the Plan or the applicable Stock Option Agreement:
(a) notice in writing signed by the Optionee or other person then
entitled to exercise such Option or portion, stating that such Option or
portion is exercised, such notice complying with all applicable rules
established by the Committee; and
(b) (i) full payment (in cash or by check) for the shares with respect
to which such Option or portion is thereby exercised; or
(ii) if permitted under the terms of an Optionee's Stock Option
Agreement or with the consent of the Committee, (A) shares of the
Company's Common Stock owned by the
13
<PAGE>
Optionee duly endorsed for transfer to the Company, or (B) shares of
the Company's Common Stock issuable to the Optionee upon exercise of
the Option, with a Fair Market Value on the date of Option exercise
equal to the aggregate Option price of the shares with respect to
which such Option or portion is thereby exercised; or
(iii) with the consent of the Committee, a full recourse promissory
note bearing interest (at least such rate as shall then preclude the
imputation of interest under the Code or any successor provision) and
payable upon such terms as may be prescribed by the Committee. The
Committee may also prescribe the form of such note and the security to
be given for such note. No Option may, however, be exercised by
delivery of a promissory note or by a loan from the Company when or
where such loan or other extension of credit is prohibited by law; or
(iv) with the consent of the Committee, any combination of the
consideration provided in the foregoing subsections (i), (ii) and
(iii); and
(c) the payment to the Company of all amounts which it is required to
withhold under federal, state or local law in connection with the exercise
of the Option; provided that, with the consent of the Committee, (i) shares
of the Company's Common Stock owned by the Optionee duly endorsed for
transfer, or (ii) shares of the Company's Common Stock issuable to the
Optionee upon exercise of the Option, valued at Fair Market Value as of the
date of Option exercise, may be used to make all or part of such payment;
and
(d) such representations and documents as the Committee, in its
absolute discretion, deems necessary or advisable to effect compliance with
all applicable provisions of the Securities Act and any other federal or
state securities laws or regulations, including the representation that the
shares of the Common Stock are being acquired for investment and not
resale. The Committee may, in its absolute discretion, also take whatever
additional actions it deems appropriate to effect such compliance
including, without limitation, placing legends on share certificates and
issuing stop-transfer orders to transfer agents and registrars; and
14
<PAGE>
(e) in the event that the Option or portion thereof shall be exercised
pursuant to Section 6.1 by any person or persons other than the Optionee,
appropriate proof of the right of such person or persons to exercise the
Option or portion thereof.
6.4 Conditions to Issuance of Stock Certificates
The shares of Common Stock issuable and deliverable upon the exercise
of an Option, or any portion thereof, may be either previously authorized but
unissued shares or issued shares which have then been reacquired by the Company.
The Company shall not be required to issue or deliver any certificate or
certificates for shares of Common Stock purchased upon the exercise of any
Option or portion thereof prior to fulfillment of all of the following
conditions:
(a) the satisfaction of all requirements set forth in Section 6.3,
including payment of the exercise price; and
(b) the obtaining of any approval or other clearance from any state or
federal governmental agency which the Committee shall, in its absolute
discretion, determine to be necessary or advisable; and
(c) the lapse of such reasonable period of time following the exercise
of the Option as the Committee may establish from time to time for reasons
of administrative convenience.
6.5 Rights as Stockholders
The holders of Options shall not be, nor have any of the rights or
privileges of, stockholders of the Company in respect to any shares purchasable
upon the exercise of any part of an Option unless and until the Option is
exercised, the Option price has been paid to the Company and certificates
representing such shares have been issued by the Company to such holders.
6.6 Transfer Restrictions
The Committee, in its absolute discretion, may impose such
restrictions on the transferability of the shares purchasable upon the exercise
of an Option as it deems appropriate. Any such restriction shall be set forth in
the respective Stock Option
15
<PAGE>
Agreement and may be referred to on the certificates evidencing such shares. The
Committee may require any Optionee to give the Company prompt notice of any
disposition of shares of stock acquired by exercise of an Incentive Stock
Option, within two years from the Date of Grant of such Option or one year after
the acquisition of such shares by such Optionee. The Committee may direct that
the certificates evidencing shares acquired by exercise of an Option refer to
such requirement to give prompt notice of disposition.
SECTION 7. ADDITIONAL PROVISIONS
7.1 Approval of Plan by Stockholders
This Plan will be submitted for the approval of the Company's
stockholders within twelve months before or after the date of the Board of
Directors' initial adoption of the Plan. Options may be granted prior to such
stockholder approval; provided, however, that such Options shall not be
exercisable prior to the time when the Plan is approved by the stockholders;
provided, further, that if such approval has not been obtained at the end of
said twelve-month period, all Options previously granted under the Plan shall
thereupon be cancelled and become null and void.
7.2 Nontransferability
No Option or interest or right therein or part thereof shall be liable
for the debts, contracts or engagements of the Optionee or any successors in
interest to the Optionee or shall be subject to disposition by transfer,
alienation, anticipation, pledge, encumbrance, assignment or any other means
whether such disposition be voluntary or involuntary or by operation of law by
judgment, levy, attachment, garnishment or any other legal or equitable
proceedings (including bankruptcy), and any attempted disposition thereof shall
be null and void and of no effect; provided, however, that nothing in this
Section 7.2 shall prevent transfers by will or by the applicable laws of descent
and distribution.
7.3 Death or Disability of Optionee
If an Optionee dies or incurs a Severance Date due to Disability, any
Option of such Optionee which has been outstanding for at least one year shall
fully and immediately be vested. In
16
<PAGE>
the event of an Optionee's death the executor, administrator or other personal
representative of the Optionee's estate, or any heir, successor, assign or other
transferee of the Optionee receiving such Options by will or by the laws of
descent and distribution, shall have the right, subject to the restrictions
hereof, to exercise all vested Options to acquire shares of Common Stock subject
to such Options at any time within one year after the date of the Optionee's
death.
7.4 Securities Act
No shares of Common Stock of the Company shall be required to be
distributed until the Company shall have taken such action, if any, as is then
required to comply with the provisions of the Securities Act or any other then
applicable securities law. The Company reserves the right to place a legend on
any stock certificate issued pursuant to the Plan to assure compliance with this
Section and with the vesting requirements of Section 5.2.
7.5 Withholding of Tax
The Company shall have the right to deduct from compensation otherwise
payable to an Optionee any federal, state or local income or other taxes
required by law to be withheld with respect to any distributions under the Plan.
7.6 Termination and Amendment of Plan
The Committee may at any time suspend or terminate the Plan, or make
such modifications of the Plan as it shall deem advisable, provided that the
Plan shall not be so changed to increase the cost of the Plan to the Company.
However, without approval of the Company's stockholders given within twelve
months before or after the action by the Committee, no action of the Committee
may, except as provided in Section 3.3, increase any limit imposed in Section
3.1 on the maximum number of shares which may be issued upon exercise of
Options, materially modify the eligibility requirements of Section 4.1, reduce
the minimum Option price requirements of Section 5.3, or extend the limit
imposed in this Section 7.6 on the period during which Options may be granted.
No Option may be granted during any period of suspension nor after termination
of the Plan, and in no event may any Option be granted under this Plan after the
first to occur of the following events:
17
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(a) the expiration of ten years from the date the Plan is adopted by
the Board of Directors; or
(b) the expiration of ten years from the date the Plan is approved by
the Company's stockholders under Section 7.1.
7.7 Duties of the Company
The Company shall, at all times during the term of each Option,
reserve and keep available for issuance or delivery such number of shares of
Common Stock as will be sufficient to satisfy the requirements of all Options at
the time outstanding, shall pay all original issue taxes with respect to the
issuance or delivery of shares pursuant to the exercise of such Option and all
other fees and expenses necessarily incurred by the Company in connection
therewith.
SECTION 8. GENERAL PROVISIONS
(a) No individual shall have any claim or right to be granted Options
under the Plan. Neither the adoption and maintenance of the Plan nor the
granting of Options pursuant to the Plan shall be deemed to constitute a
contract of employment between the Company and any individual or to be a
condition of the employment of any person.
(b) The Company shall pay all costs and expenses of administering the
Plan.
(c) The granting of Options and the issuance of shares of Common Stock
under the Plan shall be subject to all applicable laws, rules, and
regulations, and to such approvals by any governmental agencies or national
securities exchanges as may be required. The provisions of this Plan shall
be interpreted so as to comply with the conditions or requirements of the
Securities Act, the Exchange Act, and rules and regulations issued
thereunder unless a contrary interpretation of any such provision is
otherwise required by applicable law.
(d) The granting of an Option shall impose no obligation upon the
Optionee to exercise such option.
18
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(e) Whenever the context so indicates, the singular or plural number,
and the masculine, feminine or neuter gender shall each be deemed to
include the other.
(f) This Plan and all Option agreements entered into pursuant thereto
shall be construed and enforced in accordance with, and governed by, the
laws of the State of Delaware, determined without regard to its conflict of
interest rules.
19
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EXHIBIT 10.48
AGREEMENT FOR PURCHASE AND SALE
BY AND BETWEEN
LINCOLN HARBOR VILLAGE, L.P.
("SELLER")
AND
BROOKDALE LIVING COMMUNITIES, INC.
("PURCHASER")
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
SECTION 1 - DEFINITIONS.............................................. 1
SECTION 2 - PURCHASE & SALE.......................................... 5
2.1 EARNEST MONEY DEPOSIT.................................... 6
2.2 ESCROW AGENT............................................. 6
2.3 CLOSING.................................................. 7
SECTION 3 - TITLE COMMITMENT, SURVEY, EXISTING CONTRACTS AND
ENVIRONMENTAL................................................... 7
3.1 TITLE COMMITMENT......................................... 7
3.2 SURVEY................................................... 8
3.3 EXISTING CONTRACTS AND REPORTS............................ 8
3.4 ENVIRONMENTAL............................................ 8
3.5 FEASIBILITY PERIOD....................................... 8
SECTION 4 - PRORATIONS AND EXPENSES.................................. 9
4.1 TAXES.................................................... 9
4.2 RENTS.................................................... 10
4.3 OTHER ITEMS.............................................. 10
4.4 CLOSING EXPENSES......................................... 11
4.5 SURVIVAL OF SECTION 4.................................... 12
SECTION 5 - REPRESENTATIONS & WARRANTIES............................. 12
5.1 SELLER................................................... 12
5.2 PURCHASER................................................ 15
5.3 SELLER AND PURCHASER..................................... 16
5.4 SURVIVAL OF SECTION 5.................................... 16
SECTION 6 - RADON GAS................................................ 16
SECTION 7 - CONDEMNATION............................................. 17
SECTION 8 - INVESTIGATION PERIOD..................................... 17
SECTION 9 - "AS IS-WHERE IS" SALE.................................... 19
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
SECTION 10- CONDUCT OF SELLER PRIOR TO CLOSING....................... 19
SECTION 11- ASSISTANCE & COOPERATION OF PARTIES...................... 22
SECTION 12- DOCUMENTS FOR CLOSING.................................... 22
SECTION 13- BROKERS.................................................. 24
SECTION 14- TIMING OF OFFER AND ACCEPTANCE OR REJECTION THEREOF...... 24
SECTION 15- ERISA.................................................... 25
SECTION 16- CONDITIONS PRECEDENT..................................... 25
SECTION 17- TERMINATION AND DEFAULT.................................. 26
SECTION 18- RISK OF LOSS............................................. 27
18.1 DAMAGES GREATER THAN $500,000.00......................... 27
18.2 DAMAGES LESS THAN $500,000.00............................ 28
SECTION 19- NOTICES.................................................. 28
SECTION 20- ASSIGNMENT............................................... 30
SECTION 21- MISCELLANEOUS............................................ 30
21.1 ENTIRE AGREEMENT......................................... 30
21.2 NON-WAIVER............................................... 30
21.3 COUNTERPART SIGNATURES................................... 30
21.4 TIME OF THE ESSENCE...................................... 31
21.5 GENDER AND HEADINGS...................................... 31
21.6 CHOICE OF LAW............................................ 31
21.7 LITIGATION/VENUE......................................... 31
21.8 SUCCESSORS AND ASSIGNS................................... 31
21.9 CONFIDENTIALITY.......................................... 31
SECTION 22- TERMINATION OF CONTRACTS................................. 32
</TABLE>
ii
<PAGE>
AGREEMENT FOR PURCHASE AND SALE
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This Agreement for Purchase and Sale ("Agreement") between Lincoln Harbor
Village, L.P. a Delaware limited partnership (hereinafter referred to as
"Seller") and Brookdale Living Communities, Inc. a Delaware corporation,
(hereinafter referred to as "Purchaser").
W I T N E S S E T H:
In consideration of the mutual promises hereinafter set forth, and for Ten
and No/100 Dollars ($10.00) and other good and valuable consideration, the
sufficiency and receipt of which is hereby acknowledged, Seller and Purchaser
mutually agree as follows:
SECTION 1 - DEFINITIONS
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For purposes of this Agreement, each of the following terms, when used
herein with an initial capital letter, shall have the following meaning:
1.1 APPURTENANCES. All rights, privileges and easements appurtenant to
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the Land, including, without limitation, all minerals and oil, gas and other
hydrocarbon substances on and under the Land; development rights; air rights;
easements; rights of way; sidewalks; and all other appurtenances used in
connection with the beneficial use and enjoyment of the Land; and all licenses,
consents, easements, rights of way and approvals required from private parties
to make use of utilities and to insure vehicular and pedestrian ingress and
egress to and from the Real Property.
1.2 BUSINESS DAY. Each day other than Saturday, Sunday and legal holidays
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in the State of Illinois.
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1.3 CLOSING. The consummation of the purchase and sale of the Property as
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contemplated by this Agreement.
1.4 CLOSING DATE. The date upon which Closing occurs.
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1.5 DEPOSIT(S). The earnest money deposits to be paid by Purchaser to the
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Escrow Agent in accordance with Section 2.1 together with any interest earned
thereon.
1.6 EFFECTIVE DATE. The date of Seller's acceptance/approval of
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Purchaser's offer in accordance with Section 14.
1.7 ESCROW AGENT. Lawyers Title Insurance Corporation, at its office in
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Chicago, Illinois.
1.8 GOVERNMENTAL REGULATIONS. Any applicable laws, ordinances, rules, and
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regulations (including, without limitation, those relating to land use,
subdivision, zoning, environmental, toxic or hazardous wastes, the Americans
with Disabilities Act, occupational health and safety, and building and fire
codes) of any of the local, city, state, or federal governmental bodies bearing
on the construction, alteration, rehabilitation, maintenance, use, operation, or
development of the Property.
1.9 IMPROVEMENTS. All buildings, fixtures, structures, parking areas,
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landscaping and other improvements constructed and located on the Real Property.
1.10 INTANGIBLE PERSONAL PROPERTY. All of Seller's interest in assignable
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intangible property consisting of: (a) any and all Licenses and Permits and
other approvals in effect on the Closing Date and necessary for the current use
and operation of the Real Property; (b) any and all warranties, contractual
rights, rebates and indemnities or other rights used or owned in
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connection with the ownership or operation of the Real Property; and (c)
telephone numbers, trade names, including the name "Harbor Village," and other
intangible property owned or used in connection with the ownership or use of the
Real Property.
1.11 INVESTIGATION PERIOD. A period of forty-five (45) calendar days from
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the date Seller delivers the last of the items to be delivered by Seller under
Section 3 of this Agreement.
1.12 LEASES. Those leases, residency, occupancy and ancillary agreements
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listed on Exhibit B attached to and made a part of this Agreement and any leases
entered into by Seller in respect of the Property after the date of this
Agreement and prior to the Closing Date pursuant to Section 10.
1.13 LICENSES AND PERMITS. All licenses, permits, certificates of
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occupancy, approvals, dedications, subdivision maps and entitlements issued,
approved or granted by local, city, state or federal governmental bodies to
Seller in connection with the ownership, use and operation of the Real Property.
1.14 OWNER'S TITLE POLICY. The owner's title insurance policy or the final
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marked-up Title Commitment, subject only to the Permitted Exceptions, to be
issued in the amount of the Purchase Price to Purchaser at Closing by Lawyers
Title Insurance Corporation insuring Purchaser's title as the new owner of the
Real Property, with extended coverage over the standard exceptions and such
endorsements as Purchaser shall reasonably require.
1.15 PERMITTED EXCEPTIONS. The Permitted Exceptions are:
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1.15.1 The rights of the tenants, as tenants only, under the leases.
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1.15.2 The lien of all ad valorem real estate taxes for 1998 subject
to proration as herein provided; and
1.15.3 Any items shown on the Title Commitment and approved by
Purchaser.
1.16 PERSONAL PROPERTY. All Tangible Personal Property, Intangible Personal
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Property, Leases, Service Contracts and Records and Plans owned by the Seller
and used solely in the operation of the Property.
1.17 PROJECT. The independent living center located at 3121 N. Sheridan
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Road, Chicago, Illinois, commonly known as Harbor Village.
1.18 PROPERTY. The Real Property and Personal Property owned by Seller as
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described herein.
1.19 PURCHASE PRICE. The purchase price for the Property shall be Sixteen
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Million Seven Hundred Fifty Thousand and No/100 Dollars ($16,750,000.00),
subject to prorations and other adjustments, if any, as provided herein.
1.20 REAL PROPERTY. All the land legally described in attached Schedule
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1.15 together with the Improvements thereon and the Appurtenances. The legal
description of the Property attached hereto as Schedule 1.15 is believed by
Seller to be correct, but its accuracy will be confirmed by the Seller and
Purchaser prior to Closing based on the legal description contained in the
Owner's Title Policy issued by the Escrow Agent.
1.21 RECORDS AND PLANS. To the extent in the possession or control of
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Seller; (a) all financial and other books and records maintained by Seller in
connection with the operation of the Property; (b) all preliminary, final and
proposed building plans and specifications
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(including "as-built" drawings) respecting the Improvements; and (c) all
structural reviews, architectural drawings and engineering, environmental,
soils, seismic, geologic and architectural reports, studies and certificates and
other similar documents pertaining to the Property.
1.22 SELLER'S ACTUAL KNOWLEDGE. The actual knowledge of Rita Glass, Sue
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Felty and Roberto Perea without any further diligence, inquiry or investigation.
1.23 SERVICE CONTRACTS. Those design contracts, space planning contracts,
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construction contracts, subcontract and purchase orders, utility contracts,
water and sewer service contracts, maintenance contracts, and management
contracts, to which Seller is a party and which relate to the Property, and
equipment leases, which are listed on Schedule 1.23.
1.24 TANGIBLE PERSONAL PROPERTY. All physical assets owned by Seller and
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located on, within, over, or under the land and used solely in the operation of
the Project, including all furniture, furnishings, equipment and other tangible
personal property owned by Seller that is located at the Real Property and used
in connection with the management, operation or repair of the Real Property.
1.25 TITLE COMMITMENT. The title commitment to be issued prior to Closing
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by Lawyers Title Insurance Corporation, prepared pursuant to Section 3.1.
SECTION 2 - PURCHASE & SALE
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The Seller agrees to sell and the Purchaser agrees to purchase, pursuant to
the provisions of this Agreement, the Property, and all of Seller's right,
title, and interest in, and in any way pertaining to the Property.
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2.1 EARNEST MONEY DEPOSIT. Within two (2) Business Days following the
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Effective Date, Purchaser shall make an initial deposit of One Hundred Thousand
and No/100 Dollars ($100,000.00) ("Initial Deposit"), which sum shall be payable
to Escrow Agent by wire transfer, certified check, or other forms of immediately
available funds. Escrow Agent will acknowledge receipt of the Initial Deposit,
by executing the Escrow Agent Acknowledgement Form, Schedule 2.1 hereof, and
distributing copies thereof to the parties listed in Section 19 below.
After the end of the Investigation Period, and in the event Purchaser does
not terminate this Agreement in accordance with Section 8 below, Purchaser shall
deposit with the Escrow Agent an Additional Deposit of, One Hundred Fifty
Thousand and no/100 Dollars ($150,000.00) ("Additional Deposit"), which sum
shall be payable to Escrow Agent by wire transfer, certified check, or other
forms of immediately available funds. Escrow Agent will acknowledge receipt of
the Additional Deposit by executing a second Escrow Agent Acknowledgment Form
(also in the form of Schedule 2.1 hereof) and distributing copies thereof to the
parties listed in Section 19 below.
2.2 ESCROW AGENT. The Escrow Agent shall hold and retain the Deposit(s) in
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trust and shall disburse same in accordance with the terms and conditions
contained herein. The Deposit(s) shall be placed in an interest-bearing account
with such interest being reported under the Purchaser's tax identification
number. If the sale of the Property is consummated as provided herein, the
Deposit(s) shall be paid to the Seller and applied against the payment of the
Purchaser Price and the interest shall be paid to Purchaser. If the Purchaser
terminates this
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Agreement in accordance with any right to terminate granted herein, the
Deposit(s) and interest earned thereon shall be immediately delivered by the
Escrow Agent to the Purchaser and, thereafter, this Agreement shall be null and
void and of no further force and effect, except for those rights, obligations or
liabilities set forth herein which expressly survive the termination of this
Agreement. In the event Purchaser fails to perform any of the terms, conditions
or obligations required to be performed by Purchaser herein or fails to close
the transaction contemplated by this Agreement through no default of Seller,
Seller may terminate this Agreement and the Deposit(s) shall be immediately
delivered by the Escrow Agent to Seller.
2.3 CLOSING. Except as otherwise provided herein, the Closing shall take
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place on the Closing Date which shall be no later than thirty (30) calendar days
after the end of the Investigation Period. The Closing shall take place in the
office of Escrow Agent or such other place as Seller and Purchaser may
reasonably and mutually agree upon; provided, that written notice is given to
the other party and to Escrow Agent no later than five (5) Business Days prior
to the Closing Date. Pursuant to subsection 2.2 of this Section, on the Closing
Date, the Purchase Price, subject to prorations and other adjustments, if any,
shall be paid by Purchaser to Seller by wire transfer, certified check, or other
forms of immediately available funds.
SECTION 3-TITLE COMMITMENT, SURVEY,
EXISTING CONTRACTS AND ENVIRONMENTAL
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3.1 TITLE COMMITMENT. Seller will order the Title Commitment within three
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(3) Business Days of the Effective Date and shall use its best effort to cause
the Escrow Agent to furnish the Title Commitment and all recorded documents
relating to the Real Property to Purchaser within fifteen (15) days of the
Effective Date. The cost of the title premium for the
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standard coverage Owner's Title Policy shall be paid by the Seller. The cost of
extended coverage and any endorsements requested by Purchaser shall be an
expense of Purchaser.
3.2 SURVEY. Seller shall use its best effort to cause the surveyor to
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furnish to Purchaser within thirty (30) days following the Effective Date a
current survey of the Property, at Seller's cost, prepared by a registered
Illinois land surveyor, certified to Purchaser and the Title Insurer as being
made in accordance with the Minimum Detail Requirements for ALTA/ASCM land
surveys approved in 1992, for an urban survey.
3.3 EXISTING CONTRACTS AND REPORTS. Seller shall, within five (5)
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business days of the Effective Date, cause to be delivered to Purchaser all
Service Contracts.
3.4 ENVIRONMENTAL. Seller represents that there is no environmental
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report pertaining to the Property.
3.5 FEASIBILITY PERIOD. No later than five (5) Business Days following
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the Effective Date, Seller shall deliver to Purchaser at the office of the
Purchaser in Chicago, Illinois, each of the following items:
(i) a current copy of the rent roll attached hereto as Exhibit B;
(ii) copies of the most recent tax bills with respect to the
Property and copies of all notices and documents for any
assessments relating to the Property;
(iii) all existing surveys of the Property in the possession of
Seller;
(iv) copies of all existing title insurance policies insuring title
to the Property;
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(v) copies of operating statements for the Property for the
calendar years 1995 and 1996, and corresponding year-to-date
information for calendar year 1997, showing current income and
expense items and an itemization of all capital expenditures
made during the respective periods;
(vi) a list and copies of all Records and Plans;
(vii) a list and copies of the Licenses and Permits if any, and if
they are in Seller's possession, and a copy of any notice of
any statute or code violation pertaining to the Property,
including any documents pertaining to the resolution thereof;
and
(viii) copies of all Leases; provided the same shall be made
available at the Property and for purposes of this Section
shall be deemed to have been delivered on the Effective Date.
SECTION 4-PRORATIONS AND EXPENSES
4.1 TAXES. Real estate and personal property taxes applicable to the
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Property for the tax years 1997 and 1998 shall be prorated based upon the
official tax bill(s) for the current year, if available. If such bills are not
available, the proration shall be based upon one hundred ten percent (110%) of
the last ascertainable tax bill. If the official tax bill for the current year
is not available at Closing, Purchaser and Seller agree to cooperate and adjust
such proration, if necessary, after Closing when the official tax bill for the
current year becomes available. By, or at Closing, if not previously paid,
Seller shall pay or provide for
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payment of all real estate and personal property taxes applicable to the
Property which have become due and payable prior to Closing.
4.2 RENTS. All income and rents of the Property collected prior to the
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Closing Date shall be prorated as of the Closing Date. Purchaser shall
diligently pursue collection of all uncollected rents after the Closing and
agrees to remit to Seller any rents collected by Purchaser which are
attributable to the periods prior to Closing, provided, however, notwithstanding
the foregoing, any rents collected by Purchaser pursuant to this Section shall
be applied first to current rents and then to past due rents. Purchaser shall
diligently pursue collection of all percentage rents or additional rents under
the leases and remit Seller's pro rata portion to Seller. Seller shall retain
any security deposits paid by tenants, and Purchaser shall receive a credit at
Closing for all security deposits required under the leases actually paid by
tenants and retained by Seller.
4.3 OTHER ITEMS. Such other items as are customarily prorated in
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transactions of the type contemplated in this Agreement shall be ratably
prorated. All prorations shall be made pursuant to this Section 4 shall be made
as of the Closing Date, using the actual number of days of the year and month
which shall have elapsed as of the date immediately preceding the Closing Date
and, to the extent reasonably practicable, such prorations shall be determined
at Closing.
To the extent operating income, operating expenses or other charges to
be prorated are not available at Closing, then such prorations shall be adjusted
and completed after Closing as and when complete information becomes available.
Seller and Purchaser agree to cooperate
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and use their best efforts to complete such prorations or adjustments that are
not available at Closing no later than thirty (30) days after the Closing. Such
items of income and expense for the period prior to the date of Closing will be
for the account of Seller and such items of income and expense for the period on
and after the Closing Date will be for the account of Purchaser, all as
determined by the accrual method of accounting. Bills received after Closing to
the extent they relate to expenses incurred for services performed prior to the
Closing Date shall be paid by Seller, and those which relate to services
performed after the Closing Date shall be paid by Purchaser.
4.4 CLOSING EXPENSES.
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4.4.1 SELLER'S COSTS. Seller shall pay (i) Seller's legal fees and
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expenses, (ii) fifty percent (50%) of any fees charged by the Escrow Agent
for services provided hereunder, (iii) any transfer, sales or use taxes
applicable to the transactions contemplated by this Agreement, (iv) the
cost of the title premium for the standard coverage Owner's Title Policy
and (iv) the cost of the Survey.
4.4.2 PURCHASER'S COSTS. Purchaser shall pay (i) any recording fee
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payable in connection with the delivery or recording of any instrument or
document provided for or contemplated by this Agreement, (ii) the charges
for or in connection with the recording of any closing instrument or
closing document provided for herein or contemplated by this Agreement,
(iii) Purchaser's legal fees and expenses, (iv) all expenses incurred by
Purchaser in connection with Purchaser's due diligence and for the
recording of instruments in connection with any financing obtained by
Purchaser,
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(vi) fifty percent (50%) of any fees charged by the Escrow Agent for
services provided hereunder, and (vii) the cost of extended coverage and
any endorsements to the Owner's Title Policy.
4.5 SURVIVAL OF SECTION 4. The agreements of the parties in Section 4
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shall survive the Closing of this Agreement for a period of six (6) months.
SECTION 5 - REPRESENTATIONS & WARRANTIES
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5.1 SELLER. Seller makes the following representations to Purchaser as of
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the Effective Date hereof, which shall be deemed remade as of the Closing Date,
unless Seller has provided Purchaser with written notice of revisions to the
representations.
5.1.1 There are no pending and to Seller's Actual Knowledge no
contemplated condemnation proceedings affecting the Property or any part
thereof. Except for other parties who may have been granted easement rights
for ingress, egress, parking and related matters over common areas within
the Property, no person, firm or entity, except as set forth herein, has
any rights in or rights to acquire the Property or any part thereof. Except
for the reciprocal easement agreement pertaining to the parking garage,
which Seller will provide Purchaser with a copy, there are no leases,
agreements, other commitments or tenancies which pertain to or are
applicable with respect to the Property other than as disclosed in this
Agreement or provided to Purchaser as required by this Agreement.
5.1.2 Except for a Workers' Compensation claim filed by a former
employee, Kendra Arrington, against the former management company, Ashley
Management Co.,
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which also names Harbor Village Retirement Apartments, Seller is not a
party to any litigation affecting the Property and Seller knows of no
litigation affecting the Property. Seller has received no notice of and to
Seller's Actual Knowledge no violations of Governmental Regulations exist.
No leasing commission in connection with the Property is due or owing from
Seller to any party. There are no Service Contracts rendered in connection
with the operation of the Property except as may be specifically set forth
herein or provided to Purchaser as required herein. To Seller's Actual
Knowledge there are no proposed special assessments against or relating to
the Property.
5.1.3 Subject to the provision of Section 14, this Agreement has been
duly and validly executed and delivered by Seller, and this Agreement
constitutes the valid and legally binding obligation of Seller, enforceable
against Seller in accordance with its terms, except as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization,
moratorium, or similar laws affecting the enforcement of creditors' rights
generally.
5.1.4 All taxes and assessments levied upon the Property which become
due for payment prior to the Closing Date have been paid or will be paid in
full by Seller prior to the Closing.
5.1.5 Seller is a limited partnership, duly organized, validly
existing and in good standing under the laws of the State of Delaware, is
duly qualified to do business
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in the State of Illinois, and has all requisite power and authority to own
its property and carry on its business as now being conducted.
5.1.6 Neither the execution and delivery by Seller of this Agreement
nor the consummation by Seller of the sale of the Property will conflict
with, result in the breach of, constitute a default under, or accelerate
the performance provided by the terms of any law, any rule or regulation of
any government or agency of any government or any judgement, order, or
decree of any court or other agency of any government to which Seller may
be subject, any material contract, material agreement, or material
instrument to which Seller is a party or by which Seller is bound or
committed.
5.1.7 Neither the execution and delivery of this Agreement, nor the
consummation of the transaction with Purchaser will constitute an event
which, with the lapse of time or action by a third party, could result in
the creation of any lien, charge, or encumbrance upon any of the material
assets or properties of Seller.
5.1.8 To Seller's Actual Knowledge, (a) the materials delivered under
Section 3 are true and correct copies thereof, (b) the Service Contracts
are (subject to expiration of the term thereof or breach by the other party
thereof), in full force and effect, and all such Service Contracts have
been, or will be delivered to Purchaser pursuant to this Agreement, and (c)
there is no default by Seller, nor any state of facts which with the
passage of time or giving of notice or both, would constitute a default by
Seller under any of the Service Contracts.
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5.1.9 To Seller's Actual Knowledge, Seller knows of no facts, nor
has Seller failed to disclose to Purchaser any fact known to Seller, which
would prevent Purchaser from using and operating the Property after the
Closing Date in the manner in which the Property has been used and operated
prior to the Agreement Date.
5.1.10 To the best of Seller's knowledge without any due inquiry and
except to the extent disclosed in the material delivered to Purchaser,
Seller has received no notice of any proceeding or inquiry by any authority
with respect to the presence of any hazardous substances on the Property
or the migration thereof from or to other property and Seller is not aware
of the presence of substances or materials regulated under or defined as
being a hazardous material or a hazardous substance under any environmental
law.
5.2 PURCHASER. Purchaser makes the following representations and
warranties to Seller, as of the Effective Date hereof.
Purchaser represents and warrants to Seller that Purchaser is a corporation
validly existing under the laws of the State of Delaware, is, or will by the
Closing Date be, to the extent required by law, duly qualified to do business in
the State where the Property is located and has all necessary power to execute
and deliver this Agreement and perform all of Purchaser's obligations hereunder.
The execution, delivery and performance of this Agreement by Purchaser (I) has
been duly and validly authorized by all necessary action on the part of
Purchaser, (ii) does not conflict with or result in a violation of Purchaser's
organizational documents or any judgment, order or decree of any court or
arbiter in any
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proceeding to which Purchaser is a party, and (iii) does not conflict with or
constitute a material breach of, or constitute a material default under any
contract, agreement or other instrument by which Purchaser is bound or to which
Purchaser or any persons constituting Purchaser is a party. This Agreement and
the closing documents to be delivered by Purchaser pursuant hereto are or will
constitute the valid and binding obligations of Purchaser, enforceable in
accordance with their respective terms.
5.3 SELLER AND PURCHASER. Seller and Purchaser agree to comply with the
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applicable requirements of any Responsible Property Transfer Act ("RPTA") which
is in force with respect to the Property which is the subject of this Agreement.
If Seller determines that RPTA is not applicable to the Property or the
transaction contemplated by this Agreement, Seller shall deliver an affidavit to
that effect at Closing.
5.4 SURVIVAL OF SECTION 5. The representations and warranties of the
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parties in Section 5 shall survive the Closing or termination of this Agreement
for a period of one (1) year.
SECTION 6 - RADON GAS
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Radon is a naturally occurring radioactive gas that, when it has
accumulated in a building in sufficient quantities, may present health risks to
persons who are exposed to it over time. Levels of radon that exceed Federal and
State guidelines have been found in buildings in the State of Illinois.
Additional information regarding radon and radon testing may be obtained from
your county public health unit. Seller makes no representation, express or
implied, as to the presence or absence of Radon Gas in the improvements or
elsewhere on the Property.
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SECTION 7 - CONDEMNATION
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If any portion of the Property is condemned or under condemnation pursuant
to a notice of taking by appropriate authority prior to the Closing Date, Seller
shall promptly notify Purchaser and Escrow Agent of such facts and agrees that
it shall not settle or consent to any condemnation during the term of this
Agreement without Purchaser's prior written consent. By notice given to
Seller and Escrow Agent, within ten (10) days following Seller's notice,
Purchaser shall elect in writing to either (a) terminate this Agreement
whereupon all rights, obligations and liabilities of the parties shall
terminate, except for those set forth herein which expressly survive the
termination of this Agreement, or (b) consent to purchase the Property subject
to the condemnation, taking an assignment from Seller of all of Seller's rights
in and to any condemnation award, and continue this Agreement in full force and
effect.
SECTION 8 - INVESTIGATION PERIOD
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Seller hereby grants to Purchaser the Investigation Period specified in
Section 1.8 hereof during which period Purchaser shall have the right to conduct
any and all inspections, surveys, environmental audits, surface and subsurface
explorations and radon gas tests; review any of the Leases and Lease files;
physically inspect the Property and the tenants' apartments, provided such
inspection of the tenant's apartments is consented to by tenants and does not
unduly disrupt any tenancy, review all Service Contracts; and conduct such other
inspections and reviews as shall be reasonably necessary for Purchaser to
determine Purchaser's desire to proceed to close the subject transaction.
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In consideration of Purchaser's right to inspect the Property as described
in this Section, Purchaser agrees to indemnify, defend and hold Seller harmless
from any actions, suits, liens, claims, damages, expenses, losses and liability
for damage to personal property or personal injury arising from or attributable
to any acts performed in exercising Purchaser's rights under this Section 8
(including Seller's reasonable attorneys' fees and costs relating to any such
indemnified claims, but excluding any matter to the extent arising out of the
gross negligence or misconduct of Seller). This agreement to indemnify Seller
shall survive the Closing and any termination of this Agreement.
Purchaser shall no later than the end of the Investigation Period provide
Seller written notice stating whether Purchaser has elected to assume any
Service Contract(s) pertaining to the Property. In the event Seller is not
provided with such written notice, Purchaser shall be deemed to have elected to
assume all such contracts. Additionally, Purchaser shall before the end of the
Investigation Period provide Seller with a list of Permitted Exceptions.
If Purchaser, in Purchaser's sole discretion, shall deem any of said
inspections or reviews unsatisfactory, Purchaser shall notify Seller, in
writing, within the Investigation Period of Purchaser's desire to terminate this
Agreement and, provided any damage to the Property caused by Purchaser has been
restored by Purchaser to the condition that existed prior to commencement of the
Investigation Period, the Escrow Agent shall forthwith refund to Purchaser the
Deposit(s) and interest earned on the Deposit(s), less Seller's out-of-pocket
expenses; thereafter this Agreement shall be rendered null and void and neither
party shall have any further rights or obligations hereunder.
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If Purchaser accepts the Property, Purchaser shall provide written
notification to Seller of such acceptance prior to the end of the Investigation
Period, in which event, the Closing shall proceed in accordance with the
provisions of this Agreement. If Purchaser fails to give Seller notice prior to
the expiration of the Investigation Period of Purchaser's election, Purchaser
shall be deemed to have elected to accept the Property and shall proceed to
close the transaction.
SECTION 9 - "AS IS-WHERE IS" SALE
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PURCHASER ACKNOWLEDGES AND AGREES THAT THE PROPERTY IS BEING PURCHASED IN
AN "AS-IS-WHERE IS" CONDITION WITH NO REPRESENTATIONS OR WARRANTIES, EXPRESSED
OR IMPLIED, AS TO THE PHYSICAL OR OPERATING CONDITION OF ANY OF THE PERSONAL
PROPERTY OR THE PROPERTY, THE ENVIRONMENTAL OR SUBSURFACE CONDITION OR STATUS OF
THE PROPERTY, THE IMPROVEMENTS ON THE PROPERTY, CONDITION OF THE ROOF, ANY PAST
OR EXISTING VERMIN INFESTATION, CONDITION OF PLUMBING OR ELECTRICAL SERVICE, THE
STRUCTURAL INTEGRITY OF ANY IMPROVEMENTS OR BUILDINGS OR THE STATUS OF ANY
LEASES WITH RESPECT TO THE PROPERTY OTHER THAN AS STATED IN THIS AGREEMENT.
PURCHASER HEREBY FURTHER REPRESENTS THAT PURCHASER HAS CONDUCTED, OR THROUGH THE
USE OF PURCHASER'S OWN CONTRACTORS, ENGINEERS AND OTHER LIKE-TYPE CONSULTANTS
HAS CAUSED OR WILL CAUSE TO BE CONDUCTED PRIOR TO THE END OF THE INVESTIGATION
PERIOD, SUFFICIENT, ADEQUATE AND INDEPENDENT INVESTIGATIONS OF THE PROPERTY AND
THE CONTENTS THEREOF.
SECTION 10 - CONDUCT OF SELLER PRIOR TO CLOSING
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Seller covenants and agrees with Purchaser as follows:
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10.1 Seller shall not, without the prior written consent of Purchaser in
each instance, (a) modify, amend or terminate (except for material breach,
nonpayment of rent or other sums due, or death or transfer to a nursing home) in
any manner whatsoever, any of the Leases, (b) consent to the assignment or
subletting of any of the Leases, or (c) enter into any new lease of the Property
or any portion thereof or extend or renew any existing Lease which is not on the
standard form of lease currently in use for the Property and is not at a rental
rate equal to the current schedule of rentals as shown in Schedule 10.1 for the
Property (all such permitted leases shall be deemed to be included within the
term "Leases"). If Seller desires to take any of the actions described in
clauses (a), (b) or (c) above, Seller shall so notify Purchaser. Purchaser shall
have three (3) Business Days from receipt of Seller's notice to object in
writing to any proposed action described in Seller's notice. If Purchaser fails
to notify Seller within the time period prescribed above of any objections, it
shall be conclusively presumed that Purchaser consented to all of the actions
described in Seller's notice and Seller may immediately implement such actions.
If Purchaser notifies Seller of any objections to the actions proposed in
Seller's notice and thereafter Seller and Purchaser cannot agree on a course of
action within (15) Business Days of the date of Purchaser's notice of
objections, Seller shall not take any action to which Purchaser has objected.
10.2 Seller shall not, without the prior written consent of Purchaser in
each instance, enter into any new commitments, licenses, options or other
agreements of any kind affecting or relating to the Property except for
agreements that are terminable on or before the Closing Date and Leases that are
governed by Section 10.1.
-20-
<PAGE>
10.3 If Seller removes any item of Personal Property prior to the Closing
Date, Seller shall substitute therefor an item of like kind and comparable
value.
10.4 Subject to the provisions of Sections 7 and 18 hereof, Seller shall,
between the Effective Date and the Closing Date, at Seller's sole cost and
expense, maintain the Property in good order, condition and repair, reasonable
wear and tear excepted, shall perform all work required to be done by the
landlord under the terms of the Leases, and shall make all repairs and
maintenance and otherwise operate the Property in the same manner as before the
making of this Agreement and as though Seller were retaining the Property.
Seller shall not make any alterations to the Property except as required under
the Leases. Seller shall not, after the Effective Date, without in each case
obtaining Purchaser's prior written consent thereto, enter into, amend, extend
(including by exercise of option), terminate any Service Contract or waive any
rights of Seller thereunder. The foregoing notwithstanding, Purchaser's consent
shall not be required for Seller to enter into or extend (including by exercise
of option) any Service Contract, provided the term of such Service Contract does
not extend beyond the Closing Date and does not otherwise expose Purchaser to
any liability.
10.5 Seller shall immediately notify Purchaser of any fact or other
circumstance which, if known by Seller on the Effective Date or the Closing
Date, would render any representative or warranty of Seller incorrect or
incomplete.
10.6 Between the date of this Agreement and the Closing Date, Seller shall
keep all Licenses and Permits in full force and effect and operate the Property
or cause the Property to be operated, in compliance with all Licenses and
Permits.
-21-
<PAGE>
10.7 Without Purchaser's consent, Seller shall not (a) voluntarily subject
any right, title or interest in or to this Property to any new mortgage, pledge,
lien or other hypothecation or encumbrance, or (b) transfer, convey or assign
any right, title or interest in or to all or any portion of the Property or (c)
enter into any contracts to transfer, convey or assign any right, title or
interest in or to all or any portion of the Property.
10.8 Seller will, at all times after the Effective Date to and including
the Closing Date, operate the Property in a manner consistent with the operation
of the Property on the date hereof.
10.9 Seller shall permit Purchaser, at Purchaser's expense, to engage an
independent certified public accountant to audit the most recent annual
financial statements for the Property and Seller shall cooperate with such
accounting firm in connection with such audit by allowing access to all books
and records for the Property.
SECTION 11 - ASSISTANCE & COOPERATION OF PARTIES
------------------------------------------------
Seller and Purchaser agree that they shall execute and deliver to each
other such further documents and instruments in form and substance reasonably
satisfactory to the parties as may be necessary to confirm and/or effectuate the
obligations of Seller and Purchaser hereunder and the consummation of the
transaction contemplated hereby.
SECTION 12 - DOCUMENTS FOR CLOSING
----------------------------------
At closing, Seller shall deliver to Purchaser the following documents:
12.1 A Special Warranty Deed in recordable form (see Schedule 12.1
attached hereto).
-22-
<PAGE>
12.2 Bill of Sale (see Schedule 12.2 attached hereto).
12.3 Mechanic's Lien Affidavit.
12.4 Assignment and Assumption of Leases And Guaranties executed by Seller
and Purchaser as to any Leases (see Schedule 12.4 attached hereto).
12.5 Assignment and Assumption of Service Contracts and Intangible
Personal Property executed by Seller and Purchaser as to the Service Contracts
and Intangible Personal Property which, pursuant to the terms of Section 8,
Purchaser has agreed to assume (see Schedule 12.5 attached hereto).
12.6 Original Service Contracts, Licenses, Permits and Leases, if not
located on the Property.
12.7 A written certification ("FIRPTA Certificate") in form reasonably
satisfactory to Purchaser and dated no earlier than ten (10) days prior to the
Closing Date, which certification shall be in compliance with The Tax Reform
Act of 1984 (the "Act") and the regulations thereunder that are imposed by the
Foreign Investment in Real Property Tax Act ("FIRPTA") and certifying that
Seller is not a person or entity subject to withholding under FIRPTA and the
Act, and containing Seller's tax identification number and address.
12.8 Owner's Title Policy and such other documents as shall be reasonably
requested by Purchaser or Lawyers Title Insurance Corporation in order for
Seller to convey title to Purchaser, and property transfer all of the rights and
obligations being conveyed/transferred in accordance with this Agreement.
-23-
<PAGE>
At Closing, Purchaser shall provide written instructions to Escrow Agent to
deliver the Deposit(s) to Seller.
SECTION 13 - BROKERS
--------------------
The Seller and Purchaser hereby acknowledge that the following disclosure
has previously been made: National Equity Advisors is the Purchaser's agent (the
"Purchaser's Agent") and is serving solely as agent for Purchaser in connection
with this transaction. Purchaser shall pay the Purchaser's Agent's consulting
fee ("Consulting Fee"). Except for this Consulting Fee, each party warrants and
represents that no other broker, finder, or other person is entitled to a
commission, finder's fee or other compensation in connection with this
Agreement, and each party shall indemnify and hold harmless the other from any
and all claims, liabilities, losses, damages, costs and expenses, including, but
not limited to, reasonable attorneys' fees, arising from the claim of any other
broker, finder or other person for such compensation, arising by, under or
through such party. At Closing, as a condition to Purchaser's obligation to
close hereunder, Purchaser's Agent must execute a paid receipt for the
Consulting Fee.
SECTION 14 - TIMING OF OFFER AND
ACCEPTANCE OR REJECTION THEREOF
-------------------------------
Execution of this Agreement by Purchaser and submission to Seller shall
constitute Purchaser's offer and agreement to purchase the Property upon the
terms and conditions set forth herein. Purchaser shall have until 5:00 p.m.
E.S.T. on Wednesday, November 19, 1997. to execute and submit this Agreement to
Seller.
-24-
<PAGE>
Within fifteen (15) Business Days after receipt of the Agreement which has
been executed by Purchaser, provided such receipt is by 5:00 p.m. E.S.T.
Wednesday, November 19, 1997, Seller shall seek approval of the Seller's
Investment Committee, which has the sole authority to approve or reject this
proposed transaction. If Seller's Investment Committee approves this proposed
transaction, then Seller shall proceed to have the Agreement executed on its
behalf. The date of such approval/acceptance shall constitute the Effective
Date, and Seller shall notify Purchaser the day Seller's Investment Committee
approves the proposed transaction and Seller shall return a copy of the
fully-executed Agreement to Purchaser within three (3) business days after the
Effective Date. If Seller's Investment Committee approves the transaction with
conditions, then Seller shall notify the Purchaser for its further
consideration. If Seller's Investment Committee does not approve the proposed
transaction, Seller shall notify Purchaser the day Seller's Investment Committee
takes this action and then this Agreement shall be null and void and neither
party shall have any obligations or liabilities hereunder.
SECTION 15 - ERISA
------------------
At Closing, Purchaser shall deliver to Seller an ERISA Certificate in the
form attached hereto as Schedule 15.
SECTION 16 - CONDITIONS PRECEDENT
---------------------------------
Purchaser shall have no obligation to close this transaction unless the
conditions hereinafter set forth in this Section 16 shall have been satisfied or
have been waived in writing by Purchaser. Such conditions are:
-25-
<PAGE>
16.1 All representations and covenants of the Seller herein shall be true
and correct as of the Closing Date.
16.2 Seller shall have delivered to Purchaser documents required by Section
3 of this Agreement.
16.3 Between the Effective Date of this Agreement and the Closing Date,
there shall have been no condemnation of the Property, or Purchaser shall have
consented to purchase of Property subject to such condemnation.
16.4 Seller shall have performed all of its material obligations under this
Agreement.
16.5 Lawyers Title Insurance Company shall be prepared to issue the Owner's
Title Policy.
SECTION 17 - TERMINATION AND DEFAULT
If Seller fails to perform in accordance with this Agreement and Purchaser
is not then in material default hereunder, Purchaser shall be entitled to
receive a refund of the Deposit(s) as liquidated damages in full settlement of
any claim or damages available to Purchaser at law or in equity or Purchaser
shall have the remedy of specific performance, unless Seller's default is caused
by circumstances beyond Seller's control.
If Seller is unable to convey title in accordance with this Agreement, or
if as of the Closing Date, there is an adverse change in the representations of
Seller due to a circumstance which arose subsequent to the Effective Date of
this Agreement and was not due to (i) Seller's failure to perform a covenant,
(ii) Seller's breach of a covenant hereunder or, (iii) a misrepresentation by
Seller under this Agreement, then Seller shall notify Purchaser of the
-26-
<PAGE>
reasonable estimated aggregate costs to cure or correct such circumstance or
circumstances, and Purchaser may, by written notice to Seller prior to the
Closing Date, elect to accept such title as Seller is able to convey or elect to
terminate this Agreement. Seller shall have no obligation to correct such
circumstance(s). Upon the election to terminate by Purchaser, the Deposit(s)
shall be refunded to Purchaser and thereafter neither party shall have any
further rights, obligations or liabilities hereunder, except for those set forth
herein which expressly survive termination of this Agreement.
Subject to all conditions set forth in this Agreement, if Purchaser fails
to purchase the Property on the Closing Date in accordance with the terms
hereof or fails to perform any of Purchaser's other obligations hereunder, and
Seller is not then in material default hereunder, then Seller shall have the
right to receive the Deposit(s) from the Escrow Agent as liquidated damages in
full settlement of any claim for damages at law or in equity.
Where liquidated damages are provided for herein, Seller and Purchaser
acknowledge the difficulty of determining actual damages, that it is impossible
to more precisely estimate the damages upon default, that the return or
retention of the Deposit(s) is not intended as a penalty but as full liquidated
damages and that such amount constitutes a good faith estimate of the potential
damages arising from default.
SECTION 18 - RISK OF LOSS
-------------------------
18.1 Damages Greater Than $500,000.00. After the expiration of the
--------------------------------
Investigation Period and if before Closing and delivery of the deed, any Real
Property or Personal Property subject to this sale is damaged or destroyed by
fire or other casualty and the estimated cost of
-27-
<PAGE>
repair, restoration or replacement is more than Five Hundred Thousand and no/100
dollars ($500,000.00), the Purchaser shall have the right to cancel this
Agreement by written notice to Seller or advise Seller in writing that it elects
to accept title to the Property in its damaged condition, in which case Seller
shall assign and turn over to Purchaser all insurance proceeds payable or paid
as a consequence of such casualty and shall give Purchaser a credit against the
Purchase Price for the amount of the deductible portion of the claim.
18.2 Damages Less Than $500,000.00. Any damage from fire or other
-----------------------------
casualty costing less than Five Hundred Thousand ($500,000.00) to repair,
restore or replace shall be repaired, restored or replaced by Seller prior to
the Closing Date for which purpose Seller shall be entitled to a reasonable
postponement of the Closing up to but not exceeding one hundred twenty (120)
days, or at Purchaser's option, Purchaser may elect in writing to accept title
to the Property in its damaged condition, in which case Seller shall give the
Purchaser a credit at Closing for the actual cost to repair, restore or replace
the Property to the condition it was prior to the damage, which cost shall not
excess $500,000.00.
SECTION 19 - NOTICES
--------------------
All notices, consents, approvals, waivers, and elections which any party
shall be required or shall desire to make or give under this Agreement shall be
in writing and shall be sufficiently made or given only when sent by (a)
certified mail, return receipt requested, (b) prepaid overnight delivery service
with proof of delivery, or (c) electronic transmission with hard copy to follow
as confirmation of receipt, addressed:
-28-
<PAGE>
19.1 TO SELLER: Lincoln Harbor Village, L.P.
c/o Lincoln Investment Management, Inc.
200 East Berry Street
Fort Wayne, Indiana 46802
Attn: Rita Glass
Title: Assistant Vice President
Phone Number: (219)455-3959
Facsimile Number: (219)455-4114
WITH A COPY TO: C. Elisia Frazier
Lincoln National Corporation
Title: Counsel
Lincoln National Corporation
Law Division - 2R
200 East Berry Street
Fort Wayne, Indiana 46802
Phone Number: (219)455-5493
Facsimile Number: (219)455-5403
19.2 TO ESCROW AGENT: Bettina Anderson
Lawyers Title Insurance Corporation
10 S. Dearborn Street
Chicago, IL 60603
Phone Number: (312)558-1600, Ext. 3017
Facsimile Number: (312)558-3008
19.3 TO PURCHASER: Brookdale Living Communities, Inc.
Attn: Darryl W. Copeland
77 West Wacker, Suite 4800
Chicago, IL 60601
Phone Number: 312-977-3700
Facsimile Number: 312-977-3701
WITH A COPY TO: Douglas E. Wambach, Esquire
Burke, Warren, McKay & Serritella, P.C.
22 Floor IBM Plaza
330 North Wabash Avenue
Chicago, IL 60611-3607
Phone Number: 312-840-7019
Facsimile Number: 312-840-7900
-29-
<PAGE>
or to such other address as any party hereto shall designate by like notice
given to the other parties hereto. Notices, consents, approvals, waivers and
elections given or made as aforesaid shall be deemed to have been given and
received on the third business day following the post marked date of the mailing
thereof as aforesaid, or upon receipt when sent by overnight delivery service or
upon confirmation of receipt if sent by electronic transmission.
SECTION 20-ASSIGNMENT
---------------------
Purchaser shall not assign its rights under this Agreement without Seller's
prior written consent, which consent is within Seller's sole discretion;
provided, however, Purchaser may assign this Agreement to an affiliate of
Purchaser without Seller's consent. No assignments as herein permitted shall
operate to release Purchaser from its obligations hereunder.
SECTION 21-MISCELLANEOUS
------------------------
21.1 ENTIRE AGREEMENT. This Agreement, together with exhibits referenced
----------------
herein, integrates and supersedes all other oral or written agreements and
understandings of the parties and comprises the entire agreement among them with
regard to the matters herein. This Agreement may not be changed except in
writing, signed by both parties.
21.2 NON-WAIVER. No waiver of any rights or obligations hereunder shall
----------
be deemed to have occurred unless in writing signed by the party against whom
such waiver is asserted and no waiver shall be deemed a waiver of any other or
subsequent rights or obligations.
21.3 COUNTERPART SIGNATURES. This Agreement may be executed in any number
----------------------
of counterparts, which counterparts when considered together shall constitute a
single, binding, valid and enforceable Agreement.
-30-
<PAGE>
21.4 TIME OF THE ESSENCE. Time is of the essence with regard to the
-------------------
provisions of this Agreement.
21.5 GENDER AND HEADINGS. Words used herein in the singular shall include
-------------------
the plural and words in the masculine shall include words in the feminine or
neuter gender where the text of this Agreement so requires. The descriptive
paragraph headings are inserted for convenience only and shall not control of
affect the meaning or construction of any of the provision of this Agreement.
21.6 CHOICE OF LAW. This Agreement shall be interpreted according to the
-------------
laws of the State of Illinois.
21.7 LITIGATION/VENUE. In the event there is any litigation arising out of
----------------
this Agreement, the prevailing party shall be entitled to recover all costs
incurred in connection therewith including, but not limited to, reasonable
attorneys' fees and all costs of appeal including, but not limited to,
attorneys' fees incurred on appeal. The venue of any litigation arising out of
this Agreement shall be in Cook County, Illinois.
21.8 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure
----------------------
to the benefit of the parties hereto and their respective successors and
assigns.
21.9 CONFIDENTIALITY. All information, studies and reports relating to the
---------------
Property obtained by Purchaser, either by the observations and examinations of
its agents and representatives or as disclosed to it by Seller, shall remain
confidential and if the transaction contemplated herein fails to close for any
reason, Purchaser shall deliver to Seller, at no cost to Seller, all such
information, reports and studies, and Purchaser shall make no further
-31-
<PAGE>
distributions or disclosures of any such information, reports and studies.
Purchaser and Seller agree that, to the extent reasonably practical, they shall
keep the contents of this Agreement confidential and that no publicity or press
release to the general public with respect to this transaction shall be made by
either party without the prior written consent of the other party, provided that
such prohibition as to publicity shall not apply (other than to the Purchase
Price) after Closing. The provisions of this confidentiality provision shall
survive the Closing or termination of this Agreement. Notwithstanding the
foregoing, Purchaser may disclose the existance and contents of this Agreement
to (i) its legal and financial advisers, or (ii) any governmental or
administrative authority upon request or obligation to disclose by law.
SECTION 22 - TERMINATION OF CONTRACTS
-------------------------------------
No later than five (5) days before the end of the Investigation Period,
Purchaser shall provide Seller written notice of which of the Service Contracts
provided under Section 3.3 it intends to assume and which Purchaser requests
that Seller terminate on or before the Closing Date. Within five (5) business
days after receipt of Purchaser's notice, Seller shall terminate those Service
Contracts Purchaser has requested Seller to terminate prior to closing, except
for the laundry contract, which is not terminable. With respect to the laundry
contract, which cannot be terminated, Purchaser shall advise Seller prior to the
end of the Investigation Period that Purchaser has either agreed to assume the
laundry contract or has elected to terminate this Agreement, in which latter
instance the Deposit, plus any interest accrued thereon, shall be refunded to
Purchaser and neither Seller nor Purchaser shall have any further liability to
the other.
-32-
<PAGE>
IN WITNESS WHEREOF, Seller and Purchaser have caused this Agreement to be
executed as of the Effective Date.
PURCHASER
---------
Brookdale Living Communities, Inc.
By: /s/ Mark J. Schulte
-----------------------------------
Printed Name: Mark J. Schulte
------------------------
Title: President
------------------------------
Date: 11/18/97
-------------------------------------
SELLER
------
Lincoln Harbor Village,L.P.
By: Lincoln National Realty Corporation,
General Partner
By: Lincoln Investment Management, Inc., its
Attorney-in-Fact
By: /s/ Rita A. Glass
----------------------------------
Printed Name:Rita Glass
Title: Assistant Vice President
Date: 12/4/97
-------------------------------------
<PAGE>
Exhibit 10.49
ASSIGNMENT AND ASSUMPTION OF CONTRACT FOR SALE
THIS ASSIGNMENT AND ASSUMPTION OF CONTRACT FOR SALE (this "Assignment") is
made as of this 1st day of October, 1997, by and between BROOKDALE LIVING
COMMUNITIES, INC., a Delaware corporation ("Assignor") and BROOKDALE LIVING
COMMUNITIES OF MICHIGAN, INC., a Delaware corporation ("Assignee").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, The Prime Group, Inc., an Illinois corporation ("Prime") and AC
Properties, L.L.C., a Michigan limited liability company, have entered into that
certain Real Estate Purchase Agreement dated as of February 14, 1997
(hereinafter referred to as the "Agreement").
WHEREAS, all of Prime's rights, title and interests in the Agreement have
been assigned to Assignor pursuant to that certain Assignment and Assumption
Agreement for Transfer of Contributed Assets dated as of May 7, 1997.
WHEREAS, Assignor desires to assign to Assignee all of its rights, title
and interests in, to and under the Agreement.
WHEREAS, Assignee (i) desires to accept such assignment and to succeed to
all of Assignor's rights, title and interests under the Agreement and, (ii) as a
condition to this assignment, agrees to assume all of Assignor's obligations
under the Agreement.
NOW, THEREFORE, in consideration of the foregoing recitals, which by this
reference are incorporated herein as if set forth at length, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
1. Assignor does hereby assign, transfer and set over unto Assignee and
Assignee does hereby accept all of Assignor's rights, title and interests
in and to the Agreement.
2. Assignee hereby assumes all of Assignor's obligations under the Agreement
and hereby agrees to indemnify, defend and hold Assignor harmless from any
and all damages, costs, claims of action and liability whatsoever relating
to such obligations.
[Signature Page Follow]
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Assignment to be executed
as of the date first above written.
ASSIGNOR: ASSIGNEE:
BROOKDALE LIVING COMMUNITIES, INC., BROOKDALE LIVING COMMUNITIES OF
a Delaware corporation MICHIGAN, INC., a Delaware corporation
By: /s/ Darryl W. Copeland, Jr. By: /s/ Darryl W. Copeland, Jr.
------------------------------ ------------------------------
Name: Darryl W. Copeland, Jr. Name: Darryl W. Copeland, Jr.
------------------------------ ------------------------------
Title: Executive Vice President Title: Vice President
------------------------------ ------------------------------
2
<PAGE>
Exhibit 10.50
ASSIGNMENT AND ASSUMPTION OF CONTRACT FOR SALE
THIS ASSIGNMENT AND ASSUMPTION OF CONTRACT FOR SALE (this "Assignment") is
made as of this 3rd day of September, 1997, by and between BROOKDALE LIVING
COMMUNITIES, INC., a Delaware corporation ("Assignor") and BLC OF TEXAS-II,
L.P., a Delaware limited partnership ("Assignee").
WITNESSETH:
----------
WHEREAS, The Prime Group, Inc., an Illinois corporation ("Prime") and VG
Office Partnership '95, LTD., ("VG '95"), a Texas limited partnership, have
entered into that certain Contract for Sale dated as of February 14, 1997, as
amended by the terms of that certain First Amendment to Contract dated as of
February 21, 1997 between Prime and VG '95 (hereinafter referred to collectively
as the "Agreement").
WHEREAS, all of Prime's rights, title and interests in the Agreement have
been assigned to Assignor pursuant to that certain Assignment and Assumption
Agreement for Transfer of Contributed Assets dated as of May 7, 1997.
WHEREAS, Assignor desires to assign to Assignee all of its rights, title
and interests in, to and under the Agreement.
WHEREAS, Assignee (i) desires to accept such assignment and to succeed to
all of Assignor's rights, title and interests under the Agreement and, (ii) as a
condition to this assignment, agrees to assume all of Assignor's obligations
under the Agreement.
NOW, THEREFORE, in consideration of the foregoing recitals, which by this
reference are incorporated herein as if set forth at length, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
1. Assignee does hereby assign, transfer and set over unto Assignee and
Assignee does hereby accept all of Assignor's rights, title and interests
in and to the Agreement.
2. Assignee hereby assumes all of Assignor's obligations under the Agreement
and hereby agrees to indemnify, defend and hold Assignor harmless from any
and all damages, costs, claims of action and liability whatsoever relating
to such obligations.
[Signature Pages Follow]
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Assignment to be executed
as of the date first above written.
ASSIGNOR: ASSIGNEE:
BROOKDALE LIVING COMMUNITIES, BLC OF TEXAS-II, L.P., a
INC., a Delaware corporation Delaware limited partnership
By: /s/ Craig C. Walczyk By: Brookdale Living
---------------------- Communities of Texas-II,
Inc. a Delaware
Name: Craig C. Walczyk corporation, its sole
---------------------- general partner
Title: Vice President
---------------------- By: /s/ Craig C. Walczyk
----------------------
Name: Craig C. Walczyk
----------------------
Title: Vice President
----------------------
2
<PAGE>
Exhibit 10.51
REAL ESTATE PURCHASE AGREEMENT
BY AND BETWEEN
ANVIL INVESTMENTS LLC
AND
BROOKDALE LIVING COMMUNITIES, INC.
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<C> <S> <C>
1. Sale and Purchase...................................... 1
2. Purchase Price, Earnest Money.......................... 1
3. Feasibility Period..................................... 2
4. Conveyance; Permitted Title Exceptions................. 3
5. Closing................................................ 3
6. Intentionally Omitted.................................. 3
7. Commitment, Searches and Survey........................ 3
8. Title Policy........................................... 5
9. Correction of Defects.................................. 5
10. Seller's Deliveries; Inspection........................ 5
11. Seller's Covenants..................................... 6
12. Representations and Warranties......................... 7
13. Environmental Indemnity................................ 11
14. Conditions to Purchaser's Obligation to Close.......... 11
15. Provisions with Respect to Closing..................... 12
16. Closing Adjustments.................................... 13
17. Condemnation........................................... 14
18. Remedies............................................... 16
19. Modification, Waiver, etc.............................. 16
20. Notices................................................ 17
21. Governing Law.......................................... 18
22. Counterparts........................................... 18
23. Captions............................................... 18
24. Construction........................................... 18
</TABLE>
i
<PAGE>
<TABLE>
<C> <S> <C>
25. Assignability by Purchaser............................. 18
26. Binding Effect......................................... 19
27. Partial Invalidity..................................... 19
28. Time is of the Essence................................. 19
29. Acceptance of Offer.................................... 19
</TABLE>
ii
<PAGE>
REAL ESTATE PURCHASE AGREEMENT
THIS REAL ESTATE PURCHASE AGREEMENT (the "Agreement") is made and entered
into as of the Effective Date, by and between Brookdale Living Communities,
Inc., a Delaware corporation ("Purchaser") and Anvil Investments LLC, a North
Carolina limited liability company ("Seller").
In consideration of the mutual covenants, agreements, representations and
warranties set forth in this Agreement, and for other good and valuable
consideration, the receipt and legal sufficiency of which are hereby
acknowledged, the parties agree as follows:
1. Sale and Purchase.
-----------------
Seller agrees to sell, convey and assign to Purchaser, and Purchaser
agrees to purchase and accept under the terms and conditions and for the
purchase price set forth below all of the land situated in Raleigh, Wake County,
North Carolina, described on attached Exhibit A, consisting of approximately
8.25 acres, together with any improvements located on such land, all of the
rights, privileges, easements and appurtenances belonging or appertaining to
such land, including any right, title and interest in and to streets, alleys and
rights-of-way adjacent to such land (such land and all such rights, privileges,
easements and appurtenances are collectively referred to herein as the "Real
Estate").
2. Purchase Price, Earnest Money.
-----------------------------
A. The purchase price (the "Purchase Price") for the Real Estate shall be
Two Million One Hundred Thousand and No/100 Dollars ($2,100,000.00) and
shall be payable at the Closing as provided in this Agreement; provided,
however, that if Closing occurs on the first Business Day following January
31, 1998, Purchaser shall receive a credit of Forty-Five Thousand and
No/100 Dollars ($45,000.00) to be applied to the Purchase Price; if Closing
occurs after such day and on or before February 15, 1998, Purchaser shall
receive a credit of Thirty Thousand and No/100 Dollars ($30,000.00) to be
applied to the Purchase Price; and if Closing occurs after February 15,
1998 and on or before March 15, 1998, Purchaser shall receive a credit of
Fifteen Thousand and No/100 Dollars ($15,000.00) to be applied to the
Purchase Price.
B. Within three (3) Business Days after the Effective Date, Purchaser
shall deposit the sum of Ten Thousand and No/100 Dollars ($10,000.00) in an
escrow ("Escrow") established with an agency of a title insurance company
reasonably acceptable to Purchaser and Seller (the "Title Company") in
accordance with escrow instructions substantially in the form attached
<PAGE>
hereto as Exhibit B. Upon the expiration of the Feasibility Period,
Purchaser shall deposit an additional Forty Thousand and No/100 Dollars
($40,000.00) in the Escrow. The sum on deposit in the Escrow together with
all earnings accrued thereon at any time is herein referred to as the
"Earnest Money". The Earnest Money shall be invested in a money market fund
or in such other investment instrument or account designated by Purchaser.
At the Closing, the Earnest Money, together with all interest and earnings
accrued thereon, shall be returned to Purchaser.
3. Feasibility Period. This Agreement shall be contingent upon the
satisfactory inspection of the Real Estate by Purchaser, in its sole and
absolute discretion and judgment, during the period (the "Feasibility Period")
commencing on the Effective Date and ending on the sixtieth (60th) day after
receipt by Purchaser of the last of the information referenced in Paragraph 10.
During the Feasibility Period, Purchaser shall have the right to physically
inspect the condition of the Real Estate to conduct various tests with respect
to the Real Estate, including, but not limited to, soil tests and environmental
and hazardous and toxic waste tests and to otherwise determine the feasibility
(economic or otherwise) of the acquisition, ownership and development of the
Real Estate. At any time during the Feasibility Period, Purchaser, in
Purchaser's sole and absolute discretion, may, upon written notice to Seller,
terminate this Agreement, in which event the Earnest Money shall be returned to
Purchaser and all of the rights, duties and obligations of the parties hereto
shall immediately terminate, and this Agreement shall be null, void and of no
further force or effect. If, in Purchaser's sole judgment and discretion,
Purchaser decides that it does not wish to proceed with the purchase, Purchaser
shall give Seller written notice of such fact on or before the end of the
Feasibility Period. In the event Purchaser does not notify Seller in writing on
or before the end of the Feasibility Period of Purchaser's election to terminate
this Agreement, Purchaser shall purchase the Real Estate in accordance with and
subject to the terms and conditions set forth in this Agreement. Seller shall
cooperate fully with Purchaser and Purchaser's agents, employees and
representatives in connection with Purchaser's inspections, tests, surveys and
studies of the Real Estate.
Purchaser hereby agrees to pay, and to indemnify, protect, save, defend and
hold forever harmless, Seller from and against all liabilities, obligations,
claims, damages, judgements, awards, penalties, costs and expenses (including,
without limitation, reasonable attorneys' fees and expenses), which Seller may
incur, suffer or sustain by reason of Purchaser's entry upon the Real Estate
pursuant to the terms of this Agreement. Notwithstanding anything to the
contrary contained in this Agreement, this provision shall survive the Closing
or earlier termination of this
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Agreement.
4. Conveyance; Permitted Title Exceptions. Conveyance of the Real Estate
shall be by a general warranty deed delivered to Purchaser, or to a person or
entity designated by Purchaser ("Purchaser's Nominee"), in recordable form,
conveying to Purchaser or Purchaser's Nominee good, marketable and indefeasible
fee simple title to the Real Estate, subject only to (a) those exceptions to
title set forth on Exhibit C attached hereto and made a part hereof which are
not objected to in writing by Purchaser within the Feasibility Period as
provided in Paragraph 9; and (b) general real estate taxes which are not yet due
and payable (hereinafter called the "Permitted Title Exceptions"). Unless
expressly agreed to by Purchaser in writing, in its sole discretion, any title
exceptions pertaining to liens of a definite or ascertainable amount (other than
those liens arising under any Environmental Laws (as such term is defined
herein) in excess of $100,000.00) ("Removable Liens") shall be removed by Seller
by the payment of money on or before the date of Closing and shall not be
Permitted Title Exceptions hereunder.
5. Closing. When used herein, the term "Closing" shall mean the
conveyance of the Real Estate to Purchaser and the payment of the Purchase Price
to Seller. The Closing shall take place on a date specified in a notice from
Purchaser given at least ten (10) Business Days prior to the specified date, but
in no event earlier than the first Business Day following January 31, 1998, or
later than April 15, 1998; provided, Purchaser may extend the Closing until May
15, 1998, by giving written notice thereof to Seller at least five (5) Business
Days prior to April 15, 1998, together with the sum of Seven Thousand Five
Hundred and No/100 Dollars ($7,500.00) in consideration of such extension which
sum shall be deemed earned by Seller upon receipt and shall not be applied to
the Purchase Price.
6. Intentionally Omitted.
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7. Commitment, Searches and Survey. Not later than ten (10) Business Days
prior to the expiration of the Feasibility Period, Purchaser, at Purchaser's
expense, may obtain the following:
A. A commitment ("Commitment") to issue an ALTA owners title insurance
policy for the Real Estate for the benefit of Purchaser, issued by the
Title Company in the amount of the Purchase Price covering title to the
Real Estate on or after the date hereof, showing good, marketable and
indefeasible fee simple title to the Real Estate in the Seller, together
with a copy of all documents of record and all exceptions to title to the
Real Estate as indicated in the Commitment.
B. Six (6) copies of an ALTA-ACSM "Urban" survey ("Survey")
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(including field notes) with respect to the Real Estate, dated and
certified as of a date subsequent to the Effective Date, prepared by a
surveyor registered by the State of North Carolina, setting forth the legal
description of the Real Estate designated by Purchaser and showing the
location of any improvements, and showing the size and location of all
easements, encroachments and encumbrances listed on the Commitment
(identifying each by volume and page or document number, if applicable),
reciting the exact area of the Real Estate in acres and square feet,
reciting the exact area of each easement, encroachment and encumbrance,
showing no portion of the Real Estate situated in an area designated by the
U.S. Secretary of Housing and Urban Development (or by any other
governmental or quasi-governmental agency or authority having jurisdiction
over the Real Estate) as a flood plain, special flood hazard area or
general flood hazard area, showing all visible utility lines upon the Real
Estate, and indicating such other information reasonably requested by
Purchaser in writing prior to the expiration of the Feasibility Period. The
Survey shall meet the accuracy requirements of an ALTA-ACSM Urban survey,
and contain a certificate specifically addressed to Purchaser, the Title
Company and any other party or parties designated by Purchaser reading as
follows:
"The undersigned does hereby certify that (i) this survey was this day
made upon the ground of the property reflected hereon, for the benefit
of and reliance by Seller, Purchaser, the Title Company and all other
parties listed above; (ii) the description contained hereon is
correct; (iii) the property and each parcel thereof has access to and
from a dedicated roadway as shown hereon; (iv) except as shown hereon,
there are no discrepancies, conflicts, shortages in area,
encroachments, improvements, overlapping of improvements, setback
lines, easements, or roadways; (v) the total acreage and the gross
square footage and the square footage net of any portion of the
property lying within public roadways shown hereon are correct; (vi)
none of the property lies within the 100-year flood plain or any
special flood hazard area or general flood hazard area as designated
by any governmental agency; and (vii) this survey satisfies the
accuracy requirements of an ALTA/ACSM "Urban" survey."
The Survey must be satisfactory to the Title Company so as to permit
it to delete the standard survey exception in the Title Policy and issue
the endorsements required hereunder.
C. Searches, dated not more than one (1) week prior to
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delivery, of all Uniform Commercial Code financing statements and tax liens
related to the Real Estate filed against Seller, as debtor, with the
appropriate public official of the State of North Carolina, the appropriate
public official of Wake County, North Carolina, or with any other
governmental agency or authority or in any public record (the "Searches").
8. Title Policy. Purchaser, at Purchaser's sole cost and expense, shall
obtain an ALTA owner's title insurance policy (the "Title Policy") with respect
to the Real Estate, in the amount of the Purchase Price, in a form reasonably
acceptable to Purchaser, issued by the Title Company pursuant to the Commitment
containing no exceptions other than the Permitted Title Exceptions and insuring
fee simple title to the Real Estate in Purchaser or Purchaser's Nominee. The
Title Policy shall provide extended coverage over the general exceptions and
include the following endorsements: (i) zoning, (ii) access, (iii) contiguity,
if appropriate, (iv) location and (v) such other endorsements as reasonably
requested by Purchaser.
9. Correction of Defects. If the Commitment, the Survey or the Searches
disclose exceptions to title or other matters which are not permitted hereunder
or which are otherwise objectionable to Purchaser, and Purchaser sends written
notice to Seller objecting to such matters at least ten (10) days prior to the
end of the Feasibility Period, then Seller shall have ten (10) days from
delivery by Purchaser of such notice in which to elect to (i) have such
exceptions or other matters corrected, removed or otherwise waived, prior to
Closing provided Seller shall be absolutely obligated to remove any Removable
Liens, or (ii) not cause such exceptions to be removed. If Seller elects to have
such exceptions or other matters corrected, removed or otherwise waived then
Seller shall have such exceptions or other matters corrected or removed or
otherwise waived prior to Closing and any failure to do so shall constitute a
breach of this Agreement. If Seller elects not to cause such exceptions or other
matters to be corrected, removed or otherwise waived then Purchaser shall within
five (5) Business Days following receipt of such notice from Seller elect to
either (a) terminate this Agreement in which case the Earnest Money shall be
returned to Purchaser or (b) accept title to the Real Estate subject to such
exceptions, which exceptions shall then be deemed Permitted Title Exceptions.
Notwithstanding anything in this Agreement to the contrary, the Feasibility
Period shall not end before the day which is five (5) Business Days following
the day on which Purchaser receives such written notice from Seller.
10. Seller's Deliveries; Inspection.
A. Seller shall deliver to Purchaser no later than ten (10) days after the
Effective Date:
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(1) a true and correct copy of the most recent real estate tax bills
and notices of assessed valuation pertaining to the Real Estate including
any pending or past tax protests or appeals undertaken by Seller, if any,
and all documents, correspondence, pleadings and all other information
relating to any and all pending or past tax protests and appeals undertaken
by Seller relating to the Real Estate;
(2) to the extent in Seller's possession, "as-built" drawings of any
underground utilities (including storm sewer, sanitary sewer, water, and
telephone electric service cables) located under the Real Estate, and all
other materials reflecting the current status of the zoning classification
applicable to the Real Estate and the availability of utilities (including,
water, waste water, electricity, gas and telephone service) to the Real
Estate; and
(3) any and all existing soil studies and reports, any environmental
assessments, studies, tests, reports and analyses, and all other studies
and reports, any currently effective permits, subdivision and planned unit
development plats, approvals and plans, all surveys, zoning information,
topographical and engineering studies, any material, substantive
correspondence related to any of the foregoing, and all other currently
effective data and information relating to the Real Estate, or any portion
thereof, which Seller has in Seller's possession or which were prepared for
or on behalf of Seller.
B. Purchaser, its agents, representatives and employees may, during
reasonable business hours, between the Effective Date and the date of the
Closing inspect the Real Estate, and any portion thereof, and conduct
studies, tests and analyses with respect thereto. In the event this
Agreement terminates for any reason prior to Closing, other than on account
of a default by Seller, Purchaser shall repair any damage to and remove all
debris from the Real Estate caused by Purchaser, its agents and
contractors.
11. Seller's Covenants. Between the Effective Date and the date of the
Closing or earlier termination of this Agreement, Seller shall:
A. Not enter into or execute any lease, easement, license or any other
agreement or contract relating to or affecting the Real Estate, or any
portion thereof, without, in each case, Purchaser's prior written consent
and approval;
B. Not mortgage, hypothecate or further encumber the Real Estate or any
portion thereof or permit any liens on the Real Estate or any portion
thereof to arise by operation of law
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other than the lien of current real estate taxes not yet due and payable;
C. Remedy, at Seller's own expense, all violations of laws, ordinances,
orders or other requirements relating to the ownership and operation of the
Real Estate which have been or may be imposed by any governmental authority
having jurisdiction over, or affecting, all or any part of the Real Estate
prior to the date of the Closing, other than arising under any
Environmental Law;
D. Without out-of-pocket expense to Seller, cooperate with Purchaser in
obtaining all permits and approvals described in Paragraph 14E hereof, and
take all actions reasonably requested by Purchaser in connection therewith;
and
E. Without out-of-pocket expense to Seller, cooperate with Purchaser to
effectuate the release or modification of the Restrictive Covenants (as
defined below) and the restrictive covenants contained in the document
recorded in the Wake County Registry in Book 1867 at page 649 and take all
actions reasonably requested by Purchaser in connection therewith.
12. Representations and Warranties.
A. In order to induce Purchaser to enter into this Agreement, Seller
represents and warrants to Purchaser that on the date hereof and on the
date of the Closing:
(1) Seller has all necessary and requisite authority to enter into
this Agreement and to consummate all of the transactions contemplated
hereby, and the persons executing this Agreement and all other
documents required to consummate the transactions contemplated hereby
on behalf of Seller are duly authorized to execute this Agreement and
such other documents on behalf of Seller, and are authorized to bind
Seller.
(2) Seller is a limited liability company duly formed and validly
existing under the laws of the State of North Carolina.
(3) Seller is a "United States person", as defined by Internal Revenue
Code Section 1445 and Section 7701.
(4) The execution of this Agreement by Seller does not, and the
performance by Seller of the transactions contemplated by this
Agreement will not, violate or constitute a breach of the articles of
organization or operating agreement of Seller or any contract, permit,
license, order or decree to which Seller is a party or by which Seller
or its assets are bound.
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(5) Seller has good, marketable and indefeasible fee simple title to
the Real Estate, subject only to the title exceptions set forth on
Exhibit C.
(6) The Real Estate is not in violation of any applicable federal or
state law, or any ordinance, order or regulation of any governmental
or quasi-governmental agency having jurisdiction over the Real Estate,
and no proceedings of any type (including condemnation or similar
proceedings) have been instituted or to the knowledge of the Seller
are pending or contemplated against the Real Estate or any part
thereof.
(7) No party, person or entity is in possession of the Real Estate or
any portion thereof, and, no party, person or entity has any interest
in the Real Estate, or any portion thereof, except Seller.
(8) To Seller's knowledge, there are no unrecorded liens or
encumbrances (including, but not limited to, liens relating to
environmental matters) against the Real Estate or any portion thereof.
(9) There are not presently pending any special assessments of any
nature with respect to the Real Estate or any portion thereof, nor has
the Seller received any written notice of nor has the Seller knowledge
of any such special assessment being contemplated, not resulting from
Purchaser's development or proposed development of the Real Estate.
(10) Seller has not entered into and has no knowledge of any
agreements, contracts, leases, commitments, permits or approvals
relating or pertaining, in any way, to the Real Estate or any portion
thereof, or to its ownership or operation, which would be binding upon
Purchaser or the Real Estate or to which Purchaser or the Real Estate
would be subject subsequent to Closing, other than those requested or
approved by Purchaser.
(11) There are no outstanding contracts or commitments made by Seller
(or any of its agents or affiliates) for the work or materials in
connection with the Real Estate or for any improvements to the Real
Estate which have not been, or will not be on or before the date of
the Closing, fully paid for on a timely basis.
(12) No person or entity has any right or option to acquire all or any
portion of the Real Estate, other than Purchaser pursuant to this
Agreement.
(13) Seller owns no personal property, tangible or
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intangible, owned and used by Seller in connection with the ownership,
operation or use of the Real Estate.
(14) There are no violations by Seller or, to the best of Seller's
knowledge, by any other person or entity, of any restrictive covenants
or other matters affecting the Real Estate.
(15) There does not exist any litigation or governmental proceeding
(including, without limitation, any eminent domain proceeding)
affecting the Real Estate or any portion thereof, and to Seller's best
knowledge, no such litigation or proceeding is pending, threatened or
contemplated.
(16) Seller does not now owe and will not owe any taxes or any
penalties or interest thereon pursuant to any governmental law,
statute or regulation for which Purchaser is or will be obligated to
or liable for a withholding of funds from the Purchase Price pursuant
to any so called "bulk sales" law or other applicable law, statute or
regulation.
(17) (a) Seller has not generated, treated, stored or disposed of
Hazardous Materials (as defined below) in, under or upon the Real
Estate (above or below ground), or any portion thereof, or used any
Hazardous Materials in or on the Real Estate, or any portion thereof,
in violation of any Environmental Laws; and (b) other than as
disclosed in any environmental report delivered to Purchaser by Seller
pursuant to the terms hereof, to the best of Seller's knowledge: (i)
no Hazardous Materials have been generated, treated, stored or
disposed of in, under or upon the Real Estate; (ii) no Hazardous
Materials have been used in or on the Real Estate, or any portion
thereof, in violation of any Environmental Laws; (iii) no Hazardous
Materials are present in, under or upon the Real Estate or any portion
thereof; (iv) the Real Estate is not in violation of any Environmental
Laws; and (iv) no underground storage tank or tanks are or have been
located on or under the Real Estate.
(18) To the best of Seller's knowledge, no portion of the Real Estate
is a wetland designated by the United States Army Corp of Engineers or
other federal state or local body or agency having jurisdiction over
the Real Estate or any portion thereof.
B. In the event at any time prior to Closing Seller learns or has reason
to believe that any of the aforesaid representations and warranties are no
longer true or valid, Seller shall immediately notify Purchaser in writing
and
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therein specify the factors rendering or likely to render such
representations or warranties untrue or invalid. Subject to the provisions
of Paragraph 12.C. with respect to exceptions or qualifications prior to
Closing, all representations and warranties contained in Paragraph 12 or
elsewhere in this Agreement shall be deemed remade as of the date of
Closing and shall survive the Closing for a period of two (2) years.
C. Except as otherwise provided in this Paragraph 12, Seller is not to be
deemed to have contracted in this Paragraph 12 to make the representations
and warranties set forth herein as of the date of Closing without
exclusion, exception or qualification if the statement appearing in the
text of this Paragraph 12 would be inaccurate as of such date. Under such
circumstances, Seller may exclude, qualify or set forth exceptions to the
text of such representations and warranties as it may believe necessary for
their accuracy, without being in breach of this Agreement, in which case
Purchaser shall have a right to terminate this Agreement and the Earnest
Money shall be returned to Purchaser without further liability of the
parties hereto, except that if an exclusion, exception or qualification
taken as of the date of Closing with respect to any representation or
warranty resulted from a breach of an independent promise appearing in one
of the other Paragraphs of this Agreement, the breach of that independent
promise, notwithstanding the right to exclude, except or qualify, shall be
a breach of this Agreement. If no written exclusion, exception or
qualification to the representations and warranties is delivered by Seller
on or before the date of Closing, Seller shall be deemed to have remade
the representations and warranties as of the date of Closing, without
exclusion, exception or qualifications. Whenever there has been an
exclusion, exception or qualification to one or more of such
representations or warranties contained herein, Seller shall be deemed to
have represented and warranted as of the date of Closing subject to the
exclusion, exception or qualification so delivered and to none other.
D. Each party hereunder represents to the other party that no party has
relied upon any real estate broker or other finder other then Koll Property
Resources ("Broker") to consummate the transactions contemplated by this
Agreement. Seller agrees to pay the Broker a commission of four percent
(4%) of the Purchase Price upon Closing (and only upon Closing). Seller
shall indemnify, defend and hold Purchaser harmless from and against any
and all losses, damages, costs and claims suffered or incurred by Purchaser
as a result of or by reason of any claim by any person or entity for any
commission or fee arising out of the acts of the Seller, including any fee
due to the Broker. Purchaser shall indemnify, defend and hold Seller
harmless from and against any and all losses, damages, costs and claims
suffered or
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incurred by Seller as a result of or by reason of any claim asserted by any
person or entity for any commission or fee on account of a relationship
with Purchaser, except for the Broker.
13. Environmental Indemnity. Seller hereby agrees to indemnify, defend
and hold Purchaser harmless from and against any and all losses, liabilities,
damages, injuries, costs, expenses and claims of any and every kind whatsoever
paid, incurred or suffered by or asserted against Purchaser for, with respect
to, or as a direct or indirect result of Seller's breach of any Environmental
Law on or with respect to the Real Estate or any of the warranties and
representations stated in Paragraph 12A(17) hereof (including, without
limitation, any such losses, liabilities, damages, injuries, costs, expenses or
claims asserted or arising under any Environmental Laws). For purposes of this
Agreement, "Hazardous Material" means and includes any waste material or other
substance defined as hazardous in 42 U.S.C. Sec. 9601(14) or any related or
applicable federal, state or local statute, law, regulation or ordinance,
pollutants or contaminants (as defined in 42 U.S.C. Sec. 9601(33), petroleum
(including crude oil or any fraction thereof), any form of natural or synthetic
gas, sludge (as defined in 42 U.S.C. Sec. 6903(26A)), radioactive substances,
hazardous waste (as defined in 42 U.S.C. Sec. 6903(27)) and any other hazardous
wastes, hazardous substances, contaminants or pollutants as defined or described
in any of the Environmental Laws on the Effective Date. As used in this
Agreement, "Environmental Laws" means as of the Effective Date all federal,
state and local environmental laws, and any rule or regulation promulgated
thereunder and any order, standard, interim regulation, moratorium, policy or
guideline of or pertaining to any federal, state or local government, department
or agency, including but not limited to the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended ("CERCLA"), the
Superfund Amendments and Reauthorization Act of 1986 ("SARA"), the Clean Water
Act, the Clean Air Act, the Toxic Substances Control Act, the Occupational
Safety and Health Act, the Federal Insecticide, Fungicide and Rodenticide Act,
the Marine Protection, Research, and Sanctuaries Act, the National Environmental
Policy Act, the Noise Control Act, the Safe Drinking Water Act, the Resource
Conservation and Recovery Act ("RCRA"), as amended, the Hazardous Material
Transportation Act, the Refuse Act, the Uranium Mill Tailings Radiation Control
Act and the Atomic Energy Act and regulations of the Nuclear Regulatory Agency,
and all state and local counterparts or related statutes, laws, regulations, and
order and treaties of the United States. The indemnification hereunder shall
include and benefit Purchaser and Purchaser's Nominee, all subsidiaries and
affiliates of Purchaser and Purchaser's Nominee, and their respective
employees, officers, directors and stockholders.
14. Conditions to Purchaser's Obligation to Close. The
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obligations of Purchaser to close the transactions contemplated by this
Agreement and to pay the Purchase Price are conditioned upon and subject to the
satisfaction on or before the date of Closing (or waiver by Purchaser) of each
of the following conditions:
A. Seller shall have performed and complied with all agreements, covenants
and conditions to be performed or complied with prior to the date of the
Closing.
B. All of Seller's representations and warranties set forth in this
Agreement (as may be modified pursuant to Paragraph 12.C.) shall be true
and correct as of the date of the Closing.
C. Seller shall have complied with all procedures reasonably required by
the Title Company or which are customary or appropriate in transactions
similar to the transactions contemplated hereby in connection with the
consummation of all transactions contemplated hereby.
D. The Real Estate shall have been properly zoned, and Purchaser shall
have received all necessary and appropriate permits and approvals (to the
extent such permits and approvals can be issued based on the state of the
development of the Real Estate as of the date of the Closing) to permit the
development of a senior congregate and assisted living facility on the Real
Estate and the operation thereof as contemplated by Purchaser. Such permits
and approvals shall include, but are not necessarily limited to, zoning
approvals, approvals of site plans, access approval, a special use approval
and approvals of the proposed curb cuts.
E. Purchaser shall have received from the parties benefitted thereby a
release or modification of the restrictive covenants contained in Book
3092, Page 506 of the Wake County, North Carolina Registry (the
"Restrictive Covenants") which will be in form and content satisfactory to
Purchaser in its sole and absolute discretion.
15. Provisions with Respect to Closing.
A. At the Closing, Seller shall deliver to Purchaser the following, all in
form and substance reasonably satisfactory to Purchaser:
(1) a general warranty deed, duly executed and acknowledged by Seller,
conveying to Purchaser, or Purchaser's Nominee, good, marketable and
indefeasible fee simple title to the Real Estate, in proper form for
recording and subject only to the Permitted Title Exceptions;
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(2) an affidavit executed by Seller, stating Seller's U.S. Taxpayer
identification number and that Seller is not a "Foreign person" or a
"Foreign corporation" (as defined under Internal Revenue Code Section
1445 and Section 7701), and that Purchaser is not required to withhold
any portion of the Purchase Price under the provisions of such Act;
(3) a certificate executed by Seller to the effect that the
representations and warranties made by Seller to Purchaser are true
and correct in all material respects on and as of the date of the
Closing with such exclusions exceptions or qualifications permitted
pursuant to Paragraph 12C; and
(4) all such further instruments and documents as are normally made or
delivered in connection with the sale of Property similar to the Real
Estate in the county and state where the Real Estate is located or as
may be necessary, expedient, proper, or appropriate in the reasonable
opinion of Purchaser or Purchaser's counsel, in order to complete the
transactions contemplated hereby.
B. On the date of the Closing, and provided that all conditions precedent
to Purchaser's obligations under this Agreement are satisfied, Purchaser
shall deliver to the Title Company, as escrowee, the amount of the Purchase
Price (less credits, adjustments and prorations in accordance with this
Agreement) by wire transfer or other immediately available funds, payable
in United States dollars.
C. On the date of Closing the Title Company shall disburse the Purchase
Price (as adjusted by prorations and credits and Seller's closing costs) to
Seller and refund the Earnest Money to Purchaser, and Seller shall deliver
possession of the Real Estate to Purchaser in the same condition as the
Real Estate exists on the date hereof, ordinary wear and tear and damages
caused by Purchaser, its agents or contractors excepted.
D. Seller shall pay or give Purchaser a credit at Closing for: (i) any
State, county or local transfer or stamp taxes or similar charges; and (ii)
the cost of recording any releases of Removable Liens or other unpermitted
exceptions. Purchaser shall pay the cost of recording any instruments of
conveyance and securing financing of Purchaser's acquisition.
16. Closing Adjustments. Adjustments shall be made between Seller and
Purchaser for the following items, prorated on a per diem basis, as of midnight
of the day preceding the date of the Closing:
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(1) If the Closing takes place on or before December 31, 1997, real
estate taxes and other state or city taxes, charges and assessments
affecting the Real Estate, or any portion thereof, not yet due and
payable, shall be prorated for the 1997 calendar year on the basis of
the tax bills for the fiscal period July 1, 1997 to June 30, 1998. If
the Closing takes place on or after January 1, 1998, the adjustment
thereof on the date of the Closing shall be upon the basis of one
hundred ten percent (110%) of such tax bills, and there shall be a re-
proration of such tax, charge or assessment for calendar year 1998
immediately upon receipt of the bills issued for the fiscal period
July 1, 1998 to June 30, 1999, and, within ten (10) days of the
receipt of such bills, Seller shall pay Purchaser or Purchaser shall
pay Seller, as the case may be, any amount due the other party as a
result of such re-proration.
(2) Such additional adjustments as are normally made in connection
with the sale of property similar to the Real Estate in the county and
state where the Real Estate is located.
17. Condemnation. In the event between the Effective Date and the date of
the Closing Seller receives written notice that any condemnation or eminent
domain proceedings are threatened or initiated which might result in the taking
of any part of the Real Estate Purchaser may:
A. terminate this Agreement, in which event, the Earnest Money, together
with all interest accrued thereon, shall promptly be returned to Purchaser
and all rights and obligations of the parties hereunder shall cease; or
B. consummate the transactions contemplated by this Agreement, in which
event Seller shall assign to Purchaser all of Seller's right, title and
interest in and to any award made in connection with such condemnation or
eminent domain proceedings, without adjustment to the Purchase Price.
Seller shall immediately notify Purchaser in writing of the threat or the
occurrence of any condemnation or eminent domain proceedings. Purchaser shall
then notify Seller within fifteen (15) Business Days after the date of
Purchaser's receipt of Seller's notice of such condemnation or eminent domain
proceedings whether Purchaser elects to exercise its right under Subparagraph A
or B of this Paragraph. In the event Purchaser receives written notice of the
threat or occurrence of such condemnation or eminent domain proceedings within
fifteen (15) Business Days of the date of Closing, and Purchaser elects to
consummate the transactions contemplated by this Agreement within the time
period provided above, the date of the Closing shall be adjusted accordingly.
14
<PAGE>
18. Remedies.
--------
A. If Seller should breach any of its representations, warranties,
covenants or agreements contained in this Agreement or in any other
agreement, instrument, certificate or other document delivered pursuant to
this Agreement or if Seller should fail to consummate the sale contemplated
herein for any reason other than Purchaser's default, Purchaser shall have
the right to (1) cancel this Agreement and receive the prompt return of the
Earnest Money, together with all interest and earnings accrued thereon;
and (2) collect monetary damages equal to Purchaser's out-of-pocket costs
and expenses incurred in connection with this Agreement and the transaction
contemplated hereby, including, without limitation, Purchaser's feasibility
review and obtaining all permits, licenses and approvals for the
construction, development, use and operation of Purchaser's intended
project, not exceeding the sum of Five Hundred Thousand and No/100 Dollars
($500,000.00), or (3) in lieu thereof enforce specific performance of this
Agreement.
B. If all of the conditions to Purchaser's obligations to purchase the Real
Estate have been satisfied or waived in writing by Purchaser and Seller is
not in default of or under any of Seller's agreements, covenants or
obligations hereunder and Purchaser should fail to consummate the purchase
contemplated hereby for any reasons other than Seller's default, Seller, as
Seller's sole and exclusive remedy, may receive the Earnest Money, as full
and final liquidated damages, Purchaser and Seller hereby acknowledging
that, in the event of Purchaser's failure to consummate the sale
contemplated hereby, actual damages suffered by Seller would be difficult
and/or inconvenient to determine or ascertain; and, thereafter, there shall
be no further liability hereunder on the part of either party or the other
party; provided that Purchaser shall deliver to Seller copies of all tests,
reports and studies relating to physical condition of Real Estate obtained
by Purchaser as part of its feasibility review.
C. If either Purchaser or Seller brings an action to enforce its rights
under this Agreement, the successful party shall be reimbursed by the
unsuccessful party for all costs of enforcement, including reasonable
attorneys' fees and court costs. Tender of the deed or purchase money shall
not be necessary where the other party has defaulted.
19. Modification, Waiver, etc.
-------------------------
A. No waiver of any condition under, and no modification, amendment,
discharge or changes of or to this Agreement shall be valid unless the same
is in writing and signed by the party against which the enforcement of such
modification, waiver,
15
<PAGE>
amendment, discharge, or change is sought.
B. This Agreement contains the entire agreement between the parties
relating to the transactions contemplated hereby and all prior or
contemporaneous agreements, understandings, representations and statements,
oral or written, are merged herein.
20. Notices. All notices, demands, requests and other communications under
this Agreement shall be in writing and shall be deemed properly served when
delivered, if delivered by hand to the party to whose attention it is directed,
or three (3) Business Days after delivery to a United States Post Office
properly addressed, if mailed postage prepaid or one (1) Business Day after
delivery to the courier if sent by private receipt courier guaranteeing next day
delivery, delivery charges prepaid, or upon transmittal if delivered by
facsimile provided receipt of the notice is confirmed, as the case may be, and
in each case, addressed as follows:
A. If intended for Seller, to:
Anvil Investments LLC
Attn: Tim Smith
1005 High House Road, Suite 200
Cary, North Carolina 27513
Facsimile No.: (919) 481-9775
with copy to:
Higgins, Frankstone, Graves & Morris, P.A.
Preston Professional Plaza, Suite 106
1003 High House Road, Suite 106
Cary, North Carolina 27513
Attn: Kenneth L. Eagle
Facsimile No.: (919) 467-5471
B. If intended for Purchaser, to:
Brookdale Living Communities, Inc.
77 West Wacker Drive
Suite 4800
Chicago, Illinois 60601
Attn.: Mark J. Iuppenlatz
Facsimile No. (312) 977-3701
with a copy to:
Brookdale Living Communities, Inc.
77 W. Wacker Drive, Suite 4800
16
<PAGE>
Chicago, Illinois 60601
Attn.: Robert J. Rudnik
Facsimile No. (312) 917-1684
and with a further copy to:
Burke, Warren, MacKay & Serritella, P.C.
330 North Wabash Avenue
22nd Floor
Chicago, Illinois 60611
Attn: Douglas E. Wambach
Facsimile No. (312) 840-7900
or at such other address or to such other party which any party entitled to
receive notice hereunder designates to the others in writing.
21. Governing Law. The validity, meaning and effect of this Agreement
shall be determined in accordance with the laws of the State of North Carolina,
applicable to contracts made and to be performed in that State.
22. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
23. Captions. The captions of this Agreement are inserted for convenience
of reference only and in no way define, describe or limit the scope or intent of
this Agreement or any of the provisions hereof.
24. Construction. As used herein, the terms (a) "person" shall mean an
individual, a corporation, a partnership, a trust, an unincorporated
organization or any agency or political subdivision thereof; (b) "including"
shall mean including, without limiting the generality of the foregoing; (c) the
masculine shall include the feminine and the neuter; (d) "Seller's knowledge" or
any similar phrase shall mean best knowledge without independent investigation;
and (e) "Business Day" shall mean any calendar day other than Saturday, Sunday
or federal holiday; provided in addition thereto, the Closing shall not occur on
any day on which national banks in Chicago, Illinois or Raleigh, North Carolina
are closed.
25. Assignability by Purchaser. This Agreement and any of the Purchaser's
rights hereunder may be assigned by Purchaser prior to the Closing upon written
notice to Seller and without the prior consent of the Seller. Any such
assignment may provide that Purchaser's nominee or assignee assumes all of the
provisions of the Agreement to be performed by Purchaser, and in such event
Purchaser shall be released and discharged of all further liability under the
Agreement other than any liabilities under the indemnity contained in paragraph
3 arising out of Purchaser's activities
17
<PAGE>
hereunder and the obligation of Purchaser under paragraph 10B. All references to
Purchaser in this Agreement shall be deemed to include references to Purchaser's
Nominee.
26. Binding Effect. This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their respective heirs, executors,
administrators, legal representatives, successors and assigns.
27. Partial Invalidity. If any provision or provisions, or any portion of
any provision or provisions, of this Agreement is found by a court of law to be
in violation of any applicable local, state or federal ordinance, statute, law,
administrative or judicial decision, or public policy, and if such court should
declare such portion, provision or provisions of this Agreement to be illegal,
invalid, unlawful, void or unenforceable as written, then it is the intent both
of Seller and Purchaser that any portion, provision or provisions shall be given
force to the fullest possible extent that they are legal, valid and enforceable,
that the remainder of this Agreement shall be construed as if such illegal,
invalid, unlawful, void or unenforceable portion, provision or provisions were
not contained herein, and that the rights, obligations and interest of Seller
and Purchaser under the remainder of this Agreement shall continue in full force
and effect.
28. Time is of the Essence. Time is of the essence of this Agreement.
29. Acceptance of Offer. The offer to purchase the Real Estate made
by Purchaser by the delivery of a copy of this Agreement as executed on behalf
of Purchaser shall automatically terminate and expire at 5:00 p.m. C.S.T. on
October __, 1997, unless said offer is accepted earlier by Seller's execution of
this Agreement, or a counterpart hereof, and by the return to Purchaser of a
fully executed copy of this Agreement on or before the date and time
aforementioned.
18
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date the last party signs ("Effective Date").
PURCHASER:
BROOKDALE LIVING COMMUNITIES, INC.,
a Delaware corporation
Date: October 8, 1997 By: /s/ Darryl W. Copeland
--------------- -------------------------
Its: Executive Vice President
------------------------
SELLER:
ANVIL INVESTMENTS LLC, a
North Carolina limited liability company
Date: October 10, 1997 By: /s/ Tim Smith
---------------- -------------------------
Its: Manager
------------------------
Broker hereby executes this
Agreement for the purpose
of acknowledging the provisions
of paragraph 12D.
KOLL PROPERTY RESOURCES, now merged into CB Commercial/BB/
By: /s/ Barry J. Bowling
-----------------------
Name: Barry J. Bowling
---------------------
Title: Vice President
--------------------
19
<PAGE>
EXHIBIT 10.52
REAL ESTATE
PURCHASE AND SALE
AGREEMENT
between
BRENDENWOOD MRC LIMITED PARTNERSHIP, a Maryland limited partnership, as Seller
and
BROOKDALE LIVING COMMUNITIES, INC.,
a Delaware corporation, as
Purchaser
for
Brendenwood Retirement Community
One Brendenwood Drive
Voorhees, New Jersey
<PAGE>
LISTS OF EXHIBITS AND SCHEDULES
- -------------------------------
EXHIBIT A - LEGAL DESCRIPTION OF REAL PROPERTY
EXHIBIT B - RENT ROLL
EXHIBIT C - LICENSES AND PERMITS
EXHIBIT D - PERSONAL PROPERTY
EXHIBIT E - ESCROW AGREEMENT
EXHIBIT F - PERMITTED EXCEPTIONS
EXHIBIT G - SERVICE CONTRACTS
EXHIBIT H - BARGAIN AND SALE DEED WITH COVENANTS AGAINST GRANTOR'S ACTS
EXHIBIT I - BILL OF SALE
EXHIBIT J - ASSIGNMENT AND ASSUMPTION AGREEMENT
EXHIBIT K - LEASING STANDARDS
EXHIBIT L - FEASIBILITY MATERIALS
EXHIBIT M - UNDELIVERED FEASIBILITY MATERIALS
EXHIBIT N - VIOLATIONS OF GOVERNMENTAL REGULATIONS
<PAGE>
TABLE OF CONTENTS
- -----------------
<TABLE>
<CAPTION>
Section Page
- ------- ----
<C> <S> <C>
1. Definitions, and Agreement of Sale and Purchase........................ 1
2. Purchase Price and Earnest Money....................................... 5
3. Purchaser's Pre-Closing Activities and Obligations..................... 5
4. Feasibility Period..................................................... 6
5. Conditions Precedent and Closing....................................... 8
6. Documents.............................................................. 9
7. Brokerage and Other Commissions........................................ 11
8. Prorations, Credits and Adjustments.................................... 12
9. Possession and Loss by Fire or Other Casualty.......................... 13
10. Title Insurance and Survey............................................ 14
11. Taking or Condemnation................................................ 16
12. Seller's Covenants.................................................... 17
13. Remedies.............................................................. 18
14. Representations and Warranties of Purchaser........................... 20
15. Representations and Warranties of Seller.............................. 21
16. Notices............................................................... 24
17. No Assignment......................................................... 25
18. Miscellaneous......................................................... 26
</TABLE>
<PAGE>
REAL ESTATE PURCHASE
AND SALE AGREEMENT
------------------
THIS REAL ESTATE PURCHASE AND SALE AGREEMENT is made as of the 1st day of
October, 1997, by and between BRENDENWOOD MRC LIMITED PARTNERSHIP, a Maryland
limited partnership, (said partnership being herein referred to as "Seller") and
BROOKDALE LIVING COMMUNITIES, INC., a Delaware corporation (said corporation
being herein referred to as "Purchaser"), in consideration of, subject to and in
accordance with the following terms, covenants and conditions.
1. Definitions, and Agreement of Sale and Purchase.
-----------------------------------------------
1.01 Any initially capitalized term herein used, exclusive of proper names,
shall have the meaning assigned to such term in this Agreement, unless the
context otherwise expressly states.
1.02 In addition to the terms which may be elsewhere defined in this Agreement,
each of the following terms, whenever in this Agreement used, shall have the
meaning set forth in this Section 1.02:
"Agreement" means this Agreement and all the Exhibits and Schedules
attached to and made a part of this Agreement;
"Agreement Date" means the later of the dates upon which Seller and
Purchaser have caused this Agreement to be executed as evidenced by the
dates set forth below their signatures on the last page of this Agreement;
"Authorities" means any governmental or quasi-governmental body or agency
having jurisdiction over the Property and/or Seller including, without
limitation, the United States, the State of New Jersey, the Township of
Voorhees and the County of Camden;
"Appurtenances" means all rights, privileges and easements appurtenant to
the Land, including, without limitation, all minerals and oil, gas and
other hydrocarbon substances on and under the Land; development rights; air
rights; easements; rights of way; sidewalks; and all other appurtenances
used in connection with the beneficial use and enjoyment of the Land; and
all existing licenses, consents, easements, rights of way and approvals
required from private parties to make use of utilities and to insure
vehicular and pedestrian ingress and egress to the Real Property;
"Business Day" means each day other than Saturday, Sunday and legal
holidays in the State of New Jersey or Illinois;
"Closing" means the consummation of the transaction contemplated by this
Agreement;
<PAGE>
"Closing Date" means (a) the later of (i) the date thirty (30) days after
the expiration of the Feasibility Period, as such date may be extended
pursuant to Section 5.02, or (ii) the date ten (10) Business Days after the
issuance to Purchaser of any Regulatory Licenses by the New Jersey
Department of Health (the "Department"), and/or the transfer to Purchaser
of the Regulatory Licenses approved by the Department, but in any event no
later than December 31, 1997, or (b) such other date to which Seller and
Purchaser may hereafter mutually agree in writing; provided, however, that
if any or all of Sections 13.01 or 13.02 hereafter become operative, the
Closing Date shall be determined in accordance with the provisions of
whichever of said Sections is operative or, if more than one of said
Sections are operative, the provisions of the Section which renders the
latest date;
"Feasibility Period" means a period commencing on the Agreement Date and
ending on the thirtieth (30th) day thereafter as may be extended pursuant
to Section 4.02;
"Governmental Regulations" means any applicable laws, ordinances, rules,
and regulations (including, without limitation, those relating to land use,
subdivision, zoning, environmental, toxic or hazardous wastes, the
Americans with Disabilities Act, occupational health and safety, and
building and fire codes) of any of the Authorities bearing on the
construction, alteration, rehabilitation, maintenance, use, operation, or
development of the Property;
"Improvements" means all buildings, fixtures, structures, parking areas,
landscaping and other improvements constructed and located on the Real
Property, including, but not limited to, a 149-unit congregate living
facility known as Brendenwood Retirement Community;
"Intangible Property" means all of Seller's interest in the assignable
intangible property consisting of: (a) any and all Licenses and Permits and
other approvals in effect on the Closing Date and necessary for the current
use and operation of the Real Property; (b) any and all warranties,
contractual rights, rebates and indemnities or other rights used or owned
in connection with the ownership or operation of the Real Property; and (c)
telephone numbers, trade names, including the name "Brendenwood Retirement
Community", and other assignable intangible property owned or used in
connection with the ownership or use of the Real Property;
"Land" means the parcel or parcels of land legally described on Exhibit A
attached hereto and made a part hereof, consisting of approximately 5.04
acres;
"Leases" means those leases, residency, occupancy and ancillary agreements
listed on Exhibit B attached to and made a part of this Agreement and any
such agreements entered into by Seller in respect of the Property after the
date of this Agreement and prior to the Closing Date pursuant to Section
12.01;
2
<PAGE>
"Licenses and Permits" means all licenses, permits, certificates of
occupancy, approvals, dedications, subdivision maps and entitlements
issued, approved or granted by Authorities to Seller in connection with the
ownership, use and operation of the Real Property including, without
limitation, those Licenses and Permits listed on Exhibit C attached hereto
and made a part hereof;
"Person", which may be expressed in the singular or plural form, means (a)
any individual, corporation, association, limited liability company,
cooperative business trust, estate, trust or partnership, (b) any two or
more of the entities described in clause (a) having a joint or common
interest or enterprise, (c) any governmental or quasi-governmental body,
authority or agency, or (d) any other legal entity;
"Personal Property" means all furniture, furnishings, equipment and other
tangible personal property owned by Seller that is located at the Real
Property and used in connection with the management, operation or repair of
the Real Property, including, without limitation, those items of personal
property listed on Exhibit D attached to and made a part of this Agreement;
"Permitted Exceptions" means all (a) exceptions to title to the Real
Property described on Exhibit E attached hereto and made a part hereof, (b)
exceptions to title to the Real Property created prior to the Closing Date
with the prior written consent of Purchaser, (c) the Leases, (d) acts done
or suffered by, and judgments against, Purchaser or any Person claiming by,
through or under Purchaser, (e) those Unpermitted Exceptions which are
accepted by Purchaser pursuant to Section 10.05, (f) those Unpermitted
Exceptions which are insured or endorsed over pursuant to Sections 10.03
and 10.04, and (g) those exceptions to title occurring or arising pursuant
to Section 11.02;
"Property" means, collectively or severally, as the context requires, the
Real Property, the Personal Property, the Intangible Property, the Service
Contracts and the Records and Plans;
"Purchaser's Affiliates" means any Person controlling, controlled by or
under common control with Purchaser, it being agreed that, for the purposes
hereof, the concept of control shall mean, in the case of an individual,
any relationship based on marriage or blood and, in all cases, any
relationship based on ownership or voting rights in excess of ten percent
(10%) of the equity of the Person or on the ability to direct, by
affirmative or negative action or by omission, the business and affairs of
the Person;
"Purchaser's Default", which may be expressed in the singular or plural
form, means any failure in the payment, performance or observance of or in
compliance with any of the covenants, agreements, representations,
warranties and obligations of Purchaser under this Agreement in any
material respect;
3
<PAGE>
"Purchaser's Group" means Purchaser and all the directors, officers,
employees, agents and independent contractors of Purchaser;
"Real Property" means the Land, together with the Improvements and the
Appurtenances;
"Records and Plans" means, to the extent in the possession or control of
Seller or any of Seller's Group, (a) all financial and other books and
records maintained by Seller in connection with the operation of the
Property, (b) all preliminary, final and proposed building plans and
specifications (including "as-built" drawings) respecting the Improvements,
and (c) all structural reviews, architectural drawings and engineering,
environmental, soils, seismic, geologic and architectural reports, studies
and certificates and other similar documents pertaining to the Property;
"Regulatory Licenses" has the meaning set forth in clause (i) of Section
5.01 hereof;
"Seller's Default", which may be expressed in the singular or plural form,
means any failure in the payment, performance or observance of or in
compliance with any of the covenants, agreements, representations,
warranties and obligations of Seller under this Agreement in any material
respect;
"Seller's Group" means collectively Seller and all the partners, members,
directors, officers, employees, agents, and independent contractors of
Seller at any time and from time to time;
"Service Contracts" means those design contracts, space planning contracts,
construction contacts, subcontracts and purchase orders, utility contracts,
water and sewer service contracts, maintenance contracts, equipment leases
and management contracts, to which Seller is a party, which relate to the
Property, which Purchaser has elected to assume (or is deemed to have
elected to assume) pursuant to the terms of this Agreement and which are
listed on Exhibit E;
"Title Insurer" means Lawyer's Title Insurance Corporation; and
"Unpermitted Exceptions" means the exceptions to title to the Real
Property, other than Permitted Exceptions.
1.03 Seller hereby agrees to sell and to convey, assign and transfer to
Purchaser, and Purchaser hereby agrees to purchase from Seller, the Property,
subject to and in accordance with the terms and conditions, representations,
warranties and agreements set forth in this Agreement.
4
<PAGE>
2. Purchase Price and Earnest Money.
2.01 Purchaser agrees to pay or cause to be paid to Seller, as the purchase
price (the "Purchase Price") for the Property, the sum of Fifteen Million Seven
Hundred Fifty Thousand and No/100 Dollars ($15,750,000.00) plus or minus net
prorations, adjustments and credits as herein provided, which shall be paid and
satisfied at the Closing in cash by wire transfer or other immediately available
funds.
2.02 Purchaser shall, within two (2) Business Days following the Agreement
Date, deliver to the Title Insurer the sum of One Hundred Thousand and No/100
Dollars ($100,000.00) as earnest money to be held by the Title Insurer, at its
office in Chicago, Illinois, in escrow pursuant to the terms of an Escrow
Agreement substantially in the form attached hereto as Exhibit G and made part
hereof, which shall be increased by an additional Two Hundred Fifty Thousand and
No/100 Dollars ($250,000.00) within two (2) Business Days following the
expiration of the Feasibility Period (the sum on deposit at any time with the
Title Insurer pursuant to this Section 2.02, together with the earnings thereon
is herein referred to as the "Earnest Money").
2.03 The Earnest Money shall be invested and, together with any earnings
thereon, shall be, if necessary, reinvested, by the Title Insurer in a money
market account, or such other investments designated by Purchaser. Unless
otherwise expressly herein provided, the Earnest Money shall, at the Closing, be
paid to Purchaser.
3. Purchaser's Pre-Closing Activities and Obligations.
3.01 From and after the Agreement Date until the Closing or earlier termination
of this Agreement, Purchaser's Group, or any of them, shall have the right and
license to enter on the Real Property at any time, and from time to time, after
reasonable notice to Seller, for the purpose of conducting (a) surveys
(topographical, boundary and geological), (b) soil borings and tests, (c)
traffic, engineering, hydrological and drainage studies, (d) environmental
studies, (e) engineering and structural studies of the Improvements, (f)
appraisals, and (g) such other tests, inspections and studies as Purchaser shall
deem necessary to determine the feasibility of the Property (all of the
foregoing together with such other activities described in Section 4 being
herein collectively referred to as "Purchaser's Pre-Closing Activities").
3.02 Purchaser's Pre-Closing Activities shall be exercised and conducted, in
all respects, in a commercially reasonable manner by Purchaser's Group in
compliance with all Governmental Regulations.
3.03 (i) Purchaser shall, at Purchaser's expense, promptly cause (a) all
borings resulting from Purchaser's Pre-Closing Activities to be plugged or
capped in a safe manner, (b) all Property, if any, damaged or destroyed by
Purchaser's Group, or any of them, to be
5
<PAGE>
repaired, restored or replaced and (c) all debris, if any, resulting from
or in connection with Purchaser's Pre-Closing Activities to be removed
from the Property.
(ii) Purchaser's Group shall exercise the rights of entry herein granted
to Purchaser's Group in a manner so as not to unreasonably disturb or
interfere with any of the tenants or occupants under the Leases
("Tenants").
3.04 Purchaser hereby agrees to pay, and to indemnify, protect, save, defend
and hold forever harmless, Seller from and against all liabilities, obligations,
claims, damages, judgments, awards, penalties, costs and expenses, including,
without limitation, court costs, expert witness fees and reasonable attorneys'
fees and expenses at trial and on appeal, which Seller may incur, suffer or
sustain, or for which Seller may become obligated or liable by reason of:
(i) any injury to or death of persons or loss of or damage to property in
connection with, or as a result of, any entry or entries upon, or use of,
the Property by Purchaser's Group, or any of them; and
(ii) any labor or services performed or any materials furnished by or for
the account or benefit, or at the sufferance, of Purchaser in respect of
the Property.
3.05 Purchaser shall, within two (2) Business Days of the Agreement Date,
provide Seller with evidence of public liability and property loss insurance
covering Purchaser's Pre-Closing Activities and naming Seller as an additional
insured.
4. Feasibility Period.
4.01 This Agreement and the obligations of Purchaser hereunder are subject to
and conditioned upon Purchaser, at its own expense, being satisfied, in its sole
discretion, with its "Feasibility Review" (as such term is defined below) during
the Feasibility Period.
4.02 No later than five (5) Business Days following the Agreement Date, Seller
shall make available to Purchaser at the office of the Purchaser in Chicago,
Illinois, or at Purchaser's election, at the offices of Seller where such items
are kept, each of the following items (individually or collectively, as the
context may require, the "Feasibility Materials") in respect of the Property for
review by Purchaser and its consultants and independent contractors
("Feasibility Review"):
(i) copies of all Leases, together with a current copy the rent roll in
the form attached hereto as Exhibit B;
(ii) copies of the Service Contracts;
6
<PAGE>
(iii) copies of the tax bills and value renditions with respect to the
Property for the current tax year and the three (3) prior tax years and
copies of all notices and documents for any assessments with respect to the
Property for the current tax year and the three (3) prior tax years;
(iv) existing survey of the Property;
(v) copies of all existing title policies insuring title to the Property;
(vi) copies of operating statements, prepared on a monthly basis, for the
calendar years 1995 and 1996, and corresponding year-to-date information
for calendar year 1997, showing current income and expense items,
itemization of all capital expenditures made during the respective periods
and a schedule of all employees employed by Seller in the operation of the
Property, setting forth the terms of any contract with them;
(vii) copies of all Records and Plans;
(viii) a list and copies of the Licenses and Permits and a copy of any
notice of any statute or code violation pertaining to the Property,
including any documents pertaining to the resolution thereof;
(ix) the Commitment to be delivered in accordance with Section 10.01;
(x) the Survey to be delivered in accordance with Section 10.01; and
(xi) the other items described on Exhibit L attached hereto.
If Seller fails to deliver any of the Feasibility Materials within said 5
Business Day Period specified above, then the Feasibility Period shall be
extended one day for each day beyond said 5 Business Day Period that Seller
fails to deliver the Feasibility Materials. Purchaser acknowledges that only
those items described on Exhibit M attached hereto have not been delivered to
Purchaser as of the Agreement Date.
4.03 At any time during the Feasibility Period, Purchaser may terminate this
Agreement for any reason by the delivery of written notice to Seller, on or
before the last day of the Feasibility Period, of Purchaser's election to
terminate this Agreement. If Purchaser fails to give notice as required in this
Section 4.03 on or before the last day of the Feasibility Period, then Purchaser
shall be deemed to have elected to waive such condition.
4.04 If Purchaser elects to terminate this Agreement in accordance with
Section 4.03, Seller shall cause the Earnest Money to be returned to Purchaser,
and Seller and Purchaser shall be
7
<PAGE>
released from their respective obligations and liabilities under this Agreement,
subject to Section 18.14 hereof.
4.05 At any time, and from time to time, during the Feasibility Period,
Purchaser may elect not to assume one or more of the Service Contracts, which
election shall be made by the delivery of written notice to Seller, in which
event, Seller shall terminate on or before the Closing Date, at no cost or
expense to Purchaser, all Service Contracts which Purchaser has elected not to
assume. Purchaser shall be deemed to have elected to assume all Service
Contracts with respect to which Purchaser has not delivered written notice
pursuant to this Section 4.05.
4.06 The Feasibility Materials shall remain the sole property of the Seller
until Closing. If Closing does not occur for any reason, Purchaser shall return
all of the Feasibility Materials to Seller at the earliest practicable time and
shall not retain any copies thereof. Purchaser acknowledges that Seller
considers the Feasibility Materials to be confidential and proprietary and
agrees not to disclose the Feasibility Materials to any Person except (i) for
those employees, agents, professionals and financial sources consulted by
Purchaser in connection with the transaction contemplated by this Agreement,
(ii) to any governmental agencies or authorities in connection with the issuance
and/or transfer of the Regulatory Licenses or (iii) as required by law,
ordinance or court order. Purchaser shall be liable to Seller for violation of
the confidentiality provisions set forth herein, including the violation of such
provisions by any Person with whom Purchaser shares the Feasibility Materials.
5. Conditions Precedent and Closing.
--------------------------------
5.01 The following shall be additional conditions precedent to Purchaser's
obligation to perform under this Agreement:
(i) On or before December 15, 1997, Purchaser shall have received from
the Department (a) all licenses, or (b) the approval of the transfer of all
of Seller's licenses, necessary to operate the facility as an assisted
living facility (the "Regulatory Licenses");
(ii) Prior to the expiration of the Feasibility Period, (a) Seller
shall have filed a resale form and paid all applicable fees to the Voorhees
Township Zoning Administrative Officer (the "Zoning Officer") together with
a copy of the approved site plan and verification that the site plan has
been delivered to Purchaser and (b) Purchaser shall file an application for
zoning permit #2 with the Zoning Officer together with the applicable
$25.00 fee, and (c) the Zoning Officer shall have issued a certificate of
conformance for the Property without exception or exclusion;
(iii) At the Closing, the Title Insurer shall be ready, willing and
able to issue the owner's policy of the title insurance described in
Section 10.02 hereof;
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(iv) At Closing, there shall be no existing Seller's Defaults not
previously waived in writing by Purchaser; and
(v) All of Seller's representations and warranties contained herein
and in any other written documents delivered by or on behalf of Seller
pursuant to the terms of this Agreement are true and correct in all
material respects when made and shall be true and correct as of the Closing
Date.
Purchaser may, at Purchaser's sole option, elect to waive any of the foregoing
conditions precedent to performance of its obligations hereunder by giving
written notice to Seller of such election at any time on or before the Closing
Date. If Purchaser elects to waive any such conditions precedent, this Agreement
shall continue in full force and effect. If any of the foregoing conditions are
not satisfied or waived on or before the date specified, Purchaser shall give
written notice to Seller, on or before the date specified, of its election to
terminate this Agreement. If Purchaser fails to give notice on or before the
date specified, then the conditions hereunder shall be deemed satisfied or
waived and this Agreement shall continue in full force and effect. If this
Agreement is terminated pursuant to this Section 5.01, Purchaser shall be
entitled to the immediate refund of the Earnest Money, and Seller and Purchaser
shall be released from their respective obligations and liabilities under this
Agreement except as otherwise provided in Section 18.14 hereof, and each party
shall bear its own expenses incurred in connection with this Agreement.
5.02 Purchaser shall use commercially reasonable efforts to obtain the transfer
or issuance of the Regulatory Licenses and Seller shall use all commercially
reasonable efforts in cooperating with Purchaser in order to fulfill the
condition precedent set forth in clause (i) of Section 5.01 by completing such
requests and applications necessary to obtain the Regulatory Licenses. Such
cooperation shall include, at the request of Purchaser, Seller agreeing to
transfer the existing Regulatory Licenses to Purchaser or causing the holder of
the existing Regulatory Licenses to transfer such Regulatory Licenses to
Purchaser, and promptly completing and filing with the appropriate authority, or
causing the holder of the existing Regulatory Licenses to promptly complete and
file with the appropriate authority, without any out-of-pocket expense to
Seller, such forms, documents and other information as may be necessary to cause
and effect the transfer of the existing Regulatory Licenses to Purchaser. In
addition, Seller covenants and agrees to complete all alterations and
improvements to the Improvements necessary for the issuance of the Regulatory
Licenses on or before December 15, 1997. If such alterations and improvements
are not so completed, Purchaser may, at its election, terminate this Agreement
as provided in Section 5.01, or withhold from the Purchase Price a sum
reasonably estimated by Purchaser to complete such alterations and improvements.
Upon completion of such alterations and improvements, Purchaser shall pay any
excess amounts to Seller. The Closing Date may be extended, at Purchaser's
option by its written notice to Seller given at least ten (10) Business Days
prior to the then scheduled Closing Date, for two (2) consecutive thirty (30)
day periods in order to fulfill the condition precedent set forth in clause (i)
of Section 5.01 above, subject to Purchaser's further rights to terminate this
Agreement upon the expiration of the period of any such extension if all such
conditions have not then been satisfied or waived.
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5.03 The obligations of Seller to perform under this Agreement are subject to
and conditioned upon the absence of any existing Purchaser's Defaults not
previously waived in writing by Seller. Seller may, at Seller's sole option,
elect to waive this condition precedent to performance of its obligations
hereunder by giving written notice to Purchaser of such election at any time on
or before the Closing Date. If Seller elects to waive any such conditions
precedent, this Agreement shall continue in full force and effect.
5.04 The Closing shall occur on the Closing Date at the offices of the Title
Insurer in Chicago, Illinois, or at any other mutually agreeable location.
6. Documents.
---------
6.01 Unless otherwise herein expressly provided, Seller shall, at Closing,
deliver or cause to be delivered, to the Title Insurer (with copies to Purchaser
or counsel to Purchaser) the originals of the following documents:
(i) Bargain and Sale Deed With Covenants Against Grantor's Acts, in
the form attached to and made a part of this Agreement as Exhibit H
("Deed"), executed by Seller, conveying to Purchaser fee simple title to
the Real Property subject only to the Permitted Exceptions;
(ii) Bill of Sale, in the form attached to and made a part of this
Agreement as Exhibit I, executed by Seller, conveying title to the Personal
Property to Purchaser;
(iii) Affidavit, in the customary form of the Title Insurer executed by
Seller, as to matters pertaining to parties in possession and mechanic's
liens and other matters reasonably requested by the Title Insurer;
(iv) Assignment and Assumption Agreement, in the form attached to and
made a part of this Agreement as Exhibit J ("Assignment and Assumption
Agreement"), executed by Seller, assigning and transferring to Purchaser,
all the right, title and interest of Seller in and to the Leases, the
Intangible Property, the Service Contracts and the Records and Plans;
(v) Completed declarations or statements, executed by or on behalf of
Seller, in the form prescribed by any applicable governmental authority to
be filed in connection with the payment of the documentary stamp or
transfer tax imposed on the transfer of title to the Property;
(vi) The originals or, if originals are not available, true and correct
copies thereof as certified by Seller, of all Leases together with notices
addressed to each and all of the Tenants of the change in ownership of the
Property and place of payment of rent;
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(vii) Non-foreign affidavit, in form sufficient to evidence the non-
foreign exemption provided under Section 1445(f)(3) of the Internal Revenue
Code, executed by an officer of Seller;
(viii) Counterpart of the "Closing Statement" (as such term is
defined in Section 8.05) executed by Seller or its counsel.
6.02 Unless otherwise herein expressly provided, Purchaser shall, at the
Closing, deliver or cause to be delivered to the Title Insurer (with copies to
Seller or counsel to Seller) the originals of the following documents:
(i) The Purchase Price;
(ii) Affidavit, in customary form of the Title Insurer, executed by
Purchaser as to matters pertaining to parties in possession and mechanics'
liens;
(iii) Counterpart of the Assignment and Assumption Agreement executed
by Purchaser;
(iv) Counterpart of the Closing Statement executed by Purchaser or
its counsel; and
(v) Completed declarations or statements, executed by or on behalf of
Purchaser in the form prescribed by any applicable governmental authority
to be filed in connection with the payment of the documentary stamp or
transfer tax imposed on the transfer of title to the Property.
6.03 Seller shall deliver or cause to be delivered to the custody of Purchaser
on or before the Closing:
(i) Building supplies, keys and card keys appropriately tagged for
identification with an accounting of keys known by Seller to be in the
possession of others, and other items comprising the Personal Property;
(ii) Originals of all Service Contracts and any warranties or guaranties
received by Seller from any contractors, subcontractors, suppliers or
materialmen in connection with any construction, repair or alternation of
the Improvements;
(iii) Originals or if originals are not available, certified copies of the
Records and Plans;
(iv) Originals of all Licenses and Permits;
(v) Originals of all Leases; and
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(vi) All books and records (or copies thereof) relating to the
operation and maintenance of the Property prior to the Closing Date.
7. Brokerage and Other Commissions.
-------------------------------
7.01 Seller hereby warrants to Purchaser that none of Seller's Group has dealt
with any Person, other than Marcus & Millichap of Fort Lee, New Jersey (the
"Broker"), who would be entitled to the payment of a brokerage commission,
finder's fee or other similar compensation in connection with the transaction
hereby contemplated on account of the acts or omissions of Seller's Group or any
of them. Seller agrees to pay, and to indemnify, defend, protect and hold
forever harmless Purchaser from and against, any and all losses, costs, damages,
expenses and liabilities, including, without limitation, court costs, expert
witness fees and reasonable attorneys' fees and expenses at trial and on appeal,
which Purchaser may incur, suffer or sustain, or for which Purchaser may become
liable or obligated, by reason of or in connection with any right, claim, demand
or damage made or asserted by any Person or Persons, including, without
limitation, the Broker, for the payment of a brokerage commission, finder's fee
or other similar compensation on account of the acts or omissions of Seller's
Group, or any of them, in connection with the transaction hereby contemplated.
Seller agrees to pay the Broker a commission pursuant to a separate agreement
between Seller and Broker.
7.02 Purchaser hereby warrants to Seller that none of Purchaser's Group has
dealt with any Person, other than the Broker, who would be entitled to the
payment of a brokerage commission, finder's fee or other similar compensation in
connection with the transaction hereby contemplated on account of acts or
omissions of Purchaser's Group, or any of them. Purchaser agrees to pay, and to
indemnify, defend, protect and hold forever harmless Seller's Group from and
against, any and all losses, costs, damages, expenses and liabilities,
including, without limitation, court costs, expert witness and reasonable
attorneys' fees and expenses at trial or on appeal, which Seller's Group, or any
of them, may incur, suffer or sustain, or for which Seller's Group, or any of
them, may become liable or obligated, by reason of or in connection with any
right, claim, demand or damage made or asserted by any Person or Persons other
than the Broker for the payment of a brokerage commission, finder's fee or other
similar compensation on account of the acts or omissions of Purchaser's Group,
or any of them, in connection with the transaction hereby contemplated.
8. Prorations, Credits and Adjustments.
-----------------------------------
8.01 The following items in respect of the Property shall be prorated as of
11:59 p.m. of the day immediately preceding the Closing Date and adjusted at the
Closing:
(i) Subject to the provisions of Section 8.02, all general real
estate taxes and municipal assessments for public improvements which have
been completed as of the Closing Date attributable to the Property;
(ii) Subject to the provisions of Section 8.03, prepaid rents under
the Leases;
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(iii) Security deposits held under the Leases shall be credited to
Purchaser unless actually transferred;
(iv) Any other items required under this Agreement to be prorated
and adjusted at the Closing; and
(v) All other items of revenue and expense including all utilities,
which, by local custom and practice, are prorated or adjusted between
sellers and purchasers of real property similar in kind to the Property.
8.02 If, at the Closing Date, general real estate taxes for the current year are
not fixed, but the assessed value of the Property is available for the current
year, then general real estate taxes will be prorated based upon such assessment
and one hundred ten percent (110%) of the prior year's tax rate. If, at the
Closing Date, the current year's assessed valuation is not available, then
general real estate taxes will be prorated on the basis of one hundred ten
percent (110%) of the prior year's taxes. Purchaser and Seller shall reprorate
general real estate taxes upon receipt of the tax bills for the year in which
Closing occurs. This provision shall survive Closing.
8.03 As used in this Agreement, the term "rents" includes all rentals,
additional rentals and any other sums and charges payable under the Leases or in
the normal course by Tenants for services rendered in connection with the
occupancy of the Property by the Tenants. Delinquent rents for the period prior
to the Closing Date shall remain the property of Seller. Purchaser shall deliver
to Seller any rents, net of the costs of collection, received by Purchaser which
are properly allocable to rental periods occurring before the Closing Date. It
shall be conclusively presumed between Purchaser and Seller that all rents
received after the Closing Date from Tenants with rental delinquencies on the
Closing Date shall be applied as follows: (i) first, to rent then due and
payable to Purchaser (including any previously unpaid rent then due and payable
to Purchaser), (ii) second, to the delinquent rents of such Tenant attributable
to the calendar months prior to the Closing Date, and (iii) third, to future
rent due and payable to Purchaser.
8.04 (i) Seller shall pay (a) all intangible, documentary stamp, transfer,
recordation or other taxes imposed on or in connection with the Deed, (b)
the cost of the Survey, and (c) one-half (1/2) of the charges of the Title
Insurer for its service as escrow or closing agent.
(ii) Purchaser shall pay (a) the title insurance premium charged by
the Title Insurer to issue its owner's policy of title insurance pursuant
to Section 10.02, (b) the cost of recording and filing of the Deed, and (c)
one-half (1/2) of the charges of the Title Insurer for its service as
escrow or closing agent.
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(iii) Except as otherwise expressly provided, each of Seller and
Purchaser shall pay its costs, fees and expenses incurred or sustained in
connection with the negotiation and consummation of this Agreement and the
transaction hereby contemplated.
8.05 Seller shall prepare or cause to be prepared a statement showing all
prorations, adjustments and credits made and determined as provided in this
Agreement and shall deliver such statement to Purchaser at least three (3)
Business Days prior to the Closing Date. Such statement, after
review and approval by Purchaser (the "Closing Statement"), shall, at the
Closing, be executed and delivered by or on behalf of Seller and Purchaser.
9. Possession and Loss by Fire or Other Casualty.
---------------------------------------------
9.01 Seller shall, concurrently with the Closing, deliver or cause to be
delivered to Purchaser possession of the Property subject only to the rights of
the Tenants under the Leases.
9.02 If, at any time from and after the date of this Agreement and prior to the
Closing, the Property or any part thereof shall be damaged or destroyed by fire
or other casualty ("Casualty"), then in such event, Seller shall forthwith give
to Purchaser written notice thereof.
9.03 If any such Casualty shall occur, then, unless this Agreement is terminated
pursuant to Section 9.04, this Agreement shall remain in full force and effect
and Purchaser shall consummate the transaction hereby contemplated upon the
terms and conditions herein contained; provided that:
(i) If the proceeds of the insurance have not then been paid to or
for the benefit or account of, and received by, Seller, then Seller shall
assign and transfer or cause to be assigned and transferred, at the
Closing, to Purchaser all rights and interests of Seller to such proceeds
and Purchaser shall thereafter, at Purchaser's expense, bear all
responsibility for the negotiation, settlement and collection thereof and
Purchaser shall receive a credit against the Purchase Price for the
deductible under any such policy of insurance; or
(ii) If the insurance proceeds, or any part thereof, have been so paid
and received by Seller, then Seller shall, at the Closing, pay to
Purchaser, or give to Purchaser as a credit against the Purchase Price, an
amount equal to such award so paid and received plus the amount of the
deductible under any such policy of insurance.
9.04 In the event that at any time from and after the date of this Agreement and
prior to Closing, any Casualty occurs and by reason thereof, all the Property or
a material part thereof (the term "material" as here used shall be deemed to
refer to a Casualty requiring in excess of One Hundred Thousand and No/100
Dollars ($100,000.00) to repair or replace), then Purchaser
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may, at its election and upon written notice thereof given to Seller within
thirty (30) days after the date of the notice from Seller terminate this
Agreement, in which case Seller and Purchaser shall be released and discharged
of and from their respective obligations under this Agreement, subject to
Section 18.14 hereof, and except that (i) the Earnest Money shall be forthwith
returned to Purchaser, and (ii) Purchaser shall have no claim or right in and to
the proceeds of insurance resulting from any such Casualty.
10. Title Insurance and Survey.
--------------------------
10.01 Seller shall arrange for the delivery to Purchaser or counsel to
Purchaser within ten (10) days following the Agreement Date the following:
(i) a preliminary title report ("Commitment") committing the Title
Insurer to issue its owner's policy of title insurance covering title to
the Real Property, with extended coverage and with an ALTA 3.1 zoning
endorsement, an access endorsement, a survey endorsement, a contingency
endorsement (if applicable) and such other endorsements as Purchaser may
reasonably require together with copies of all documents referred to
therein; and
(ii) a current plat of survey ("Survey") of the Real Property prepared
by a licensed New Jersey land surveyor, certified to and for the benefit of
Seller, Purchaser and the Title Insurer as being prepared in accordance
with the Minimum Standard Detail Requirements for ALTA/ACSM Land Surveys
adopted in 1992, for an Urban Survey, with such Table A requirements as
Purchaser may reasonably require and certifying to such other matters as
Purchaser may reasonably require.
The Commitment shall be conclusive evidence of good and indefeasible title as
therein shown as to all matters to be insured by the policy of title insurance,
subject only to the exceptions, qualifications and limitations as therein
stated.
10.02 The obligation of Purchaser to close the transaction hereby contemplated
shall, in addition to other conditions herein stated, be subject to the
condition that, at the Closing, the Title Insurer be prepared to issue its
owner's policy of title insurance pursuant to the Commitment (and the Title
Insurer shall issue a new Commitment or update the existing Commitment to the
date of Closing to so insure), insuring title to the Real Property in Purchaser,
in an amount equal to the Purchase Price, subject only to the Permitted
Exceptions with the deletion of the standard exceptions customarily contained in
a commitment for an owner's policy of title insurance issued by the Title
Insurer and with such endorsements as Purchaser may reasonably require, by
notice to the Title Insurer and the Seller prior to the end of the Feasibility
Period.
10.03 If the Commitment shall disclose any Unpermitted Exceptions which
constitute interests, encumbrances or liens of definite or liquidated amounts
and such Unpermitted Exceptions may be discharged or satisfied by the payment of
money, then Seller shall discharge or satisfy the same (i) prior to the Closing,
by using its own funds or (ii) at the Closing, by using the Purchase
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Price provided, however, that if any Unpermitted Exceptions constitute
mechanics' or materialmen's liens, then Seller may, at its election, provide, in
lieu of the discharge or satisfaction thereof, a bond in accordance with law
and, otherwise, in form and amount as may be required by the Title Insurer to
delete such Unpermitted Exceptions.
10.04 If the Commitment shall disclose any Unpermitted Exceptions which do not
constitute interests, encumbrances or liens of definite or liquidated amounts,
then, within five (5) Business Days following receipt of the last of the
Commitment or the Survey, Purchaser shall notify Seller of any Unpermitted
Exceptions disclosed in the Commitment or Survey and Seller shall have a period
ending on the date five (5) days before the expiration of the Feasibility Period
to cure or correct such Unpermitted Exceptions or, if Seller, after exercising
reasonable diligence, is unable to cure or correct any such Unpermitted
Exceptions, then, if available at a commercially reasonable cost, to cause the
Title Insurer to commit to insure Purchaser and all subsequent owners and
lenders of all or any part of the Property affected by any such Unpermitted
Exceptions, by affirmative endorsement reasonably satisfactory to Purchaser,
against any loss or damage resulting from any such Unpermitted Exceptions, all
at Seller's expense.
10.05 In the event that any Unpermitted Exceptions are not discharged or
satisfied as provided in Section 10.03 or cured or corrected or insured over as
provided in Section 10.04, then Seller shall give notice thereof to Purchaser at
or prior to the expiration of the period specified in Section 10.04 and
Purchaser may, upon notice thereof given to Seller on or before the Closing
Date, elect to (i) accept title to the Property, subject to the then
undischarged or unsatisfied, uncured or uncorrected, or uninsured Unpermitted
Exceptions in which case such Unpermitted Exceptions shall be deemed Permitted
Exceptions and the transaction hereby contemplated shall be consummated at the
Closing, without adjustment of the Purchase Price or payment of consideration of
any kind to Purchaser on account of such Unpermitted Exceptions, or (ii)
terminate this Agreement in which case Seller and Purchaser shall be released
and discharged of and from their respective obligations under this Agreement to
sell and purchase the Property and the provisions of Section 13.02(iii) shall be
operative and binding on Seller and Purchaser.
11. Taking or Condemnation.
----------------------
11.01 If, at any time from and after the Agreement Date and prior to the
Closing, Seller shall receive notice the Property or any part thereof shall be
taken or condemned under or pursuant to eminent domain proceedings ("Taking"),
then in such event, Seller shall forthwith give to Purchaser written notice
thereof.
11.02 If any such eminent domain proceedings shall be instituted or threatened,
then, unless this Agreement is terminated pursuant to Section 11.03, this
Agreement shall remain in full force and effect and Purchaser shall consummate
the transaction hereby contemplated upon the terms and conditions herein
contained; provided, however, that Seller shall only be obligated to convey to
Purchaser, and Purchaser shall accept (a) the Property less that portion so
taken or
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condemned, and (b) title to the Property subject, in addition to other Permitted
Exceptions, to such exceptions thereto as may occur or arise by reason of such
Taking, and provided, further, that:
(i) If the condemnation award has not then been paid to or for the
benefit or account of, and received by Seller, then Seller shall assign and
transfer or cause to be assigned and transferred, at the Closing, to
Purchaser all rights and interests of Seller in the Property so taken or
condemned and in such award and Purchaser shall thereafter, at Purchaser's
expense, bear all responsibility for the negotiation, settlement and
collection thereof from the condemning authority; or
(ii) If the condemnation award, or any part thereof, has been so paid
and received by Seller, then Seller shall, at the Closing, pay to
Purchaser, or give to Purchaser as a credit against the Purchase Price, an
amount equal to such award so paid and received.
11.03 In the event that at any time from and after the date of this Agreement
and prior to the Closing, any eminent domain proceedings shall be instituted by
any public or quasi-public authority or utility company, then Purchaser may, at
its election and upon written notice thereof given to Seller within thirty (30)
days after receipt of Seller's notice pursuant to Section 11.01 terminate this
Agreement, in which case Seller and Purchaser shall be released and discharged
of and from their respective obligations under this Agreement, subject to
Section 18.14 hereof, and except that (i) the Earnest Money shall be forthwith
returned to Purchaser, and (ii) Purchaser shall have no claim or right in and to
the award or other proceeds resulting from any such eminent domain proceedings.
12. Seller's Covenants.
------------------
12.01 Seller covenants and agrees with Purchaser as follows:
(i) Seller shall not, without the prior written consent of Purchaser
in each instance, (a) modify, amend or terminate (except for material
breach or nonpayment of rent or other sums due) in any manner whatsoever,
any of the Leases, (b) consent to the assignment or subletting of any of
the Leases, or (c) enter into any new lease of the Property or any portion
thereof or extend or renew any existing Lease which is not on the standard
form of lease currently in use for the Property and which does not comply
with the Leasing Standards set forth in Exhibit K attached hereto and made
a part hereof (all such permitted leases shall be deemed to be included
within the term "Leases"); provided Seller may offer concessions to tenants
if such concessions will expire or be extinguished prior to Closing. If
Seller desires to take any of the actions described in clauses (a), (b) or
(c) of this Section 12.01(i), Seller shall so notify Purchaser. Purchaser
shall have five (5) Business Days from receipt of Seller's notice to object
in writing to any proposed action described in Seller's notice. If
Purchaser fails to notify Seller on a timely basis of any objections, it
shall be conclusively presumed that Purchaser consented to all of the
actions described in Seller's notice and Seller may immediately
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implement such actions. If Purchaser notifies Seller of any objections to
the actions proposed in Seller's notice and thereafter Seller and Purchaser
cannot agree on a course of action within fifteen (15) Business Days of the
date of Purchaser's notice of objections, Seller shall not take any action
to which Purchaser has objected.
(ii) Seller shall not, without the prior written consent of Purchaser
in each instance, enter into any new commitments, contracts, licenses,
options or other agreements of any kind affecting or relating to the
Property except for agreements that are terminable on or before Closing
Date at no cost to Purchaser and Leases that are governed by Section
12.01(i).
(iii) If Seller removes any item of Personal Property prior to the
Closing Date, Seller shall substitute therefor an item of like kind and
comparable value.
(iv) Subject to the provisions of Articles 9 and 11 hereof, Seller
shall, between the date of this Agreement and the Closing Date, at Seller's
sole cost and expense, maintain the Property in good order, condition and
repair, reasonable wear and tear excepted, shall perform all work required
to be done by the landlord under the terms of the Leases, and shall make
all repairs, maintenance and replacements of the Improvements and any
Personal Property and otherwise operate the Property in the same manner as
before the making of this Agreement and as though Seller were retaining the
Property. Seller shall not make any alterations to the Property except as
required under the Leases. Seller shall not, after the date of this
Agreement, without in each case obtaining Purchaser's prior written consent
thereto, enter into, amend, terminate or permit the early termination of
any Service Contract which Purchaser has elected to assume or waive any
rights of Seller thereunder, or extend any Service Contract which Purchaser
has not elected to assume. The foregoing notwithstanding, Purchaser's
consent shall not be required for Seller to enter into, extend (including
by exercise of option) any Service Contract, provided the term of such
Service Contract does not extend beyond the Closing Date and does not
otherwise expose Purchaser to any liability.
(v) At all times prior the Closing Date, Seller shall maintain and pay
for fire and extended coverage insurance for the full replacement cost of
the Improvements and Personal Property and other casualty coverage and
public liability insurance in amounts no event less than the coverage in
effect on the date of this Agreement and/or as may be required under the
Leases and all Service Contracts.
(vi) Seller shall immediately notify Purchaser of any fact or other
circumstance which, if known by Seller on the Agreement Date or the Closing
Date, would render any representation or warranty of Seller incorrect or
incomplete.
(vii) Between the date of this Agreement and the Closing Date, Seller
shall keep all Licenses and Permits and the Regulatory Licenses in full
force and effect and operate the
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Property or cause the Property to be operated, in compliance with all
Licenses and Permits and all Regulatory Licenses.
(viii) Without Purchaser's consent, Seller shall not (a) voluntarily
subject any right, title or interest in or to this Property to any
mortgage, pledge, lien or other hypothecation or encumbrance, or (b)
transfer, convey or assign any right, title or interest in or to all or
any portion of the Property.
12.02 Without limiting the provisions of Section 12.01 hereof, Seller will
at all times after the Agreement Date to and including the Closing Date operate
the Property in a manner consistent with the operation of the Property on the
date hereof.
13. Remedies.
--------
13.01 (i) If, prior to or at the Closing Date as determined without regard
to the provisions of Section 13.01(ii), a Purchaser's Default shall occur
or exist, then Purchaser shall have a period ("Purchaser's Curative
Period") expiring the earlier of the Closing Date or the fifth (5th)
Business Day after the date of such Purchaser's Default, to correct or
cure such Purchaser's Default.
(ii) In the event that Purchaser's Default is corrected or cured
within Purchaser's Curative Period, the Closing Date shall be the later
of (1) the date determined in Section 1.02 or (2) the tenth (10th)
Business Day following the date such Purchaser's Default has been cured
or corrected, or on such other date to which Seller and Purchaser shall
mutually agree in writing, provided that there are not other Purchaser's
Defaults then pending and all other conditions precedent to the
performance by Seller of its obligations under this Agreement have been
satisfied or waived.
(iii) If, within Purchaser's Curative Period, such Purchaser's
Default is not cured or corrected then at the election of Seller and
effective upon notice thereof given to Purchaser prior to or at 5:00 p.m.
(Chicago, Illinois time) on the second (2nd) Business Day next following
the date of expiration of Purchaser's Curative Period, this Agreement
shall terminate and the parties hereto shall be released and discharged
of and from all further obligation and liability under this Agreement,
subject to Section 18.14, and except that exclusive of and in addition to
the liability, if any, of Purchaser accruing as a result of Purchaser's
breach of any of the representations, warranties and covenants deemed by
Section 18.14 to survive any termination of this Agreement, the Title
Insurer shall deliver the Earnest Money to Seller in full settlement and
liquidation of all damages sustained by Seller, it being acknowledged and
agreed that the damages sustained by Seller as a result of a material
default by Purchaser hereunder, exclusive of and in addition to the
liability of Purchaser accruing as a result of Purchaser's breach of any
of the representations, warranties and covenants deemed by Section 18.14
to survive any termination of this Agreement, would be substantial but
difficult to ascertain.
19
<PAGE>
(iv) Seller shall not be entitled, and hereby expressly waives its
right, to exercise any and all rights, powers and remedies at law or in
equity, other than such remedies as may be required to enforce the rights
of Seller as specifically provided in Section 13.01(iii).
13.02 (i) If, prior to or at the Closing Date (as determined without regard
to the provisions of Section 13.02(ii)), a Seller's Default shall occur
or exist, then Seller shall have a period ("Seller's Curative Period")
expiring the later of the (2nd) Business Day immediately preceding the
Closing Date or the fifth (5th) Business Day after the date of Seller's
Default, to correct or cure such Seller's Default.
(ii) In the event that Seller's Default is corrected or cured within
Seller's Curative Period, the Closing Date shall be the later of (1) the
date determined in Section 1.02 or (2) the tenth (10th) Business Day
following the date such Seller's Default has been cured or corrected, or
on such other date to which Seller and Purchaser shall mutually agree in
writing, provided that there are no other Seller's Defaults then pending
and all other conditions precedent to the performance by Purchaser of its
obligations under this Agreement have been satisfied or waived.
(iii) If, within Seller's Curative Period, such Seller's Default is
not cured or corrected then at the election of Purchaser and effective
upon notice thereof given to Seller prior to or at 5:00 p.m. (Chicago,
Illinois time) on the second (2nd) Business Day following the date of
expiration of Seller's Curative Period, this Agreement shall terminate
and the parties hereto shall be released and discharged of and from all
further obligation and liability under this Agreement, subject to Section
18.14 hereof, and except that:
(a) the Earnest Money shall be forthwith returned to Purchaser
by the Title Insurer; and
(b) exclusive of and in addition to the liability, if any, of
Seller accruing as a result of Seller's breach of any of the
representations, warranties and covenants deemed by Section 18.14 to
survive any termination of this Agreement, Purchaser shall have all
rights and remedies available at law or in equity on account thereof,
including, but not limited, the right to specific performance.
13.03 In any suit, action or proceeding under this Agreement, the party hereto
prevailing therein shall be entitled to reimbursement from the other party of
all reasonable costs and expenses, including, without limitation, court costs,
expert witness fees and reasonable attorneys' fees and expenses at trial and on
appeal, incurred or sustained by the prevailing party in connection with such
suit, action or proceeding, and all such costs and expenses shall be included in
any order, judgment or decree issued or rendered therein.
20
<PAGE>
14. Representations and Warranties of Purchaser. As of the Agreement Date and as
of the Closing Date, Purchaser represents and warrants to and covenants with
Seller that:
14.01 Purchaser is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has all requisite power and
authority to own its property and carry on its business as now being conducted.
14.02 Purchaser has all necessary power and authority to enter into this
Agreement and to perform all of the obligations to be performed by Purchaser
hereunder.
14.03 This Agreement has been duly and validly executed and delivered by
Purchaser, and this Agreement constitutes the valid and legally binding
obligation of Purchaser, enforceable against Purchaser in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, or similar laws affecting the
enforcement of creditors' rights generally and except that the availability of
injunctive relief is subject to the discretion of the court before which any
proceeding may be brought.
14.04 This Agreement and its consummation have been duly authorized and approved
on behalf of Purchaser by all requisite action. Neither the execution and
delivery by Purchaser of this Agreement nor the consummation by Purchaser of the
acquisition of the Property will conflict with, result in the breach of,
constitute a default under, or accelerate the performance provided by the terms
of (i) any law, ordinance, rule or regulation of any governmental body,
authority or agency, (ii) any judgment, order or decree of any court or any
governmental authority or agency to which Purchaser may be subject, (iii) any
material contract, material agreement or material instrument to which Purchaser
is a party or by which Purchaser is bound or committed or (iv) Purchaser's
Articles of Incorporation or By-Laws.
15. Representations and Warranties of Seller. As of the Agreement Date and as of
the Closing Date, Seller represents and warrants to and covenants with Purchaser
that:
15.01 Seller is a limited partnership, duly organized, validly existing and in
good standing under the laws of the State of Maryland and has all requisite
power and authority to own its property and carry on its business as now being
conducted.
15.02 Seller has all necessary power and authority to enter into this Agreement
and to perform all of the obligations to be performed by Seller hereunder.
15.03 This Agreement has been duly and validly executed and delivered by Seller,
and this Agreement constitutes the valid and legally binding obligation of
Seller, enforceable against Seller in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or similar laws affecting the enforcement of
creditors' rights generally and except that the availability of injunctive
relief is subject to the discretion of the court before which any proceeding may
be brought.
21
<PAGE>
15.04 This Agreement and the consummation of the transactions contemplated
by this Agreement have been duly authorized and approved on behalf of Seller by
all requisite action. Neither the execution and delivery by Seller of this
Agreement nor the consummation by Seller of the sale of the Property will
conflict with, result in the breach of, constitute a default under, or
accelerate the performance provided by the terms of (i) any law, ordinance, rule
or regulation of any governmental body, authority or agency, (ii) any judgment,
order, or decree of any court or any governmental authority or agency to which
Seller or the Property may be subject, (iii) any material contract, material
agreement, or material instrument to which Seller is a party or by which Seller
or the Property is bound or committed, or (iv) any organizational document of
Seller.
15.05 Neither the execution and delivery of this Agreement, nor the
consummation of the transaction with Purchaser will constitute an event which,
with the lapse of time or action by a third party, could result in the creation
of any lien, charge, or encumbrance upon any of the Property.
15.06 There are no actions, suits or proceedings pending or, to the
knowledge of Seller, threatened against or affecting Seller, at law or in
equity, or before any federal, state, municipal or governmental department,
commission, board, bureau, agency or instrumentality which involve the
possibility of any judgment or liability, not substantially covered by
insurance, and which affects the Property or which may result in any material
adverse change in the business operations, prospects, properties or assets or in
the condition, financial or other, of Seller, or which could prevent Seller's
closing of this Agreement.
15.07 There are no pending, and Seller has not received any notice and has
no actual knowledge of any threatened, proceedings or other actions by any
Governmental Authority to rezone, condemn or impose any assessment, charge or
encumbrance on the Property.
15.08 Seller has not entered into any agreement, contract or other document
to sell, assign, transfer, convey, encumber or dispose of the Property or any
part thereof or interest therein other than this Agreement.
15.09 Except as disclosed on Exhibit N attached hereto, Seller has received
no notice of failure by Seller to comply with any applicable Governmental
Regulations, which failure remains uncured as of Agreement Date.
15.10 (a) The Feasibility Materials are, and at the Closing Date will be,
true, correct and complete copies thereof, (b) the Service Contracts are, and at
the Closing Date will be (subject to expiration of the term thereof or breach by
the other party thereto), in full force and effect, and all such Service
Contracts have been, or will be delivered to Purchaser pursuant to this
Agreement, and (c) there is no material default by Seller, nor any state of
facts which with the passage of time or giving of notice or both, would
constitute a material default by Seller under any of the Service Contracts,
which would give the other party thereto the right to terminate such Service
Contract.
22
<PAGE>
15.11 Seller (a) is not party to, or otherwise bound by, any collective
bargaining agreement or multi-employer pension fund covering employees who
service the Property, (b) has not entered into any oral or written agreements
which would bind or obligate Purchaser to engage the services of any person as
employee or independent contractor relating to the Property, and (c) is not
involved in any current labor dispute with any maintenance or other personnel or
employees of Seller.
15.12 Seller knows of no facts, nor has Seller failed to disclose to
Purchaser any fact known to Seller, which would prevent Purchaser from using
and operating the Property after the Closing Date in the manner in which the
Property has been used and operated prior to the Agreement Date.
15.13 To Seller's knowledge (a) other than amounts disclosed by the
Commitment or by the tax bills delivered to Purchaser by Seller, no other real
property taxes have been or will be assessed against the Property for the
current year, (b) other than as disclosed in the public records, there are not
any special assessments or charges which have been levied against the Property,
and (c) there are no intended public improvements which will result in any
charge being levied against or in the creation of any lien upon the Property or
any portion thereof.
15.14 The statements of Seller contained herein and in any other written
documents delivered by or on behalf of Seller pursuant to the terms of this
Agreement are true and correct in all material respects as of the date thereof
and will be true and correct as of the Closing Date, and this Agreement and such
other documents, considered in the aggregate, do not as of the date thereof and
will not as of the Closing Date, omit any material fact necessary to make the
statements of Seller contained herein or therein, in light of the circumstances
under which they were made, not misleading.
15.15 To Seller's knowledge and except to the extent disclosed in the
Feasibility Materials, as of the Agreement Date (a) the Property is not in
violation of any applicable environmental law or regulation promulgated by any
Authority (collectively, "Environmental Laws"); (b) neither Seller nor any prior
owner or occupant of the Real Property has engaged in or permitted any release,
dumping, discharge, disposal, spillage or leakage (whether legal or illegal,
accidental or intentional) of substances or materials regulated under or
defined as being a "hazardous material" or a "hazardous substance" under any
Environmental Law ("Hazardous Materials") on the Property; and (c) there is no
friable asbestos present upon the Property. Seller has received no notice of any
proceeding or inquiry by any Authority with respect to the presence of any
Hazardous Substances on the Property or the migration thereof from or to other
property.
15.16 Except as disclosed in the Feasibility Materials, Seller has received
no notice, and Seller has no knowledge, that the Improvements are not
permitted, conforming structures under applicable zoning and building laws and
ordinances. Seller has received no notice from any insurer that the condition,
use or operation of the Property violates the terms of any insurance coverage
applicable to the Property, and, to Seller's knowledge, the current condition,
use or operation of the Property does not violate the terms of such insurance.
23
<PAGE>
15.17 The copies of the Leases delivered or to be delivered by Seller to
Purchaser are true, correct and complete copies of such Leases and are in full
force and effect, and include all modifications and amendments thereto in effect
as of the date of such delivery; and the information set forth in the Rent Roll
is true, correct and complete as of the date such Rent Roll was made available
to Purchaser and there are no leases of space in the Improvements and no
material defaults under any of the Leases, except as set forth in the Leases.
15.18 The operating statements for the Property delivered to Purchaser are
true, correct and complete and accurately reflect in all material respects the
financial condition of the Property for the periods to which such statements
relate.
15.19 The Licenses and Permits constitute all of the licenses and permits
required for the normal use and operation of the Property. To Seller's
knowledge, the Regulatory Licenses constitute all of the licenses required to
operate the Property as an adult living facility. Seller has materially complied
with all the terms of all Licenses and Permits and Regulatory Licenses and has
not received any notice that any such Licenses or Permits or Regulatory Licenses
will not be renewed upon expiration, or of any material conditions which will be
imposed in order to receive any such renewal.
16. Notices.
16.01 All notices, requests, demands and other communications required or
desired to be given hereunder shall be in writing signed by Seller or Purchaser,
or their respective authorized agents or attorneys, as the case may be, and
shall be deemed to have been properly given if (i) served in person, (ii)
mailed, by United States registered or certified mail, full postage prepaid,
return receipt requested (iii) sent by special courier service (e.g. Federal
Express) or (iv) sent by telecopy, provided that in confirmation thereof, an
executed original of such notice, request, demand or other communication is
concurrently given by means of any other mode of delivery permitted hereunder,
addressed as follows:
24
<PAGE>
If to Seller: Brendenwood MRC Limited Partnership
515 Fairmount Avenue, Suite 900
Towson, Maryland 21286
Attn: Roger C. Lipitz
Telephone No.: 410-494-7667
Telecopier No.:
---------------
With a copy thereof to Gallagher, Evelius & Jones
counsel to Seller: 218 North Charles Street, Suite 400
Baltimore, Maryland 21201
Attn: Stephen A. Goldberg
Telephone No.: 410-347-1343
Telecopier No.: 410-837-3085
If to Purchaser: Brookdale Living Communities, Inc.
77 West Wacker Drive
Chicago, Illinois 60601
Attn: Matthew F. Whitlock
Telephone No.: (312) 917-4288
Telecopier No.: (312) 917-0460
and
Brookdale Living Communities, Inc.
77 West Wacker Drive
Chicago, Illinois 60601
Attn: Robert J. Rudnik
Telephone No.: (312) 917-4234
Telecopier No.: (312) 917-1684
With a copy thereof to Burke, Warren, MacKay & Serritella, P.C.
counsel to Purchaser: 330 N. Wabash Avenue, 22nd Floor
Chicago, Illinois 60601
Attn: Douglas E. Wambach
Telephone No.: (312) 840-7019
Telecopier No.: (312) 840-7900
or to such other address in the United States of America as may from time to
time be designated by the party to be addressed by notice to the other in the
manner hereinabove provided.
25
<PAGE>
16.02 Any notice, request, demand or other communication served as provided
in Section 16.01(i) shall be deemed to have been given and received on the date
of actual receipt of such notice, request, demand or other communication. Any
notice, request, demand or other communication mailed as provided in Section
16.01(ii) or sent as provided in Section 16.01(iii) shall be deemed to have been
given and received on the earlier of (a) the date of actual receipt of such
notice, request, demand or other communication, regardless of mode of delivery,
or (b) the second Business Day next following the date of mailing by U.S.
registered or certified mail or (c) the date of delivery to such special courier
service of such notice, request, demand or other communication. Any notice,
request, demand or other communication delivered as provided in Section
16.01(iv), shall be deemed to be given and received on the date received
provided that the confirmation thereof is sent and deemed received pursuant to
the other provisions of this Section 16.02.
16.03 The delivery to or receipt by parties, other than and in addition to
Seller or Purchaser, of copies of any notice, request, demand or other
communication hereunder is merely an accommodation and is not necessary or
required to make effective the actual giving or receipt by Seller or Purchaser
of any notice, request, demand or other communication.
17. No Assignment.
17.01 Except as provided in Section 17.02, Purchaser shall not have the
right to transfer or assign this Agreement or any right or interest herein
without the prior written consent of Seller, and any purported assignment or
transfer thereof by Purchaser, without the prior written consent of Seller,
shall not vest in the transferee or assignee any right, title or interest herein
or in the Property.
17.02 Notwithstanding the provisions of Section 17.01, Purchaser may assign
this Agreement (i) at any time, to a Purchaser's Affiliate, or (ii) as part of a
sale or lease transaction, or a financing lease transaction, including a
"synthetic lease transaction" pursuant to which Purchaser or Purchaser's
Affiliate is the lessee and operator of the Property, which, in either case,
Purchaser shall give notice thereof to Seller.
17.03 In the event that, with the prior written consent of Seller or pursuant
to Section 17.02, Purchaser shall assign or transfer this Agreement or any right
or interest herein, the transferee or assignee shall, by instrument reasonably
satisfactory to Seller assume and agree to pay, perform and observe all the
covenants, agreements and obligations of Purchaser under this Agreement. No such
transfer shall release Purchaser from its obligations under this Agreement
unless Seller has expressly consented to such release in writing.
18. Miscellaneous. It is further understood and agreed that:
18.01 Time is of the essence of each and every covenant, condition and
obligation of this Agreement. Except as herein expressly permitted, neither
party hereto shall have the right to
26
<PAGE>
extend the Closing, the Closing Date, the date of expiration of any period of
time or the date for the performance of any act or the satisfaction of any
condition. Failure by a party hereto to perform timely its covenants,
agreements and obligations hereunder, unless waived in writing by the other
party hereto, shall be a material default under this Agreement.
18.02 The Section headings of this Agreement and the captions of the
Exhibits and Schedules attached hereto are for convenience only and are not
intended, and shall not be construed, to alter, limit or enlarge in any way the
scope or meaning of the language contained in this Agreement and the Exhibits
and Schedules attached hereto.
18.03 If any act hereunder by one party requires reasonably the execution of
any documents or papers by the other party, then the other party shall cooperate
to that end and execute all such documents and papers, subject to and in
accordance with this Agreement.
18.04 Except as otherwise provided herein, this Agreement, including, without
limitation, all the Exhibits and Schedules attached hereto, contains the whole
agreement between Seller and Purchaser, and there are no other terms, promises,
obligations, covenants, warranties, representations, statements or conditions,
express or implied, of any kind, and any and all prior negotiations and
agreements are hereby superseded by and merged into this Agreement.
18.05 None of the covenants, terms or conditions of this Agreement to be
paid, observed and performed by either party shall in any manner be altered,
waived, modified, changed or abandoned except by a written instrument, duly
signed, acknowledged and delivered by the parties hereto.
18.06 This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original and all of which, taken together, shall
constitute and be taken as one and the same instrument.
18.07 This Agreement shall be governed by, construed and enforced in accordance
with the laws of the State of New Jersey.
18.08 (i) All the covenants, agreements and provisions contained in the
Exhibits and Schedules attached hereto shall, by this reference, be
incorporated into and made a part of this Agreement.
(ii) Any reference to this Agreement herein or in any other documents
shall, unless the context otherwise requires, or there is any express
statement to the contrary, be deemed and construed to encompass this
Agreement and all the Exhibits and Schedules attached hereto.
18.09 (i) This Agreement and all the provisions hereof shall extend to and be
binding upon Purchaser, its successors and assigns.
27
<PAGE>
(ii) This Agreement and all the provisions hereof shall extend to, be
binding upon and inure to the benefit of Seller, its successors and
assigns.
18.10 This Agreement is intended for the benefit of the parties hereto and
their respective heirs, legal representatives, successors and permitted assigns
and no third party shall have any legal or equitable rights, interests, remedies
or claims under any provisions of this Agreement or as a result of any action or
inaction of any of the parties hereto in connection therewith.
18.11 If the consent or approval of either Seller or Purchaser is required
under this Agreement, then unless otherwise herein expressly stated to the
contrary, such consent or approval shall not be unreasonably withheld or
delayed.
18.12 If the Closing Date, the date of expiration of any period of time or
the date for the performance of any act or the satisfaction of any condition,
whether specified or determined by formula or calculation, under this Agreement
occurs on a Saturday, Sunday or legal holiday in the State of New Jersey,
Maryland or Illinois, then the Closing Date or such date shall automatically be
extended to the next following Business Day in said State.
18.13 All payments made or to be made under or pursuant to this Agreement
shall be in the lawful money of the United States of America for the payment of
public and private debts and no other money or currency.
18.14 Except for the representations, warranties and covenants of Seller
contained in Sections 7.01, 8.02, 13.02 and 15, the representations, warranties
or covenants of Seller contained in this Agreement shall not survive the Closing
and/or termination of this Agreement. Except for the representations,
warranties and covenants of Purchaser contained in Sections 3.03, 3.04, 7.02,
8.02, 13.01 and 14, the representations, warranties or covenants of Purchaser
contained in this Agreement shall not survive the Closing and/or termination of
this Agreement.
18.15 Purchaser shall not record this Agreement or any memorandum hereof and
any attempt to do so shall render this Agreement null and void but shall not
impair Seller's remedies on account of a Purchaser Default; provided this
provision shall not apply in the case of any lis pendens recorded by Purchaser
in connection with any proceeding for specific enforcement of this Agreement.
[signature page follows]
28
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered, or
caused to be executed and delivered on their behalf by their duly authorized and
empowered officers (and such officers represent that they are so authorized and
empowered), this Agreement as of the day and year written below.
SELLER: PURCHASER:
BRENDENWOOD MRC LIMITED BROOKDALE LIVING COMMUNITIES,
PARTNERSHIP, a Maryland limited INC., a Delaware corporation
partnership
By: MERIDIAN RETIREMENT By: /s/ Craig G. Walczyk
CENTERS, INC., a Maryland ----------------------
corporation, general partner Name: Craig G. Walczyk
--------------------
By: /s/ Roger C. Lipitz Title: Vice President
----------------------- -------------------
Name: Roger C. Lipitz
---------------------
Title: President DATED: September 25 , 1997
-------------------- ---------------------
By: KWB PARTNERSHIP, a Maryland
partnership, general partner
By: MERIDIAN RETIREMENT
CENTERS, INC., a
Maryland corporation,
general partner
By: /s/ Roger C. Lipitz
-----------------------
Name: Roger C. Lipitz
---------------------
Title: President
--------------------
DATED: October 1 , 1997
----------------------
29
<PAGE>
EXHIBIT 10.53
FIRST AMENDMENT TO
REAL ESTATE PURCHASE AND SALE AGREEMENT
---------------------------------------
THIS FIRST AMENDMENT (this "Amendment") is made and entered into as of this
22nd day of November, 1997, by and between BRENDENWOOD MRC LIMITED PARTNERSHIP,
a Maryland limited partnership ("Seller") and BROOKDALE LIVING COMMUNITIES,
INC., a Delaware corporation ("Purchaser").
RECITALS
--------
A. Purchaser and Seller have entered into a Real Estate Purchase and Sale
Agreement dated October 1, 1997 (the "Original Agreement").
B. Purchaser and Seller desire to amend the Original Agreement on the
terms and conditions herein contained.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and in the Original Agreement and other good and valuable
considerations, the receipt and sufficiency of which are hereby acknowledged,
the parties to this Amendment agree as follows:
1. Definitions. All capitalized terms used herein and not herein defined
shall have the meanings ascribed to such terms in the Original Agreement. The
term "Agreement" when used hereafter shall mean the Original Agreement as hereby
amended.
2. Feasibility Period. The Feasibility Period is hereby extended to and
including the earlier of (i) December 15, 1997, or the (ii) second Business Day
following receipt of the certificate of conformance referred to in clause (c) of
Section 5.01(ii), solely for purposes of satisfying the condition precedent set
forth therein by obtaining such certificate of conformance from the Zoning
Officer. Purchaser's right to terminate the Agreement pursuant to Section 4.03
shall be limited to the failure to receive an acceptable certificate. All other
items under Section 4 are approved.
3. Miscellaneous.
A. The Original Agreement as hereby amended is hereby ratified and
confirmed and shall remain unmodified and in full force and effect except as
herein expressly amended.
B. This Amendment may be executed in multiple counterparts (no one of
which need contain the signatures of more than one party hereto so long as each
party hereto executes at least one such counterpart), each of which shall be
deemed an original and all of which, when taken together, shall constitute and
be one and the same instrument.
C. The paragraph headings of this Amendment and the captions of the
exhibits attached hereto are for convenience only and are not intended, and
shall not be construed to alter, limit or enlarge in any way the scope or
meaning of the language contained in this Amendment and exhibits attached
hereto.
<PAGE>
D. This Amendment shall be governed by and construed and enforced in
accordance with the laws of the State of New Jersey.
E. This Amendment shall extend to, be binding upon and inure to the
benefit of the parties hereto and their respective successors, assigns, heirs
and legal representatives, subject in the case of Purchaser, to the limitations
set forth in Section 17 of the Agreement.
IN WITNESS WHEREOF, the parties hereto have executed or caused this
Amendment to be executed and delivered on their behalf as of the day and year
first written.
PURCHASER: SELLER:
BROOKDALE LIVING COMMUNITIES, INC., BRENDENWOOD MRC LIMITED PARTNERSHIP,
a Delaware corporation a Maryland limited partnership
By: /s/ Mark J. Schulte By: MERIDIAN RETIREMENT CENTERS,
-------------------------------- INC., a Maryland corporation
Name: Mark J. Schulte Its: General Partner
------------------------------
Title: Pres CEO By: /s/ Roger Lipitz
----------------------------- -------------------------
Name: Roger Lipitz
-----------------------
Title: President
----------------------
By: KWB PARTNERSHIP, a Maryland
partnership
Its: General Partner
By: MERIDIAN RETIREMENT
CENTERS, INC.
Its: General partner
By: /s/ Roger Lipitz
---------------------
Name: Roger Lipitz
-------------------
Title: President
------------------
2
<PAGE>
EXHIBIT 10.54
FIRST AMENDMENT TO
REAL ESTATE PURCHASE AND SALE AGREEMENT
---------------------------------------
THIS FIRST AMENDMENT (this "Amendment") is made and entered into as of this
18th day of November, 1997, by and between THE CLASSIC AT WEST PALM BEACH
LIMITED PARTNERSHIP, a Florida limited partnership ("Seller") and BROOKDALE
LIVING COMMUNITIES, INC., a Delaware corporation ("Purchaser").
RECITALS
--------
A. Purchaser and Seller have entered into a Real Estate Purchase and Sale
Agreement dated July 29, 1997 (the "Original Agreement").
B. Purchaser and Seller desire to amend the Original Agreement on the
terms and conditions herein contained.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and in the Original Agreement and other good and valuable
considerations, the receipt and sufficiency of which are hereby acknowledged,
the parties to this Amendment agree as follows:
1. Definitions. All capitalized terms used herein and not herein defined
shall have the meanings ascribed to such terms in the Original Agreement. The
term "Agreement" when used hereafter shall mean the Original Agreement as hereby
amended.
2. Closing Date. In the definition of Closing Date in Section 1.02 of the
Original Agreement delete clause (a) and insert in lieu thereof the following
language:
"(a) the date set forth in a notice from Purchaser to Seller at least
five (5) Business Days following the date of such notice, but in no event
later than December 31, 1997,"
Notwithstanding any other provisions of the Agreement, including, without
limitation, the provisions of Section 13.01, in no event shall the Closing Date
be after December 31, 1997.
3. Conditions Precedent. Purchaser hereby waives the conditions to
closing set forth in Sections 5.01(i), 5.01(ii) and 5.01(v) of the Agreement.
4. Purchase Price and Earnest Money.
(a) Section 2.01 of the Original Agreement is hereby deleted in its
entirety and the following substituted in lieu thereof:
"2.01 Purchaser agrees to pay or cause to be paid to Seller, as the
purchase price for the Property (the "Purchase Price"), the sum of
Twenty Eight Million and No/100 Dollars ($28,000,000.00), plus or
minus net prorations, adjustments and credits as herein provided, in
cash by wire transfer or other immediately available funds."
<PAGE>
All references in the Original Agreement to the Loan, the Loan Documents, the
Mortgage, the Mortgagee and the Note are hereby deleted except as provided in
paragraph 4(b) of this Amendment.
(b) In addition to those costs to be paid by Purchaser pursuant to Section
8.04(ii) Purchaser shall pay the prepayment fee or premium charged by the
Mortgagee pursuant to the terms of the Note upon prepayment in full of the Loan
at Closing together with any fees payable to the Mortgagee in connection with
the proposed assumption of the Loan.
(c) As a condition to the effectiveness of this Amendment, within two (2)
Business Days following the date of this Amendment, Purchaser and Seller shall
cause the Title Insurer to deliver the Earnest Money to Seller. Seller shall
hold the Earnest Money pursuant to the terms of the Agreement. Section 2.03 is
hereby deleted. At Closing, the Earnest Money shall be applied to the Purchase
Price; or, on December 31, 1997, if Closing has not occurred, the Earnest Money
shall be returned to Purchaser or retained by Seller as provided in the
Agreement.
5. Miscellaneous.
A. The Original Agreement as hereby amended is hereby ratified and
confirmed and shall remain unmodified and in full force and effect except as
herein expressly amended.
B. This Amendment may be executed in multiple counterparts (no one of
which need contain the signatures of more than one party hereto so long as each
party hereto executes at least one such counterpart), each of which shall be
deemed an original and all of which, when taken together, shall constitute and
be one and the same instrument.
C. The paragraph headings of this Amendment and the captions of the
exhibits attached hereto are for convenience only and are not intended, and
shall not be construed to alter, limit or enlarge in any way the scope or
meaning of the language contained in this Amendment and exhibits attached
hereto.
D. This Amendment shall be governed by and construed and enforced in
accordance with the laws of the State of Florida.
E. This Amendment shall extend to, be binding upon and inure to the
benefit of the parties hereto and their respective successors, assigns, heirs
and legal representatives, subject in the case of Purchaser, to the limitations
set forth in Section 17 of the Agreement.
2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed or caused this
Amendment to be executed and delivered on their behalf as of the day and year
first written.
PURCHASER: SELLER:
BROOKDALE LIVING COMMUNITIES, THE CLASSIC AT WEST PALM BEACH
INC., a Delaware corporation LIMITED PARTNERSHIP, a Florida
limited partnership
By: /s/ Darryl W. Copeland, Jr. By: Greystone Classic, Inc., a
---------------------------- Virginia corporation
Name: Darryl W. Copeland, Jr. Its: Sole General Partner
--------------------------
Title: Executive Vice President
-------------------------
By: /s/ Stephen Rosenberg
-----------------------------
Name: Stephen Rosenberg
---------------------------
Title: President
--------------------------
3
<PAGE>
EXHIBIT 10.55
LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of October 22, 1997 (this "Agreement"), is
entered into by and between BROOKDALE LIVING COMMUNITIES, INC., a Delaware
corporation (the "Borrower"), and LaSALLE NATIONAL BANK, a national banking
association (the "Bank"). In consideration of the covenants, agreements and
provisions set forth herein, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I. DEFINITIONS: RULES OF CONSTRUCTION.
-----------------------------------
1.01 Definitions. The following words and phrases, as used herein, shall
-----------
have the following respective meanings:
"Affiliate" shall mean any Person which, directly or indirectly, owns or
controls, on an aggregate basis, including all beneficial ownership and
ownership or control as a trustee, guardian or other fiduciary, any of the
outstanding Stock having ordinary voting power to elect a majority of the board
of directors (irrespective of whether, at the time, Stock of any other class or
classes of such corporation have or might have voting power by reason of the
happening of any contingency) of the Borrower, or which controls, is controlled
by or is under common control with the Borrower or any stockholders of the
Borrower. For purposes hereof, "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of management and
policies, whether through the ownership of voting securities, by contract or
otherwise.
"Authorized Borrower Representative" shall mean Mark J. Shulte, Darryl W.
Copeland, Jr., Craig G. Walczyk, or such other person or persons approved by
resolution of the Board of Directors of the Borrower from time to time, a
certified copy of which resolution shall be delivered to the Bank.
"Bank" shall mean LaSalle National Bank, a national banking association,
with its principal place of business at 135 South LaSalle Street, Chicago,
Illinois 60603.
"Borrower" shall mean Brookdale Living Communities, Inc., a Delaware
corportaion having its principal place of business at 77 West Wacker Drive,
Suite 4800, Chicago, Illinois 60601.
"Business Day" shall mean any calendar day, other than a Saturday, Sunday
or other day in which the Bank's downtown Chicago, Illinois office is authorized
to close for domestic business.
"Closing" shall have the meaning specified in Section 3.01.
<PAGE>
"Debt" shall mean, with respect to the subject Person, all items of
indebtedness, obligation or liability, whether matured or unmatured, liquidated
or unliquidated, direct or indirect, or joint or several, including:
(A) all Obligations of such Person;
(B) all indebtedness in effect guaranteed, directly or indirectly, in any
manner, or endorsed by such Person (other than for collection or deposit in the
ordinary course of business) or discounted by such Person with recourse;
(C) all indebtedness in effect guaranteed by such Person, directly or
indirectly through agreements, contingent or otherwise: (1) to purchase such
indebtedness, or (2) to purchase, sell or lease (as lessee or lessor) property,
products, materials or supplies or to purchase or sell services, primarily for
the purpose of enabling the debtor to make payment of such indebtedness or to
assure the owner of the indebtedness against loss, or (3) to supply funds to or
in any other manner invest in any Person;
(D) all indebtedness secured (or for which the holder of such
indebtedness has a right, contingent or otherwise, to be secured) by any
mortgage, trust deed, deed of trust, pledge, lien, security interest or other
charge or encumbrance upon property owned or acquired by such Person subject
thereto, whether or not the liabilities secured thereby have been assumed; and
(E) all indebtedness incurred by such Person as the lessee of goods or
services under leases that, in accordance with GAAP, are or should be reflected
on the lessee's balance sheet as a capital lease.
"Documents" shall mean this Agreement, the Note and any other documents,
instruments or certificates to be executed and delivered hereunder or in
connection herewith by or on behalf of the Borrower or any of its Affiliates.
"Employee Benefit Plan" shall mean any employee benefit plan (within the
meaning of Section 3(3) of ERISA) and any other profit sharing, deferred
compensation, bonus, stock option, stock ownership, stock purchase, employment,
consulting, incentive, vacation, sick leave, salary continuation, service ward,
severance pay, insurance, or other retirement, welfare or fringe benefit plan,
agreement or practice, that is (or within the last five years was) established,
maintained or contributed to by the Borrower or by any ERISA Affiliate of the
Borrower. For purposes of this definition, an ERISa Affiliate is any
corporation, trade or business that is considered a single employer, or
otherwise aggregated, with the Borrower under Section 414(b), (c), (m), (n), or
(o) of the Code or Section 4001(b)(1) of ERISA.
-2-
<PAGE>
"Environmental Laws" shall mean any federal, state or local law, statute,
ordinance, order, decree, rule or regulation relating to releases, discharges,
emissions or disposals to air, water, land or groundwater, to the withdrawal or
use of groundwater, to the use, handling or disposal of polychlorinated
biphenyls, asbestos or urea formaldehyde, to the treatment, storage, disposal
or management of Hazardous Substances, to exposure to toxic, hazardous or other
controlled, prohibited or regulated substances and to the transportation,
storage, disposal, management or release of gaseous or other liquid substances,
including the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of
1986, 42 USC (S)9601 et seq., the Resource, Conservation and Recovery Act of
-- ---
1976, as amended by the Hazardous Solid Waste Amendments of 1984, 42 USC (S)6901
et seq., the Toxic Substances Control Act, 15 USC (S)2601 et seq., the
- -- --- -- ---
Occupational Safety and Health Act of 1970, 29 USC (S)651 et seq., the Clean Air
-- ---
Act of 1966, as amended, 42 USC (S)7401 et seq., and the Federal Water Pollution
-- ---
Control Act, as amended by the Clean Water Act of 1977, 33 USC (S)1251 et seq.,
-- ---
the Illinois Environmental Protection Act, as amended (415 ILCS 5/1 et seq.) and
-- ---
all rules, regulations and guidance documents promulgated pursuant thereto or
published thereunder.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended, together with any successor statutes of similar import, together with
all regulations thereunder, in each case as amended from time to time.
"Event of Default" shall have the meaning specified in Section 7.01.
"Financial Statements: shall mean any of the audited consolidated
financial statements of the Borrower for its most recently ended fiscal year,
the unaudited consolidated financial statements for the most recently ended
quarter of the Borrower that have been filed with a Governmental Authority, and
any other information and data concerning the financial affairs of the Borrower
(including without limitation pro forma financial statements), copies of which
have previously been furnished to the Bank.
"GAAP" shall mean generally accepted accounting principles consistently
applied.
"Governmental Authority" shall mean the United States of America, any
state, territory of district thereof, and any other political subdivision or
body politic created pursuant to any applicable Law, and any court, agency,
department, commission, board, bureau or instrumentality of any of the
foregoing.
"Hazardous Substances" shall mean (i) any hazardous or toxic substance,
chemical or waste, or any pollutant or contaminant defined as such in any now or
hereafter existing Environmental Law, (ii) asbestos, (iii) radon, (iv)
petroleum, its derivative by-products and other hydrocarbons, (v)
polychlorinated biphenyls, (vi) explosives, (vii) radioactive materials and
(viii) any additional substances or materials which at any time are classified
or considered to be hazardous or toxic under any Environmental Laws.
-3-
<PAGE>
"Laws" shall mean any federal, state or local law, statute, ordinance,
order, decree, rule or regulation.
"Loan" shall mean the unsecured loan in the principal amount of up to Ten
Million Dollars ($10,000,000.00) contemplated buy this Agreement.
"Loan Advance" shall have the meaning specified in Section 2.01(a).
"Loan Commitment" shall have the meaning specified in Section 2.01(a).
"Maturity Date" means the first to occur of (a) the Refinance Date or (b)
April 30, 1997.
"NASDAQ" shall mean the National Association of Securities Dealers
Automated Quotations system.
"Note" shall mean the Note in form attached hereto as Exhibit A.
"Obligations" shall mean all of Borrower's liabilities, obligations and
indebtedness to the Bank of any and every kind and nature, including the Loan,
Borrower's other liabilities and obligations to the Bank under this Agreement,
and Borrower's liabilities and obligations to the Bank under any other
agreement, document or instrument, (including any guaranty of another Person's
Obligations), whether heretofore, now or hereafter owing, arising, due or
payable by or from such Person to the Bank, howsoever evidenced, created,
incurred, acquired or owing, and whether joint, several, primary, secondary,
direct, contingent, fixed or otherwise.
"Ordinary Course of Business" shall mean, with respect to Borrower, such
debt, financing or other obligations incurred by the Borrower in the normal
operation and course of its business, specifically excluding, however, any
indebtedness, liabilities, guarantees or obligations incurred in connection with
the acquisition or development of real estate, or which is prohibited under
other provisions of this Agreement.
"Person" shall mean any individual, corporation, partnership, association,
limited liability company, limited liability partnership, joint-stock company,
trust, unincorporated association, joint venture, court, Governmental Authority,
or any other similar entry.
"Prime Rate" shall mean the rate of interest referred to by the Bank from
time to time as its prime rate, as fixed by the management of the Bank for the
guidance of its loan officers, whether or not such rate is otherwise published,
with each change in such prime rate to take effect on the same day as the
determination of each change by the Bank. Such rate is not necessarily the most
favorable rate offered by the Bank to its borrowers.
-4-
<PAGE>
"Refinance Date" shall mean the date on which a certain letter of credit(s)
in the original aggregate stated amount of approximately $65,000,000.00 issued
for the benefit of the Subsidiaries of the Borrower by the Bank and certain
other financial institutions is refinanced, terminated, revoked or expired or in
any event is no longer in effect.
"Reportable Event" shall mean any of the events described in Section 4043
of ERISA, other than such event for which the thirty (30) day notice requirement
has been waived.
"Stock" shall mean all shares, options, interests, participations or other
equivalents, howsoever designated, of or in a corporation, partnership or
similar entity, whether voting or nonvoting, including common stock, warrants,
preferred stock, convertible debentures, partnership interests and all
agreements, instruments and documents convertible, in whole or in part, into any
one or more of the foregoing.
"Subsidiary" shall mean, with respect to any Person, any corporation,
partnership or similar entity of which fifty percent (50%) or more of the
outstanding Stock having ordinary voting power is at the time, directly or
indirectly, owned by such Person and/or one or more of such Person's
Subsidiaries (irrespective of whether, at the time, Stock of any other class or
classes of such entity shall have or might have voting power by reason of the
happening of any contingency).
"Supplemental Documentation" means all agreements, instruments, documents,
financing statements, warehouse receipts, schedules of accounts assigned,
certificates of title and other written matter necessary or requested by the
Bank to create, evidence, enforce, or to consummate the transactions
contemplated in or by this Agreement and the other Documents.
1.02 Rules of Construction. Whenever it is provided in this Agreement
---------------------
that a party "may" perform an act or do anything, it shall be construed that
such party "may, but shall not be obligated to," so perform or so do. The
following words and phrases shall be construed as follows: (i) "at any time"
shall be construed as "at any time or from time to time;"(ii) "any" shall be
construed as "any and all;" (iii) "include" and "including" shall be construed
as "including but not limited to;" and (iv) "will" and "shall" shall each be
construed as mandatory. Except as otherwise specifically indicated herein, all
references to Article, Section and Sub-Section numbers and letters shall refer
to Articles, Sections and Sub-Sections of this Agreement; all references to
Exhibits and Schedules shall refer to the Exhibits and Schedules attached to
this Agreement. The words "hereby", "hereof", "hereto", "herein" and "hereunder"
and any similar terms shall refer to this Agreement as a whole and not to any
particular Article, Section or Sub-Section. The word "hereafter" shall mean
after the date this Agreement is executed and delivered by the parties hereto,
and the word "heretofore" shall mean before such date. Words of the masculine
feminine or neuter gender shall mean and include the correlative words of other
genders, and words importing the singular number shall mean and include the
plural number and vice versa. The Article headings are inserted in this
Agreement for convenience only and are not intended to, and
-5-
<PAGE>
shall not be construed to limit, enlarge or affect the scope or intent of this
Agreement or the meaning of any provision hereof.
ARTICLE II. THE LOAN.
--------
2.01 Loan Terms.
----------
(A) Subject to the terms and conditions of this Agreement, the Bank will
make an unsecured loan facility (the "Loan Commitment") available to the
Borrower, pursuant to which the Bank shall from time to time make credit
advances (each, a "Loan Advance") to the Borrower. The Borrower may repay and
reborrow under the Loan Commitment subject to the terms and conditions of this
Agreement. The aggregate amount of Loan Advances outstanding under the Loan
Commitment shall at no time exceed the sum of $10,000,000.00. The Loan
Commitment shall terminate on the Maturity Date at which time no further Loan
Advances shall be made by the Bank. Requests for Loan Advances under this
Agreement may be made by the Borrower at any time, and from time to time, prior
to the Maturity Date.
(B) The proceeds of each Loan Advance shall be disbursed by deposit to
the Borrower's operating account pursuant to instructions provided by the
Borrower, unless other arrangements are agreed upon between the Bank and the
Borrower. The Loan shall be used by the Borrower solely for working capital and
real estate acquisition purposes.
(C) Commencing on the first day of the first month following the first
disbursement of any portion of the Loan Commitment and on the first day of each
consecutive month thereafter until the Maturity Date, the Borrower shall pay all
interest that has accrued on the outstanding balance of the Loan. All
outstanding Loan Advances together with any accrued but unpaid interest thereon
and any other costs or amounts owed to the Bank hereunder shall be due and paid
in full on the Maturity Date. If any payment falls due on a day which is not a
Business Day, payment shall be made on the next Business Day, and interest shall
accrue until such later date.
(D) The Loan shall be evidenced by the Note.
2.02 Interest Rate; Calculation. Except as provided in Section 2.03, Loan
--------------------------
Advances under the Loan Commitment shall bear interest at the Prime Rate plus
one percent (1%) per annum. Interest shall be calculated on the basis of a
360-day year, counting the actual number of days elapsed, and shall be paid
monthly in arrears.
2.03 Default Rate. Any Obligation of the Borrower which is not paid when
------------
due, whether at stated maturity, by acceleration or otherwise, shall, without
notice, bear interest payable on demand at the interest rate then in effect with
respect thereto plus six percent (6%). In addition, after the occurrence of any
other Event of Default and delivery to the Borrower of
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<PAGE>
the Bank's notice to charge post-default interest, all Obligations of the
Borrower hereunder shall bear interest at the rate provided for in the
immediately preceding sentence.
2.04 Excessive Rate. If, at any time, the interest rate and other charges
--------------
imposed hereunder shall be deemed by any competent Governmental Authority to
exceed the maximum rate of interest permitted by any applicable Laws, for such
time as the interest and such charges would be deemed excessive, its application
shall be suspended and there shall be charged instead the maximum rate of
interest and charges permissible under such Laws.
2.05 Prepayment. The Borrower may prepay the outstanding amounts of the
----------
Loan from time to time in whole or in part on any Business Day without penalty
or premium.
2.06 Application of Payments. All payments, which are not prepayments,
-----------------------
received from the Borrower for payment on the Loan shall be applied by the Bank
first to unpaid interest due and payable on the Loan, and second the reduction
of the principal outstanding on the Loan.
2.07 No Setoff. All payments received from the Borrower hereunder shall
---------
be paid directly to the Bank without setoff or counterclaim in immediately
available funds. The Bank shall send the Borrower statements of all amounts due
hereunder, which statements shall be considered correct and conclusively binding
on the Borrower absent manifest error.
2.08 Loan Commitment Fee. On or before the date hereof, the Borrower has
-------------------
paid or agrees to pay the Bank a non-refundable loan commitment fee of
$50,000.00 as an inducement to the Bank to enter into this Agreement, of which
amount $25,000.00 has previously been paid by the Borrower to the Bank.
ARTICLE III. CONDITIONS PRECEDENT
--------------------
The obligation of the Bank to make the Loan is subject to the following
conditions precedent:
3.01 Conditions Precedent to Initial Loan Advance. The Borrower shall have
--------------------------------------------
delivered or caused to be delivered to the Bank on the date of, but prior to,
the disbursement of any Loan Advance pursuant to the Loan Commitment
(hereinafter called the "Closing"), the following:
(A) the Note, duly executed by the Borrower;
(B) a certificate of the secretary or an assistant secretary of the
Borrower, dated the date of the Closing, as to incumbency, resolutions of the
Board of Directors of Borrower (or an authorized committee thereof) approving
the transaction contemplated hereby, and attaching copies of the current and
complete articles of incorporation and bylaws of Borrower, and such other
matters as Bank shall require;
-7-
<PAGE>
(C) a certificate, dated as of the most recent date practicable, of the
Secretary of State of Delaware and the Secretary of State of Illinois as to the
good standing of the Borrower;
(D) a Solvency and Business Purpose Affidavit, in form and substance
satisfactory to the Bank, duly executed by the Borrower;
(E) an opinion of counsel to the Borrower in form and substance
satisfactory to the Bank;
(F) the Borrower shall have paid the balance of the $50,000.00 loan
commitment fee (i.e., $25,000.00) due the Bank pursuant to Section 2.08 in
connection with the Loan and agrees to reimburse the Bank for all other out-of-
pocket expenses and fees incurred by the Bank, including reasonable legal fees
of Bank counsel; and
(G) such other documents, certificates or evidence as the Bank may
reasonably request to consummate the transactions contemplated hereby.
3.02 Condition Precedent to Subsequent Loan Advances. At the time of the
-----------------------------------------------
Closing, at the time of each subsequent request for and disbursement under the
Loan Commitment and on the last day of each fiscal quarter of the Borrower after
the date hereof, each of the following statements shall be true;
(A) The representations and warranties set forth in this Agreement are
true and correct in all material respects unless otherwise disclosed to and
approved by the Bank in writing, in its sole discretion, since the prior Loan
Advance.
(B) No event of Default shall have occurred and be continuing, and no
event shall have occurred and be continuing that, with the giving of notice or
passage of time or both, would be an Event of Default.
(C) No material adverse change shall have occurred in the financial
condition of the Borrower since the date of this Agreement.
ARTICLE IV. REPRESENTATIONS AND WARRANTIES
------------------------------
To induce the Bank to consummate the transactions contemplated hereby, the
Borrower represents and warrants to the Bank as follows:
-8-
<PAGE>
4.01 The Borrower is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, has the lawful
power and authority to own its properties and to carry on its business as now
conducted, and possesses all material permits necessary to operate the business
it conducts. Borrower is duly qualified to do business as a foreign corporation
and is in good standing in the State of Illinois and in each other jurisdiction
in which such qualification is required for the conduct of Borrower's business.
4.02 The Borrower is empowered to perform all acts and things
undertaken and done pursuant to this Agreement and has taken all corporate or
other action necessary to authorize the execution, delivery and performance of
the Documents. The officers of Borrower executing the Documents have been duly
elected or appointed and have been fully authorized to execute such Documents at
the time executed. The Documents, when executed and delivered, will be the
legal, valid and binding obligations of the Borrower, enforceable against it in
accordance with their respective terms.
4.03 The Financial Statements furnished by or on behalf of the
Borrower to the Bank are complete and accurate, fairly present the financial
condition of the Borrower and its Subsidiaries at the respective dates thereof
and the results of operations for the respective periods covered thereby, and
(subject to normal year-end adjustments with respect to interim Financial
Statements) were prepared in accordance with GAAP. The Borrower does not have
any material liabilities or obligations (contingent or otherwise), liability for
taxes, or unusual forward or long-term commitments, except as disclosed in the
Financial Statements.
4.04 Since the date of Borrower's most recent Financial Statements
furnished to the Bank, there has been no material charge in the assets,
liabilities or condition, financial or otherwise, of Borrower or its
Subsidiaries, other than changes arising from transactions in the Borrower's
Ordinary Course of Business, and none of such changes has been materially
adverse.
4.05 Other than as set forth in the Financial Statements, there are
no actions, suits or proceedings pending, or, to the best of the knowledge of
the Borrower, threatened against or affecting the Borrower or any of its
Subsidiaries at law or in equity or before or by any Governmental Authority or
any foreign equivalent thereof, which is reasonably likely to result in a
material judgment or liability, or which are, in the aggregate, material in
light of the financial condition and assets of the Borrower or any of its
Subsidiaries, as determined by the Bank in its sole discretion. There are no
actions, suits, investigations or proceedings pending, or to the best of the
knowledge of the Borrower, threatened against the Borrower or any of its
Subsidiaries or its properties regarding Environmental Laws, the manufacture,
storage or treatment of Hazardous Substances or products liability.
-9-
<PAGE>
4.06 The Borrower is not in violation of, and the execution and
delivery of the Documents and the performance by the Borrower of its obligations
under the Documents, do not and will not result in the Borrower being in
violation of or in conflict with, or constitute a default under any of, the
Borrower's Articles of Incorporations or By-Laws, any term or provision of any
note, mortgage, indenture, contract, agreement, instrument, judgment or Law
applicable to the Borrower, and the execution and delivery of the Documents and
the performance by Borrower of its obligations under the Documents do not and
will not result in the creation or imposition of any mortgage, lien, charge or
encumbrance of any nature whatsoever (other than those in favor of Bank) upon
any of the assets of the Borrower or any of its Subsidiaries pursuant to any
such term or provision. Neither the Borrower nor any of its Subsidiaries is in
default, after the expiration of any applicable grace or cure periods, in any
respect in the performance or fulfillment of any of its obligations, covenants
or conditions contained in any agreement or instrument to which it is a party or
by which any of its properties may be bound, and the Borrower does not know of
any dispute regarding any such agreement or instrument.
4.07 Neither the Borrower nor any of its Subsidiaries have
outstanding any Debt or other obligation for borrowed money, or for the deferred
purchase price of property or services nor are the Borrower or any Subsidiary
obligated as guarantor, co-signer or otherwise on any Debt or other obligation
of any kind of any other Person, except and to the extent shown on the Financial
Statements or trade debt incurred in the Borrower's Ordinary Course of Business.
No Person is in default under any of said obligations.
4.08 All tax returns and reports of the Borrower and its
Subsidiaries required by law to be filed have been duly filed, and all taxes,
assessments, fees and other governmental charges (other than those presently
payable without penalty or interest) upon each or upon any of its properties or
assets, which are due and payable, have been paid. The charges, accruals and
reserves on the books of the Borrower and its Subsidiaries in respect of taxes
are considered adequate by the Borrower, and the Borrower does not know of any
assessment of a material nature against it or any of its Subsidiaries.
4.09 Except to the extent that failure to comply would not materially
or practically interfere with the conduct of the business of the Borrower or its
Subsidiaries, or affect in any way the Borrower's obligations (or Bank's rights)
under the Documents, the Borrower and its Subsidiaries have complied with all
applicable laws with respect to: (i) any restrictions, specifications or other
requirements pertaining to products that the Borrower or its Subsidiaries
manufacture and/or sell or the services they perform, including without
limitation all Environmental Laws, (ii) the conduct of their business and (iii)
the use, maintenance, and operation of the real and personal properties owned or
leased by them in the conduct of their business.
4.10 No authorization, consent, license or approval of, or filing or
registration with, or notification to, any Governmental Authority is required in
connection with the execution, delivery or performance of the Documents by the
Borrower.
-10-
<PAGE>
4.11 With respect to each Employee Benefit Plan:
(A) each Employee Benefit Plan that is intended to qualify under
Section 401(a) of the Code and the assets of which are exempt from taxation
under Section 501 of the Code ("Qualified Plan") has received a favorable
determination letter as to such qualification and there has been no development
or circumstance since the date of such letter that creates a material risk of
the loss of such plan's qualified status, except with respect to Borrower's 401k
plan, in which case a favorable determination letter as to such qualification
has been applied for and Borrower has no reason to believe such favorable
determination letter will not be issued;
(B) each Qualified Plan that is subject to the requirements of the
Title IV of ERISA has met the minimum funding standards of Section 412 of the
Code and is not subject to any event or condition (including a reportable event
under Section 4043 of ERISA) that would be grounds for the termination of such
plan by the Pension Benefit Guaranty Corporation or would otherwise subject the
Borrower to any liability with respect to such plan (including liability for
Pension Benefit Guaranty Corporation premiums for periods prior to the Closing);
(C) no Employee Benefit Plan has engaged in a transaction prohibited
by or under Section 406 of ERISA, or which would subject the Borrower or any of
its Subsidiaries to any tax on prohibited transactions under Section 4975 of the
Code;
(D) each Employee Benefit Plan is in full compliance in all material
respects (as determined by the Bank in its sole discretion) with the reporting
and disclosure requirements of ERISA and all other applicable laws;
(E) no Qualified Plan is a multi-employer plan within the meaning of
Section 3(37) of ERISA; and
(F) there are no obligations for future post-retirement health,
medical or death benefits under any Employee Benefit Plan except for death
benefits under a Qualified Plan.
4.12 The Borrower is solvent, no transaction under of contemplated by
this Agreement renders or will render the Borrower insolvent, the Borrower
retains sufficient capital for the business and transactions in which it engages
or intends to engage, no obligation incurred hereby is beyond the ability of the
Borrower to pay as such obligation matures, the Borrower is not contemplating
either the filing of a petition under any state or federal bankruptcy or
insolvency laws or the liquidating of all or a major portion of any of its
property, and Borrower has no knowledge of any person contemplating the filing
of any such petition against it.
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<PAGE>
4.13 There exists no actual or threatened termination, cancellation or
limitation of, or any modification or change in, the proposed business
relationship of Borrower or any of its Subsidiaries with any customer or group
of customers whose purchases individually or in the aggregate are material to
the current business of Borrower or any of its Subsidiaries, or in the
proposed business relationship with Borrower or any of its Subsidiaries with any
material supplier, and Borrower reasonably anticipates that all such customers
and suppliers will continue a business relationship with Borrower and its
Subsidiaries, as the case may be, on a basis no less favorable to the Borrower
than that heretofore conducted; and there exists no other condition or state of
facts or circumstances which would materially adversely affect the current
operation of the business of Borrower after the consummation of the transactions
contemplated by this Agreement on a basis no less favorable to the Borrower than
that in which it has heretofore been conducted by Borrower.
4.14 No strike, work stoppage or other labor dispute relating to the
Borrower or any of its Subsidiaries is pending or, to the best knowledge of the
Borrower or any of its Subsidiaries, is threatened and no application for
certification of a collective bargaining agent is pending or, to the best
knowledge of the Borrower, is threatened. There are no unfair labor practice
charges or grievances or similar matters pending or in process or, to the best
knowledge of the Borrower, threatened by or on behalf of any employee of the
Borrower or any of its Subsidiaries, nor any complaints received by the
Borrower, or any of its Subsidiaries or, to the best knowledge of the Borrower,
threatened or on file, with any federal, state or local governmental agencies
alleging employment discrimination or other violations of laws pertaining to
such employees which could have a material adverse effect on the condition
(financial or otherwise), properties, assets, operations, results of operations,
business or rights of the Company or any of its Subsidiaries.
4.15 The Borrower's execution and delivery of this Agreement or any other
Document does not directly or indirectly violate or result in a violation of
Section 7 of the Securities and Exchange Act of 1934, as amended, or any
regulations issued pursuant thereto, including, without limitation, regulations
G, U, T and X of the Board of Governors of the Federal Reserve System, and
neither the Borrower nor any of its Subsidiaries owns any "margin stock," within
the meaning of said regulations, or is engaged in the business of extending
credit to others for such purpose, and no part of the proceeds of any borrowing
hereunder will be used to purchase or carry any "margin stock" or to extend
credit to others for the purpose of purchasing or carrying any "margin stock."
4.16 No representation or warranty by the Borrower contained herein or in
any certificate or other document furnished by or on behalf of the Borrower or
its Subsidiaries in connection with the transactions hereunder contains any
untrue statement of material fact or omits to state a material fact necessary
to make such representation or warranty not misleading in any material respect,
as determined by the Bank in its sole discretion, in light of the circumstances
under which it was made.
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<PAGE>
4.17 All of the representations and warranties set forth in this Article
IV shall survive and continue to be true, complete and correct until all
Obligations of the Borrower hereunder are paid and satisfied in full and this
Agreement shall have been terminated.
ARTICLE V. NEGATIVE COVENANTS
------------------
The Borrower covenants that until all Obligations of Borrower hereunder are
paid and satisfied in full, and the Bank's obligation to make advances hereunder
has terminated, the Borrower will not, directly or indirectly, without the prior
consent in writing of the Bank:
5.01 dispose by sale, assignment, lease, sale leaseback or otherwise any
material portion, as determined by the Bank in its sole discretion, of its
properties or assets (other than obsolete or worn out property or equipment not
used or useful in its business), whether now owned or hereafter acquired and
including, without limitation, any notes, accounts receivable, equipment or
machinery;
5.02 transfer, directly or indirectly, any of its assets or pay out,
directly or indirectly, money or property or provide services or do any other
act, or fail to do any act, which would have the effect of materially and
adversely affecting its ability to perform its obligations hereunder;
5.03 own, hold, purchase from or acquire stock, bonds, debentures or other
securities of, or make any capital contribution to any new Subsidiary or
dissolve or liquidate any existing Subsidiary; provided, however, Borrower may
create and contribute capital to new Subsidiaries upon the conditions that (i)
Borrower owns 100% of all of the Stock of each such Subsidiary, and (ii) such
subsidiary is formed for the sole purpose of acquiring real estate to be owned,
operated or developed by such Subsidiary and does not violate any other
provision of this Agreement;
5.04 make any material change in its ownership of financial structure,
make any material change in its management (except on 15 days prior notice to
the Bank), change its name (except on 15 days prior notice to the Bank), enter
into any merger, consolidation, dissolution, liquidation, reorganization or
recapitalization, or reclassification of its stock except for stock options
granted to employees of Borrower pursuant to employment incentive plans as
previously disclosed to the Bank and issuing stock pursuant to such stock
options;
5.05 engage in business activities or operations substantially different
from and unrelated to its business activities on the date of this Agreement;
5.06 directly or indirectly apply any part of the proceeds of the Loan for
any purpose other than as set forth herein;
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<PAGE>
5.07 directly or indirectly apply any part of the proceeds of the Loan to
the purchasing or carrying of any "margin stock" within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System, or any
regulations, interpretations or rulings thereunder;
5.08 create, incur or assume any Debt other than (i) the Loan, (ii) Debt
disclosed in Financial Statements provided to the Bank on or before the date
hereof, (iii) debt incurred in the Borrower's Ordinary Course of Business and
which is not prohibited by the other provisions of this Agreement, and (iv)
guarantees and indemnities pursuant to and required under the terms of a certain
$100,000,000.00 construction-permanent financing facility between Borrower and
Nomura Asset Capital Corporation as described in a certain letter dated
September 4, 1997 from Nomura Asset Capital Corporation to Borrower, a copy of
which has been provided to the Bank, (v) environmental indemnities to lenders in
connection with real estate acquisition loans made to Subsidiaries of Borrower,
upon the condition that Borrower has procured from a qualified environmental
professional a Phase I and, if necessary, a Phase II environmental audit of each
property for which an environmental indemnity is delivered, which concludes that
there is no presence or likely presence of Hazardous Substances and that there
has been no release or substantial threat of a release of Hazardous Substances
in connection with such property, and (vi) loan guaranties to lenders in
connection with nonrecourse loans made to Subsidiaries of Borrower in connection
with real estate acquisitions by Subsidiaries of Borrower, upon the condition
that such guaranties are limited to the customary "carve-outs" to nonrecourse
financing due to fraud, misrepresentation and similar conduct of Borrower or
such Subsidiary;
5.09 enter into, or be a party to, any transaction with any Affiliate,
except in the ordinary course of any pursuant to the reasonable requirements of
its business and upon fair and reasonable terms which are fully disclosed in
writing to the Bank and are no less favorable to such Person than would be
obtained in a comparable arm's length transaction with a person not an
Affiliate;
5.10 change its fiscal year; or
5.11 furnish the Bank any certificate or other document that will contain
any untrue statement of material fact or that will omit to state a material fact
necessary to make it not misleading in any material respect, as determined by
the Bank in its sole discretion, in light of the circumstances under which it
was furnished.
ARTICLE VI. AFFIRMATIVE COVENANTS
---------------------
The Borrower covenants that until all Obligations of the Borrower are paid
and satisfied in full, and the Bank's obligation to make advances hereunder has
terminated, the Borrower will:
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<PAGE>
6.01 furnish and deliver to the Bank:
(A) as soon as practicable, and in any event within 120 days after the end of
each fiscal year: (i) a statement of cash flows of the Borrower for such
year, (ii) an income statement of the Borrower for such year, (iii) a
balance sheet of the Borrower as of the end of such year; all in
reasonable detail, including all footnotes, and audited by certified
public accountants selected by the Borrower and reasonably acceptable to
the Bank and certified by such accountants to have been prepared in
accordance with GAAP, except for any inconsistencies explained in such
certificate, and (iv) a copy of all Form 10-K reports required to be
filed with any Governmental Authority;
(B) as soon as practicable, and in any event within 45 days after the end of
each quarter commencing with the quarter ending immediately subsequent to
the first Loan Advance, (i) a statement of cash flows of the Borrower for
such quarter and the portion of the fiscal year ended, (ii) an income of
the Borrower for such quarter and the portion of the fiscal year then
ended, (iii) a balance sheet of the Borrower as of the end of such
quarter; all in reasonable detail and certified by an Authorized Borrower
Representative as complete and accurate in all material respects, fairly
presenting the financial condition of the Borrower and prepared in
accordance with GAAP, and (iv) a copy of all Form 10-Q reports required
to be filed with any Governmental Authority;
(C) within 45 days after the end of each month commencing as of the date of
this Agreement, a report of all cash flows and operations of the Borrower
as is typically prepared by the Borrower for the preceding month and year
to date; and
(D) with reasonable promptness, such other information materially concerning
the business, properties, conditions or operations, financial or
otherwise, of the Borrower, or compliance by the Borrower with any
covenants in the Documents, as the Bank may from time to time reasonably
request;
6.02 furnish and deliver to Bank;
(A) immediately after the occurrence thereof, notice of any Event of Default
or of any fact, condition or event that with the giving of notice or
passage of time or both, could become as Event of Default, or of the
failure by the Borrower to observe any of its respective undertakings
hereunder;
(B) immediately after the occurrence thereof, notice of any default under any
Debt, or under any indenture, mortgage or other agreement relating
thereto for which the Borrower is liable;
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<PAGE>
(C) immediately after knowledge thereof, notice of any litigation
or proceeding in which the Borrower is a party if an adverse
decision therein would require the Borrower to pay more than
$1,000,000 or deliver assets the value of which exceeds such
sum (whether or not the claim is considered to be covered by
insurance);
(D) immediately after receipt of notice thereof, notice of the
institution of any other suit or preceeding involving the
Borrower that would reasonably likely materially and adversely
affect the Borrower's business, properties or conditions or
operations, financial or otherwise, as determined by the Bank
in its sole discretion;
(E) immediately after the occurrence thereof, notice of any other
matter which has resulted in, or would reasonably likely result
in, a materially adverse change in the business, properties, or
the conditions or operations, financial or otherwise, of the
Borrower, as determined by the Bank in its sole discretion; and
(F) immediately upon their becoming available, Borrower shall
deliver or cause to be delivered to the Bank a copy of (i) all
regular or special reports or effective registration
statements which Borrower, or any Subsidiary of Borrower, shall
file with the U.S. Securities and Exchange Commission (or any
successor thereto) or any securities exchange, (ii) all
reports, proxy statements, financial statements and other
information distributed by Borrower, or any Subsidiary of
Borrower, to all of its stockholders, bondholders or the
financial community in general, and (iii) any written reports
submitted to Borrower, or any Subsidiary of Borrower, by
independent accountants in connection with any annual, interim
or special audit of the financial statements of Borrower, or
any Subsidiary of Borrower;
6.03 promptly pay and discharge when due all taxes, assessments and
other governmental charges imposed upon it, or upon its income, profits or
property, and all claims for labor, material or supplies which, if unpaid, might
by law become a lien or change upon its property; provided, however, that it
shall not be required to pay any tax, assessment, charge or claim if so
permitted by law, so long as the validity thereof shall be contested in good
faith by appropriate proceedings and adequate reserves therefor in accordance
with GAAP shall be maintained on its books;
6.04 maintain its inventory, equipment, real estate and other
properties in good condition and repair (normal wear and tear excepted), pay and
discharge or cause to be paid and discharged when due, the costs of repairs to
or maintenance of the same, and pay or cause to be paid all rental or mortgage
payments due on the same except if it is in good faith contesting by appropriate
proceedings such amounts due and is maintaining adequate reserves for such
liability in accordance with GAAP;
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<PAGE>
6.05 maintain and comply with leases covering real property, if any, used
by it in accordance with the respective terms thereof so as to prevent any
default thereunder which may result in the exercise or enforcement of any
landlord's or other lien against it or its property; provided, however, that it
may contest any matters in connection with such leases in good faith and by
appropriate proceedings if it makes such payments as are required by law and
maintains adequate reserves on its books in accordance with GAAP in connection
therewith;
6.06 maintain its corporate existence, maintain all rights, privileges,
franchises, permits and approvals necessary or desirable for the continuation of
its business, and comply with the requirements of all material agreements to
which it is a party or by which any of its assets is bound, and all applicable
Laws, including Environmental Laws, and orders of any Governmental Authority,
noncompliance with which would materially adversely affect its business,
properties, condition, financial or otherwise or ability to repay its
Obligations;
6.07 keep adequate records and books of the accounts and operations of
Borrower, in which complete entries will be made in accordance with its past
practices and consistent with sound business practice, reflecting all of its
financial transactions, and collect its accounts only in the Ordinary Course of
Business;
6.08 permit any of the Bank's representatives to examine and inspect all
properties and operations of Borrower, and all books of account, records,
reports and other papers and to make copies and extracts therefrom, and to
discuss the Borrower's affairs, finances and accounts with its officers and
employees or its independent public accountants (and by this provision the
Borrower authorizes said accountants to discuss the finances and affairs of the
Borrower), all at such reasonable times and as often as may be reasonably
requested and upon two (2) Business Days notice by the Bank, (not to exceed
$3,000.00 provided no Event of Default has occurred);
6.09 at its sole cost and expense, keep and maintain all of its property
and assets insured for the full insurable value thereof against loss or damage
by fire, theft, explosions, sprinklers and all other hazards and risks (i)
covered by extended coverage and/or (ii) ordinarily insured against by other
owners or users of properties in similar businesses. All such policies of
insurance shall be in form, with insurers and in such amounts as may be
reasonably satisfactory to the Bank;
6.10 pay when due all of its Debt except if (with respect to Debt other
than the Obligations hereunder) it is in good faith contesting by appropriate
proceedings such amounts due and has maintained adequate reserves for such
liability in accordance with GAAP; and
6.11 at the Bank's request, execute and/or deliver to the Bank, at any
time or times hereafter, all Supplemental Documentation that the Bank may
request, in form and substance acceptable to the Bank, and pay the costs of any
recording or filing of the same.
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<PAGE>
ARTICLE VII. EVENTS OF DEFAULT
-----------------
7.01 The occurrence of any of the following events or acts shall
constitute an Event of Default ("Event of Default"):
(A) The Borrower defaults in the payment of any of its Obligations or any
part thereof when the same shall become due and payable, either by their terms
or otherwise herein provided.
(B) Any Financial Statement, representation or warranty made by the
Borrower herein or delivered by the Borrower pursuant hereto or otherwise made
in writing by the Borrower in connection with this Agreement proves to have been
false in any material respect as of the date on which it was made or deemed
made, or the Borrower defaults in the performance of any of the covenants,
conditions or agreements contained in this Agreement.
(C) The Borrower fails to pay any Debt when due, or suffers to exist any
other event of default giving rise to any obligation under any agreement binding
the Borrower and such failure or event of default continues beyond any
applicable grace period, the effect of which is to cause the Debt or such
obligation to become due prior to its stated maturity or prior to its regularly
scheduled dates of payment.
(D) The Borrower or any of its Subsidiaries files a petition under any
section or chapter of the United States Bankruptcy Code or any similar federal
or state law or regulation, the Borrower or any of its Subsidiaries admits its
inability to pay debts as they mature, the Borrower or any of its Subsidiaries
makes an assignment for the benefit of one or more of its creditors, the
Borrower or any of its Subsidiaries makes an application for the appointment of
a receiver, trustee or custodian for any of its properties or assets, or the
Borrower or any of its Subsidiaries files any case or proceeding for its
reorganization, dissolution or liquidation or for relief from creditors;
provided that any of the foregoing with respect to a Subsidiary will constitute
an Event of Default only if it materially and adversely affects the ability of
Borrower to perform its Obligations hereunder.
(E) The Borrower or any of its Subsidiaries is enjoined, restrained or in
any way prevented by court order from conducting all or any material part of its
business affairs, a petition under any section or chapter of the United States
Bankruptcy Code or any similar federal or state law or regulation is filed
against the Borrower or any of its Subsidiaries, any case or proceeding is filed
against the Borrower or any of its Subsidiaries for its reorganization,
dissolution or liquidation or for creditor relief, or an application is made by
any Person other than the Borrower or any of its Subsidiaries for the
appointment of a receiver, trustee, or custodian for any of its properties or
assets, and such injunction, restraint, petition or
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<PAGE>
application is not dismissed or stayed within thirty (30) days
after the entry or filing thereof; provided that any of the
foregoing with respect to a Subsidiary will constitute an Event
of Default only if it materially and adversely affects the
ability of Borrower to perform its Obligations hereunder.
(F) The Borrower or any of its Subsidiaries conceals or removes or
permits to be concealed or removed any part of its property with
intent to hinder, delay or defraud its creditors or any of them,
or makes or suffers to be made a transfer of any of its property
that may be fraudulent under any federal or state bankruptcy,
fraudulent conveyance or similar law.
(G) The Borrower or any of its Subsidiaries permits any of its
properties or assets to be attached, seized, subjected to a writ
or distress warrant, or levied upon, or to come within the
possession of any receiver, trustee, custodian or assignee for
the benefit of creditors; provided that any of the foregoing
with respect to a Subsidiary will constitute an Event of Default
only if it materially and adversely affects the ability of
Borrower to perform its Obligations hereunder.
(H) The Borrower or any of its Subsidiaries suffers a final judgment
for payment of money in excess of $1,000,000 which shall not be
stayed on appeal and does not discharge the same within a period
of thirty (30) days; provided that any of the foregoing with
respect to a Subsidiary will constitute an Event of Default only
if it materially and adversely affects the ability of Borrower
to perform its Obligations hereunder, as determined by the Bank
in its sole discretion.
(I) A judgment creditor of the Borrower or any of its Subsidiaries
obtains possession of any of its properties or assets with an
aggregate value in excess of $1,000,000 by any means, including
without limitation, levy, distraint, replevin or self-help;
provided that any of the foregoing with respect to a Subsidiary
will constitute an Event of Default only if it materially and
adversely affects the ability of Borrower to perform its
Obligations hereunder, as determined by the Bank in its sole
discretion.
(J) Any authorization, consent, approval, license, exemption,
registration, qualification, designation, declaration, report
filing or other action or undertaking now or hereafter made by
or with any Governmental Authority in connection with the
business or operations of Borrower or any of its Subsidiaries,
or with this Agreement or any other Document or any such action
or undertaking now or hereafter necessary to make its business
and operations or this Agreement or any other Document legal,
valid, enforceable and admissible in evidence is not obtained or
shall have ceased to be in full force and effect or shall have
been revoked, modified or amended or shall have been held to be
illegal or invalid and, as a result
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<PAGE>
thereof, the ability of the Borrower to perform its Obligations
hereunder is materially and adversely affected, as determined by
the Bank in its sole discretion.
(K) Any permit material to the business, operations or financial
condition of the Borrower or any of its Subsidiaries shall be
terminated, suspended or revoked and, as a result thereof, the
ability of the Borrower to perform its Obligations hereunder is
materially and adversely affected, as determined by the Bank in
its sole discretion.
(L) There shall occur any uninsured damage to, or loss, theft, or
destruction of, any of the properties or assets of the Borrower
in excess of $1,000,000.
(M) A notice of lien or assessment is filed or recorded with respect
to all or any of the Borrower's or any Subsidiary of the
Borrower's assets by the United States, or any department,
agency or instrumentality thereof, or by any state, county,
municipal or other governmental agency, or if any taxes or debts
owing at any times hereafter to any one of these becomes a lien
or encumbrance upon any such Person's assets and the same is not
released within thirty (30) days after the same becomes a lien
or encumbrance and, as a result, the ability of the Borrower to
perform its obligations hereunder is or could be materially and
adversely affected, as determined by the Bank in its sole
discretion; provided that such Person shall have the right to
contest by appropriate proceedings any such lien, levy or
assessment if such Person provides the Bank with a bond or
indemnity satisfactory to the Bank assuring the payment of such
lien, levy or assessment.
(N) Any of the following events if such event could have a material
adverse effect on the Borrower as reasonably determined by the
Bank: (i) the existence of a Reportable Event, (ii) the
withdrawal of the Borrower or any of its Subsidiaries, or any
ERISA Affiliate from an Employee Benefit Plan during a plan year
in which it was a "substantial employer" as defined in Section
4001(a)(2) of ERISA, (iii) the occurrence of an obligation to
provide affected parties with a written notice of intent to
terminate an Employee Benefit Plan in a distress termination
under Section 4041 of ERISA, (iv) the institution by PBGC of
proceedings to terminate any Employee Benefit Plan, (v) any
event or condition which would require the appointment of a
trustee to administer an Employee Benefit Plan, (vi) the
withdrawal of the Borrower or any of its Subsidiaries, or any
ERISA AFfiliate from a Multi-employer Plan, and (vii) any event
that would give rise to a Lien under Section 302(f) of ERISA.
(O) At any time that any portion of the Loan remains outstanding,
the closing price of the Borrower's publicly traded shares of
stock as quoted on the NASDAQ is less than $11.00 per share
(adjusted for any share splits after the date of this
Agreement).
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<PAGE>
(P) The occurrence of a default or an Event of Default under any of
the other Documents which is not cured within the time, if any,
specified therefor in such other Document.
7.02 Upon the occurrence of any Event of Default, and at any and all
times while any Event of Default shall be continuing, the Bank shall have all
rights and remedies provided by this Agreement or any other Document and by
applicable law and, without limiting the generality of the foregoing, may, at
its option, declare the Loan Commitment to be terminated by giving written
notice thereof to the Borrower, and the Note, upon such declaration, shall
thereupon be and become forthwith, due and payable, without any presentment,
demand, protest or other notice of any kind, all of which are hereby expressly
waived. The Bank should further have the right, without notice to the Borrower,
to set off against and to appropriate and apply to such due and payable amounts
any debt owning to, and any other funds, accounts, deposits or amounts held in
any manner for the account of the Borrower by Lender.
ARTICLE VIII. MISCELLANEOUS
-------------
8.01 No failure or delay on the part of the Bank in exercising any
right, power or remedy hereunder or under any other Documents shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right,
power or remedy preclude any other or further exercise thereof or the exercise
of any other right, power or remedy hereunder or under any other Document. The
remedies herein provided and under any other Document are cumulative and not
exclusive of any remedies provided by law.
8.02 This Agreement and the other Documents constitute the entire
agreement between the parties with respect to the subject matter hereof and
thereof and there are no promises expressed or implied unless contained herein
and therein. No amendment, modification, termination or waiver of any provision
of the Documents nor consent to any departure by the Borrower therefrom shall in
any event be effective unless the same be in writing and signed by the Bank, and
then such waiver or consent shall be effective only for the specific purpose for
which given. No notice to or demand on the Borrower in any case shall entitle
the Borrower to any other or further notice or demand in similar or other
circumstances.
8.03 The Borrower will pay any documentary, stamp or similar taxes
payable in respect of the Documents. The Borrower will, on demand, reimburse the
Bank for all expenses, including the reasonable fees and expenses of legal
counsel (including, without limitation, legal assistants) for the Bank, incurred
by the Bank in connection with any amendment or modification of the Documents,
the administration of the Loan and the enforcement of the Documents and the
collection or attempted collection of the Obligations.
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<PAGE>
8.04 (A) For the purposes of any action or proceeding involving the
Documents or any other agreement or document referred to therein, the Borrower
hereby expressly submits to the jurisdiction of all federal and state courts
located in the State of Illinois and consents that any order, process, notice of
motion or other application to or by any of said courts or a judge thereof may
be served within or without such court's jurisdiction by registered mail or by
personal service, provided a reasonable time for appearance is allowed. To the
extent permitted by applicable law, the Borrower hereby irrevocably waives any
objection that it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Agreement or any other
Document brought in any federal or state court sitting in Cook County, State of
Illinois, and, to the extent permitted by law, hereby further irrevocably waives
any claim that any such suit, action or proceeding brought in any such court has
been brought in an inconvenient forum.
(B) THE BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVES (TO THE EXTENT PERMITTED BY APPLICABLE LAW) ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY OF ANY DISPUTE ARISING UNDER OR RELATING TO THIS AGREEMENT, THE
NOTE, ANY OTHER OF THE DOCUMENTS AND AGREES THAT ANY SUCH DISPUTE SHALL BE TRIED
BEFORE A JUDGE SITTING WITHOUT A JURY.
8.05 Any notices or consents required or permitted by this Agreement
shall be in writing and shall be delivered in person or sent by certified mail,
postage prepaid, return receipt requested, or delivered by, facsimile, telegram
or telex, or delivered by a nationally recognized overnight express delivery
service, addressed as follows, unless such address is changed by written notice
hereunder:
If to the Borrower: Brookdale Living Communities, Inc.
77 West Wacker Drive, Suite 4800
Chicago, Illinois 60601
Attn: Darryl W. Copeland, Jr.
Executive Vice President
FAX: (312) 977-3699
with a copy to: Brookdale Living Communities, Inc.
c/o The Prime Group, Inc.
77 West Wacker Drive, Suite 3900
Chicago, Illinois 60601
Attn: Robert J. Rudnik
General Counsel
FAX: (312) 917-1684
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<PAGE>
If to the Bank: LaSalle National Bank
135 South LaSalle Street
Chicago, Illinois 60603
Attn: Jeffrey D. Steele
Senior Vice President
Any such notice or communication shall be deemed to have been given either at
the time of personal delivery, or in the case of overnight express delivery, as
of the date delivery was first attempted, or in the case of facsimile, telegram
or telex, upon receipt or in the case of certified mail, two (2) Business Days
after delivery to the United States Postal Service.
8.06 This Agreement may be executed in any number of counterparts and
by the different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed to be an original and all of which taken
together shall constitute but one and the same instrument.
8.07 This Agreement shall become effective when it shall have been
executed and delivered by the Borrower and the Bank, and thereafter shall be
binding upon and inure to the benefit of the Borrower and the Bank and their
respective successors and assigns, except that the Borrower shall not have the
right to assign it rights hereunder or any interest herein without the prior
written consent of the Bank.
8.08 This Agreement has been, and any other Documents will be,
delivered and accepted in and shall be deemed to be, contracts made under and
governed by the laws of the State of Illinois, and for all purposes shall be
construed in accordance with the laws of said State.
8.09 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 or affecting the validity or enforceability of such
provision in any other jurisdiction; wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable Law.
8.10 All covenants, agreements, representations and warranties made
by the Borrower herein and any and all certificates and instruments delivered by
the Borrower in connection herewith shall, notwithstanding any investigation by
the Bank, be deemed material and relied on by the Bank and shall survive the
execution and delivery to the Bank of this Agreement, the Note and any extension
or renewal thereof.
8.11 From time to time, the Borrower will execute and deliver to Bank
such additional documents and will provide such additional information as the
Bank may reasonably require to carry out the terms of this Agreement and be
informed of the Borrower's status and affairs.
-23-
<PAGE>
8.12 All Exhibits attached to this Agreement shall be deemed incorporated
herein by this reference.
8.13 Whenever under the terms of this Agreement, the time for performance
of a covenant or condition falls upon a day other than a Business Day, such time
for performance shall be extended to the next Business Day. Unless otherwise
stated, all references herein to "days" shall mean calendar days.
8.14 The Borrower hereby consents to the Bank's participation, sale,
assignment or transfer, at any time or times hereafter of this Agreement or the
Documents, or any portion hereof or thereof, without affecting the liability of
the Borrower hereunder; provided, however, the Bank shall at all times act as
sole agent on behalf of itself and any participant that acquires any interest in
this Agreement or the Documents and shall at all times service the Loan on
behalf of itself and any participant.
IN WITNESS WHEREOF, the parties have hereunto caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
BORROWER:
BROOKDALE LIVING COMMUNITIES, INC.
By: /s/ Darryl W. Copeland, Jr.
-------------------------------------
Print Name: Darryl W. Copeland, Jr.
-------------------------
Title: Executive Vice President
------------------------------
ATTEST:
By: /s/ Robert J. Rudnik
-------------------------------------
Print Name: Robert J. Rudnik
-------------------------
Title: Secretary
------------------------------
BANK:
LaSALLE NATIONAL BANK
By: /s/ Ann B. O'Shaughnessy
-------------------------------------
Print Name: Ann B. O'Shaughnessy
-------------------------
Title: Assistant Vice President
------------------------------
-24-
<PAGE>
EXHIBIT 10.56
FIRST AMENDMENT TO LOAN AGREEMENT AND DOCUMENTS
THE FIRST AMENDMENT TO LOAN AGREEMENT AND DOCUMENTS, dated as of December
1, 1997 (this "Amendment"), is entered into by and between BROOKDALE LIVING
COMMUNITIES, INC., a Delaware corporation (the "Borrower"), and LaSALLE NATIONAL
BANK, a national banking association (the "Bank").
WITNESSETH
WHEREAS, the Borrower has previously executed and delivered to the Bank a
certain Note dated October 22, 1997 in the original principal amount of up to
Ten Million Dollars ($10,000,000.00) evidencing a certain Loan set forth more
fully in and governed by a certain Loan Agreement of the same date to which the
Bank is also a party ("Loan Agreement"),
WHEREAS, the Borrower has requested the Bank to increase the principal
amount of the Loan by $5,000,000 from $10,000,000 to $15,000,000 and has agreed
to provide the Bank with an additional source of repayment for the Loan,
WHEREAS, the Borrower and the Bank desire to modify the Loan Agreement and
the Documents to reflect the modified terms of the Loan as set forth in this
Amendment.
NOW, THEREFORE, in consideration of the premises, the covenants and
agreements herein contained, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
1. Incorporation of Recitals. The above and foregoing recitals are
incorporated into and made a part of this Amendment. All capitalized terms used
herein, if not otherwise specifically defined, shall have the meanings and
definitions prescribed in the Loan Agreement and the Documents referred to
therein.
2. Increased Loan Commitment. As of the date of this Amendment, the Loan
Agreement and the Documents are hereby amended to increase the principal amount
of the Loan and Loan Commitment from $10,000,000.00 to $15,000,000.00.
3. Execution Note. Contemporaneous with the execution of this Agreement,
the Borrower has executed and delivered an Amended and Restated Note in the
principal sum of up to $15,000,000.00 evidencing the Loan as amended by this
Amendment, which Amended and Restated Note shall replace and supersede the Note.
4. Maturity Date. The definition of Maturity Date in the Loan Agreement is
amended and restated to mean and be defined as the first to occur of (a) the
date on which Borrower closes on (i) an offering of Borrower's convertible
preferred stock or convertible debt securities with a minimum aggregate sales
price (before underwriting commissions and discounts and other expenses
-1-
<PAGE>
relating to such sale) of $50,000,000, or (ii) a secondary offering of
Borrower's common stock with a minimum aggregate sales price (before
underwriting commissions and discounts and other expenses relating to such sale)
of $50,000,000, (b) the Refinance Date, or (c) April 22, 1998.
5. Payment of Fees. Contemporaneous with and as a condition of the
execution of this Agreement, the Borrower shall pay the Bank a fee in the amount
of $25,000.00 as additional consideration for increasing the amount of the Loan.
The Borrower shall also pay the legal fees of Bank counsel in connection with
the preparation of this Amendment and matters related thereto.
6. Reaffirmation. To the extent any term(s) or condition(s) in any of the
Documents shall contradict or be in conflict with the amended terms of the Loan
as set forth herein, such terms and conditions are hereby deemed modified and
amended accordingly, upon the effective date hereof, to reflect the terms of the
Loan as so amended herein. All terms of the Documents, as amended hereby, shall
be and remain in full force and effect and shall constitute the legal, valid,
binding and enforceable obligations of the Borrower to the Bank. As of the date
of this Amendment, the Borrower herein restates, ratifies and reaffirms each and
every term and condition set forth in the Documents as amended herein. There are
no other changes to the Documents except for the changes specifically set forth
herein.
7. Certification. To further induce the Bank to enter into this Amendment,
the Borrower represents and warrants to the Bank as follows: (a) the Borrower is
empowered to perform all acts and things undertaken and done pursuant to this
Amendment and the Amended and Restated Note and has taken all corporate or other
action necessary to authorize the execution, delivery and performance of this
Amendment and Amended and Restated Note; (b) the officers of Borrower executing
this Amendment and the Amended and Restated Note have been duly elected or
appointed and have been fully authorized to execute the same at the time
executed; (c) this Amendment and the Amended and Restated Note, when executed
and delivered, will be the legal, valid and binding obligation of the Borrower,
enforceable against it in accordance with its respective terms; and (d) the
Borrower is delivering to the Bank contemporaneously herewith, a certificate of
the Borrower's Secretary certifying as to the resolutions of the Borrower's
Board of Directors approving this Amendment and the Amended and Restated Note
and the incumbency and signatures of the officers of the Borrower signing this
Amendment and the Amended and Restated Note.
8. Absence Of Claim. To further induce the Bank to enter into this
Amendment, the Borrower hereby acknowledges and agrees that, as of the date
hereof, there exists no right of offset, defense, counterclaim or objection in
favor of the Borrower as against the Bank with respect to the Obligations to the
Bank.
9. Illinois Law To Govern. This Amendment and each transaction
contemplated hereunder shall be deemed to be made under and shall be construed
and interpreted in accordance with the laws of the State of Illinois.
-2-
<PAGE>
10. Binding Effect. The terms, provisions and conditions of this Agreement
shall be binding upon and inure to the benefit of each respective party and
their respective legal representatives, successors and assigns.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
BORROWER:
BROOKDALE LIVING COMMUNITIES, INC.
By: /s/ Mark J. Schulte
--------------------------------
Print Name: Mark J. Schulte
------------------------
Title: President
----------------------------
ATTEST:
By: /s/ Robert J. Rudnik
---------------------------
Print Name: Robert J. Rudnik
-------------------
Title: Secretary
------------------------
BANK:
LaSALLE NATIONAL BANK
By: /s/ Ann B. O'Shaughnessy
--------------------------------
Print Name: Ann B. O'Shaughnessy
------------------------
Title: Assistant Vice President
----------------------------
-3-
<PAGE>
EXHIBIT 10.57
===============================================================================
LEASE
Dated as of November 21, 1997
between
BROOKDALE LIVING COMMUNITIES OF CONNECTICUT, INC.
as the Lessee
and
THE GABLES BUSINESS TRUST
as the Lessor
===============================================================================
Acquisition of Managed Residential Care Facility in Farmington, Connecticut
===============================================================================
This Lease has been executed in several counterparts. To the extent, if any,
that this Lease constitutes chattel paper (as such term is defined in the
Uniform Commercial Code as in effect in any applicable jurisdiction), no lien on
this Lease may be created through the transfer or possession of any counterpart
other than the original counterpart containing the receipt therefor executed by
Nomura Asset Capital Corporation and its successors and assigns, as Lender.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C>
ARTICLE I
DEFINITIONS; INTERPRETATION
1.1. Definitions; Interpretation......................................... 1
ARTICLE II
PURCHASE AND LEASE
2.1. Acceptance and Lease of Property.................................... 1
2.2. Acceptance Procedure................................................ 1
2.3. Lease Term.......................................................... 2
2.4. Title............................................................... 2
ARTICLE III
FUNDING OF THE ADVANCE
3.1. Lessor Commitment................................................... 2
3.2. Procedures for Advance.............................................. 2
ARTICLE IV
CONDITIONS PRECEDENT
4.1. Documentation Date.................................................. 3
4.2. Acquisition Date.................................................... 3
4.3. Conditions Precedent to the Acquisition Date and the Advance........ 3
ARTICLE V
[INTENTIONALLY OMITTED]
ARTICLE VI
REPRESENTATIONS
6.1. Representations of the Lessor....................................... 6
6.2. Representations of Lessee........................................... 7
6.3. Representations of the Lessee with Respect to the Advance........... 10
ARTICLE VII
PAYMENT OF RENT
7.1. Rent................................................................ 10
7.2. Payment of Rent..................................................... 11
7.3. Supplemental Rent................................................... 11
7.4. Method of Payment................................................... 11
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ARTICLE VIII
QUIET ENJOYMENT:RIGHT TO INSPECT
<C> <S>
8.1. Quiet Enjoyment..........................................................12
8.2. Right to Inspect.........................................................12
ARTICLE IX
NET LEASE, ETC.
9.1. Net Lease................................................................12
9.2. No Termination or Abatement..............................................13
ARTICLE X
SUBLEASES
10.1. Subletting..............................................................13
ARTICLE XI
LESSEE ACKNOWLEDGEMENTS
11.1. Condition of the Property...............................................13
11.2. Risk or Loss............................................................14
ARTICLE XII
POSSESSION AND USE OF THE PROPERTY, ETC.
12.1. Utility Charges.........................................................14
12.2. Possession and Use of the Property......................................14
12.3. Compliance with Requirements of Law and Insurance Requirements..........14
12.4. Assignment by Lessee....................................................14
ARTICLE XIII
MAINTENANCE AND REPAIR; RETURN
13.1. Maintenance and Repair; Return..........................................15
ARTICLE XIV
MODIFICATIONS, ETC.
14.1. Modifications, Substitutions and Replacements...........................15
Article XV
WARRANT OF TITLE; EASEMENTS
15.1. Warrant of Title........................................................16
15.2. Grants and Releases of Easements; Lessor's Waivers......................16
-ii-
</TABLE>
<PAGE>
ARTICLE XVI
PERMITTED CONTESTS
16.1. Permitted Contests in Respect of Applicable Law ....................... 17
ARTICLE XVII
INSURANCE
17.1. Public Liability and Workers' Compensation Insurance .................. 18
17.2. Hazard and Other Insurance ............................................ 18
17.3. Insurance Coverage .................................................... 18
17.4. Insurance Proceeds .................................................... 19
17.5. Insurance Requirements in Loan Documents .............................. 19
ARTICLE XVIII
CASUALTY AND CONDEMNATION;
ENVIRONMENTAL MATTERS
18.1. Casualty and Condemnation ............................................. 20
18.2. Environmental Matters ................................................. 21
18.3. Notice of Environmental Matters ....................................... 21
18.4. Environmental Obligations of the Lessor Pursuant to the
Nomura Loan Agreement ................................................ 21
ARTICLE XIX
TERMINATION OF LEASE
19.1. Termination upon Certain Events ....................................... 21
19.2. Termination Procedures ................................................ 22
ARTICLE XX
EVENTS OF DEFAULT
20.1. Events of Default ..................................................... 22
20.2. Remedies .............................................................. 24
20.3. Waiver of Certain Rights .............................................. 27
ARTICLE XXI
LESSOR ASSIGNMENT
21.1. Assignment ............................................................ 27
ARTICLE XXII
PURCHASE PROVISIONS
22.1. Purchase Option ....................................................... 28
-iii-
<PAGE>
ARTICLES XXIII
RENEWAL PROCEDURES
23.1. Renewal .............................................................. 28
ARTICLE XXIV
REMARKETING OPTION
24.1. Option to Remarket ................................................... 29
24.2. Certain Obligations Continue ......................................... 32
ARTICLE XXV
PROCEDURES RELATING TO PURCHASE OR REMARKETING
25.1. Provisions Relating to the Exercise of Purchase Option and
Conveyance Upon Remarketing and Conveyance Upon Certain
Other Events. ........................................................ 32
ARTICLE XXVI
INDEMNIFICATION
26.1. General Indemnification .............................................. 33
26.2. End of Term Indemnity ................................................ 34
26.3. Environment Indemnity ................................................ 35
26.4. Proceedings in Respect of Claims ..................................... 36
26.5. General Tax Indemnity ................................................ 37
26.6. Funding Losses ....................................................... 42
26.7. Regulation D Compensation ............................................ 42
26.8. Deposits Unavailable ................................................. 42
26.9. Illegality ........................................................... 43
26.10. Increased Cost and Reduced Return .................................... 43
ARTICLE XXVII
ESTOPPEL CERTIFICATES
27.1. Estoppel Certificates ................................................ 44
ARTICLE XXVIII
ACCEPTANCE OF SURRENDER
28.1. Acceptance of Surrender .............................................. 45
ARTICLE XXIX
NO MERGER OF TITLE
29.1. No Merger of Title ................................................... 45
-iv-
<PAGE>
ARTICLE XXX
INTENT OF THE PARTIES
30.1. Ownership of the Property ............................................ 45
ARTICLE XXXI
PAYMENT OF CERTAIN EXPENSES
31.1. Transaction Expenses ................................................. 46
31.2. Broker's Fees and Stamp Taxes ........................................ 46
ARTICLE XXXII
OTHER COVENANTS AND AGREEMENTS OF LESSEE
32.1. Covenants ............................................................ 47
ARTICLE XXXIII
MISCELLANEOUS
33.1. Survival; Severability; Etc. ......................................... 49
33.2. Amendments and Modifications ......................................... 49
33.3. No Waiver ............................................................ 49
33.4. Notices .............................................................. 49
33.5. Successors and Assigns ............................................... 49
33.6. Headings and Table of Contents ....................................... 49
33.7. Counterparts ......................................................... 49
33.8. GOVERNING LAW ........................................................ 49
33.9. Original Lease ....................................................... 50
33.10. Waiver of Jury Trial ................................................. 50
33.11. Compliance with Loan Documents ....................................... 50
33.12. Payment of Equity Balance, Transfer of Beneficial Interest
in Lessor ........................................................... 50
33.13. Concerning the Lessor ................................................ 50
-v-
<PAGE>
Schedules
SCHEDULE I Notice Information
SCHEDULE II FBTC Basic Rent
Exhibits
EXHIBIT A Funding Request
EXHIBIT B Lease Supplement
EXHIBIT C Responsible Employee's Certificate
-vi-
<PAGE>
LEASE
THIS LEASE (together with the Lease Supplement (as defined in Appendix 1
----------
hereto), this "Lease"), dated as of November 21, 1997, between THE GABLES
-----
BUSINESS TRUST, a Delaware business trust, having its principal office at
Wilmington Trust Company, Rodney Square North, 1100 North Market Street,
Wilmington, Delaware 19890-0001, and BROOKDALE LIVING COMMUNITIES OF
CONNECTICUT, INC., a Delaware corporation, having its principal office at c/o
Brookdale Living Communities, Inc., 77 West Wacker Drive, Chicago, Illinois
60601.
WITNESSETH:
----------
WHEREAS, the Lessor desires to lease to the Lessee, and the Lessee desires
to lease from the Lessor, the Property; and
NOW, THEREFORE, in consideration of the foregoing, and of other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS; INTERPRETATION
1.1 Definitions; Interpretation. Capitalized terms used but not otherwise
---------------------------
defined in this Lease have the respective meanings specified in Appendix 1 to
----------
this Lease; and the rules of interpretation set forth in Appendix 1 to this
----------
Lease shall apply to this Lease; provided, however, that capitalized terms used
-------- -------
but not otherwise defined in this Lease and Appendix 1 to this Lease shall have
----------
the respective meanings specified in the Nomura Loan Agreement.
ARTICLE II
PURCHASE AND LEASE
2.1 Acceptance and Lease of Property. Subject to the terms and conditions
--------------------------------
of this Lease, on the Acquisition Date (i) the Seller shall convey to the
Lessor, and the Lessor shall accept delivery of, the Property pursuant to the
terms hereof (and subject to the conditions set forth herein) and (ii) the
Lessor shall demise and lease to the Lessee hereunder for the Term the Lessor's
interest in the Property, subject to the Loan Documents and the Lessee hereby
agrees, expressly for the direct benefit of the Lessor, to lease from the Lessor
for the Term, the Lessor's interest in the Property.
2.2 Acceptance Procedure. The Lessee hereby agrees that the execution and
--------------------
delivery by the Lessee on the Acquisition Date of an appropriately completed
Lease Supplement in the form of Exhibit B hereto covering the Property thereon
---------
shall, without further act, constitute the irrevocable acceptance by the Lessee
of the Property for all purposes of this Lease and the other Operative Documents
on the terms set forth therein and herein, and that the Property, shall be
deemed to be included in the leasehold estate of this Lease and shall be subject
to the terms and conditions of this Lease as of the Acquisition Date.
<PAGE>
2.3 Lease Term. The term of this Lease (the "Term") shall consist of an
---------- ----
Interim Lease Term (the "Interim Lease Term") and a Base Lease Term (a "Base
------------------ ----
Lease Term"). The Interim Lease Term of this Lease shall commence on (and
- ----------
include) the Acquisition Date and end on February 11, 1999. Upon no less than
sixty (60) days' prior written notice to the Lessor and the payment of an
extension fee in the amount of one percent (1%) of the Principal Indebtedness,
if the payment of same by Lessor is required under the Nomura Loan Agreement,
the Lessee may extend the Interim Lease Term for a period not to exceed twelve
(12) months, but in all events to the eleventh day of a calendar month. The
Base Lease Term shall commence on (and include) the last day of the Interim
Lease Term (and any extensions thereto) and end on (but exclude) the Expiration
Date, as such Expiration Date may be extended from time to time in accordance
with Article XXIII.
-------------
2.4 Title. The Property is leased to the Lessee without any
-----
representation or warranty, express or implied, by the Lessor and subject to the
rights of parties in possession, the existing state of title (including, without
limitation, Permitted Liens other than Lessor Liens) and all applicable
Requirements of Law. The Lessee shall in no event have any recourse against the
Lessor for any defect in or exception to title to the Property other than to the
extent resulting from Lessor Liens.
ARTICLE III
FUNDING OF THE ADVANCE
3.1 Lessor Commitment. Subject to the conditions and terms hereof, the
-----------------
Lessor shall, upon the written request of the Lessee, make the Advance on the
Acquisition Date up to the amount of the Commitment for the purpose of financing
the acquisition of the Property.
3.2 Procedures for Advance.
----------------------
(a) The Lessee shall give the Lessor prior written notice not
later than 9:00 a.m., New York City time, five (5) Business Days prior to the
Acquisition Date, pursuant to a Funding Request substantially in the form of
Exhibit A (the "Funding Request"), specifying the proposed Acquisition Date and
- --------- ---------------
the amount of Advance requested. Except as the parties may otherwise agree in
writing, the Advance shall be made solely to provide the Lessee with funds with
which to pay or reimburse itself for amounts paid or payable to third parties as
Property Cost and Transaction Expenses paid or payable by the Lessee in
connection with the preparation, execution and delivery of the Operative
Documents, and all fees paid or payable by the Lessee to the Lessor in
connection with the Operative Documents and any amounts paid or payable by
Lessee pursuant to Section 31.2 hereof.
------------
(b) The Advance shall be made on the Acquisition Date in
immediately available federal funds by wire transfer to the account designated
by the Lessee, except that a portion of the Advance shall be made (in accordance
with instructions to be included in the Funding Request) by wire transfer
directly to an account designated by Lessee to pay the Seller and/or to
reimburse the Lessee for Transaction Expenses.
-2-
<PAGE>
ARTICLE IV
CONDITIONS PRECEDENT
4.1. Documentation Date. The Documentation Date (the "Documentation Date")
------------------ ------------------
shall occur on the earliest date on which the following conditions precedent
shall have been satisfied:
(a) Lease. This Lease shall have been duly authorized, executed
-----
and delivered by the parties thereto.
(b) FBTC Loan Agreement. The FBTC Loan Agreement shall have been
-------------------
duly authorized, executed and delivered by the parties thereto.
(c) Lessee's Resolutions and Incumbency Certificate. The Lessee
-----------------------------------------------
shall have delivered to the Lessor a certificate of its Secretary or an
Assistant Secretary attaching and certifying as to the incumbency and signature
of persons authorized to execute and deliver on its behalf the Operative
Documents to which it is a party.
(d) Opinion of Counsel to the Lessee. On or prior to the
--------------------------------
Documentation Date, the Lessor shall have received an opinion of internal
counsel for the Lessee in form and substance satisfactory to the Lessor.
(e) Certain Transaction Expenses. Counsel for the Lessor shall
----------------------------
have received, to the extent then invoiced, payment in full in cash of all
Transaction Expenses payable to such counsel pursuant to Section 31.1(a).
---------------
(f) FBTC Indemnity. The FBTC Indemnity shall have been duly
--------------
authorized, executed and delivered by the Parent.
(g) Opinion of Counsel to Lessor. On or prior to the Documentation
----------------------------
Date, the Lessee shall have received an opinion of counsel to the Lessor in form
and substance reasonably satisfactory to the Lessee.
4.2. Acquisition Date. The closing date with respect to the acquisition of
----------------
Land (and the improvements, if any, existing thereon) (the "Acquisition Date")
----------------
shall occur on the earliest date after the Documentation Date, on which all the
conditions precedent thereto set forth in Section 4.3 with respect to such
-----------
acquisition of the Property shall have been satisfied or waived by the
applicable parties as set forth therein. The Acquisition Date for the Property
shall be the date the Advance is made.
4.3. Conditions Precedent to the Acquisition Date and the Advance. The
------------------------------------------------------------
occurrence of the Acquisition Date and the obligation of the Lessor to make the
Advance are subject to the satisfaction or waiver of the following conditions
precedent:
(a) Operative Documents; No Default. Each of the Operative
-------------------------------
Documents shall have been duly authorized, executed and delivered by the parties
thereto, in form and substance satisfactory to the parties hereto, and shall be
in full force and effect. No Default or Event of Default shall exist under any
of the Operative Documents (either before or after giving effect to the
transactions contemplated by the Operative Documents), and the Lessor shall have
received a fully executed copy of each of such Operative Documents (other than
this Lease, of which the Lessor shall receive the original). The Operative
Documents (or memoranda thereof), any
-3-
<PAGE>
supplements thereto and any financing statements in connection therewith
required under the Uniform Commercial Code shall have been recorded, registered
and filed, if necessary, in such manner as to enable counsel to render the
opinions referred to in clause (c) below and to enable the title company to
----------
issue the title insurance policies referred to in clause (j) below.
----------
(b) Taxes. All taxes, fees and other charges in connection with the
-----
execution, delivery, recording, filing and registration of the Operative
Documents shall have been paid or provisions for such payment shall have been
made to the satisfaction of the Lessor.
(c) Opinions of Counsel. Counsel to the Lessee (i) in the
-------------------
jurisdiction in which the Property is located shall have issued to the Lessor
their opinions, all in form and substance satisfactory to the Lessor and (ii)
shall have issued to the Lessor their opinions to the effect that upon delivery
to the Custodian of the Pledged Securities pursuant to the Securities Pledge
Agreement, a valid first priority security interest in the Pledged Securities
shall have been created and granted to the Custodian in the Pledged Securities.
(d) Governmental Approvals. All necessary (or, in the reasonable
----------------------
opinion of the Lessor, advisable) Governmental Actions, in each case required by
any Requirement of Law, shall have been obtained or made and be in full force
and effect.
(e) Litigation. No action or proceeding shall have been instituted,
----------
nor shall any action or proceeding be threatened, before any Governmental
Authority, nor shall any order, judgment or decree have been issued or proposed
to be issued by any Governmental Authority (i) to set aside, restrain, enjoin or
prevent the full performance of this Lease, any other Operative Document or any
transaction contemplated hereby or thereby or (ii) which is reasonably likely to
materially and adversely affect the Lessee.
(f) Requirements of Law. The transactions contemplated by the
-------------------
Operative Documents do not and will not violate any Material Requirement of Law
and do not and will not subject the Lessor to any Material adverse regulatory
prohibitions or constraints.
(g) Responsible Employee's Certificates. The Lessor shall have
-----------------------------------
received a Responsible Employee's Certificate of the Lessee, in substantially
the form of Exhibit C, dated as of the Acquisition Date, stating that for the
---------
Lessee (i) each and every representation and warranty of the Lessee contained in
each Operative Document to which it is a party is true and correct in all
material respects on and as of the Acquisition Date; (ii) no Default or Event of
Default has occurred and is continuing under any Operative Document with respect
to the Lessee; (iii) each Operative Document to which the Lessee is a party is
in full force and effect with respect to it; and (iv) the Lessee has duly
performed and complied in all material respects with all covenants, agreements
and conditions contained herein or in any Operative Document required to be
performed or complied with by it on or prior to the Acquisition Date.
(h) Environmental Audit. The Lessor shall have received an
-------------------
Environmental Audit for the Property in form and substance acceptable to the
Lessor, provided, Lessor shall not deem an Environmental Audit unacceptable
solely because a Phase Two environmental site assessment is called for.
(i) Appraisal. The Lessor shall have received an Appraisal of the
---------
Property.
-4-
<PAGE>
(j) Survey and Title Insurance. The Lessee shall have delivered to
--------------------------
the Lessor an ALTA/1992 (Urban) Survey of the Property (other than the Equipment
located therein) prepared by a licensed surveyor and meeting the Minimum
Standard Detail Requirements for ALTA/ACSM Land Title Surveys as adopted by the
American Land Title Association/American Society and American Congress on
Surveying and Mapping in 1992 certified to the Lessor and the title company and
otherwise in form reasonably acceptable to the Lessor and an ALTA owner's
insurance policy covering the Property (other than any Equipment) in favor of
the Lessor, and, at an option of Lessee, a leasehold policy in favor of the
Lessee evidencing the Lessee's equitable ownership in the Property, each such
policy to be dated as of the Acquisition Date and in an amount not less than the
Property Cost and to be reasonably satisfactory to the Lessor with
comprehensive, zoning and mechanics liens' endorsements and such other
endorsements reasonably requested by the Lessor.
(k) Recordation. The Lessor shall have received evidence
-----------
reasonably satisfactory to it that each of the Deed and the Lease Supplement
shall have been delivered to the title company in escrow for recordation with
the appropriate Governmental Authorities (and the issuance of the title
insurance policies in clause (j) above shall be satisfactory evidence of the
----------
foregoing).
(l) Evidence of Property Insurance. The Lessor shall have received
------------------------------
evidence of insurance with respect to the Property required to be maintained
pursuant to this Lease, setting forth the respective coverages, limits of
liability, carrier, policy number and period of coverage, and otherwise
satisfying the requirements set forth in Article XVII.
------------
(m) Lease Supplement. On or prior to the Acquisition Date, the
----------------
Lessee shall have delivered to the Lessor the Lease Supplement executed by the
Lessee.
(n) Nomura Loan Agreement Conditions Precedent. The conditions
------------------------------------------
precedent set forth in Section 3.1 of the Nomura Loan Agreement shall have been
satisfied or waived; provided, however, that the conditions precedent set forth
-------- -------
in Sections 3.1 (a)(A), (ix), (xi), (D)-(J) (but with respect to Section
-------------------- ----- ----- ------------------------------------
3.1(a)(J) only to the extent same is made by the Lessee). (K), (M)-(T) and
- -------------------------------------------------------------- -------
(V)-(W) of the Nomura Loan Agreement shall have been satisfied by the Lessee
- -------
or waived.
(o) Funding Request. The Lessor shall have received no later than
---------------
five (5) Business Days prior to the Acquisition Date a fully executed
counterpart of the applicable Funding Request, executed by the Lessee.
(p) Delivery of Pledged Securities and Certificate A. The Lessee
------------------------------------------------
shall have delivered the Pledged Securities and the Certificate A to the
Custodian and the Lessor, respectively, in accordance with the Securities Pledge
Agreement and Certificate Pledge Agreement, respectively.
All documents and instruments required to be delivered on the Acquisition
Date shall be delivered at the offices of Mayer, Brown & Platt, 1675 Broadway,
New York, New York 10019, or at such other location as may be determined by the
Lessor and the Lessee.
-5-
<PAGE>
ARTICLE V
[INTENTIONALLY OMITTED]
ARTICLE VI
REPRESENTATIONS
6.1. Representations of the Lessor. The Lessor represents and warrants to
-----------------------------
the Lessee that:
(a) ERISA. The Lessor is not and will not be funding the Advance
-----
hereunder, and is not performing its obligations under the Operative Documents,
with the assets of an "employee benefit plan" (as defined in Section 3(3) of
------------
ERISA) which is subject to Title I of ERISA, or "plan" (as defined in Section
-------
4975(e)(l) of the Code).
- ----------
(b) Status. The Lessor is a duly organized and validly existing
------
Delaware business trust and has all requisite power and authority to own its
property and to conduct the business in which it is currently engaged.
(c) Corporate Power and Authority. The Lessor has the requisite
-----------------------------
power and authority to execute, deliver and carry out the terms and provisions
of the Operative Documents to which it is or will be a party and has taken all
necessary action to authorize the execution, delivery and performance of the
Operative Documents to which it is a party and has duly executed and delivered
each Operative Document required to be executed and delivered by it and,
assuming the due authorization, execution and delivery thereof on the part of
each other party thereto, each such Operative Document constitutes a legal,
valid and binding obligation enforceable against it in accordance with its terms
except as the same may be limited by insolvency, bankruptcy, reorganization or
other laws relating to or affecting the enforcement of creditors' rights
generally and by equitable principles whether enforcement is sought by
proceedings in equity or at law and except as the same may be limited by certain
circumstances under law or court decisions in respect of provisions providing
for indemnification of a party with respect to liability where such
indemnification is contrary to public policy.
(d) No Legal Bar. Neither the execution, delivery and performance
------------
by the Lessor of the Operative Documents to which it is or will be a party nor
compliance with the terms and provisions thereof, nor the consummation by the
Lessor of the transactions contemplated therein (i) will result in a violation
by the Lessor of any provision of any Applicable Law that would Materially
adversely affect (x) the validity or enforceability of the Operative Documents
to which the Lessor is a party, or the title to, or value or condition of, the
Property, or (y) the financial position, business or results of operations of
the Lessor or the ability of the Lessor to perform its obligations under the
Operative Documents (ii) will conflict with or result in any breach which would
constitute a default under, or (other than pursuant to the Operative Documents)
result in the creation or imposition of (or the obligation to create or impose)
any Lien upon any of the property or assets of the Lessor pursuant to the terms
of any indenture, loan agreement or other agreement for borrowed money to which
the Lessor is a party or by which it or any of its property or assets is bound
or to which it may be subject (other than Permitted Liens), or (iii) will
violate any provision of the Trust Agreement.
(e) Litigation. There are no actions, suits or proceedings pending
----------
or, to the knowledge of the Lessor, threatened (i) against the Property, (ii)
that are reasonably likely to have a Materially
-6-
<PAGE>
adverse effect on the ability of the Lessor to perform its obligations under the
Operative Documents or (iii) that question the validity of the Operative
Documents or the rights or remedies of the Lessor with respect to the Lessor or
the Property under the Operative Documents.
(f) Governmental Approvals. No Governmental Action by any Governmental
----------------------
Authority having jurisdiction over the Lessor which has not been taken on or
prior to the Acquisition Date is required to authorize or is required in
connection with (i) the execution, delivery and performance by the Lessor of any
Operative Document to which it is a party, or (ii) the legality, validity,
binding effect or enforceability against the Lessor of any Operative Document to
which it is a party.
(g) Investment Company Act. The Lessor is not an "investment company" or
----------------------
a company "controlled" by an "investment company," within the meaning of the
Investment Company Act.
(h) Public Utility Holding Company Act. The Lessor is not a "holding
----------------------------------
company" or a "subsidiary company," or an "affiliate" of a "holding company" or
of a "subsidiary company" of a "holding company," within the meaning of the
Public Utility Company Act of 1935, as amended.
6.2 Representations of Lessee. The Lessee represents and warrants to the Lessor
-------------------------
that:
(a) Corporate Status. The Lessee (i) is a duly organized and validly
----------------
existing corporation in good standing under the laws of the State of Delaware
and (ii) had the corporate power and authority to own its properties and to
conduct the business in which it is currently engaged.
(b) Corporate Power and Authority. The Lessee has the corporate power and
-----------------------------
authority to execute, deliver and carry out the terms and provisions of the
Operative Documents to which it is or will be a party and has taken all
necessary corporate action to authorize the execution, delivery and performance
of the Operative Documents to which it is a party and has duly executed and
delivered each Operative Document required to be executed and delivered by it
and, assuming the due authorization, execution and delivery thereof on the part
of each other party thereto, each such Operative Document constitutes a legal,
valid and binding obligation enforceable against it in accordance with its
terms, except as the same may be limited by insolvency, bankruptcy,
reorganization or other laws relating to or affecting the enforcement of
creditors' rights generally and by equitable principles whether enforcement is
sought by proceedings in equity or at law and except as the same may be limited
by certain circumstances under law or court decisions in respect of provisions
providing for indemnification of a party with respect to liability where such
indemnification is contrary to public policy.
(c) No Legal Bar. Neither the execution, delivery and performance by the
------------
Lessee of the Operative Documents to which it is or will be a party nor
compliance with the terms and provisions thereof, nor the consummation by the
Lessee of the transactions contemplated therein (i) will result in a violation
by the Lessee of any provision of any Applicable Law that would Materially
adversely affect (x) the validity or enforceability of the Operative Documents
to which the Lessee is a party, or the title to, or value or condition of, the
Property, or (y) the consolidated financial position, business or consolidated
results of operations of the Lessee or the ability of the Lessee to perform its
obligations under the Operative Documents, (ii) will conflict with or result in
any breach which would constitute a default under, or (other than pursuant to
the Operative Documents) result in the creation or imposition of (or the
obligation to create or impose) any Lien
-7-
<PAGE>
upon any of the property or assets of the Lessee pursuant to the terms of any
indenture, loan agreement or other agreement for borrowed money to which the
Lessee is a party or by which it or any of its property or assets is bound or to
which it may be subject (other than Permitted Liens), or (iii) will violate any
provision of the certificate of incorporation or by-laws of the Lessee.
(d) Litigation. There are no actions, suits or proceedings pending or,
----------
to the knowledge of the Lessee, threatened (i) against the Property, (ii) that
are reasonably likely to have a Materially adverse effect on the ability of the
Lessee to perform its obligations under the Operative Documents or (iii) that
question the validity of the Operative Documents or the rights or remedies of
the Lessor with respect to the Lessee or the Property under the Operative
Documents.
(e) Governmental Approvals. No Governmental Action by any
----------------------
Governmental Authority having jurisdiction over the Lessee or the Property which
has not been taken on or prior to the Acquisition Date is required to authorize
or is required in connection with (i) the execution, delivery and performance by
the Lessee of any Operative Document to which it is a party, or (ii) the
legality, validity, binding effect or enforceability against the Lessee of any
Operative Document to which it is a party.
(f) Investment Company Act. The Lessee is not an "investment company"
----------------------
or a company "controlled" by an "investment company," within the meaning of the
Investment Company Act.
(g) Public Utility Holding Company Act. The Lessee is not a "holding
----------------------------------
company" or a "subsidiary company", or an "affiliate" of a "holding company" or
of a "subsidiary company" of a "holding company", within the meaning of the
Public Utility Company Act of 1935, as amended.
(h) Offer of Securities, etc. Neither the Lessee nor any Person
------------------------
authorized to act on the Lessee's behalf has, directly or indirectly, offered
any interest in the Property or any other interest similar thereto (the sale or
offer of which would be integrated with the sale or offer of such interest in
the Property), for sale to, or solicited any offer to acquire any of the same
from, any Person other than the Lessor and other "accredited investors" (as
defined in Regulation D of the Securities and Exchange Commission).
(i) Solvency. The Lessee's representations and warranties set forth
--------
in Section 4.1 (c)(I) are true and correct.
---
(j) Use of Property. The Property and the contemplated use thereof
---------------
by the Lessee and its agents, assignees, employees, lessees, licensees and
tenants will comply with all Material Requirements of Law (including, without
limitation, all zoning and land use laws and Environmental Laws) and Material
Insurance Requirements, except for such Requirements of Law as the Lessee shall
be contesting in good faith by appropriate proceedings. There is no action,
suit or proceeding (including any proceeding in condemnation or eminent domain
or under any Environmental Law) pending or, to the best of the Lessee's
knowledge, threatened with respect to the Lessee, its Affiliates or the Property
which adversely Materially affects the title to, or the use, operation or value
of, the Property.
-8-
<PAGE>
(k) Condition of Property. The Property has all utilities required
---------------------
to adequately service it for its intended use pursuant to adequate permits
(including any that may be required under applicable Environmental Laws). No
fire or other casualty with respect to the Property has occurred which fire or
other casualty has had a Material adverse effect on the Property. The Property
has available all Material services of public facilities and other utilities
necessary for use and operation of the Property as a managed residential
community with assisted living services, including required public utilities and
means of access between the Property and public highways for pedestrians and
motor vehicles. All utilities proposed to serve the Property are located in, and
vehicular access to the Property is provided by, either public rights-of-way
abutting the Property of Appurtenant Rights.
(l) Title. The Deed will be in form and substance sufficient to
-----
convey good and marketable title to the Property in fee simple, subject only to
Permitted Liens. The Lessor will at all time during the Term have good title to
all Equipment located on the Property and in any Improvements, subject only to
Permitted Liens and Lessor Liens, if any.
(m) Insurance. The Lessee has obtained insurance coverage covering the
---------
Property or self insures in a manner which satisfies the terms of this Lease,
and any such coverage is in full force and effect. The Lessee carries insurance
with reputable insurers in respect of its Material Assets, in such manner, in
such amounts and against such risks as is customarily maintained by other
Persons of similar size engaged in similar business.
(n) Flood Hazard Areas. Except as otherwise identified on the survey
------------------
delivered pursuant to Section 4.3(i), no portion of the Property is located in
--------------
an area identified as a special flood hazard area by the Federal Emergency
Management Agency or other applicable agency. With respect to any portion of
the Property located in an area identified as a special flood hazard area by the
Federal Emergency Management Agency or other applicable agency, the Lessee is
self-insured with respect to all risks related thereto to the same extent as the
Lessee self-insures its other assets similarly situated, and otherwise, in
accordance with Section 17.2 and in accordance with the National Flood Insurance
------------
Act of 1968, as amended, or has provided adequate flood hazard insurance as
required under the Nomura Loan Agreement.
(o) Defaults. No Event of Default or similar event which with the
--------
lapse of time or notice or both would constitute an "Event of Default" or
similar event has occurred and is continuing hereunder or under any Material
bond, debenture, note or other evidence of indebtedness or Material mortgage,
deed of trust, indenture or loan agreement or other instrument to which the
Lessee is a party or is subject to or bound.
(p) Use of Advance. No part of the Advance will be used directly or
---------------
indirectly for the purpose of purchasing or carrying, or for payment in full or
in part of Debt that was incurred for the purposes of purchasing or carrying,
any margin security as such term is defined in Section 207.2 of Regulation G of
-------------
the Board of Governors of the Federal Reserve System (12 C.F.R., Chapter II,
Part 207).
6.3. Representations of the Lessee with Respect to the Advance. The
---------------------------------------------------------
Lessee represents and warrants to the Lessor as of the Acquisition Date as
follows:
(a) Representations. The representations and warranties of the Lessee
---------------
set forth in the Operative Documents (including the representations and
warranties set forth in Section 6.2) are
-----------
-9-
<PAGE>
true and correct in all material respects on and as of the Acquisition Date,
except to the extent such representations or warranties relate solely to an
earlier date, in which case such representations and warranties shall have been
true and correct in all material respects on and as of such earlier date. The
Lessee is in compliance in all material respects with its respective obligations
under the Operative Documents and there exists no Default or Event of Default
under this Lease or any other Operative Documents to which the Lessee is a
party. No Default or Event of Default under this Lease or any other Operative
Document to which the Lessee is a party will occur as a result of, or by giving
effect to, the Advance requested by the Funding Request on such date.
(b) Liens. The Lessee had not permitted Liens to be placed against
-----
the Property other than Permitted Liens.
(c) Advance. The Advance requested represents amounts owed by, or
-------
previously paid by, the Lessee to third parties in respect of Property Cost. The
conditions precedent to the Advance set forth in Article IV have been satisfied.
----------
ARTICLE VII
PAYMENT OF RENT
7.1. Rent
----
(a) The Lessee shall pay FBTC Basic Rent and Lessor Basic Rent on the
Acquisition Date. Thereafter the Lessee shall pay Basic Rent (to the extent such
Basic Rent (or any component thereof) is then due and owing) on (x) each Payment
Date during the Term, (y) the date required under Section 24.1(i) in connection
---------------
with the Lessee's exercise of the Remarketing Option, and (z) any date on which
this Lease shall terminate. The Lessee and Lessor hereby agree that amounts
which would otherwise be payable by Lessee to Lessor hereunder as Lessor Basic
Rent are payable as interest on the Pledged Securities pursuant to the terms of
the Securities Pledge Agreement and such amounts shall not constitute Rent
hereunder.
(b) Rent shall be due and payable in lawful money of the United
States and, after the occurrence and during the continuance of a Cash Management
Event, shall be paid by wire transfer of immediately available funds on the due
date therefor from the relevant Sub-Accounts of the Cash Collateral Account, to
the extent funds exist therein. With the exception of the first payment on the
Acquisition Date of FBTC Basic Rent and Lessor Basic Rent, for which at least
two (2) Business Days prior written notice from the Lessor shall be provided,
the Lessor shall provide written notice of the amount of Basic Rent due at least
five (5) Business Days prior to each due date therefor; provided, however, that
-------- -------
the failure of the Lessor to provide such notice shall not affect Lessee's
obligations hereunder or impose liability on Lessor. Lessee shall deposit all
security deposits received by it with respect to the Property into the Security
Deposit Account and shall cause all relevant checks to be made payable to the
name on the Security Deposit Account.
(c) So long as Cash Management Event is not continuing, Rent shall
be payable by wire transfer of immediately available funds on the due date
therefor as follows: (i) Lessor Basic Rent and FBTC Basic Rent and Supplemental
Rent to which the Lessor is entitled shall be payable to the Lessor at the place
of payment designated in writing by the Lessor and (ii) the
-10-
<PAGE>
remainder of Basic Rent and Supplemental Rent to which the Lender is
entitled shall be payable to the Lender or Lender's designee or to an
account identified by the Lender of Lender's designee as set forth in
Section 2.12 (b) of the Nomura Loan Agreement.
----------------
(d) Neither the Lessee's inability or failure to take
possession of all or any portion of the Property when delivered by the
Lessor, whether or not attributable to any act or omission of the
Lessee, or for any other reason whatsoever, shall delay or otherwise
affect the Lessee's obligation to pay Rent for the Property in
accordance with the terms of this Lease.
7.2. Payment of Rent. Rent shall be paid absolutely net to the Lessor,
---------------
so that this Lease shall yield to the Lessor the full amount thereof, without
setoff, deduction or reduction.
7.3. Supplemental Rent. The Lessee shall pay promptly as Supplemental
-----------------
Rent shall become due and payable (a) after the occurrence and during the
continuance of a Cash Management Event, to the Collection Account and (b) so
long as that a Cash Management Event is not continuing, any and all Supplemental
Rent payable pursuant to the Nomura Loan Agreement, to the Lender, Lender's
designee or to such parties as set forth in the Nomura Loan Agreement, and all
other Supplemental Rent to the Lessor. If the Lessee fails to pay any
Supplemental Rent, the Lessor shall have all rights, powers and remedies
provided for herein or by law or equity or otherwise in the case of nonpayment
of Basic Rent. The Lessee shall pay as Supplemental Rent, among other things,
with ten (10) days following demand (or such shorter period that such payment is
required to be made under the Loan Documents) to the extent permitted by
applicable Requirements of Law, interest at the applicable Overdue Rate on any
installment of Basic Rent not paid when due for the period for which the same
shall be overdue and on any payment of Supplemental Rent not paid when due or
demanded by the Lessor for the period from the due date or the date of any such
demand, as the case may be, until the same shall be paid. The expiration or
other termination of the Lessee's obligations to pay Basic Rent hereunder shall
not limit or modify the obligations of the Lessee with respect to Supplemental
Rent. Unless expressly provided otherwise in this Lease, in the event of any
failure on the part of the Lessee to pay and discharge any Supplemental Rent as
and when due, the Lessee shall also promptly pay and discharge any fine,
penalty, interest or cost which may be assessed or added under any agreement
with a third party for nonpayment or late payment of such Supplemental Rent, all
of which shall also constitute Supplemental Rent.
7.4. Method of Payment. Except as otherwise set forth in the Nomura Loan
-----------------
Agreement, each payment of Rent or any other amount due hereunder shall be made
by the Lessee to the applicable party prior to 12:00 noon., New York City time
at the place of payment designated in writing by the Lessor or such applicable
party in funds consisting of lawful currency of the United States of America
which shall be in federal or other immediately available funds to an account
specified by Lender ( with respect to payments to Lender ) and, with respect to
all other payees, to such accounts as specified by such payees. If any payment
is due on a date which is not a Business Day, such payment shall be made on the
next succeeding Business Day. Payments received after 12:00 noon, New York City
time on the date due shall for all purposes hereof be deemed to have been paid
on the next succeeding Business Day.
ARTICLE VIII
QUIET ENJOYMENT; RIGHT TO INSPECT
8.1. Quiet Enjoyment. Subject to Sections 2.4 and 8.2, and subject to
--------------- ------------ ----
the rights of the Lessor contained herein and the other terms of the Operative
Documents to which the Lessee is a party, the Lessee shall peaceably and quietly
have, hold and enjoy the Property for the Term free of any claim or
-11-
<PAGE>
other action by the Lessor or anyone claiming by, through or under the Lessor
(other than the Lessee) with respect to any matters arising from and after the
Acquisition Date. Such right of quiet enjoyment is independent of, and shall not
affect the Lessor's rights otherwise to initiate legal action to enforce, the
obligations of the Lessee under this Lease.
8.2. Right to Inspect. During the Term, the Lessee shall, upon
----------------
reasonable prior written notice from the Lessor (except that no notice shall be
required if an Event of Default under this Lease has occurred and is
continuing), and subject to the rights of permitted sublessees permit the Lessor
and its authorized representatives to inspect the Property during normal
business hours, provided that such inspections shall not unreasonably interfere
with the Lessee's business operations at the Property.
ARTICLE IX
NET LEASE, ETC.
9.1. Net Lease. This Lease shall constitute a net lease. Any present or
---------
future law to the contrary notwithstanding, this Lease shall not terminate, nor
shall the Lessee be entitled to any abatement, suspension, deferment, reduction,
setoff, counterclaim, or defense with respect to the Rent, nor shall the
obligations of the Lessee hereunder be affected (except as expressly herein
permitted and by performance of the obligations in connection therewith) by
reason of: (i) any defect in the condition, merchantability, design,
construction, quality or fitness for use of the Property or any part thereof, or
the failure of the Property to comply with all Requirements of Law, including
any inability to occupy or use the Property by reason of such non-compliance;
(ii) any damage to, removal, abandonment, salvage, loss, contamination of or
Release from, scrapping or destruction of or any requisition or taking of the
Property or any part thereof; (iii) any restriction, prevention or curtailment
of or interference with any use of the Property or any part thereof including
eviction; (iv) any defect in title to or rights to the Property or any Lien on
such title or rights or on the Property (other than Lessor Liens); (v) any
change, waiver, extension, indulgence or other action or omission or breach in
respect of any obligation or liability of or by the Lessor; (vi) any bankruptcy,
insolvency, reorganization, composition, adjustment, dissolution, liquidation or
other like proceedings relating to the Lessee or any other Person, or any action
taken with respect to this Lease by any trustee or receiver of the Lessee or
any other Person, or by any court, in any such proceeding; (vii) any claim that
the Lessee has or might have against any Person, including without limitation
the Lessor and any vendor, manufacturer, contractor of or for any portion of the
Property; (viii) any failure on the part of the Lessor to perform or comply with
any of the terms of this Lease (other than performance by Lessor of its
obligations set forth in Section 2.1 hereof), of any other Operative Document or
-----------
of any other agreement; (ix) any invalidity or unenforceability or illegality or
disaffirmance of this Lease against or by the Lessee or any provision hereof or
any of the other Operative Documents or any provision of any thereof; (x) the
impossibility or illegality of performance by the Lessee, the Lessor or both;
(xi) any action by any court, administrative agency or other Governmental
Authority; (xii) any restriction, prevention or curtailment of or interference
with the construction on or any use of the Property or any part thereof; or
(xiii) any other cause or circumstances, whether or not the Lessee shall have
notice or knowledge of any of the foregoing. The parties intend that the
obligations of the Lessee hereunder shall be covenants and agreements that are
separate and independent from any obligations of the Lessor hereunder or under
any other Operative Documents and the obligations of the Lessee shall continue
unaffected unless such obligations shall have been modified or terminated in
accordance with an express provision of this Lease. Nothing contained herein is
intended to obviate or otherwise diminish any right the Lessee may have to bring
an action, either at law or in equity, to remedy any breach by the Lessor of the
Lessor's obligations hereunder.
-12-
<PAGE>
9.2. No Termination or Abatement. The Lessee shall remain obligated under
---------------------------
this Lease in accordance with its terms and shall not take any action to
terminate, rescind or avoid this Lease, notwithstanding any action for
bankruptcy, insolvency, reorganization, liquidation, dissolution, or other
proceeding affecting the Lessor, or any action with respect to this Lease which
may be taken by any trustee, receiver or liquidator of the Lessor or by any
court with respect to the Lessor. The Lessee hereby waives all right (i) to
terminate or surrender this Lease (except as provided herein) or (ii) to avail
itself of any abatement, suspension, deferment, reduction, setoff, counterclaim
or defense with respect to any Rent. The Lessee shall remain obligated under
this Lease in accordance with its terms and the Lessee hereby waives any and all
rights now or hereafter conferred by statute or otherwise to modify or to avoid
strict compliance with its obligations under this Lease. Notwithstanding any
such statute or otherwise, the Lessee shall be bound by all of the terms and
conditions contained in this Lease. Notwithstanding anything contained in this
Article IX, this Lease may be terminated by Lessor pursuant to, inter alia,
- ---------- ----- ----
Sections 19.1 and 20.2 hereof.
- ------------- ----
ARTICLE X
SUBLEASES
10.1. Subletting. The Lessee may, without the consent of the Lessor,
----------
sublease the Property or any portion thereof to any Person. No sublease or other
relinquishment of possession of the Property shall in any way discharge or
diminish any of the Lessee's obligations to the Lessor hereunder, and the Lessee
shall remain directly and primarily liable under this Lease, even if assigned,
and as to the Property or portion thereof so sublet. Any sublease of the
property shall have a term of not longer than one year or if such sublease has a
term of more than one year, such term shall not extend beyond the Base Lease
Term or any Renewal Period. The Lessor hereby expressly agrees that any
obligations or covenants under this Lease may be performed by any permitted
sublessee directly, and the Lessor agrees that any such performance will be
accepted in satisfaction of the obligations or covenants in this Lease.
ARTICLE XI
LESSEE ACKNOWLEDGMENTS
11.1. Condition of the Property. THE LESSEE ACKNOWLEDGES AND AGREES THAT IT
-------------------------
IS LEASING THE PROPERTY "AS IS" WITHOUT REPRESENTATION, WARRANTY OR COVENANT
(EXPRESS OR IMPLIED) BY THE LESSOR AND SUBJECT TO (A) THE EXISTING STATE OF
TITLE, (B) THE RIGHTS OF ANY PARTIES IN POSSESSION THEREOF, (C) ANY STATE OF
FACTS WHICH AN ACCURATE SURVEY OR PHYSICAL INSPECTION MIGHT SHOW, AND (D)
VIOLATIONS OF REQUIREMENTS OF LAW WHICH MAY EXIST ON THE DATE HEREOF OR ON THE
ACQUISITION DATE. THE LESSOR HAS NOT MADE AND SHALL NOT BE DEEMED TO HAVE MADE
ANY REPRESENTATION, WARRANTY OR COVENANT (EXPRESS OR IMPLIED) AND SHALL NOT BE
DEEMED TO HAVE ANY LIABILITY WHATSOEVER AS TO THE TITLE (OTHER THAN FOR LESSOR
LIENS), VALUE, HABITABILITY, USE, CONDITION, DESIGN, OPERATION, OR FITNESS FOR
USE OF THE PROPERTY (OR ANY PART THEREOF), OR ANY OTHER REPRESENTATION, WARRANTY
OR COVENANT WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE PROPERTY (OR ANY
PART THEREOF) AND THE LESSOR SHALL NOT BE LIABLE FOR ANY LATENT, HIDDEN, OR
PATENT DEFECT THEREIN (OTHER THAN FOR LESSOR LIENS) OR THE FAILURE OF THE
PROPERTY, OR ANY PART THEREOF, TO COMPLY WITH ANY REQUIREMENT OF LAW.
-13-
<PAGE>
11.2. Risk of Loss. During the Term the risk of loss of or decrease in the
------------
enjoyment and beneficial use of the Property as a result of the damage or
destruction thereof by fire, the elements, casualties, thefts, riots, wars or
otherwise is assumed by the Lessee, and the Lessor shall in no event be
answerable or accountable therefor.
ARTICLE XII
POSSESSION AND USE OF THE PROPERTY, ETC.
12.1. Utility Charges. The Lessee shall pay or cause to be paid all
---------------
charges for electricity, power, gas, oil, water, telephone, sanitary sewer
service and all other rents and utilities used in or on the Property during the
Term. The Lessee shall be entitled to receive any credit or refund with respect
to any utility charge paid by the Lessee and the amount of any credit or refund
received by the Lessor on account of any utility charges paid by the Lessee, net
of the costs and expenses reasonably incurred by the Lessor in obtaining such
credit or refund, shall be promptly paid over to the Lessee.
12.2. Possession and Use of the Property. The Property shall be used as a
----------------------------------
managed residential community with assisted living services in a manner
consistent with the standards applicable to properties of a similar nature in
the geographic area in which the Property is located and in any event not less
than the standards applied by Affiliates of the Lessee for other comparable
properties of the Lessee or such Affiliates in such geographic area. The Lessee
shall pay, or cause to be paid, all charges and costs required in connection
with the use of the Property as contemplated by this Lease. The Lessee shall not
intentionally commit or permit any waste of the Property or any part thereof.
12.3. Compliance with Requirements of Law and Insurance Requirements.
--------------------------------------------------------------
Subject to the terms hereof relating to permitted contests, the Lessee, at its
sole cost and expense, shall (a) comply in all Material respects with all
Requirements of Law (including all Environmental Laws) and Insurance
Requirements relating to the Property, including the use, construction,
operation, maintenance, repair and restoration thereof and the remarketing
thereof pursuant to Article XXIV, whether or not compliance therewith shall
------------
require structural or extraordinary changes in the applicable Improvements or
interfere with the use and enjoyment of the Property, and (b) procure, maintain
and comply with all Material licenses, permits, orders, approvals, consents and
other authorizations required for the construction, use, maintenance and
operation of the Property and for the use, operation, maintenance, repair and
restoration of the applicable Improvements.
12.4. Assignment by Lessee. Subject to the terms of the Nomura Loan
--------------------
Agreement, the Lessee may, with the consent of the Lessor, assign its rights
hereunder, including the Purchase Option, to any other Person so long as the
Lessee remains fully liable for all of the obligations of the "Lessee" hereunder
and under the other Operative Documents.
ARTICLE XIII
MAINTENANCE AND REPAIR; RETURN
13.1. Maintenance and Repair; Return.
------------------------------
(a) The Lessee, at its sole cost and expense, shall maintain the
Property in good condition (ordinary wear and tear excepted) and make all
necessary repairs thereto, of every kind and nature whatsoever, whether
interior or exterior, ordinary or extraordinary, structural or
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nonstructural or foreseen or unforeseen, in each case as required by all
Requirements of Law and Insurance Requirements and on a basis consistent
with the operation and maintenance by the Lessee or its Affiliates of
properties of a similar nature owned or leased by the Lessee or any of its
Affiliates in the geographic area where the Property is located.
(b) The Lessor shall under no circumstances be required to build any
improvements on the Property, make any repairs, replacement, alterations or
renewals of any nature or description to the Property, make any expenditure
whatsoever in connection with this Lease or maintain the Property in any
way. The Lessor shall not be required to maintain, repair or rebuild all or
any part of the Property, and the Lessee waives any right to (i) require
the Lessor to maintain, repair, or rebuild all or any part of the Property,
or (ii) make repairs at the expense of the Lessor pursuant to any
Requirement of Law, Insurance Requirement, contract, agreement, or
covenant, condition or restriction in effect at any time during the Term.
(c) The Lessee shall, upon the expiration or earlier termination of
this Lease, vacate and surrender the Property to the Lessor in its then-
current, "AS IS" condition, subject to the Lessee's obligations under
Section 12.3, 13.1(a), 14.1, 15.1, 18.1(e), 18.2 and 24.1, unless the
------------ ------- ---- ---- ------- ---- ----
Lessee has purchased the Property from the Lessor as provided herein.
ARTICLE XIV
MODIFICATIONS, ETC.
14.1 Modifications, Substitutions and Replacements. The Lessee, at its sole
---------------------------------------------
cost and expense, may at any time and from time to time make alterations,
renovations, improvements and additions to the Property or any part thereof and
substitutions and replacements therefor (collectively, "Modifications");
-------------
provided, however, that: (i) except for any Modification required to be made
- -------- -------
pursuant to a Requirement of Law, (a "Required Modification"), no Modification
---------------------
shall impair the value, utility or useful life of the Property or any part
thereof from that which existed immediately prior to such Modification; (ii) the
Modification shall be done expeditiously and in a good and workmanlike manner,
(iii) the Lessee shall comply with all Requirements of Law (including all
Environmental Laws) and Insurance Requirements applicable to the Modification,
including the obtaining of all permits and certificates of occupancy, and the
structural integrity of the Property shall not be materially adversely affected;
(iv) subject to the terms of Article XVI relating to permitted contests, the
-----------
Lessee shall pay all costs and expenses and shall discharge (or cause to be
insured or bonded over) within sixty (60) days after the same shall be filed (or
otherwise become effective) any Liens arising with respect to the Modification;
and (v) such Modifications shall comply with Sections 12.3 and 13.1(a). All
------------- -------
Modifications shall remain part of the realty and shall be subject to this Lease
and title thereto shall immediately vest in the Lessor; provided, however, that
-------- -------
Modifications that meet each of the following conditions shall not be subject to
this Lease: (x) such Modifications are not Required Modifications, (y) such
Modifications were not financed by the Lessor and (z) such Modifications are
readily removable without impairing the value, utility or remaining useful life
of the Property. The Lessee may place upon the Property any trade fixtures,
machinery, equipment or other property belonging to the Lessee or third parties
and may remove the same at any time during the Term, subject, however, to the
terms of Section 13.1(a) and Lessor hereby waives any liens, to which it may be
---------------
entitled pursuant to any statutory or common law, in such trade fixtures,
machinery, equipment or other property; provided that such trade fixtures,
--------
machinery, equipment or other property do not Materially impair the value,
utility or remaining useful life of the Property; provided, further, that the
-------- -------
Lessee shall keep and maintain at the Property and shall not, without the
Lessor's prior consent, remove from the Property and Equipment financed or
otherwise paid for (directly or indirectly) by the Lessor
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pursuant to this Lease. Notwithstanding the foregoing, the Lessee shall comply
with all provisions of the Loan Documents with respect to Modifications as if
the Lessee were the Borrower thereunder, and to the extent the provisions hereof
are inconsistent with same, the provisions of the Loan Documents shall control.
ARTICLE XV
WARRANT OF TITLE; EASEMENTS
15.1. Warrant of Title.
----------------
(a) The Lessee agrees that except as otherwise provided herein and
subject to the terms of Article XVI relating to permitted contests, the
-----------
Lessee shall not directly or indirectly create or allow to remain, and
shall promptly discharge at its sole cost and expense, any Lien, defect,
attachment, levy, title retention agreement or claim upon the Property or
any Modifications or any Lien, attachment, levy or claim with respect to
the Rent, other than Permitted Liens and Liens on machinery, equipment,
general intangibles and other personal property not financed by the
Advance.
(b) Nothing contained in this Lease shall be construed as constituting
the consent or request of the Lessor, expressed or implied, to or for the
performance by any contractor, mechanic, laborer, materialman, supplier or
vendor of any labor or services or for the furnishing of any materials for
any construction, alteration, addition, repair or demolition of or to the
Property or any part thereof. NOTICE IS HEREBY GIVEN THAT THE LESSOR IS NOT
AND SHALL NOT BE LIABLE FOR ANY LABOR, SERVICES OR MATERIALS FURNISHED OR
TO BE FURNISHED TO THE LESSEE, OR TO ANYONE HOLDING THE PROPERTY OR ANY
PART THEREOF THROUGH OR UNDER THE LESSEE, AND THAT NO MECHANIC'S OR OTHER
LIENS FOR ANY SUCH LABOR, SERVICES OR MATERIALS SHALL ATTACH TO OR AFFECT
THE INTEREST OF THE LESSOR, IN AND TO THE PROPERTY.
15.2. Grants and Releases of Easements; Lessor's Waivers. (x) Provided that
--------------------------------------------------
no Event of Default shall have occurred and be continuing, (y) subject to the
rights of the Lessee under the provisions of Articles XII, XIII and XIV and (z)
------------ ---- ---
provided that the following is consistent with the terms of the Loan Documents,
the Lessor hereby consents in each instance to the following actions by the
Lessee, in the name and stead of the Lessor, but at the Lessee's sole cost and
expense: (a) the granting of easements, licenses, rights-of-way and other rights
and privileges in the nature of easements reasonably necessary or desirable for
the use, repair, or maintenance of the Property as herein provided; (b) the
release of existing easements or other rights in the nature of easements which
are for the benefit of the Property; (c) if required by applicable Governmental
Authority for any purpose, including, but not limited to, the dedication or
transfer of unimproved portions of the Property for road, highway or other
public purposes; and (d) the execution of amendments to any covenants and
restrictions affecting the Property; provided, however, that in each case (i)
-------- -------
such grant, release, dedication, transfer or amendment does not Materially
impair the value, utility or remaining useful life of the Property, (ii) such
grant, release, dedication, transfer, annexation or amendment is reasonably
necessary in connection with the use, maintenance, alteration or improvement of
the Property, (iii) such grant, release, dedication, transfer, annexation or
amendment will not cause the Property or any portion thereof to fail to comply
in any Material respect with the provisions of this Lease or any other Operative
Documents and all Requirements of Law (including, without limitation, all
applicable zoning, planning, building and subdivision ordinances, all
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applicable restrictive covenants and all applicable architectural approval
requirements): (iv) all governmental consents or approvals required prior to
such grant, release, dedication, transfer, annexation or amendment have been
obtained, and all filings required prior to such action have been made; (v) such
grant, release, dedication, transfer, annexation or amendment will not result in
any down-zoning of the Property or any portion thereof or a material reduction
in the maximum density or development rights available to the Property under all
Requirements of Law; (vi) the Lessee shall remain obligated under this Lease and
under any instrument executed by the Lessee consenting to the assignment of the
Lessor's interest in this Lease as security for indebtedness, in each such case
in accordance with their terms, as though such grant, release, dedication,
transfer, annexation or amendment had not been effected and (vii) the Lessee
shall pay and perform any obligations of the Lessor under such grant, release,
dedication, transfer, annexation or amendment. The Lessor acknowledges the
Lessee's right to finance and to secure under the Uniform Commercial Code,
inventory, furnishings, furniture, equipment, machinery, leasehold improvements
and other personal property located at the Property other than Equipment which
has been purchased with funds provided by the Lessor, and Lessor hereby
disclaims and waives any interest therein and right thereto and the Lessor
shall, upon the request of the Lessee, and at the Lessee's sole cost and
expense, execute and deliver any instruments necessary or appropriate to confirm
any such grant, release, dedication, transfer, annexation, amendment, disclaimer
or waiver to any Person permitted under this Section 15.2 including landlord
------------
waivers with respect to any of the foregoing.
ARTICLE XVI
PERMITTED CONTESTS
16.1. Permitted contests in Respect of applicable Law. Subject to the terms
-----------------------------------------------
of the Loan Documents, if, to the extent and for so long as (a) a test,
challenge, appeal or proceeding for review of any Applicable Law relating to the
Property shall be prosecuted diligently and in good faith in appropriate
proceedings by the Lessee or (b) compliance with such Applicable Law shall have
been excused or exempted by a valid nonconforming use, variance permit, waiver,
extension or forbearance, the Lessee shall not be required to comply with such
Applicable Law but only if and so long as any such test, challenge, appeal,
proceeding, waiver, extension, forbearance or noncompliance shall not, in the
reasonable opinion of the Lessor, involve (A) any risk of criminal liability
being imposed on the Lessor or the Property, or (B) any risk of (1) foreclosure,
forfeiture or loss of the Property, or any Material part thereof, or (2) the
nonpayment of Rent or (C) any substantial danger of (1) the sale of, or the
creation of any Lien (other than a Permitted Lien) on, any part of the Property,
(2) civil liability being imposed on the Lessor, or the Property, or (3)
enjoinment of, or interference with, the use, possession or disposition of the
Property in any Material respect.
The Lessor will not be required to join in any proceedings pursuant to this
Section 16.1 unless a provision of any Applicable Law requires that such
- ------------
proceedings be brought by or in the name of the Lessor; and in that event the
Lessor will join in the proceedings or permit them or any part thereof to be
brought in its name if and so long as (i) no Default has occurred and is
continuing and (ii) the Lessee pays all related expenses and indemnifies the
Lessor to its reasonable satisfaction.
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<PAGE>
ARTICLE XVII
INSURANCE
17.1. Public Liability and Workers' Compensation Insurance.
----------------------------------------------------
(a) During the Term the Lessee shall procure and carry, at the
Lessee's sole cost and expense, commercial general liability insurance
for claims for bodily injury or death sustained by persons or damage to
property while on the Property and such other public liability coverages
as are ordinarily procured by the Lessee or its Affiliates who own or
operate similar properties. Such insurance shall be on terms and in
amounts that are in accordance with normal industry practice. The policy
shall be endorsed to name the Lessor, the Trust Company and the Lender
as additional insured. The policy shall also specifically provide that
the policy shall be considered primary insurance which shall apply to
any loss or claim before any contribution by any insurance which the
Lessor may have in force.
(b) The Lessee shall, in the construction of any Improvements
(including in connection with any Modifications thereof) and the
operation of the Property, comply with, or cause the applicable
contractor to comply with, all applicable workers' compensation laws.
17.2. Hazard and Other Insurance. During the Term the Lessee shall keep,
--------------------------
or cause to be kept, the Property insured against loss or damage by fire, flood
and other risks on terms and in amounts that are no less favorable than
insurance covering other similar properties owned by the Lessee or its
Affiliates and that are in accordance with normal industry practice and as
required in the Loan Documents. During the construction of any Improvements the
Lessee shall also maintain or cause to be maintained builders' risk insurance.
17.3. Insurance Coverage.
------------------
(a) The Lessee shall furnish the Lessor with certificates
showing the insurance required under Sections 17.1 and 17.2 to be in
------------- ----
effect and naming the Lessor as additional insured with respect to
liability coverage (excluding worker's compensation insurance), and
naming the Lessor as loss payee with respect to property coverage and
showing the mortgagee endorsement required by Section 17.3(c) with
---------------
respect to such coverage. All such insurance shall be at the cost and
expense of the Lessee. Such certificates shall include a provision for
no less than thirty (30) days' advance written notice by the insurer to
the Lessor in the event of cancellation or reduction of such insurance.
(b) The Lessee agrees that the insurance policy or policies
required by Section 17.2 shall include appropriate clause pursuant to
------------
which such policy shall provide that it will not be invalidated should
the Lessee waive, in writing, prior to a loss, any or all rights of
recovery against any party for losses covered by such policy, and that
the insurance in favor of the Lessor and its rights under and interests
in said policies shall not be invalidated or reduced by any act or
omission or negligence of the Lessee or any other Person having any
interest in the Property. The Lessee hereby waives any and all such
rights against the Lessor to the extent of payments made under such
policies.
(c) All such insurance shall be written by reputable insurance
companies that are financially sound and solvent and otherwise
reasonably appropriate considering the amount and type of insurance
being provided by such companies. Any insurance company selected by the
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Lessee which is rated in Best's Insurance Guide or any successor thereto
(or if there be none, an organization having a similar national
reputation) shall have a general policyholder rating of "A" and a
financial rating of at least "12" or be otherwise acceptable to the
Lessor. All insurance policies required by Section 17.2 shall include a
------------
standard form mortgagee endorsement in favor of the Lender.
(d) The Lessor may carry separate liability insurance so long as
(i) the Lessee's insurance is designated as primary and in no event
excess or contributory to any insurance the Lessor may have in force
which would apply to a loss covered under the Lessee's policy and (ii)
each such insurance policy will not cause the Lessee's insurance
required under this Article XVII to be subject to a coinsurance
------------
exception of any kind.
(e) The Lessee shall pay as they become due all premiums for the
insurance required by Section 17.1 and Section 17.2, and shall renew or
------------ ------------
replace each policy prior to the expiration date thereof. Throughout the
Term, at the time each of the Lessee's insurance policies is renewed
(but in no event less frequently than once each year), the Lessee shall
deliver to the Lessor certificates of insurance evidencing that all
insurance required by this Article XVII is being maintained by the
------------
Lessee and is in effect.
17.4. Insurance Proceeds. All insurance proceeds in respect of any loss
------------------
or occurrence shall, to the extent permitted under the Loan Documents, be paid
to the Lender and, upon compliance with the terms of the Loan Documents, the
Lender shall pay same to the Lessee for application toward the reconstruction,
repair or refurbishment of the Property to the extent permitted under the Loan
Documents.
17.5. Insurance Requirements in Loan Documents. Notwithstanding the
----------------------------------------
provisions of Section 17.1, 17.2, 17.3 and 17.4, the Lessee shall comply with
------- ---- ---- ---- ----
all Insurance Requirements (as defined in the Nomura Loan Agreement) and to the
extent the provisions hereof are inconsistent with same, the provisions of the
Loan Documents shall control. The Lessor acknowledges that the Insurance
Requirements are acceptable to it; provided, however, that notwithstanding the
-------- -------
foregoing, the Lessee must at all times during the Term have liability
insurance complying with Section 17.1.
------------
ARTICLE XVIII
CASUALTY AND CONDEMNATION;
ENVIRONMENTAL MATTERS
18.1. Casualty and Condemnation.
-------------------------
(a) Subject to the provisions of the Article XVIII, if all or a
-------------
portion of the Property is damaged or destroyed in whole or in part by a
Casualty or if the use, access, occupancy, easement rights or title to
the Property or any part thereof, is the subject of a Condemnation, then
the Lessee shall (i) reconstruct, refurbish and repair the Property upon
submission to the Lessor of an architect's certificate as to the cost of
such restoration and to the effect that the Property can be fully
restored to the condition required under the Operative Documents and as
to the cost of such restoration or (ii) pay the Lease Balance.
(b) The Lessee may appear in any proceeding or action to
negotiate, prosecute, adjust or appeal any claim for any award,
compensation or insurance payment on account of any such Casualty or
Condemnation and shall pay all expenses thereof. At the Lessee's
reasonable request,
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and at the Lessee's sole cost and expense, the Lessor shall participate in
any such proceeding, action, negotiation, prosecution or adjustment. The
Lessor and the Lessee agree that this Lease shall control the rights of the
Lessor and the Lessee in and to any such award, compensation or insurance
payment.
(c) If the Lessor or the Lessee shall receive notice of a Casualty or
of an actual, pending or threatened Condemnation of the Property or any
interest therein, the Lessor or the Lessee, as the case may be, shall give
notice thereof to the other and the Lender promptly after the receipt of
such notice.
(d) If pursuant to this Section 18.1 and Section 19.1 this Lease shall
------------ ------------
continue in full force and effect following a Casualty or Condemnation with
respect to the Property, the Lessee shall, at its sole cost and expense
(and, without limitation, if any award, compensation or insurance payment
is not sufficient to restore the Property in accordance with this
paragraph, the Lessee shall pay the shortfall), promptly and diligently
repair any damage to the Property caused by such Casualty or Condemnation
in conformity with the requirements of Sections 13.1 and 14.1 using the as-
------------- ----
built plans and specifications for the Property (as modified to give effect
to any subsequent Modifications, any Condemnation affecting the Property
and all applicable Requirements of Law) so as to restore the Property as
near as possible to the condition, operation, function and value as existed
immediately prior to such Casualty or Condemnation with such Modification
as the Lessee may elect in accordance with Section 14.1. In such event,
------------
title to the Property shall remain with the Lessor. Upon completion of such
restoration, the Lessee shall furnish the Lessor an architect's certificate
of substantial completion and a Responsible Employee's Certificate
confirming that such restoration has been completed pursuant to this Lease.
(e) In no event shall a Casualty or Condemnation affect the Lessee's
obligations to pay Rent pursuant to Section 7.1 or to perform its
-----------
obligations and pay any amounts due on the Expiration Date or pursuant to
Articles XXII and XXV.
------------- ---
(f) Any Excess Proceeds received by the Lessor in respect of a
Casualty or Condemnation shall be turned over to the Lessee.
(g) Notwithstanding the provisions of this Section 18.1, the Lessee
------------
shall comply with and be entitled to the benefit of all provisions in the
Loan Documents regarding Casualty and Condemnation and to the extent the
provisions hereof are inconsistent with same, the provisions of the Loan
Documents shall control.
18.2. Environmental Matters. Promptly upon the Lessee's knowledge of the
---------------------
existence of an Environmental Violation, the Lessee shall notify the Lessor in
writing of such Environmental Violation. If the Lessor elects not to terminate
this Lease pursuant to Section 19.1, at the Lessee's sole cost and expense, the
------------
Lessee shall promptly and diligently commence any response, clean up, remedial
or other action necessary to remove, clean up or remediate the Environmental
Violation in accordance with the terms of Section 12.3. If the Lessor does not
------------
deliver a Termination Notice pursuant to Section 19.1, the Lessee shall, upon
------------
completion of remedial action by the Lessee, cause to be prepared by an
environmental consultant reasonably acceptable to the Lessor a report describing
the Environmental Violation and the actions taken by the Lessee (or its agents)
in response to such Environmental Violation, and a statement by the consultant
that the Environmental Violation has been remedied in compliance in all material
respects with applicable Environmental Law. Each such Environmental Violation
shall be remedied prior
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to the Expiration Date. Nothing in this Article XVIII shall reduce or limit the
-------------
Lessee's obligations under the indemnity provisions hereof.
18.3. Notice of Environmental Matters. Promptly, but in any event within
-------------------------------
sixty (60) Business Days from the date the Lessee has actual knowledge thereof,
the Lessee shall provide to the Lessor written notice of any pending or
threatened claim, action or proceeding involving any Environmental Violation on
or in connection with the Property. All such notices shall describe in
reasonable detail the nature of the claim, action or proceeding and the Lessee's
proposed response thereto. In addition, the Lessee shall provide to the Lessor,
within sixty (60) Business Days of receipt, copies of all written communications
with any Governmental Authority relating to any Environmental Law or any Release
in connection with the Property. The Lessee shall also promptly provide such
detailed reports of any such environmental claims as may reasonably be requested
by the Lessor. In the event that the Lessor receives written notice of any
pending or threatened claim, action or proceeding involving any Environmental
Violation on or in connection with the Property, the Lessor shall promptly give
notice thereof to the Lessee.
18.4. Environmental Obligations of the Lessor Pursuant to the Nomura Loan
-------------------------------------------------------------------
Agreement. The representations, warranties and covenants set forth in Section
- --------- -------
4.1(d)(U) and Section 5.1(b)(D) through Section 5.1(b)(I) of the Nomura Loan
- --------- ----------------- -----------------
Agreement imposed upon Lessee pursuant thereto shall survive in perpetuity.
ARTICLE XIX
TERMINATION OF LEASE
19.1. Termination upon Certain Events. With respect to the Property, if
-------------------------------
either:
(i) a Significant Condemnation occurs; or
(ii) an Environmental Violation occurs which (x) either causes the
Lender to accelerate the Principal Indebtedness or (y) is not being
addressed by the Lessee or the Parent as required hereby or by the FBTC
Environmental Guaranty;
and the Lessor or the Lessee shall have given written notice to the other party
that this Lease is to be terminated as a consequence of the occurrence of such
an event (a "Termination Notice"), then, the Lessee shall be obligated to
------------------
purchase all or a portion of the Lessor's interest in the Property on a Payment
Date prior to the date occurring one hundred eighty (180) days after the date of
the notice of termination (or if such Payment Date arises prior to the second
anniversary of the Start-Up Date, on the first Payment Date after such
anniversary) by paying the Lessor on such Payment Date an amount equal to (a)
the Equity Balance, in which case this Lease shall not terminate but the Lease
Balance shall be reduced by the amount of such payment of Equity Balance or (b)
the Lease Balance.
19.2. Termination Procedures. On the date of the payment by the Lessee of
----------------------
the Lease Balance in accordance with the Termination Notice or in accordance
with Section 19.1 (such date, the "Termination Date"), this Lease shall
------------ ----------------
terminate and, concurrent with the Lessor's receipt of such payment,
(a) the Lessor shall execute and deliver to the Lessee (or to the
Lessee's cost and expense a quitclaim deed with respect to the Property, a
quitclaim bill of sale with respect to the applicable Equipment and an
assignment of the Lessor's entire interest in the
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<PAGE>
Property (which shall include an assignment of all of the Lessor's
right, title and interest in and to any Net Proceeds not previously
received by the Lessor and existing subleases and security deposits
thereunder), in each case in recordable form and otherwise in conformity
with local custom and free and clear of any Lessor Liens attributable to
the Lessor;
(b) the Property shall be conveyed to such Person "AS IS" and in
its then present physical condition;
(c) in the case of a termination pursuant to clause (i) or (ii)
---------- ----
of Section 19.1 the Lessor shall convey to the Lessee any Net Proceeds
------------
with respect to the Casualty or Condemnation giving rise to the partial
termination of this Lease theretofore received by the Lessor or at the
request of the Lessee, such amounts shall be applied against sums due
hereunder; and
(d) the Lessor shall execute and deliver to Lessee and the
Lessee's title insurance company an affidavit as to the absence of any
Lessor Liens and shall execute and deliver to the Lessee a statement of
termination of this Lease to the extent relating to the Property.
ARTICLE XX
EVENTS OF DEFAULT
20.1 Events of Default. The occurrence of any one or more of the
-----------------
following events (whether such event shall be voluntary of involuntary or come
about or be effected by operation of law or pursuant to or in compliance with
any judgment, decree or order of any court or any order, rule or regulation of
any administrative or governmental body) shall constitute an "Event of Default";
----------------
(a) the Lessee shall fail to make a payment of any Basic Rent,
including amounts due pursuant to Section 19.1 or 22.1 or Article XXIV,
------------ ---- ------------
Equity Balance or Lease Balance when due; provided, however, that if a
-------- -------
Cash Management Event has not occurred, the failure to pay those
portions of Basic Rent consisting of FBTC Basic Rent, Lessor Basic Rent,
the Required Debt Service Payment due on such date, the Basic Carrying
Costs Monthly Installment due on such date or the Capital Reserve
Monthly Installment due on the due date therefor shall not constitute an
Event of Default if Lessee shall cure such failure within five (5) days
after the due date therefor;
(b) the Lessee shall fail to make payment of any Supplemental
Rent (i) required to be made pursuant to the Nomura Loan Agreement on
the due date therefor and such failure is not remedied within any
applicable grace period set forth in the Loan Documents, and (ii) any
other component of Supplement Rent due and payable within five (5)
Business Days after receipt of notice thereof;
(c) the Lessee shall fail to maintain insurance as required by
Article XVII of this Lease;
------------
(d) the Lessee shall fail in any Material respect to observe or
perform any term, covenant or condition of the Lessee under this Lease
or the Operative Documents to which it is party other than those
described in Section 20.1(a), (b), or (c) hereof, and such failure shall
--------------- --- ---
have continued for thirty (30) days after the earlier or (i) delivery to
the Lessee of written notice thereof from the Lessor or (ii) a
Responsible Employee of the Lessee shall have knowledge of such failure;
provided, however, that if such failure is capable of cure but cannot be
-------- -------
cured by payment of
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<PAGE>
money or cannot be cured by diligent efforts within such thirty (30) day
period but such diligent efforts shall be properly commenced within the
cure period and the Lessee is diligently pursuing, and shall continue to
pursue diligently, remedy of such failure, the cure period shall be
extended for an additional period of time as may be necessary to cure,
not to exceed an additional one hundred twenty (120) days or the extend
beyond the Expiration Date; provided further, that failure by the Lessee
-------- -------
to fully comply with the requirements of Section 24.1, hereof shall not
------------
be subject to any cure period;
(e) to the extent the same causes an Event of Default under the
Nomura Loan Agreement, any representation or warranty made by the Lessee
in any of the Operative Documents to which it is a party shall prove to
have been inaccurate in any Material respect at the time made, and if
such inaccuracy can be cured, it shall not have been cured within forty-
five (45) days after the earlier of (i) delivery to the Lessee of
written notice thereof from the Lessor or (ii) a Responsible Employee of
the Lessee shall have knowledge of such inaccuracy;
(f) an "Event of Default" under the Nomura Loan Agreement shall
have occurred and be continuing;
(g) the Lessee or the Parent shall (i) admit in writing its
inability to pay its debts generally as they become due, (ii) file a
petition under the United States bankruptcy laws or any other applicable
insolvency law or statute of the United States of America or any State
or Commonwealth thereof, (iii) make a general assignment for the benefit
of its creditors, (iv) consent to the appointment of a receiver of
itself or the whole or any substantial part of its property, (v) fail to
cause the discharge of any custodian, trustee or receiver appointed for
the Lessee or the Parent, as applicable, or the whole or a substantial
part of the Lessee's or the Parent's property within ninety (90) days
after such appointment, (vi) file a petition or answer seeking or
consenting to reorganization under the United States bankruptcy laws or
any other applicable insolvency law or statute of the United States of
America or any State or Commonwealth thereof; or (vii) be adjudicated as
bankrupt or insolvent;
(h) dissolution, liquidation or insolvency proceedings or a
petition under the United States bankruptcy laws or any other applicable
insolvency law or statute of the United States of America or any State
or Commonwealth thereof shall be filed against, consented to or
acquiesced by the Lessee or the Parent and not dismissed within ninety
(90) days from the date of its filing, or a court of competent
jurisdiction shall enter an order or decree appointing, without the
consent of the Lessee or the Parent, as applicable, a receiver,
liquidator or trustee of the Lessee or the Parent or the whole or a
substantial part of any of the Lessee's or the Parent's property and
such order or decree shall not be vacated or set aside within ninety
(90) days from the date of the entry thereof;
(i) an event of default, as defined in any agreement, mortgage,
indenture or instrument under which there may be issued, or by which
there may be secured or evidenced, any indebtedness of the Lessee in a
principal amount in excess of $5,000,000, whether such indebtedness now
exists or shall hereafter be created, shall happen, if the effect of
such default is to accelerate the maturity of such indebtedness, unless
the Lessee is diligently and in good faith contesting such default in
appropriate proceedings;
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(j) any Lien granted by the Lessee under any Operative Document shall, in
whole or in part, terminate, cease to be effective against, or cease to be the
legal, valid, binding and enforceable obligation of, the Lessee:
(k) the Lessee shall directly or indirectly contest the validity of any
Operative Document in any manner in any court of competent jurisdiction or any
lien granted by the Lessee under any Operative Document:
(l) the Lessee shall fail to satisfy any of its obligations under the
Securities Pledge Agreement or Certificate Pledge Agreement, including, without
limitation, satisfying the Collateral Requirement (as defined in the Securities
Pledge Agreement) within the applicable grace period provided therefor, for
which the exclusive remedy for such Event of Default is provided in Section
-------
20.2(k); or
- -------
(m) the Lessor shall not have received all FBTC Basic Rent and Lessor Basic
Rent within five (5) days after any FBTC Payment Date.
20.2. Remedies. Upon the occurrence of any Event of Default and at any time
--------
thereafter, the Lessor may, so long as such Event of Default is continuing, do
one or more of the following as the Lessor in its sole discretion shall
determine, without limiting any other right or remedy the Lessor may have on
account of such Event of Default:
(a) The Lessor may, by notice to the Lessee, rescind or terminate this
Lease as of the date specified in such notice; however, (i) no reletting,
reentry or taking of possession of the Property (or any portion thereof) by the
Lessor will be construed as an election on the Lessor's part to terminate this
Lease unless a written notice of such intention is given to the Lessee,
(ii) notwithstanding any reletting, reentry or taking of possession, the Lessor
may at any time thereafter elect to terminate this Lease for a continuing Event
of Default and (iii) no act or thing done by the Lessor or any of its agents,
representatives or employees and no agreement accepting a surrender of the
Property shall be valid unless the same be made in writing and executed by the
Lessor.
(b) The Lessor may (i) demand that the Lessee, and the Lessee shall upon
the written demand of the Lessor, return the Property promptly to the Lessor in
the manner and condition required by, and otherwise in accordance with all of
the provisions of, Articles XI and XIII and Section 12.3 hereof as if the
----------- ---- ------------
Property were begin returned at the end of the Term, and the Lessor shall not be
liable for the reimbursement of the Lessee for any costs and expenses incurred
by the Lessee in connection therewith and (ii) without prejudice to any other
remedy which the Lessor may have for possession of the Property, and to the
extent and in the manner permitted by Applicable Law, enter upon the Property
and take immediate possession of (to the exclusion of the Lessee) the Property
or any part thereof and expel or remove the Lessee and any other Person who may
be occupying the Property, by summary proceedings or otherwise, all without
liability to the Lessee for or by reason of such entry or taking of possession,
whether for the restoration of damage to property caused by such taking or
otherwise and, in addition to the Lessor's other damages, the Lessee shall be
responsible for all costs and expenses incurred by the Lessor in connection with
any reletting including, without limitation, reasonable brokers' fees and all
costs of any alterations or repairs made by the Lessor.
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(c) The Lessor may (i) sell all or any part of the Property at public sale
free and clear of any rights of the Lessee and without any duty to account to
the Lessee with respect to such action or inaction or any proceeds (except that
Excess Proceeds are payable to and shall be paid to the Lessee) with respect
thereto (except to the extent required by clause (ii) below if the Lessor shall
-----------
elect to exercise its rights thereunder) in which event the Lessee's obligation
to pay Basic Rent hereunder for periods commencing after the date of such sale
shall be terminated or proportionately reduced, as the case may be; and (ii) if
the Lessor shall so elect, demand that the Lessee pay to the Lessor, and the
Lessee shall pay to the Lessor, on the date of such sale, as liquidating damages
for loss of a bargain and not as a penalty (the parties agreeing that the
Lessor's actual damages would be difficult to predict, but the aforementioned
liquidated damages represents a reasonable approximation of such amount) (in
lieu of Basic Rent due for periods commencing on or after the Payment Date
coinciding with such date of sale (or, if the sale date is not a Payment Date,
the Payment Date next preceding the date of such sale)), an amount equal to (A)
the excess, if any, of (1) the Lease Balance calculated as of such Payment Date
(including all Rent due and unpaid to and including such Payment Date and), over
(2) the net proceeds of such sale (that is, after deducting all costs and
expenses incurred by the Lessor incident to such conveyance, including, without
limitation, repossession costs, brokerage commissions, prorations, transfer
taxes, fees and expenses for counsel, title, insurance fees, survey costs,
recording fees, and any repair costs); plus (B) interest at the Overdue Rate on
the foregoing amount from such Payment Date until the date of payment.
(d) The Lessor may, at its option, elect not to terminate this Lease and
continue to collect all Basic Rent, Supplemental Rent, and all other amounts due
the Lessor (together with all costs of collection) and enforce the Lessee's
obligations under this Lease as and when the same become due, or are to be
performed, and at the option of the Lessor, upon any abandonment of the Property
by the Lessee or re-entry of same by the Lessor, the Lessor may, in its sole and
absolute discretion, elect not to terminate this Lease and may make the
necessary repairs in order to relet the Property, and relet the Property or any
part thereof for such term or terms (which may be for a long term extending
beyond the Term of this Lease) and at such rental or rentals and upon such other
terms and conditions as the Lessor in its reasonable discretion may deem
advisable; and upon each such reletting all rentals actually received by the
Lessor from such reletting shall be applied to the Lessee's obligation hereunder
and their other Operative Documents in such order, proportion and priority as
the Lessor may elect to the Lessor's sole and absolute discretion. If such
rentals received from such reletting during any period are less than the Rent
with respect to the Property to be paid during that period by the Lessee
hereunder, the Lessee shall pay any deficiency, as calculated by the Lessor, to
the Lessor on the next Payment Date.
(e) Unless the Property has been sold in its entirety, the Lessor may,
whether or not the Lessor shall have exercised or shall thereafter at any time
exercise any of its rights under paragraph (b), (c) or (d) of this Section 20.2
------------ --- --- ------- ----
with respect to the Property or portion thereof, demand, by written notice to
the Lessee specifying a date (a "Termination Date") not earlier than 10 days
----------------
after the date of such notice, that the Lessee purchase, on such Termination
Date, the Property (or the remaining portion thereof) in accordance with the
provisions of Article XXII; provided, however, that no such written notice shall
------------ -------- -------
be required upon the occurrence of any Event of Default in clause (g) or (h) of
---------- ---
Section 20.1.
- ------------
(f) The Lessor may exercise any other right or remedy that may be
available to it under Applicable Law, or proceed by appropriate court action
(legal or equitable) to enforce the terms.
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hereof or to recover damages for the breach hereof. Separate suits may
be brought to collect any such damages for any period(s), and such suits
shall not in any manner prejudice the Lessor's right to collect any such
damages for any subsequent period(s), or the Lessor may defer any such
suit until after the expiration of the Term, in which event such suit
shall be deemed not to have accrued until the expiration of the Term.
(g) The Lessor may retain and apply against the Lessor's damages
all sums which the Lessor would, absent such Event of Default, be
required to pay to, or turn over to, the Lessee pursuant to the terms of
the Lease.
(h) If an Event of Default shall have occurred and so long as
same is continuing, the Lessor, as a matter of right and without notice
to the Lessee, and without regard to the value of the Property or the
solvency of the Lessee, shall have the right to apply to any court
having jurisdiction to appoint a receiver or receivers of the Property,
and the Lessee hereby irrevocably consents to any such appointment. Any
such receiver(s) shall have all of the usual powers and duties of
receivers in like or similar cases and all of the powers and duties of
the Lessor in case of entry, and shall continue as such and exercise
such powers until the date of confirmation of the sale of the Property
unless such receivership is sooner terminated.
(i) To the maximum extent permitted by law, the Lessee hereby
waives the benefit of any appraisement, valuation, stay, extension,
reinstatement and redemption laws now or hereafter in force and all
rights of marshaling in the event of any sale of any or all of the
Property or any interest therein.
(j) The Lessor shall be entitled to enforce payment of the
indebtedness and performance of the obligations secured hereby and to
exercise all rights and powers under this instrument or under any of the
other Operative Documents or other agreement or any laws now or
hereafter in force, notwithstanding some or all of the obligations
secured hereby may now or hereafter be otherwise secured, whether by
mortgage, security agreement, pledge, lien, assignment or otherwise.
Neither the acceptance of this instrument nor its enforcement, shall
prejudice or in any manner affect the Lessor's right to realize upon or
enforce any other security now or hereafter held by the Lessor, it being
agreed that the Lessor shall be entitled to enforce this instrument and
any other security now or hereafter held by the Lessor in such order and
manner as the Lessor may determine in its absolute discretion. No remedy
herein conferred upon or reserved to the Lessor is intended to be
exclusive of any other remedy herein or by law provided or permitted,
but each shall be cumulative and shall be in addition to every other
remedy given hereunder or now or hereafter existing at law or in equity
or by statute. Every power or remedy given by any of the Operative
Documents to the Lessor or to which it may otherwise be entitled, may be
exercised, concurrently or independently, from time to time and as often
as may be deemed expedient by the Lessor.
(k) The Lessor may exercise any and all rights under (a) the
Certificate Pledge Agreement against Certificate A and/or (b) the
Securities Pledge Agreement against the Pledged Securities, and the
collateral represented thereby.
In no event shall the Lessor, in the exercise of the remedies provided in this
instrument (including, without limitation, in connection with the assignment of
rents to Lessor, or the appointment of a receiver and the entry of such receiver
on to all or any part of the Property), be deemed a "mortgagee in
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possession," and the Lessor shall not in any way be made liable for any act,
either of commission or omission, in connection with the exercise of such
remedies.
If, pursuant to the exercise by the Lessor of its remedies pursuant to
this Section 20.2, the Lease Balance, all other amounts due and owing from the
------------
Lessee under this Lease and the other Operative Documents have been paid in
full, then the Lessor shall remit to the Lessee any excess amounts received by
the Lessor.
20.3. Waiver of Certain Rights. If this Lease shall be terminated
------------------------
pursuant to Section 20.2, the Lessee waives, to the fullest extent permitted by
------------
law, (a) any notice of re-entry or the institution of legal proceedings to
obtain re-entry or possession; (b) any right of redemption, re-entry or
repossession; (c) the benefit of any laws now or hereafter in force exempting
property from liability for rent or for debt or limiting the Lessor with respect
to the election of remedies; and (d) any other rights which might otherwise
limit or modify any of the Lessor's rights or remedies under this Article XX.
----------
ARTICLE XXI
LESSOR ASSIGNMENT
21.1. Assignment. The Lessee hereby consents to the Lessor's assignment
----------
of this Lease to the Lender and the Lender and the Lessee acknowledge that the
Lender is a third party beneficiary of this Lease.
ARTICLE XXII
PURCHASE PROVISIONS
22.1. Purchase Option. Provided that the Lessee shall not have given
---------------
notice of its intention to exercise the Remarketing Option, the Lessee shall
have the option on any Payment Date after the second anniversary of the Start-Up
Date (exercisable by giving the Lessor irrevocable written notice (the "Purchase
--------
Notice") of the Lessee's election to exercise such option) to (a) purchase all,
- ------
and not less than all, of the Property on the date specified in such Purchase
Notice at a price equal to the Lease Balance theretofore accruing or (b) pay the
Lessor the Equity Balance and reduce the amount of the Lease Balance by the
amount paid. The Lessee shall deliver the Purchase Notice to the Lessor not less
than thirty (30) days prior to such purchase or payment of the Equity Balance.
If the Lessee exercises its option to purchase the Property pursuant to Section
-------
22.1(a) (the "Purchase Option"), the Lessor shall transfer to the Lessee or its
- ------- ---------------
designee all of the Lessor's right, title and interest in and to the Property as
of the date specified in the Purchase Notice upon receipt of the Lease Balance
in accordance with Section 25.1. Subject to Section 12.4 and with the consent of
------------ ------------
the Lessor the Lessee may assign the Purchase Option to any Person. The Lessee
may designate, in a notice given to the Lessor not less than five (5) Business
Days prior to the closing of such purchase (time being of the essence), the
transferee or transferees to whom the conveyance shall be made (if other than
to the Lessee), in which case such conveyance shall (subject to the terms and
conditions set forth herein) be made to such designee; provided, however, that
-------- -------
such designation of a transferee or transferees shall not cause the Lessee to
be released, fully or partially, from any of its obligations under this Lease,
including, without limitation, the obligation to pay the Lessor the Lease
Balance on the Expiration Date.
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<PAGE>
ARTICLE XXIII
RENEWAL PROCEDURES
23.1. Renewal. Subject to the conditions set forth herein, the Lessee and
-------
the Lessor may agree to renew the Base Lease Term for the Property for up to
eleven one-year terms (each, a "Renewal Term"), with each such Renewal Term to
------------
commence on the first day following the Expiration Date then in effect. The
effective extension of the Base Lease Term for the Property shall be subject to
the satisfaction of each of the following conditions:
(a) each renewal shall be automatic unless on or before one hundred
eighty (180) days prior to the Expiration Date the Lessee shall have
delivered written notice to the Lessor of the Lessee's determination not to
extend the Base Lease Term for the Property;
(b) on the Expiration Date then in effect prior to any renewal, no
Event of Default shall have occurred and be continuing; and
(c) the Lessee shall not have given notice of its intention to
exercise the Remarketing Option.
ARTICLE XXIV
REMARKETING OPTION
24.1. Option to Remarket. Subject to the fulfillment of each of the
------------------
conditions set forth in this Section 24.1 the Lessee shall have the option
------------
beginning on the second anniversary of the Start-Up Date (the "Remarketing
-----------
Option") to market and complete the sale of the Property for the Lessor.
- ------
The Lessee's effective exercise and consummation of the Remarketing Option
shall be subject to the due and timely fulfillment of each of the following
provisions as to the Property as of the dates set forth below.
(a) Not later than one hundred eighty (180) days prior to the
Expiration Date, the Lessee shall give to the Lessor written notice of the
Lessee's exercise of the Remarketing Option, which exercise shall be
irrevocable. If Lessee does not deliver a notice of its intention not to
renew this Lease as provided in Section 23.1 and fails to timely provide
the Remarketing Notice, then this Lease shall be renewed for a Renewal Term
as provided in Section 23.1. If Lessee delivers the notice of its intention
not to renew this Lease as provided in Section 23.1 and fails to timely
provide the Remarketing Notice, then Lessee shall be deemed to have elected
to exercise its Purchase Option under Section 22.1(i).
---------------
(b) Not later than one hundred twenty (120) days prior to the
Expiration Date, the Lessee shall deliver to the Lessor an Environmental
Audit for the Property. Such Environmental Audit shall be prepared by an
environmental consultant selected by the Lessor in the Lessor's reasonable
discretion and shall contain conclusions reasonably satisfactory to the
Lessor as to the environmental status of the Property. If any such
Environmental Audit indicates any exceptions with respect to which a Phase
Two environmental assessment is recommended, the Lessee shall also deliver
(i) a Phase Two environmental assessment by such environmental consultant
within thirty (30) days prior to the Expiration Date and (ii) a certificate
of such environmental consultant
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<PAGE>
prior to the Expiration Date showing the completion of all remedial action
in compliance with Applicable Law.
(c) On the date of the Lessee's notice to the Lessor of the Lessee's
exercise of the Remarketing Option, and on the Expiration Date, no Event of
Default shall exist.
(d) The Lessee shall have completed in all Material respects all
Modifications, restoration and rebuilding of the Property pursuant to
Sections 14.1 and 18.1 (as the case may be) and shall have fulfilled in all
------------- ----
Material respects all of the conditions and requirements in connection
therewith pursuant to said Sections, in each case by the date on which the
Lessor receives the Lessee's notice of the Lessee's exercise of the
Remarketing Option (time being of the essence), regardless of whether the
same shall be within the Lessee's control. The Lessee shall have also paid
the cost of all Modifications commenced prior to the Expiration Date. The
Lessee shall not have been excused pursuant to Section 16.1 from complying
------------
with any Applicable Law that involved the extension of the ultimate
imposition of such Applicable Law beyond the last day of the Term. Any
Permitted Liens (other than Lessor Liens) on the Property that were
contested by the Lessee shall have been removed.
(e) During the Marketing Period, the Lessee shall, as nonexclusive
agent for the Lessor, use best efforts to sell the Lessor's interest in the
Property and will attempt to obtain the highest purchase price therefor and
for not less than the Fair Market Sales Value of the Property. The Lessee
will be responsible for hiring brokers and making the Property available
for inspection by prospective purchasers. The Lessee shall promptly upon
request permit inspection of the Property and any maintenance records
relating to the Property by the Lessor and any potential purchasers, and
shall otherwise do all things reasonably necessary to sell and deliver
possession of the Property to any purchaser. All such marketing of the
Property shall be at the Lessee's sole expense. The Lessee shall allow the
Lessor and any potential qualified purchaser reasonable access to the
Property for the purpose of inspecting the same.
(f) The Lessee shall submit all bids to the Lessor, and the Lessor
will have the right to submit any one or more bids. The Lessee shall
deliver to the Lessor, not less than thirty (30) days prior to the
Expiration Date, binding written unconditional (except as set forth below),
irrevocable offer or offers by such purchaser or purchasers offering the
highest bid to purchase the Property. No such purchaser shall be the Lessee
or an Affiliate of the Lessee. The written offer must specify the
Expiration Date as the closing date unless the Lessor shall otherwise agree
in its reasonable discretion. Any sale by the Lessee shall be for the
highest cash bid submitted to the Lessor. The determination of the highest
bid shall be made by the Lessor prior to the end of the Marketing Period,
but in any event, the Lessor shall have no obligation to approve any bid
unless the aggregate amount of the highest bids for the Property equals or
exceeds an amount equal to the Lease Balance minus the Contingent Rental
-----
Adjustment determined as of the Expiration Date. All bids shall be on an
all-cash basis unless the Lessor shall otherwise agree in its sole
discretion.
(g) In connection with any such sale of the Property, the Lessee will
provide to each Purchaser all customary "seller's" indemnities,
representations and warranties regarding absence of Liens (other than
Lessor Liens and the condition of the Property. The Lessee shall have
obtained, at its cost and expense, all required governmental and regulatory
consents and approvals and shall have made all filings as required by
Applicable Law in order to carry out and complete the transfer of the
Property. As to the Lessor, any such sale shall be made on an "as is
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with all faults" basis without representation or warranty by the Lessor
other than the absence of Lessor Liens. Any agreement as to such sale
shall be made subject to the Lessor's rights hereunder.
(h) The Lessee shall pay directly, and not from the sale
proceeds, all prorations, credits, costs and expenses of the sale of the
Property, whether incurred by the Lessor or the Lessee, including
without limitation, the cost of all title insurance, surveys,
environmental reports, appraisals, transfer taxes, the Lessor's
reasonable attorneys' fees, the Lessee's attorneys' fees, commissions,
escrow fees, recording fees, and all applicable documentary and other
transfer taxes.
(i) The Lessee shall pay to the Lessor on or prior to the
Expiration Date (or to such other Person as the Lessor shall notify the
Lessee in writing) an amount equal to the Contingent Rental Adjustment
for the Property plus all Basic Rent and all other amounts hereunder
----
which have accrued or will accrue prior to or as of the Expiration Date
or such other closing date approved by the parties, in the type of funds
specified in Section 7.4 hereof.
-----------
(j) The Lessee shall pay to the Lessor on or prior to the
Expiration Date the amounts, if any, required to be paid pursuant to
Section 26.2 hereof.
------------
(k) If the Lessor approves any bid for the Property, the
purchase of the Property shall be consummated on or before the
Expiration Date and the gross proceeds (the "Gross Proceeds") of the
--------------
sale of the Property, less the documented expenses incurred by the
Lessee under clause (h) shall be paid directly to the Lessor; provided,
---------- --------
however, that if the sum of (x) the remaining Gross Proceeds from such
-------
sale or sales plus (y) the Contingent Rental Adjustment received by the
----
Lessor pursuant to clause (i) plus (z) amounts received by the Lessor
---------- ----
pursuant to Section 26.2 hereof exceeds the Lease Balance as of such
------------
date, then the excess shall be paid to the Lessee on the Expiration Date
or such other closing date approved by the parties.
(l) All reconstruction, refurbishment and repair to the Property
resulting from a Casualty or Condemnation shall have been completed prior to
the end of the Marketing Period.
If one or more of the foregoing provisions shall not be fulfilled as of
the date set forth above with respect to the Property, then the Lessor shall
declare by written notice to the Lessee the Remarketing Option to be null and
void (whether or not it has been theretofore exercised by the Lessee), in which
event all of the Lessee's rights under this Section 24.1 shall immediately
------------
terminate and the Lessee shall be obligated to purchase the Property pursuant to
Section 22.1 on the Expiration Date.
- ------------
If the Lessee effectively elects the Remarketing Option and no sale of
the Property is consummated prior to the end of the Marketing Period, the Lessee
shall, in addition to making the payment required pursuant to Section 24.1(i)
---------------
above, return the Property to the Lessor (or to any other Person specified by
the Lessor). In connection with any such return of the Property, the Lessee
shall, at its own cost and expense, do each of the following:
(i) the Lessee shall, on or prior to the Expiration Date,
execute and deliver to the Lessor (or to the Lessor's designee) (A) a
deed with respect to the Property containing representations and
warranties of grantor to the Lessor (or such other Person) regarding the
absence of Liens (other than Permitted Liens of the type described in
clause (i), (iii), (vii), (viii), (ix) or (x) of the definition of
---------- ----- ----- ------ --- ---
"Permitted Liens"), (B) a bill of sale with respect to any Equipment
then located on
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the Property and (C) an assignment of the Lessee's entire interest in
the Property (which shall include an assignment of all of the Lessee's
right, title and interest in and to any Net Proceeds with respect to the
Property not previously received by the Lessee and an assignment of
leases of the Property) in each case in recordable form and otherwise in
conformity with local custom and free and clear of any Liens
attributable to the Lessee:
(ii) the Lessee shall execute and deliver to Lessor and the
Lessor's title insurance company an affidavit as to the absence of any
Liens (other than Permitted Liens of the type described in clause (i),
----------
(iii), (vii), (viii), (ix) or (x)), and shall execute and deliver to the
----- ----- ------ ---- ---
Lessor a statement of termination of this Lease to the extent relating
to the Property;
(iii) the Lessee shall, on the Expiration Date, transfer
possession of the Property to the Lessor or any Person designated by the
Lessor, by surrendering the same into the possession of the Lessor or
such Person, as the case may be, in the condition required by this
Section 24.1 and in compliance with Applicable Law;
------------
(iv) the Lessee shall, for a period of up to one year after
the Expiration Date, cooperate reasonably with the Lessor and/or Person
designated by the Lessor to receive the Property, which cooperation
shall include reasonable efforts with respect to the following, all of
which the Lessee shall do on or before the Expiration Date or as soon
thereafter as is reasonably practicable; providing copies of all books
and records regarding the maintenance and ownership of the Property and
all know-how, data and technical information relating thereto, granting
or assigning all licenses necessary for the operation and maintenance of
the Property and cooperating reasonably in seeking and obtaining all
necessary Governmental Action. The obligations of the Lessee under this
paragraph shall survive the expiration or termination of this Lease; and
(v) no subleases with respect to the Property or any portion
thereof shall be in effect on the Expiration Date.
Except as expressly set forth herein, the Lessee shall have no right,
power or authority to bind the Lessor in connection with any proposed sale or
sales of the Property.
24.2. Certain Obligations Continue. During the Marketing Period, the
----------------------------
obligation of the Lessee to pay Rent shall continue undiminished until payment
in full to the Lessor of the Contingent Rental Adjustment and all other amounts
due to the Lessor by Lessee under the Operative Documents to which the Lessee is
a party. The Lessor shall have the right, but shall be under no duty, to solicit
bids, to inquire into the efforts of the Lessee to obtain bids or otherwise to
take actions in connection with any such sale, other than as expressly provided
in this Article XXIV.
------------
ARTICLE XXV
PROCEDURES RELATING TO PURCHASE OR REMARKETING
25.1. Provisions Relating to the Exercise of Purchase Option and
----------------------------------------------------------
Conveyance Upon Remarketing and Conveyance Upon Certain Other Events. In
- --------------------------------------------------------------------
connection with the Lessee's exercise of its Purchase Option, upon the
Expiration Date or the purchase of the Property under Article XIX or
-----------
Section 20.2 (e) hereof and upon tender by the Lessee of the amounts set forth
- ----------------
in Article XIX, Section 20.2 (e) or 22.1 (a) hereof, as applicable;
----------- ---------------- --------
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<PAGE>
(i) the Lessor shall execute and deliver to the Lessee (or to
the Lessee's designee) at the Lessee's cost and expense a limited
warranty deed (with covenants against grantor acts) with respect to
the Property, a limited warranty bill of sale (with covenants against
grantor acts) with respect to any Equipment and an assignment of the
Lessor's entire interest in the Property (which shall include an
assignment of all of the Lessor's right, title and interest in and to
any Net Proceeds not previously received by the Lessor, and an
assignment of leases of the Property and any security deposits
collected by the Lessor), in each case in recordable form and
otherwise in conformity with local custom and free and clear of any
Lessor Liens attributable to the Lessor;
(ii) the Property shall be conveyed to the Lessee "AS IS" and
in its then present physical condition;
(iii) the Lessor shall execute and deliver to Lessee and the
Lessee's title insurance company an affidavit as to the Lessor's
title and the absence of Lessor Liens; and
(iv) the Lessor shall execute such other documents reasonably
requested by the Lessee, or otherwise required under local law, to
effect a transfer of the Property and title thereto.
ARTICLE XXVI
INDEMNIFICATION
26.1. General Indemnification. The Lessee agrees, whether or not any
-----------------------
of the transactions contemplated hereby shall be consummated, to assume
liability for, and to indemnify, protect, defend, save and keep harmless
each Indemnitee, on an After Tax Basis, from and against, any and all
Claims that may be imposed on, incurred by or asserted against such
Indemnitee (whether because of action or omission by such Indemnitee or
otherwise), whether or not such Indemnitee shall also be indemnified as to
any such Claim by any other Person and whether or not such Claim arises or
accrues prior to the Documentation Date or after the Expiration Date, in
any way relating to or arising out of:
(a) any of the Operative Documents or any of the transactions
contemplated thereby, and any amendment, modification or waiver in
respect thereof;
(b) the Property or any part thereof or interest therein;
(c) the purchase, design, construction, preparation,
installation, inspection, delivery, non-delivery, acceptance,
rejection, ownership, management, possession, operation, rental,
lease, sublease, repossession, maintenance, repair, alteration,
modification, addition or substitution, storage, transfer of title,
redelivery, use, financing, refinancing, disposition, operation,
condition, sale (including, without limitation, any sale pursuant to
any provision hereof), return or other disposition of all or any part
or any interest in the Property or the imposition of any Lien other
than a Lessor Lien (or incurring of any liability to refund or pay
over any amount as a result of any Lien other than a Lessor Lien)
thereon, including, without limitation: (1) Claims or penalties
arising from any violation of law or in tort (strict liability or
otherwise), (2) latent or other defects, whether or not discoverable,
(3) any Claim based upon a violation or alleged violation of the
terms of any restriction, easement, condition or covenant or other
matter affecting title to the Property, (4) the making of any
Modifications in violation of any standards imposed by any insurance
policies required to be maintained by the Lessee pursuant to this
Lease which are in effect at any time with respect to the Property or
any part thereof, (5) any Claim for patent,
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trademark or copyright infringement, and (6) Claims arising from any public
improvements with respect to the Property resulting in any change or
special assessments being levied against the Property or any plans to
widen, modify or realign any street or highway adjacent to the Property, or
any Claim for utility "tap-in" fees;
(d) the breach by the Lessee of any covenant, representation or
warranty made by it or deemed made by it in any Operative Document or any
certificate required to be delivered by any Operative Document;
(e) the retaining or employment of any broker, finder or financial
advisor by the Lessee to act on its behalf in connection with the
transactions contemplated hereby;
(f) the existence of any Lien on or with respect to the Property, any
Improvements, or Basic Rent or Supplemental Rent, title thereto, or any
interest therein including any Liens which arise out of the possession,
use, occupancy, construction, repair or rebuilding of the Property or by
reason of labor or materials furnished or claimed to have been furnished to
the Lessee, or any of its contractors or agents or by reason of the
financing of any personalty or equipment purchased or leased by the Lessee
or Modifications constructed by the Lessee, except with respect to any of
the foregoing Lessor Liens and Liens in favor of the Lessor; or
(g) subject to the accuracy of Lessor's representation set forth in
Section 6.1(a), the transactions contemplated by this Lease or by any other
--------------
Operative Document, in respect of the application of Parts 4 and 5 of
Subtitle B of Title 1 of ERISA and any prohibited transaction described in
Section 4975(c) of the Code;
---------------
provided, however, the Lessee shall not be required to indemnify any Indemnitee
- -------- -------
under this Section 26.1 for any of the following: (1) any Claim to the extent
------------
resulting from the willful misconduct or gross negligence of such Indemnitee (it
--
being understood that the Lessee shall be required to indemnify an Indemnitee
- ----------------
even if the ordinary (but not gross) negligence of such Indemnitee caused or
contributed to such Claim) or the breach of any representation, warranty or
covenant of such Indemnitee set forth in any Operative Document, (2) any Claim
resulting from Lessor Liens which the Lessor is responsible for discharging
under the Operative Documents, (3) any Claim to the extent attributable to acts
or events occurring after the expiration of the Term or the return or
remarketing of the Property so long as the Lessor is not exercising remedies
against the Lessee in respect of the Operative Documents, and (4) any Claim
arising from a breach or alleged breach by the Lessor of any agreement entered
into in connection with the assignment or participation of Rent. It is expressly
understood and agreed that the indemnity provided for herein shall survive the
expiration or termination of and shall be separate and independent from any
remedy under this Lease or any other Operative Document. Without limiting the
express rights of any Indemnitee under this Section 26.1, this Section 26.1
------------ ------------
shall be construed as an indemnity only and not a guaranty of residual value of
the Property.
26.2. End of Term Indemnity.
---------------------
(a) If the Lessee elects the Remarketing Option and there would, after
giving effect, to the proposed remarketing transactions, be a Shortfall
Amount, then prior to the Expiration Date and as a condition to the
Lessee's right to complete the remarketing of the Property pursuant to
Section 24.1, the Lessee shall cause to be delivered to the Lessor at least
------------
thirty (30) days prior to the Expiration Date, at the Lessee's sole cost
and expense, a report from an appraiser selected by the Lessor and
reasonably satisfactory to the Lessee in form and substance satisfactory to
the
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<PAGE>
Lessor (the "End of the Term Report") which shall state the appraiser's
----------------------
conclusions as to the reason for any decline in the Fair Market Sales Value
of the Property from that anticipated for such date in the Appraisal
delivered on the Acquisition Date.
(b) If the Lessee elects the Remarketing Option, then on or prior to
the Expiration Date, the Lessee shall pay to the Lessor an amount (not to
exceed the Shortfall Amount) equal to the portion of Shortfall Amount that
the End of the Term Report demonstrates was the result of a decline in the
Fair Market Sales Value of the Property due to
(i) extraordinary use, failure to maintain, to repair, to
restore, to rebuild or to replace, failure to comply with all
applicable laws, failure to use, workmanship, method of installation
or removal or maintenance, repair, rebuilding or replacement,
(excepting in each case ordinary wear and tear), or
(ii) with respect to the Property, any Modification made to, or
any rebuilding of, the Property or any part thereof by the Lessee, or
(iii) the existence of any Environmental Violations, or
(iv) any restoration or rebuilding carried out by the Lessee, or
(v) any use of the Property or any part thereof by the Lessee
other than as permitted under this Lease, or
(vi) any grant release, dedication, transfer, annexation or
amendment made pursuant to Section 15.2, or
------------
(vii) the failure of the Lessor to have title to the Property
free and clear of all Liens (excluding Permitted Liens).
26.3. Environmental Indemnity. Without limitation of the other provisions
-----------------------
of this Article XXVI, the Lessee hereby agrees to indemnify, hold harmless and
------------
defend each Indemnitee from and against any all and claims (including without
limitation third party claims for personal injury or real or personal property
damage), losses (including but not limited to, to the extent the Lease Balance
has not been fully paid, any loss of value of the Property), damages,
liabilities, fines, penalties, charges, administrative and judicial proceedings
(including informal proceedings) and orders, judgments, remedial action,
requirements, enforcement actions of any kind, and all reasonable and documented
costs and expenses incurred in connection therewith (including but not limited
to reasonable and documented attorneys' and/or paralegals' fees and expenses),
including, but not limited to, all costs incurred in connection with any
investigation or monitoring of site conditions or any clean-up, remedial,
removal or restoration work by any federal, state or local government agency,
arising in whole or in part, out of
(a) the presence on or under the Property of any Hazardous Substance
in violation of Environmental Law, or any releases or discharges of any
Hazardous Substance on, under, from or onto the Property in violation of
Environmental Law,
(b) any activity, including, without limitation, construction,
carried on or undertaken on or off the Property, and whether by the Lessee
or any predecessor in title or any employees, agents, contractors or
subcontractors of the Lessee or any predecessor in title, or any other
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<PAGE>
Persons (including such Indemnitee), in connection with the handling,
treatment, removal, storage, decontamination, clean-up, transport or
disposal of any Hazardous Substances in violation of Environmental Law that
at any time are located or present on or under or that at any time migrate,
flow, percolate, diffuse or in any way move onto or under the Property.
(c) loss of or damage to any property or the environment (including,
without limitation, clean-up costs, response costs, remediation and removal
costs, costs of corrective action, costs of financial assurance, fines and
penalties and natural resource damages), or death or injury to any Person,
and all expenses associated with the protection of wildlife, aquatic
species, vegetation, flora and fauna, and any mitigative action required by
or under Environmental Laws.
(d) any claim concerning lack of compliance with Environmental Laws,
or any act or omission causing an environmental conditions that requires
remediation or would allow any Governmental Authority to record a Lien on
the land records, or.
(e) any residual contamination on or under the Land, or affecting any
natural resources, and to any contamination of any property or natural
resources arising in connection with the generation, use, handling,
storage, transport or disposal of any such Hazardous Substances, and
irrespective of whether any of such activities were or will be undertaken
in accordance with applicable laws, regulations, codes and ordinances;
provided, however, the Lessee shall not be required to indemnify any Indemnitee
- -------- -------
under this Section 26.3 for (1) any Claim to the extent resulting from the
------------
willful misconduct or gross negligence of such Indemnitee (it being understood
-- ----- ----------
that, unless the applicable Indemnitee was in possession of the Property and
caused the Claim, the Lessee shall be required to indemnify an Indemnitee even
if the ordinary (but not gross) negligence of such Indemnitee caused or
contributed to such Claim) of (2) any Claim to the extent attributable to acts
or events occurring after the expiration of the Term or the return or
remarketing of the Property so long as the Lessor is not exercising remedies
against the Lessee in respect or the Operative Documents. It is expressly
understood and agreed that the indemnity provided for herein shall survive the
expiration or termination of and shall be separate and independent from any
remedy under this Lease or any other Operative Document.
26.4. Proceedings in Respect of Claims. With respect to any amount that the
--------------------------------
Lessee is requested by the Indemnitee to pay by reason of Section 26.1 or 26.3,
------------ ----
such Indemnitee shall, if so requested by the Lessee and prior to any payment,
submit such additional information to the Lessee as the Lessee may reasonably
request and which is in the possession of such Indemnitee to substantiate
properly the requested payment.
In case any action, suit or proceeding shall be brought against any
Indemnitee, such Indemnitee shall promptly notify the Lessee of the commencement
thereof, and the Lessee shall be entitled, at its expense, to participate in,
and, to the extent that the Lessee desires to, assume and control the defense
thereof; provided, however, that the Lessee shall not have any increased
-------- -------
liability as a direct result of an Indemnitee's failure to provide such notice
promptly; provided, further, that the Lessee shall have acknowledged in writing
-------- -------
its obligation to fully indemnify such Indemnitee in respect of such action,
suit or proceeding, and, the Lessee shall keep such Indemnitee fully apprised of
the status of such action suit or proceeding and shall provide such Indemnitee
with all information with respect to such action suit or proceeding as such
Indemnitee shall reasonably request, and provided, further, that the Lessee
-------- -------
shall not be entitled to assume and control the defense of any such action, suit
or proceeding if and to the extent that, (A) in the reasonable opinion of such
Indemnitee, (x) such action, suit or proceeding involves any risk of
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<PAGE>
imposition of criminal liability or any risk of imposition of material civil
liability on such Indemnitee or will involve a material risk of the sale,
forfeiture or loss of, or the creation of any Lien (other than a Permitted Lien
or Lessor Lien) on the Property or any part thereof unless, in the case of civil
liability, the Lessee shall have posted a bond or other security satisfactory to
the relevant Indemnitees in respect to such risk or (y) the control of such
action, suit or proceeding would involve an actual or potential conflict of
interest, (B) such proceeding involves Claims not fully indemnified by the
Lessee which the Lessee and the Indemnitee have been unable to sever from the
indemnified claim(s), or (C) an Event of Default has occurred and is continuing.
The Indemnitee may participate in a reasonable manner at its own expense and
with its own counsel in any proceeding conducted by the Lessee in accordance
with the foregoing. The Lessee shall not enter into any settlement or other
compromise with respect to any Claim which is entitled to be indemnified under
Section 26.1 or 26.3 without the prior written consent of the Indemnitee which
- ------------ ----
consent shall not be unreasonably withheld in the case of a money settlement not
involving an admission of liability of such Indemnitee; provided, however, that
-------- -------
in the event that such Indemnitee withholds consent to any settlement or other
compromise, the Lessee shall not be required to indemnify such Indemnitee under
Section 26.1 or 26.3 to the extent that the applicable Claim (x) is for legal
- ------------ ----
fees and expenses incurred after the date of the proposed settlement or (y)
results in a judgement in excess or such offered money settlement.
Each indemnitee shall at the expense of the Lessee supply the Lessee with
such information and documents reasonably requested by the Lessee are
necessary or advisable for the Lessee to participate in any action, suit or
proceeding to the extent permitted by Section 26.1 or 26.3. Unless an Event of
------------ -----
Default shall have occurred and be continuing, no Indemnitee shall enter into
any settlement or other compromise with respect to any Claim which is entitled
to be indemnified under Section 26.1 or 26.3 without the prior written consent
------------ ----
of the Lessee, which consent shall not be unreasonably withheld, unless such
Indemnitee waives its right to be indemnified under Section 26.1 or 26.3 with
------------ ----
respect to such Claim.
Upon payment in full of any Claim by the Lessee pursuant to Section 26.1 or
------------
26.3 to or on behalf of an Indemnitee, the Lessee, without any further action,
- ----
shall be subrogated to any and all claims that such Indemnitee may have relating
thereto (other than claims in respect of insurance policies maintained by such
Indemnitee at its own expense), and such Indemnitee shall execute such
instruments of assignment and conveyance, evidence of claims and payment and
such other documents, instruments and agreements as may be necessary to preserve
any such claims and otherwise cooperate with the Lessee and give such further
assurances as are necessary or advisable to enable the Lessee vigorously to
pursue such claims.
Any amount payable to an Indemnitee pursuant to Section 26.1 or 26.3 shall
------------ ----
be paid to such indemnitee within ten (10) Business Days after receipt of a
written demand therefor from such indemnitee, accompanied by a written statement
describing in reasonable detail the basis for such indemnity and the computation
of the amount so payable and, if requested by the Lessee, such determination
shall be verified by a nationally recognized independent accounting firm
mutually acceptable to the Lessee and the Indemnitee at the expense of the
Lessee; provided, however, that if the Lessee has assumed the defense of the
-------- -------
related Claim or is paying the costs of the Indemnitee's defense of the related
claim on an ongoing basis, the Lessee shall not be required to pay such amount
to the applicable Indemnitee until such time as a judgment is entered with
respect to such Claim, the enforcement of which is not stayed or which judgment
is not bonded over, or the Claim is otherwise settled or lost. To the extent the
Lessee suffers any losses or damages as a result of an Indemnitee's failure to
provided the Lessee with prompt notice of the commencement of any action, suit
or proceeding against any Indemnitee in accordance with the first sentence of
the second paragraph of this Section 26.4,
------------
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<PAGE>
the amounts of such losses or damages may be offset against the Lessee's
indemnification obligation to such Indemnitee.
26.5. General Tax Indemnity.
---------------------
(a) Indemnification. The Lessee shall pay and assume liability for,
---------------
and does hereby agree to indemnify, protect and defend the Property and all
Tax Indemnitees, and hold them harmless against, all Impositions on an
After Tax Basis.
(b) Contests. If any claim shall be made against any Tax Indemnitee
--------
or if any proceeding shall be commenced against any Tax Indemnitee
(including a written notice of such proceeding) for any Imposition as to
which the Lessee may have an indemnity obligation pursuant to this Section
-------
26.5, or if any Tax Indemnitee shall determine that any Imposition to which
----
the Lessee may have an indemnity obligation pursuant to this Section 26.5
------------
may be payable, such Tax Indemnitee shall promptly (and in any event,
within 30 days) notify the Lessee in writing (provided that failure to so
--------
notify the Lessee within 30 days shall not alter such Tax Indemnitee's
rights under this Section 26.5 except to the extent such failure precludes
------------
or materially adversely affects the ability to conduct a contest of any
indemnified Taxes) and shall not take any action with respect to such
claim, proceeding or Imposition without the written consent of the Lessee
(such consent not to be unreasonably withheld or unreasonably delayed) for
30 days after the receipt of such notice by the Lessee; provided, however,
-------- -------
that in the case of any such claim or proceeding, if such Tax Indemnitee
shall be required by law or regulation to take action prior to the end of
such 30-day period, such Tax Indemnitee shall in such notice to the Lessee,
so inform the Lessee, and such Tax Indemnitee shall not take any action
with respect to such claim, proceeding or Imposition without the consent of
the Lessee (such consent not to be unreasonably withheld or unreasonably
delayed) for 10 days after the receipt of such notice by the Lessee unless
the Tax Indemnitee shall be required by law or regulation to take action
prior to the end of such 10-day period.
The Lessee shall be entitled for a period of 30 days from receipt
of such notice from the Tax Indemniteee (or such shorter period as the Tax
Indemnitee has notified the Lessee is required by law or regulation for the
Tax Indemnitee to commence such contest), to request in writing that such
Tax Indemnitee contest the imposition of such Tax, at the Lessee's expense.
If (x) such contest can be pursued in the name of the Lessee and
independently from any other proceeding involving a Tax liability of such
Tax Indemnitee for which the Lessee has not agreed to indemnify such Tax
Indemnitee, (y) such contest must be pursued in the name of the Tax
Indemnitee, but can be pursued independently from any other proceeding
involving a Tax liability of such Tax Indemnitee for which the Lessee has
not agreed to indemnify such Tax Indemnitee or (z) the Tax Indemnitee so
requests, then the Lessee shall be permitted to control the contest of such
claim, provided that in the case of a contest described in clause (y), if
-------- ----------
the Tax Indemnitee determines in good faith that such contest by the Lessee
could have a material adverse impact on the business or operations of the
Tax Indemnitee and provides a written explanation to the Lessee of such
determination, the Tax Indemnitee may elect to control or reassert control
of the contest, and provided, that by taking control of the contest, Lessee
--------
acknowledges that it is responsible for the Imposition ultimately
determined to be due by reason of such claim, and provided, further, that
-------- -------
in determining the application of clauses (x) and (y) of the preceding
----------- ---
sentence, each Tax Indemnitee shall take any and all reasonable steps to
segregate claims for any Taxes for which the Lessee indemnifies hereunder
from Taxes for which the Lessee is not obligated to indemnify hereunder, so
that the Lessee can control the contest of the former. In all
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<PAGE>
other claims requested to be contested by the Lessee, the Tax Indemnitee shall
control the contest of such claim, acting through counsel reasonably acceptable
to the Lessee. In no event shall the Lessee be permitted to contest (or the Tax
Indemnitee required to contest) any claim, (A) if such Tax Indemnitee provides
the Lessee with a legal opinion of counsel reasonably acceptable to the Lessee
that such action, suit or proceeding involves a risk of imposition of criminal
liability or will involve a material risk of the sale, forfeiture or loss of, or
the creation of any Lien (other than a Permitted Lien or Lessor Lien) on the
Property or any part of any thereof unless the Lessee shall have posted and
maintained a bond or other security reasonably satisfactory to the relevant Tax
Indemnitee in respect to such risk, (B) if an Event of Default has occurred and
is continuing unless the Lessee shall have posted and maintained a bond or other
security reasonably satisfactory to the relevant Tax Indemnitee in respect of
the Taxes subject to such claim and any and all expenses for which the Lessee is
responsible hereunder reasonably foreseeable in connection with the contest of
such claim, (C) unless the Lessee shall have agreed to pay and shall pay, to
such Tax Indemnitee within ten (10) Business Days after demand all reasonable
out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in
connection with contesting such Imposition including all reasonable legal,
accounting and investigatory fees and disbursements, or (D) if such contest
shall involve the payment of the Tax prior to the contest, unless the Lessee
shall provide to the Tax Indemnitee an interest-free advance in an amount equal
to the Imposition that the Indemnitee is required to pay (with no additional net
after-tax costs to such Tax Indemnitee). In addition for Tax Indemnitee
controlled contests and claims contested in the name of the Tax Indemnitee in a
public forum, no contest shall be required: (A) unless the amount of the
potential indemnity (taking into account all similar or logically related claims
that have been or could be raised in any audit involving such Tax Indemnitee for
which the Lessee may be liable to pay an indemnity under this Section 26.5(b)
---------------
exceeds $500,000 and (B) unless, if requested by the Tax Indemnitee, the Lessee
shall have provided to the Tax Indemnitee an opinion of counsel selected by the
Lessee (which may be in-house counsel) (except, in the case of income taxes
indemnified hereunder which shall be an opinion of independent tax counsel
selected by the Tax Indemnitee and reasonably acceptable to the Lessee) that a
reasonable basis exists to contest such claim. In no event shall a Tax
Indemnitee be required to appeal an adverse judicial determination to the United
States Supreme Court.
The party conducting the contest shall consult in good faith with the
other party and its counsel with respect to the contest of such claim for Taxes
(or claim for refund) but the decisions regarding what actions to be taken shall
be made by the controlling party in its sole judgement, provided, however, that
-------- -------
if the Tax Indemnitee is the controlling party and the Lessee recommends the
acceptance of a settlement offer made by the relevant Governmental Authority and
such Tax Indemnitee rejects such settlement offer then the amount for which the
Lessee will be required to indemnify such Tax Indemnitee with respect to the
Taxes subject to such offer shall not exceed the amount which it would have owed
if such settlement offer had been accepted. In addition, the controlling party
shall keep the noncontrolling party reasonably informed as to the progress of
the contest, and shall provide the noncontrolling party with a copy of (or
appropriate excerpts from) any reports or claims issued by the relevant auditing
agents or taxing authority to the controlling party thereof, in connection with
such claim or the contest thereof.
Each Tax Indemnitee shall at the Lessee's expense supply the Lessee with
such information and documents reasonably requested by the Lessee as are
necessary or advisable for the Lessee to participate in any action, suit or
proceeding to the extent permitted by this Section 26.5(b). No Tax Indemnitee
---------------
shall enter into any settlement or other compromise or fail to appeal an
adverse ruling with respect to any claim which is entitled to be indemnified
under this Section
-------
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<PAGE>
26.5 (and with respect to which contest is required under this Section 26.5(b))
- ---- ----------------
without the prior written consent of the Lessee, unless such Tax Indemnitee
waives its right to be indemnified under this Section 26.5 with respect to such
------------
claim.
Notwithstanding anything contained herein to the contrary, a Tax Indemnitee
will not be required to contest(and the Lessee shall not be permitted to
contest) a claim with respect to the imposition of any Tax if such Tax
Indemnitee shall waive its right to indemnification under this Section 26.5 with
------------
respect to such claim (and any claim with respect to such year or any other
taxable year the contest of which is materially adversely affected as a result
of such waiver).
(c) Reimbursement for Tax Savings. If (x) a Tax Indemnitee or any Affiliate
-----------------------------
thereof realizes a deduction, offset, credit or refund of any Taxes or any other
savings or benefit as a result of any indemnity paid by the Lessee pursuant to
this Section 26.5 or (y) by reason of the incurrence or imposition of any Tax
------------
(or the circumstances or event giving rise thereto) for which a Tax Indemnitee
is indemnified hereunder or any payment made to or for the account of such Tax
Indemnitee by the Lessee pursuant to this Section 26.5 or any payment made by a
------------
Tax Indemnitee to the Lessee by reason of this Section 26.5(c), such Tax
---------------
Indemnitee at any time actually realizes a reduction in any Taxes for which the
Lessee is not required to indemnify such Tax Indemnitee pursuant to this Section
-------
26.5 which reduction in Taxes was not taken into account in computing such
- ----
payment by the Lessee to or for the account of such Tax Indemnitee or by the Tax
Indemnitee to the Lessee, then such Tax Indemnitee shall promptly pay to the
Lessee (xx) the amount of such deduction, offset credit, refund, or other
savings or benefit together with the amount of any interest received by such Tax
Indemnitee on account of such deduction, offset, credit, refund or other savings
or benefit or (yy) an amount equal to such reduction in Taxes, as the case may
be, in either case together with an amount equal to any reduced Taxes payable by
such Tax Indemnitee as a result of such payment; provided that no such payment
--------
shall be made so long as a Default or Event of Default shall have occurred and
be continuing but shall be paid promptly after cure of such Default or Event of
Default. Each Tax Indemnitee agrees to take such actions as the Lessee may
reasonably request (provided in the good faith judgment of the Tax Indemnitee,
such actions would not result in a material adverse effect on the Tax Indemnitee
for which the Tax Indemnitee is not entitled to indemnification from the Lessee)
and to otherwise act in good faith to claim such refunds and other available Tax
benefits, and take such other actions as may be reasonable to minimize any
payment due from the Lessee pursuant to this Section 26.5 and to maximize the
------------
amount of any Tax savings available to it. The disallowance or reduction of any
credit, refund or other tax savings with respect to which a Tax Indemnitee has
made a payment to the Lessee under this Section 26.5(e) shall be treated as a
---------------
Tax for which the Lessee is obligated to indemnify such Tax Indemnitee hereunder
without regard to the exclusions set forth in the definition of Impositions
except the exclusions set forth in (iv), (v), (vi), (vii), (ix), (x), (xi),
(xiv) and (xvi).
(d) Payments. Any Imposition indemnifiable under this Section 26.5 shall be
-------- ------------
paid directly when due to the applicable taxing authority if direct payment is
practicable and permitted. If direct payment to the applicable taxing authority
is not permitted or is otherwise not made, any amount payable to a Tax
Indemnitee pursuant to Section 26.5 shall be paid within thirty (30) days after
------------
receipt of a written demand therefor from such Tax Indemnitee accompanied by a
written statement describing in reasonable detail the amount so payable, but not
before two Business Days prior to the date that the relevant Taxes are due. Any
payments made pursuant to this Section 26.5 shall be made directly to the Tax
------------
Indemnitee entitled thereto or the Lessee, as the case may be, in immediately
available funds at such bank or to such account as specified by
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<PAGE>
the payee in written directions to the payor, or, if no such direction
shall have been given, by check of the payor payable to the order of the
payee by certified mail, postage prepaid at its address as set forth in
Schedule I hereto. Upon the request of any Tax Indemnitee with respect
----------
to a Tax that the Lessee is required to pay, the Lessee shall furnish to
such Tax Indemnitee the original or a certified copy of a receipt for
the Lessee's payment of such Tax or such other evidence of payment as is
reasonably acceptable to such Tax Indemnitee.
(e) Reports. In the case of any report, return or statement
-------
required to be filed with respect to any Taxes that are subject to
indemnification under this Section 26.5 and of which the Lessee has
------------
knowledge, the Lessee shall promptly notify the Tax Indemnitee of such
requirement and, at the Lessee's expense (i) if the Lessee is permitted
(unless otherwise requested by the Tax Indemnitee) by Applicable Law,
timely file such report, return or statement in its own name or (ii) if
such report, return or statement is required to be in the name of or
filed by such Tax Indemnitee or the Tax Indemnitee otherwise requests
that such report, return or statement for filing by such Tax Indemnitee
in such manner as shall be satisfactory to such Tax Indemnitee and send
the same to the Tax Indemnitee for filing no later than 15 days prior to
the due date therefor. In any case in which the Tax Indemnitee will file
any such report, return or statement, the Lessee shall, upon written
request of such Tax Indemnitee, provide such Tax Indemnitee with such
information as is reasonable necessary to allow the Tax Indemnitee to
file such report, return or statement.
(f) Verification. At the Lessee's request, the amount of any
------------
indemnity payment by the Lessee or any payment by a Tax Indemnitee to
the Lessee pursuant to this Section 26.5 shall be verified and certified
------------
by an independent public accounting firm mutually acceptable to the
Lessee and the Tax Indemnitee. The costs of such verification shall be
borne by the Lessee unless such verification shall result in an
adjustment in the Lessee's favor of the lessor of (i) $10,000, and (ii)
five (5%) percent of the payment as computed by the Tax Indemnitee, in
which case such fee shall be paid by the Tax Indemnitee. In no event
shall the Lessee have the right to review the Tax Indemnitee's tax
returns or receive any other confidential information from the Tax
Indemnitee in connection with such verification. Any information
provided to such accountants by any Person shall be and remain the
exclusive property of such Person and shall be deemed by the parties to
be (and the accountants will confirm in writing that they will treat
such information as) the private, proprietary and confidential property
of such Person, and no Person other than such Person and the accountants
shall be entitled thereto and all such materials shall be returned to
such Person. Such accounting firm shall be requested to make its
determination within 30 days of the Lessee's request for verifications
and the computations of the accounting firm shall be final, binding and
conclusive upon the Lessee and the Tax Indemnitee. The parties agree
that the sole responsibility of the independent public accounting firm
shall be to verify and amount of a payment pursuant to this Lease and
that matters of interpretation of this Lease are not within the scope of
the independent accounting firm's responsibilities.
(g) Tax Ownership. The Lessor represents and warrants that it
-------------
will not, prior to the termination of this Lease, claim ownership of (or
any tax benefits, including depreciation, with respect to) the Property
for any income tax purposes, it being understood that the Lessee is and
will remain the owner of the Property for such income tax purposes until
the termination of this Lease. If, notwithstanding the income tax
intentions of the Parties as set forth herein, the Lessor actually
receives any income tax deductions, reductions in income tax or other
income tax benefit as a result of any claim for, or recharacterization
requiring such party to take, any tax benefits attributable to ownership
of the Property for income tax purposes, the Lessor shall pay to the
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Lessee, together with an amount equal to any reduced Taxes payable by
such Tax Indemnitee as a result of such payment, the amount of such
income tax savings actually realized by the Lessor (less the amount of
any anticipated increase in income tax which the Lessor determines is
currently payable as a result of such claim or recharacterization),
provided that the Lessee shall agree to reimburse the Lessor for any
--------
subsequent increase in the Lessor's income taxes resulting from such
claim or recharacterization not taken into account in the payment made
to the Lessee, up to the amount paid to the Lessee by the Lessor. The
parties agree that this Section 26.5(g) is intended to require a payment
---------------
to the Lessee if and only if the Lessor shall have actually received an
unanticipated tax savings with respect to the Property that would not
have been received if the Lessor had advanced funds to the Lessee in the
form of a loan secured by the Property in an amount equal to the Lease
Balance. Nothing in this Section 26.5(g) shall be construed to require
---------------
the Lessor to take any affirmative action to realize any tax savings if
in its good faith judgment such action may have a material adverse
affect on the Lessor.
26.6. Funding Losses. If any payment of Rent or the Lease Balance,
--------------
including pursuant to the Lessee's exercise of the Purchase Option under Section
-------
22.1, is made on any day other than the last day of an Interest Period
- ----
applicable thereto, the Lessee shall reimburse the Lessor within fifteen (15)
days after demand for any actual resulting loss or expense incurred by it,
including any loss incurred in obtaining, liquidating or employing deposits from
third parties, swaps, hedges or similar transactions entered into in connection
with or in contemplation of transactions relating to the Property, but excluding
loss of margin for the period after any such payment or conversion or failure to
borrow or prepay, provided that the Lessor shall have delivered to the Lessee a
--------
certificate signed by an officer of the Lessor as to the amount of such loss or
expense, which certificate shall be conclusive in the absence of manifest error,
and provided, further, that such loss shall in no event exceed the then
-------- -------
effective Lease Rate which would have been payable for the balance of such
Interest Period. The Lessor will, at the request of the Lessee, furnish such
additional information concerning the determination of such loss at the Lessee
may reasonable request.
26.7. Regulation D Compensation. During the Term, for so long as the
-------------------------
Lessor (or FBTC) is required to maintain reserves against "Eurocurrency
Liabilities" (or any other category of liabilities which include deposits by
reference to which the Lease Rate is determined or any category of extensions of
credit or other assets which includes loans by a non-United States office of the
Lessor to United States residents), and, as a result, the cost to the Lessor (or
its Funding Office) of making or maintaining its Advances is increased, then the
Lessor may require the Lessee to pay, contemporaneously with each payment of
Rent, an additional amount at a rate per annum up to but not exceeding the
excess of (i)(A) the applicable Eurodollar Rate divided by (B) one minus the
-----
Eurocurrency Reserve Requirements and (ii) the applicable Eurodollar Rate. In
the event that the Lessor wishes to require payment of such additional amount,
the Lessor (x) shall so notify the Lessee, in which case such additional Rent
shall be payable to the Lessor at the place indicated in such notice with
respect to each Interest Period commencing at least three Business Days after
the giving of such notice and (y) shall furnish to the Lessee at least five
Business Days prior to each date on which Rent is payable a certificate setting
forth the amount to which it is then entitled under this Section (which shall be
consistent with its good faith estimate of the level at which the related
reserves are maintained by it). Each such certificate shall be accompanied by
such information as the Lessee may reasonably request as to the computation set
forth therein.
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26.8. Deposits Unavailable. If on or prior to the first day of any Interest
--------------------
Period:
(a) deposits in dollars (in the applicable amounts) are not being
offered to the Lessor (or its Affiliates) in the relevant market for such
Interest Period, or
(b) the Lessor advises the Lessee that the Eurodollar Rate as
determined by the Lessor will not adequately and fairly reflect the cost to
the Lessor of funding Advances for such interest Period,
the Lessor shall forthwith give notice thereof to the Lessee, whereupon until
the Lessor notifies the Lessee that the circumstances giving rise to such
suspension no longer exist, the Advance shall begin to bear interest at the
Alternate Base Rate on the last day of the then current Interest Period
applicable thereto. The Lessor shall provide to the Lessee a statement in
writing of the Alternate Base Rate as calculated hereunder.
26.9. Illegality. If, on or after the date hereof, the adoption of any
----------
applicable law, rule or regulation, or any change therein, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by the Lessor (or its Funding Office) with any request or
directive (whether or not having the force of law) of any such authority,
central bank or comparable agency shall make it unlawful or impossible for the
Lessor (or its Funding Office) to make, maintain or fund the Advance, and the
Lessor shall so notify the Lessee, whereupon until the Lessor notifies the
Lessee that the circumstances giving rise to such suspension no longer exist,
the obligation to make the Advance shall be suspended. The Lessor, with the
consent of the Lessee (which consent shall not unreasonably be withheld), will
designate a different Funding Office if such designation will avoid the need for
giving such notice and will not, in the judgment of the Lessor, be otherwise
disadvantageous to the Lessor. If such notice is given (i) the Lessee shall be
entitled upon its request to a reasonable explanation of the factors underlying
such notice and (ii) the Advance shall begin to bear interest at the Alternate
Base Rate either (a) on the last day of the then current Interest Period
applicable thereto, if the Lessor may lawfully continue to maintain and fund the
Advance to such day or (b) immediately, if the Lessor shall determine that it
may not lawfully continue to maintain and fund the Advance to such day. The
Lessor shall provide to the Lessee a statement in writing of the Alternate Base
Rate as calculated hereunder.
26.10. Increased Cost and Reduced Return.
---------------------------------
(a) In the event that the adoption of any applicable law, rule or
regulation, or any change therein or in the interpretation or application
thereof by any governmental authority, central bank or comparable agency
charged with the interpretation or administration thereof or compliance by
the Lessor with any request or directive after the date hereof (whether or
not having the force of law) of any such authority, central bank or
comparable agency:
(i) does or shall subject the Lessor to any additional tax of any
kind whatsoever with respect to the Operative Documents or the Advance
made by it, or change the basis or the applicable rate of taxation of
payments to the Lessor of principal, interest or any other amount
payable hereunder (except for the imposition of or change in any tax
on or measured by the overall net income of the Lessor (other than any
such tax imposed by means of withholding));
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(ii) does or shall impose, modify or hold applicable any reserve,
special deposit, insurance assessment, compulsory loan or similar
requirement against assets held by, or deposits or other liabilities in or
for the account of, advances or loans by, or other credit extended by, or
any other acquisition of funds by, any office of the Lessor which are not
otherwise included in determination of the rate of interest on the Advance;
or
(iii) does or shall impose on the Lessor any other condition; and the
result of any of the foregoing is to increase the cost to the Lessor of
making or maintaining the Advance or to reduce any amount receivable
hereunder, then in any such case, the Lessee shall promptly pay to the
Lessor, upon demand, any additional amounts necessary to compensate the
Lessor for such increased cost or reduced amount receivable which the
Lessor deems to be material as determined by the Lessor with respect to the
Advance.
(b) If the Lessor shall have determined that, after the date hereof, the
adoption of any applicable law, rule or regulation regarding capital adequacy,
or any change therein, or any change in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or any request or directive
regarding capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, has or would have the effect of
reducing the rate of return on capital of the Lessor (or any entity directly or
indirectly controlling the Lessor) as a consequence of the Lessor's obligations
under the Operative Documents to a level below that which the Lessor (or any
entity directly or indirectly controlling the Lessor) could have achieved but
for such adoption, change, request or directive (taking into consideration its
policies with respect to capital adequacy) by an amount deemed by the Lessor to
be material, then from time to time, within fifteen (15) days after demand by
the Lessor, the Lessee shall pay to the Lessor such additional amount or amounts
as will compensate for Lessor for such reduction.
(c) The Lessor will promptly notify the Lessee of any event of which it
has knowledge, occurring after the date hereof, which will entitle the Lessor to
compensation pursuant to this Section and will, if practicable, with the consent
of the Lessee (which shall not unreasonably by withheld), designate a different
Funding Office or take any other reasonable action if such designation or action
will avoid the need for, or reduce the amount of, such compensation and will
not, in the judgement of the Lessor, be otherwise disadvantageous to the Lessor.
A certificate signed by an officer of the Lessor claiming compensation under
this Section and setting forth in reasonable detail its computation of the
additional amount or amounts to be paid to it hereunder shall be conclusive in
the absence of manifest error. In determining such amount, the Lessor may use
any reasonable averaging and attribution methods.
(d) Notwithstanding the foregoing clauses (a) and (b) of this Section
----------- --- -------
26.10, the Lessee shall only be obligated to compensate the Lessor for any
- -----
amount arising or accruing both:
(i) during (A) any time or period commencing (x) in the case of
subsection (a), not earlier than the first day of any Interest Period in
--------------
effect on the date which, and (y) in the case of subsection (b), not
--------------
earlier than the date on which the Lessor notifies the Lessee that it
proposes to demand such compensation and identifies to the Lessee the
statue, regulation or other basis upon which the claimed compensation is or
will be based and (B) any time or period during which, because of the
retroactive application of such statue, regulation or other basis, the
Lessor did not know that such amount would arise or accrue; and
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(ii) within six months prior to any demand therefor,
accompanied by a certificate of the Lessor claiming compensation
and setting forth in reasonable detail its computation of the
additional amount or amounts to be paid to it hereunder.
ARTICLE XXVII
ESTOPPEL CERTIFICATES
27.1. Estoppel Certificates. At any time and from time to time upon not
---------------------
less than fifteen (15) days' prior request by the Lessor or the Lessee (the
"Requesting Party"), the other party (whichever party shall have received such
----------------
request, the "Certifying Party") shall furnish to the Requesting Party (but in
----------------
the case of the Lessor, as Certifying Party, not more than four times per year
unless required to satisfy the requirements of any subleases and only to the
extent that the required information has been provided to the Lessor by the
Lessee) a certificate signed by an individual having the office of vice
president or higher in the Certifying Party certifying that this Lease is in
full force and effect (or that this Lease is in full force and effect as
modified and setting forth the modifications); the dates to which the Basic Rent
and Supplemental Rent have been paid; to the best knowledge of the signer of
such certificate, whether or not the Requesting Party is in default under any of
its obligations hereunder (and, if so, the nature of such alleged default); and
such other matters under this Lease as the Requesting Party may reasonably
request. Any such certificate furnished pursuant to this Article XXVII may be
-------------
relied upon by the Requesting Party, and any existing or prospective mortgagee,
purchaser or lender, and any accountant or auditor, of, from or the Requesting
Party (or any Affiliate thereof.)
ARTICLE XXVIII
ACCEPTANCE OF SURRENDER
28.1. Acceptance of Surrender. No surrender to the Lessor of this Lease
-----------------------
or of all or any portion of the Property or of any interest therein shall be
valid or effective unless agreed to and accepted in writing by the Lessor, and
no act by the Lessor or any representative or agent of the Lessor, other than a
written acceptance, shall constitute an acceptance of any such surrender.
ARTICLE XXIX
NO MERGER OF TITLE
29.1. No Merger of Title. There shall be no merger of this Lease or of
------------------
the leasehold estate created hereby by reason of the fact that the same Person
may acquire, own or hold, directly or indirectly, in whole or in part, (a) this
Lease or the leasehold estate created hereby or any interest in this Lease or
such leasehold estate, (b) the fee or groundleasehold estate in the Property,
except as may expressly be stated in a written instrument duly executed and
delivered by the appropriate Person or (c) a beneficial interest in the Lessor.
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ARTICLE XXX
INTENT OF THE PARTIES
30.1. Ownership of the Property.
-------------------------
(a) It is the intent of the parties hereto that for financial
accounting purposes the Lease constitutes an "operating lease" pursuant to
Statement of Financial Accounting Standards No. 13, as amended, and for
purposes of commercial, real estate, bankruptcy and federal, state and
local income tax law, the transaction contemplated hereby is a financing
arrangement. The parties further intend that Lessee shall be treated as
owner of the Property for income tax purposes and shall be entitled to all
deductions for depreciation thereof. Lessor shall take no action
inconsistent with such treatment.
(b) It is the intent of the parties hereto that the obligations of
the Lessee under this Lease to pay Basic Rent and Supplemental Rent or
Lease Balance in connection with any purchase of the Property pursuant to
this Lease shall be treated as payments of interest on and principal of,
respectively, loans from the Lessor to the Lessee.
(c) Specifically, without limiting the generality of subsection (b)
--------------
of this Section 30.1, the Lessor and the Lessee intend and agree that with
------------
respect to the nature of the transactions evidenced by this Lease in the
context of the exercise of remedies under the Operative Documents,
including, without limitation, in the case of any insolvency or
receivership proceedings or a petition under the United States bankruptcy
laws or any other applicable insolvency laws or statute of the United
States of America or any State or Commonwealth thereof affecting the Lessee
and the Lessor, or any enforcement or collection actions, the transactions
evidenced by this Lease are loans made by the Lessor as unrelated third
party lender to the Lessee.
ARTICLE XXXI
PAYMENT OF CERTAIN EXPENSES
31.1. Transaction Expenses.
--------------------
(a) The Lessee shall pay, or cause to be paid, from time to time all
Transaction Expenses in respect of the transactions taking place on the
Documentation Date and on Acquisition Date on such respected date;
provided, however, that, if the Lessee has not received written invoices
-------- -------
therefor prior to such date, such Transaction Expenses shall be paid within
ten (10) Business Days after the Lessee has received written invoices
therefor.
(b) The Lessee shall pay or cause to be paid (i) all Transaction
Expenses incurred by the Lessor in entering into any future amendments or
supplements with respect to any of the Operative Documents, whether or not
such amendments or supplements are ultimately entered into, or giving or
withholding of waivers of consents hereto or thereto, in each case which
have been requested by or approved by the Lessee, (ii) all Transaction
Expenses incurred by the Lessor in connection with any purchase of the
Property by the Lessee or other Person pursuant to this Lease and (iii) all
Transaction Expenses incurred by the Lessor in respect of enforcement of
any of its rights or remedies against the Lessee in respect of the
Operative Documents.
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31.2. Brokers' Fees and Stamp Taxes. The Lessee shall pay or cause to be
-----------------------------
paid any broker's fees and any and all stamp, transfer and other similar taxes,
fees and excises, if any, including any interest and penalties, which are
payable in connection with the transactions contemplated by this Lease and the
other Operative Documents.
ARTICLE XXXII
OTHER COVENANTS AND AGREEMENTS OF LESSEE
32.1 Covenants. The Lessee hereby agrees that so long this Lease is in
----------
effect:
(a) Information. The Lessee will deliver to the Lessor:
-----------
(i) promptly upon the request of the Lessor, the publicly
available consolidated and consolidating statements of financial position of the
Lessee and its consolidated subsidiaries as of the end of each of the Lessee's
fiscal years and the related consolidated and consolidating statements of income
and cash flows for such fiscal year, setting forth in each case in comparative
form the figures for the previous fiscal year, with such consolidated financial
statements reported on by Ernst & Young or other independent public accountants
of nationally recognized standing reasonably acceptable to the Lessor; and with
respect to each of the first three quarters of each fiscal year of the Lessee,
the publicly available unaudited consolidated statement of financial position of
the Lessee as of the end of such quarter and the related unaudited consolidated
statements of income and cash flows for such quarter and for the portion of the
Lessee's fiscal year ended at the end of such quarter:
(ii) as soon as possible and in any event within ten (10) days
after a Responsible Employee of the Lessee obtains knowledge of the occurrence
of each Event of Default or each event that, with the giving of notice or time
elapse, or both, would constitute an Event of Default continuing on the date of
such statement, a statement of the authorized officer setting forth details of
such Event of Default or event an the action that the Lessee proposes to take
with respect thereto; provided that the Lessee shall not be obligated to give
notice of any Event of Default which is remedied within ten (10) days after such
Responsible Employee first obtains knowledge;
(iii) promptly upon becoming aware thereof, written notice of the
commencement or existence of any proceeding against the Lessee or any Affiliate
of the Lessee by or before any court or governmental agency that might, in the
reasonable judgement of the Lessee, result in a Material adverse effect on the
business, operations or financial conditions of the Lessee or the ability of the
Lessee to perform its obligations under the Operative Documents;
(iv) as soon as possible and in any event within ten (10) days
after a Responsible Employee of the Lessee obtains knowledge of the occurence of
any violation or alleged violation of an Environmental Law by Lessee, a
statement of an authorized officer setting forth the details of such violation
and the action which the Lessee proposes to take with respect thereto; and
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(v) from time to time such additional information regarding the
business, properties, condition or operations, financial or otherwise, of
the Lessee, or regarding the Property or the status of any construction
thereon, if any, as the Lessor may reasonably request in connection with
the Property.
(b) Obligations under Loan Documents. Absent prior written notice from the
--------------------------------
Lessor to the contrary, the Lessee shall comply with (i) all requirements in the
Nomura Loan Agreement that the Lessor, as Borrower, furnish the Lender with
notices, documents, reports, budgets, data and all other information relating to
the Property, including, without limitation, the requirements in connection with
a defeasance of the Loan pursuant to Section 2.11 of the Nomura Loan Agreement
------------
and (ii) all requirements and obligations of Operator set forth in the Mortgage.
(c) Compliance with Laws. The Lessee will comply in all Material respects
--------------------
with all applicable laws, ordinances, rules, regulations, and requirements of
governmental authorities (including, without limitation, Environmental Laws and
ERISA and the rules and regulations thereunder) with respect to its Material
Assets, including the Property, except where the necessity of compliance
therewith is contested in good faith by appropriate proceedings.
(d) Further Assurances. The Lessee shall take or cause to be taken from
------------------
time to time all action necessary to assure that the intent of the parties
pursuant to the Operative Documents is given effect as contemplated by this
Lease. The Lessee shall execute and deliver, or cause to be executed and
delivered, to the Lessor from time to time, promptly upon request therefor, any
and all other and further instruments that may be reasonably requested by the
Lessor to cure any deficiency in the execution and delivery of this Lease or any
Operative Document to which it is a party.
(e) Preservation of Existence, Etc. The Lessee will preserve and maintain
------------------------------
its existence and all rights, privileges and franchises necessary and desirable
in the normal conduct of its business and the performance of its obligations
hereunder and under the Operative Documents; provided that the Lessee may
consolidate with or merge with or into any other corporation or convey or
transfer its properties and assets substantially as an entirety to any Person,
if either the Lessee shall be the continuing corporation, or the corporation (if
other than the Lessee) formed by such consolidation or into which the Lessee is
merged or the Person which acquires by conveyance or transfer the properties and
assets of the Lessee substantially as an entirety shall expressly assume, by an
assumption agreement executed and delivered to the Lessor, the performance of
the Lessee's obligations under each of the Operative Documents.
(f) Nonpetition Covenants. Lessee shall not during the Term of the Lease
---------------------
acquiesce, petition or otherwise invoke or cause the Lessor to invoke the
process of any court or government authority for the purpose of commencing or
sustaining a case against the Lessor under any federal or state bankruptcy,
insolvency or similar law or appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of the Lessor or any
substantial part of its property, or ordering the winding up or liquidation of
the affairs of the Lessor. Lessor shall not during the Term of the Lease
acquiesce, petition or otherwise invoke or cause the Lessee to invoke the
process of any court or government authority for the purpose of commencing or
sustaining a case against the Lessee under any federal or state bankruptcy,
insolvency or similar law or appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of the Lessee or any
substantial part of its property, or ordering the winding up or liquidation of
the affairs of the Lessee.
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ARTICLE XXXIII
MISCELLANEOUS
33.1. Survival; Severability; Etc. Anything contained in this Lease to the
---------------------------
contrary notwithstanding, all claims against and liabilities of the Lessee or
the Lessor arising from events commencing prior to the expiration or earlier
termination of this Lease shall survive such expiration or earlier termination
for a period of one year except as to indemnification which shall continue to
survive. If any term or provision of this Lease or any application thereof shall
be declared invalid or unenforceable, the remainder of this Lease and any other
application of such term or provision shall not be affected thereby. If any
right or option of the Lessee provided in this Lease would, in the absence of
the limitation imposed by this sentence, be invalid or unenforceable as being in
violation of the rule against perpetuities or any other rule of law relating to
the vesting of an interest in or the suspension of the power of alienation of
property, then such right or option shall be exercisable only during the period
which shall end twenty-one (21) years after the date of death of the last
survivor of the descendants of Franklin D. Roosevelt, the former President of
the United States, Henry Ford, the deceased automobile manufacturer, and John D.
Rockefeller, the founder of the Standard Oil Company, known to be alive on the
date of the execution, acknowledgment and delivery of this Lease.
33.2. Amendments and Modifications. Neither this Lease nor any provision
----------------------------
hereof may be amended, waived, discharged or terminated except by an instrument
in writing in recordable form signed by the Lessor and the Lessee.
33.3. No Waiver. No failure by the Lessor or the Lessee to insist upon the
---------
strict performance of any term hereof or to exercise any right, power or remedy
upon a default hereunder, and no acceptance of full or partial payment of Rent
during the continuance of any such default, shall constitute a waiver of any
such default or of any such term. To the fullest extent permitted by law, no
waiver of any default shall affect or alter this Lease, and this Lease shall
continue in full force and effect with respect to any other then existing or
subsequent default.
33.4. Notices. All notices, demands, requests, consents, approvals and
-------
other communications hereunder shall be in writing (including by facsimile), and
directed to the address of the appropriate party as set forth in Schedule I
----------
hereto.
33.5. Successor and Assigns. All the terms and provisions of this Lease
---------------------
shall inure to the benefit of the parties hereto and their respective successors
and permitted assigns.
33.6. Headings and Table of Contents. The headings and table of contents in
------------------------------
this Lease are for convenience of reference only and shall not limit or
otherwise affect the meaning hereof.
33.7. Counterparts. This Lease may be executed in any number of
------------
counterparts, each of which shall be an original, but all of which shall
together constitute one and the same instrument.
33.8. GOVERNING LAW. THIS LEASE SHALL BE GOVERNED BY, AND CONSTRUED AND
-------------
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CONNECTICUT. WITHOUT
LIMITING THE FOREGOING, IN THE EVENT THAT THIS LEASE IS DEEMED TO CONSTITUTE A
FINANCING, WHICH IS THE INTENTION OF THE PARTIES, THE LAWS OF THE STATE OF
CONNECTICUT, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES,
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SHALL GOVERN THE CREATION, TERMS AND PROVISIONS OF THE INDEBTEDNESS EVIDENCED
HEREBY.
33.9. Original Lease. The single executed original of this Lease marked
--------------
"THIS COUNTERPART IS THE ORIGINAL EXECUTED COUNTERPART" on the signature page
thereof and containing the receipt of the Lessor therefor on or following the
signature page thereof shall be the Original Executed Counterpart of this Lease
(the "Original Executed Counterpart"). To the extent that this Lease constitutes
-----------------------------
chattel paper, as such term is defined in the Uniform Commercial Code as in
effect in any applicable jurisdiction, no security interest in this Lease may be
created through the transfer or possession of any counterpart other than the
Original Executed Counterpart.
33.10. Waiver of Jury Trial. THE PARTIES HERETO KNOWINGLY, VOLUNTARILY AND
--------------------
INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH,
THIS LEASE AND/OR ANY OF THE OTHER OPERATIVE DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED THEREBY, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER VERBAL OF WRITTEN) OR ACTIONS OR SUCH PARTIES. THE PARTIES HERETO
ACKNOWLEDGE AND AGREE THAT THEY HAVE RECEIVED FULL AND SUFFICIENT CONSIDERATION
FOR THIS PROVISION AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE
PARTIES ENTERING INTO THIS LEASE AND EACH SUCH OTHER OPERATIVE DOCUMENT.
33.33. Compliance with Loan Documents. Lessor covenants and agrees with
------------------------------
Lessee that Lessor shall (a) not without the express written consent of the
Lessee, which consent shall not be unreasonably withheld, enter into any
amendments or modifications of the FBTC Loan Agreement, the Lessor Pledge
Agreement or any of the Loan Documents to which it is a party and (b) comply
with the terms of the FBTC Loan Agreement, the Lessor Pledge Agreement and the
Loan Document to which it is a party.
33.12. Payment of Equity Balance; Transfer of Beneficial Interest in
-------------------------------------------------------------
Lessor. In the event the Lessee exercises it right to pay the Equity Balance to
- ------
the Lessor as set forth in this Lease, the Lessee shall not pay such Equity
Balance without complying with the provisions of the Nomura Loan Agreement. The
parties further agree that as soon as possible (time being of the essence) after
the payment by the Lessee to the Lessor of the Equity Balance or upon the
Lessor's exercise of all its rights under the Securities Pledge Agreement and
the Certificate Pledge Agreement, including, without limitation, its rights to
possess the Pledged Securities and the Certificate A, the Lessee shall accept a
transfer requested of it by the beneficial owner of the Lessor or its equity
interest in the Lessor. The Lessee and Lessor agree to execute all documents
reasonably necessary to effectuate such transfer. The acquisition by the Lessee
of the equity interest in the Lessor shall comply with the provisions of the
Nomura Loan Agreement.
33.13. Concerning the Lessor. This Lease has been executed by Wilmington
---------------------
Trust Company solely in its capacity as Trustee under the Trust Agreement and
not in its individual capacity and in no case shall the Trust Company (or any
entity acting as successor or additional Trustee under the Trust Agreement) be
personally liable for or on account of any of the statements, representations,
warranties, covenants or obligations of the Trust, the Trustee or the Lessor
hereunder, any such liabilities being hereby waived by the other parties hereto
provided, that Wilmington Trust Company accepts the benefits or running to it
- --------
hereunder and agrees that is shall be liable in its individual capacity for its
own gross negligence or willful misconduct. If a successor Trustee is appointed
in accordance with the terms of the Trust Agreement, such successor Trustee
shall, without any further act, succeed to all the rights, duties,
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<PAGE>
immunities and obligations of the Lessor hereunder and the predecessor Trustee
shall be released from all further duties and obligations hereunder arising
after such successor Trustee will have been appointed.
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<PAGE>
IN WITNESS WHEREOF, the parties have caused this Lease be duly executed
and delivered as of the date first above written.
BROOKDALE LIVING COMMUNITIES OF
CONNECTICUT, INC.,
By /s/ Darryl W. Copeland, Jr.
----------------------------------
Name: Darryl W. Copeland, Jr.
Title: Vice President
<PAGE>
Commitment: THE GABLES BUSINESS TRUST
- ---------- By Wilmington Trust Company, not in its
individual capacity but as Trustee
$23,125,000
By /s/ Patricia Evans
---------------------------------------
Patricia A. Evans
Financial Services Officer
<PAGE>
THIS COUNTERPART IS NOT ORIGINAL EXECUTED COUNTERPART.
Receipt of this original counterpart of the foregoing Lease is hereby
acknowledged as of the date hereof.
NOMURA ASSET CAPITAL CORPORATION
By /s/ Raymond M. Anthony
-----------------------------------
Name: Raymond M. Anthony
Title: Managing Director
<PAGE>
Exhibit 10.58
-------------
SECOND AMENDMENT TO LOAN AGREEMENT AND DOCUMENTS
THIS SECOND AMENDMENT TO LOAN AGREEMENT AND DOCUMENTS, dated as of December
11, 1997 (this "Second Amendment"), is entered into by and between BROOKDALE
LIVING COMMUNITIES, INC., a Delaware corporation (the "Borrower"), and LaSALLE
NATIONAL BANK, a national banking association (the "Bank").
WITNESSETH
WHEREAS, the Borrower has previously executed and delivered to the Bank (a)
a certain Note dated October 22, 1997 in the original principal amount of
$10,000,000.00 (the "Original Note"), (b) a certain Loan Agreement dated October
22, 1997 (the "Original Loan Agreement") evidencing a Loan made by the Bank to
the Borrower pursuant to such Original Loan Agreement, (c) a certain Amended and
Restated Note dated December 1, 1997 in the original principal amount of
$15,000,000.00 (the "Amended Note"), and (d) a certain First Amendment to Loan
Agreement and Documents dated December 1, 1997 (the "First Amendment") amending
certain terms of the Original Loan Agreement and Documents:
WHEREAS, the Borrower has requested the Bank to increase the principal
amount of the Loan by $5,000,000.00 from $15,000,000.00 to $20,000,000.00
subject to the terms hereof;
WHEREAS, the Borrower and the Bank desire to modify the Original Loan
Agreement and the Documents, as amended by the First Amendment and evidenced by
the Amended Note, to reflect the modified terms of the Loan as set forth in this
Second Amendment (the Original Loan Agreement, as amended by the First
Amendment, is herein referred to as the "Loan Agreement").
NOW, THEREFORE, in consideration of the premises, the covenants and
agreements herein contained, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
Incorporation of Recitals. The above foregoing recitals are
incorporated into and made a part of this Second Amendment. All capitalized
terms used herein, if not otherwise specifically defined herein, shall have the
meanings and definitions prescribed in the Loan Agreement and the Documents.
Loan Commitment. As of the date of this Second Amendment, the Loan
Agreement and the Documents are hereby amended to increase the principal amount
of the Loan and Loan Commitment from $15,000,000.00 to an amount not to exceed
$20,000,000.00 until January 31, 1998 at which time, without further notice or
demand (a) the Borrower shall pay all amounts necessary to reduce the
outstanding principal balance of the Loan to $15,000,000.00 or less, and (b) the
Loan Commitment shall be permanently reduced to an amount not to exceed
$15,000,000.00.
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<PAGE>
Execution of Note. Contemporaneous with the execution of this Second
Amendment the Borrower has executed and delivered a Second Amended and Restated
Note in the principal sum of up to $20,000,000.00 evidencing the Loan as amended
by this Second Amendment, which Second Amended and Restated Note shall replace
and supersede the Amended Note.
Maturity Date. The definition of Maturity Date in the Loan Agreement
is amended and restated to mean and be defined as the first to occur of (a) the
date on which Borrower closes on a secondary offering of Borrower's common
stock, (b) the Refinance Date, or (c) April 22, 1998; provided, however, if
Borrower has not closed on its secondary offering of common stock on or before
January 31, 1998, and if the Refinance Date is not on or before January 31,
1998, the Maturity Date means (x) January 31, 1998 as to $5,000,000.00 of the
Loan, on which date Borrower shall pay all amounts necessary to reduce the
outstanding principal balance of the Loan to $15,000,000.00 or less and on which
date the Loan Commitment shall be permanently reduced to an amount not to exceed
$15,000,000.00 and (y) as to the balance of the Loan and all outstanding Loan
Advances together with any accrued but unpaid interest thereon and any other
costs or amounts owed to the Bank under the Loan Agreement as amended hereby (i)
the date on which Borrower closes on a secondary offering of Borrower's common
stock, (ii) the Refinance Date, or (iii) April 22, 1998.
Payment of Fees. Comtemporaneous with and as a condition of the
execution of this Second Amendment, the Borrower shall pay the Bank a fee in
the amount of $37,500.00 as additional consideration for increasing the amount
of the Loan. The Borrower shall also pay the legal fees of Bank counsel in
connection with the preparation of this Second Amendment and matters related
thereto.
Reaffirmation. To the extent any term(s) or conditions(s) in any of
the Documents shall contradict or be in conflict with the amended terms of the
Loan as set forth herein, such terms and conditions are hereby deemed modified
and amended accordingly, upon the effective date hereof, to reflect the terms of
the Loan as so amended herein. All terms of the Documents, as amended hereby,
shall be and remain in full force and effect and shall constitute the legal,
valid, binding and enforceable obligations of the Borrower to the Bank. As of
the date of this Second Amendment, the Borrower herein restates, ratifies and
reaffirms each and every term and condition set forth in the Loan Agreement and
the Documents as amended herein. There are no other changes to the Loan
Agreement or the Documents except for the changes specifically set forth herein.
Certification. To further induce the Bank to enter into this Second
Amendment, the Borrower represents and warrants to the Bank as follows: (a) the
Borrower is empowered to perform all acts and things undertaken and done
pursuant to this Second Amendment and the Second Amended and Restated Note and
has taken all corporate or other action necessary to authorize the execution,
delivery and performance of this Second Amendment and the Second Amended and
Restated Note; (b) the officers of Borrower executing this Second Amendment and
the Second Amended and Restated Note have been duly elected or appointed and
have been fully authorized to executive the same at the time executed; (c) this
Second Amendment and the Second Amended and Restated Note, when executed and
delivered, will be the legal, valid and binding obligation of the Borrower,
enforceable against it in accordance with its respective terms; and (d) the
Borrower is delivering to the Bank contemporaneously herewith, a certificate of
the Borrower's Secretary
-2-
<PAGE>
certifying as to the resolutions of the Executive Committee of Borrower's Board
of Directors approving this Second Amendment and the Second Amended and Restated
Note and the incumbency and signatures of the officers of the Borrower signing
this Second Amendment and the Second Amended and Restated Note.
Absence Of Claim. To further induce the Bank to enter into this
Second Amendment, the Borrower hereby acknowledges and agrees that, as of the
date hereof, there exists no right of offset, defense, counterclaim or objection
in favor of the Borrower as against the Bank with respect to the Obligations to
the Bank.
Illinois Law to Govern. This Second Amendment and each transaction
contemplated hereunder shall be deemed to be made under and shall be construed
and interpreted in accordance with the laws of the State of Illinois.
Binding Effect. The terms, provisions and conditions of this Second
Amendment shall be binding upon and inure to the benefit of each respective
party and their respective legal representatives, successors and assigns.
IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
BORROWER:
BROOKDALE LIVING COMMUNITIES, INC.
By: /s/ Craig G. Walczyk
-----------------------------------------
Print Name: Craig G. Walczyk
------------------------------------
Title: Vice President
-----------------------------------------
ATTEST:
By: Robert J. Rudnik
-------------------------
Print Name: Robert J. Rudnik
-------------------
Title: Secretary
-------------------------
BANK:
LaSALLE NATIONAL BANK
By: /s/ Ann B. O'Shaughnessy
-----------------------------------------
Print Name: Ann B. O'Shaughnessy
------------------------------------
Title: Asst. Vice President
-----------------------------------------
-3-
<PAGE>
EXHIBIT 21.1
<TABLE>
<CAPTION>
Subsidiaries of the Company (including indirectly owned subsidiaries)
<S> <C>
Name State of Incorporation/Formation
- ---- --------------------------------
BLC Property, Inc. Delaware
Brookdale Living Communities of Delaware
Arizona, Inc.
Brookdale Living Communities of Delaware
Illinois, Inc.
Brookdale Living Communities of Delaware
New York, Inc.
Brookdale Living Communities of Delaware
Washington, Inc.
Brookdale Holdings, Inc. Delaware
Brookdale Living Communities of Delaware
Delaware, Inc.
Brookdale Living Communities of Delaware
Illinois-II, Inc.
Brookdale Living Communities of Delaware
Michigan, Inc.
Brookdale Living Communities of Delaware
Minnesota, Inc.
Brookdale Living Communities of Delaware
Minnesota-II, Inc.
Brookdale Living Communities of Delaware
Texas, Inc.
Brookdale Living Communities of Delaware
Texas-II, Inc.
Brookdale Living Communities of Delaware
Connecticut, Inc.
River Oaks Partners Illinois
Ponds of Pembroke Limited Partnership Illinois
BLC of Texas-II, L.P. Delaware
Brookdale Living Communities of Florida, Inc. Delaware
Brookdale Living Communities of California, Inc. Delaware
Brookdale Living Communities of North Carolina, Inc. Delaware
Brookdale Living Communities of New Jersey, Inc. Delaware
</TABLE>
