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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
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CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 20, 2000
BROOKDALE LIVING COMMUNITIES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 0-22253 36-4103821
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(State or other jurisdiction of (Commission File (I.R.S. Employer
incorporation or organization) Number) Identification No.)
330 North Wabash Avenue, Suite 1400, Chicago, Illinois 60611
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (312) 977-3700
77 West Wacker Drive, Suite 4400, Chicago, Illinois 60601
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS.
In a press release, dated April 20, 2000 (the "Press Release"), Brookdale
Living Communities, Inc. (the "Company") announced that The Prime Group Inc. and
certain of its affiliates have agreed to sell 3,916,850 of their shares of the
Company's common stock, representing approximately 39.8% of the Company's
outstanding shares, to Fortress Registered Investment Trust ("Fortress"),
pursuant to a Stock Purchase Agreement by and among Fortress, the Company,
Michael W. Reschke, The Prime Group, Inc., Prime Group II, L.P., Prime Group VI,
L.P. and PGLP, Inc., dated as of April 20, 2000 (the "Stock Purchase
Agreement"). The aggregate purchase price for the shares is $58,752,750, or $15
per share. In addition, Fortress has agreed to purchase from The Prime Group,
Inc. and Michael W. Reschke, the Company's Chairman and the principal
shareholder of The Prime Group Inc., up to an additional 87,500 shares of the
Company's common stock which are subject to certain options for an aggregate
purchase price of up to $1,312,500, or $15 per share. Completion of the sale is
subject to certain customary closing conditions, including satisfaction of the
applicable requirements of the Hart-Scott-Rodino Antitrust Improvements Act.
Upon completion of the sale, Mr. Reschke will resign from the Company's board of
directors, and two of Fortress' designees will be elected to the Company's board
to fill the vacancy created by Mr. Reschke's resignation and to fill the
currently existing vacancy on the board.
The transaction was approved by an independent committee of the Company's
board of director's based on, among other things, the execution of a standstill
agreement by and between Fortress and the Company, dated as of April 20, 2000
(the "Standstill Agreement"). The Standstill Agreement provides that Fortress
may not acquire during its term additional shares of the Company's common stock
or engage in other activity designed to acquire control of the Company, except
in the context of a cash tender offer for all of the Company's shares at not
less than $15 per share, which cannot occur without the board's consent prior to
July 5, 2000. The Standstill Agreement terminates after two years or earlier if
Fortress acquires a majority of the Company's Common Stock.
A copy of the Standstill Agreement, the Press Release and the Stock
Purchase Agreement are attached hereto as Exhibits 10.1, 99.1 and 99.2,
respectively, and are incorporated herein by reference.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits:
Exhibit
No. Description
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10.1 Standstill Agreement, dated as of April 20, 2000, by and
between Fortress Registered Investment Trust and
Brookdale Living Communities, Inc.
99.1 Press Release of Brookdale Living Communities, Inc. dated
April 20, 2000.
99.2 Stock Purchase Agreement, dated as of April 20, 2000, by
and among Fortress Registered Investment Trust, Brookdale
Living Communities, Inc., Michael W. Reschke, The Prime
Group, Inc., Prime Group II, L.P., Prime Group VI, L.P.
and PGLP, Inc. dated as of April 20, 2000
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BROOKDALE LIVING COMMUNITIES, INC.
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Registrant
Dated: April 21, 2000 By: /s/ Robert J. Rudnik
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Robert J. Rudnik
Executive Vice President,
General Counsel and Secretary
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EXHIBIT 10.1
STANDSTILL AGREEMENT
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THIS STANDSTILL AGREEMENT (this "Standstill Agreement") dated as of
April 20, 2000, is entered into by and between Brookdale Living Communities,
Inc., a Delaware corporation (including its successors, the "Company"), and
Fortress Registered Investment Trust, a Delaware business trust (the
"Purchaser").
WHEREAS, the Purchaser wishes to acquire all of the common stock,
$0.01 par value, of the Corporation (the "Common Stock") currently owned
(including shares subject to currently outstanding options) by The Prime Group,
Inc. certain of its affiliates and Mr. Michael W. Reschke (collectively, the
"Seller") as set forth in Exhibit A (the "Prime Shares") pursuant to the Stock
Purchase Agreement by and among the Company, the Seller, and the Purchaser (the
"Stock Purchase Agreement");
WHEREAS, the Board of Directors of the Company approved the Purchaser
becoming an interested stockholder for purposes of Section 203 of the General
Corporation Law of the State of Delaware so as to eliminate any restriction
under such Section 203 on a subsequent business combination involving the
Corporation and the Purchaser (the "Section 203 Approval");
WHEREAS, as a condition to the Section 203 Approval, the Board of
Directors of the Company has required the Purchaser to execute this Agreement on
and subject to the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the respective representations and
warranties hereinafter set forth and of the mutual covenants and agreements
contained herein and other good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound,
the parties hereto agree as follows:
Section 1. Standstill. (a) For a period commencing upon the date of
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this Agreement and ending on May 14, 2002 (the "Expiration Day"), neither the
Purchaser, any persons controlling the Purchaser (the "Controlling Person"), nor
any of their affiliates shall (nor shall the Controlling Person permit the
Purchaser to), without the prior written consent of the Company (without
counting as a director for
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such purpose any director designated by the Purchaser or the Controlling
Person), directly or indirectly:
(i) purchase, offer to purchase, agree to acquire or otherwise acquire
Beneficial Ownership (as defined below) of additional Common Stock or any
equivalents to the Common Stock (the "Common Stock Equivalents"), except
pursuant to the Stock Purchase Agreement;
(ii) except as required by law, propose to enter into, or announce or
disclose any intention to propose to enter into, directly or indirectly, any
merger or business combination involving the Company of any of its subsidiaries
or to purchase, directly or indirectly, all or substantially all of the assets
of the Company and its subsidiaries, taken as a whole;
(iii) request the Company (or its directors, officers, employees or
agents), directly or indirectly, to take any action which would require the
Company to make a public announcement regarding the possibility of (A) a
business combination or merger involving the Company or any of its subsidiaries,
on the one hand, or Purchaser or any Controlling Person, or any affiliate, on
the other hand, or (B) the sale to the Purchaser or any Controlling Person, or
any affiliate thereof of all or substantially all of the assets of the Company
and its subsidiaries, taken as a whole;
(iv) make, or in any way participate in, directly or indirectly, any
"solicitation" of "proxies" (as such terms are defined or used in Regulation 14A
of the Securities Exchange Act of 1934, as amended (the "Exchange Act")), to
vote, or seek to advise or influence any person with respect to the voting of,
any Common Stock, or become a "participant" in any "election contest" (as such
terms are used or defined in Regulation 14A of the Exchange Act);
(v) form, join or in any way participate in a "group" (within the meaning
of Section 13(d)(3) of the Exchange Act) or otherwise act in concert with any
person for the purpose of circumventing the provisions of this Agreement;
(vi) nominate a slate of directors or seek to change the size of the Board
of Directors of the Company together or in connection with any other person or
group; or
(vii) challenge the legality of the foregoing restrictions; provided that
after July 5, 2000 the Purchaser or any of its affiliates may commence a cash
tender offer for not less than all shares of Common Stock not owned by it for a
price equal to the
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greater of $15 per share or the price paid to the Seller pursuant to the Stock
Purchase Agreement and may acquire all shares tendered pursuant thereto (it
being understood that the foregoing restrictions shall not prohibit or limit the
Purchaser from taking any appropriate action to disclose its intentions or
seeking the support of the Board of Directors of the Company with respect to
such tender offer), and, if the Purchaser shall thereafter Beneficially Own a
majority (not including for such purposes shares owned by or acquired from Cap Z
(as hereinafter defined)) of the Common Stock, the foregoing restrictions shall
no longer be applicable. Notwithstanding the foregoing, for the purposes of
calculating the number of shares of Common Stock and/or Common Stock Equivalents
Beneficially Owned by the Purchaser, the Controlling Person and their
affiliates, there shall be excluded from such calculation any shares owned by
any institution which is controlled by the Controlling Person as part of such
institution's investment portfolio (and not owned for the purpose of affecting
control of the Company). For purposes of this Agreement, "Beneficially Own" or
"Beneficial Ownership" means beneficial ownership determined in accordance with
Rule 13d-3 promulgated under the Exchange Act, and "Fully Diluted Common Stock"
means all outstanding shares of Common Stock and all shares of Common Stock
issuable upon the conversion or exchange of all then outstanding Common Stock
Equivalents.
(b) The provisions of this Section 1 shall terminate prior to the
Expiration Day, and the Purchaser, the Controlling Person or any of their
affiliates shall be free to acquire Common Stock and/or Common Stock Equivalents
without regard to the Standstill, at and following the earliest time that (A)
any person other than the Purchaser, the Controlling Person, Health Partners,
Capital Z Partners, Ltd. (the ultimate general partner of Health Partners,
hereinafter "Cap Z") or any of their affiliates (and other than a person acting
in concert with any of the foregoing) acquires Beneficial Ownership of Common
Stock and/or Common Stock Equivalents representing, together with any Common
Stock and/or Common Stock Equivalents already Beneficially Owned by such person
and its affiliates, at least 20% of the total Fully-Diluted Common Stock, (B)
any person other than the Purchaser, the Controlling Person or any of their
affiliates notifies in writing the Company or its Board of Directors or publicly
announces that it has acquired or has offered to acquire (including but not
limited to any offer to acquire by means of a tender offer) Beneficial Ownership
of Common Stock and/or Common Stock Equivalents representing, together with any
Common Stock and/or Common Stock Equivalents already Beneficially Owned (as
determined in accordance with Rule l3d-3 promulgated under the Exchange Act) by
such person and its affiliates, at least 20% of the total Fully-Diluted Common
Stock, (C) any person commences (or publicly announces its intention to
commence) a proxy contest pursuant to which such person
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seeks to defeat or otherwise challenge the election of the designees of the
Purchaser as directors of the Company, (D) the restrictions set forth in Article
2 "Health Partners Standstill" of the Stockholder Agreement, dated May 14, 1999,
shall be amended, modified, waived, or otherwise terminated without the prior
written consent of the Purchaser or (E) the Stock Purchase Agreement shall have
terminated without the Purchaser or any assignee thereof having acquired shares
of Common Stock pursuant thereto.
Section 2. Representations and Warranties of the Company. The
---------------------------------------------
Company hereby represents and warrants to, and agrees with, the Purchaser as
follows:
2.1 Organization and Good Standing. The Company is a
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corporation duly formed, validly existing and in good standing under the laws of
the State of Delaware.
2.2 Authorization; Validity of Agreement. This Agreement has
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been duly authorized, executed and delivered by the Company, and constitutes a
legal, valid and binding obligations enforceable against the Company in
accordance with its terms.
2.3 No Conflict. None of the execution and delivery of this
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Agreement, and the consummation of the transaction contemplated hereby, will
result in a breach, violation or default of, or give rise to an event which with
the giving of notice or after the passage of time, or both, would result in a
breach, violation or default of, or will require any consent, approval or notice
under, any of the terms or provisions of the Company's Certificate of
Incorporation or By-laws, or of any material note, bond, indenture, mortgage,
deed of trust, loan agreement or other material contract, agreement, instrument,
restriction, or arrangement to which the Company is a party or by which the
Company or any of its assets may be bound or affected, or any order, rule or
regulation of any court or governmental agency or body having jurisdiction over
the Company.
2.4 Approval of the Board. The Board of the Directors of the
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Company have approved the Purchaser (or any person controlling, controlled by or
under common control with Purchaser, including any person of which the Purchaser
owns, directly or indirectly, at least 50% of the ownership interest) becoming
an interested stockholder for purposes of Section 203 of the General Corporation
Law of the State of Delaware.
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Section 3. Representations and Warranties of the Purchaser. The
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Purchaser hereby represents and warrants to, and agrees with, the Company as
follows:
3.1 Organization and Good Standing. The Purchaser is a
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business trust duly formed, validly existing and in good standing under the laws
of the State of Delaware.
3.2 Authorization; Validity of Agreement. This Agreement has
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been duly authorized, executed and delivered by the Purchaser, and constitutes a
legal, valid and binding obligation against the Purchaser in accordance with its
terms.
3.3 No Conflict. None of the execution and delivery of this
-----------
Agreement, and the consummation of the transaction contemplated hereby, will
result in a breach, violation or default of, or give rise to an event which with
the giving of notice or after the passage of time, or both, would result in a
breach, violation or default of, or will require any consent, approval or notice
under, any of the terms or provisions of the Declaration of Trust and By-laws of
the Purchaser, or of any note, bond, indenture, mortgage, deed of trust, loan
agreement or other contract, agreement, instrument, restriction, or arrangement
to which the Purchaser is a party or by which the Purchaser or any of its assets
may be bound or affected, or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Purchaser.
Section 4. Entire Agreement; Modification. This Agreement (i)
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constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof and thereof and (ii) is not intended to confer upon any
person other than the parties hereto any rights or remedies hereunder. This
Agreement may not be modified or amended except by an instrument in writing duly
signed by or on behalf of the parties hereto and dated on or subsequent to the
date hereof.
Section 5. Governing Law. This Agreement shall be governed by and
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construed and enforced in accordance with the laws of the State of New York
applicable to agreements made and to be performed entirely within the State.
Section 6. Binding Effect. This Agreement shall be binding upon the
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parties and inure to the benefits of the successors and assigns of the
respective parties hereto.
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Section 7. Counterparts. This Agreement may be executed
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simultaneously in any number of counterparts, each of which shall be deemed an
original but all of which together shall constitute one and the same instrument.
Section 8. Paragraph Headings. The paragraph headings in this
------------------
Agreement are for convenience of reference only and shall not be deemed to alter
or affect any provision hereof.
Section 9. Transaction Expenses. Notwithstanding anything else in
--------------------
this Agreement to the contrary, the parties hereto shall each by responsible for
the payment of any and all of its or his own expenses, including, without
limitation, the fees and expenses of counsel, accountants and other advisers,
arising out of or relating directly or indirectly to the transactions
contemplated by this Agreement, whether or not such transactions are consummated
in whole or in part.
Section 10. Severability. If any provision of this Agreement is
------------
invalid, illegal, or unenforceable, the balance of this Agreement shall remain
in effect, and if any provision is inapplicable to any person or circumstance,
it shall nevertheless remain applicable to all other persons and circumstances.
Section 11. Waiver. The waiver of one breach or default hereunder
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shall not constitute the waiver of any other or subsequent breach or default.
Section 12. No Agency. This Agreement shall not constitute any party
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the legal representative or agent of the other, nor shall any party have the
right or authority to assume, create, or incur any liability or any obligation
of any kind, express or implied, against or in the name of or on behalf of the
other party.
Section 13. Adjustment upon Changes in Capitalization. In the case
-----------------------------------------
of any changes affecting the Company's capitalization, including, but not
limited to, stock dividends, cash dividends in excess of normal quarterly cash
dividends consistent with past practice, stock splits, recapitalization and the
like, the number of shares and any other items affected by such change shall be
appropriately adjusted.
Section 14. Interpretation. The words "hereof", "herein" and
--------------
"herewith" and words of similar import shall, unless otherwise stated, be
construed to refer to this Agreement as a whole and not to any particular
provision of this Agreement, and article, section, paragraph, exhibit and
schedule references are to the articles, sections, paragraphs, exhibits and
schedules of this Agreement unless
6
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otherwise specified. Whenever the words "include", "includes" or "including" are
used in this Agreement they shall be deemed to be followed by the words "without
limitation". The words describing the singular number shall include the plural
and vice versa, and words denoting any gender shall include all genders and
words denoting natural persons shall include corporations and partnerships and
vice versa. As used in this Agreement, the term "affiliate(s)" shall have the
meaning set forth in Rule l2b-2 of the Exchange Act. As used in this Agreement,
the term "person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint stock company, trust,
unincorporated organization or government or other agency or political
subdivision thereof. The parties have participated jointly in the negotiation
and drafting of this Agreement. In the event an ambiguity or question of intent
or interpretation arises, this Agreement shall be construed as if drafted
jointly by the parties and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any provisions
of this Agreement.
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IN WITNESS WHEREOF, the Purchaser and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized as
of the date first written above.
FORTRESS REGISTERED
INVESTMENT TRUST
/s/ Randal Nardone
By:__________________________
Name: Randal Nardone
Title: Chief Operating Officer
BROOKDALE LIVING
COMMUNITIES, INC.
/s/ Mark J. Schulte
By:__________________________
Name: Mark J. Schulte
Title: President and Chief Executive Officer
<PAGE>
EXHIBIT 99.1
FOR FURTHER INFORMATION:
AT THE COMPANY: AT EDELMAN PUBLIC RELATIONS:
Mark J. Schulte Kenneth G. Trantowski
President and Chief Executive Officer Executive Vice President & General
Manager
(312) 977-3700 (312) 240-2625
FOR IMMEDIATE RELEASE
APRIL 20, 2000
BROOKDALE LIVING COMMUNITIES, INC. ANNOUNCES FORTRESS' AGREEMENT TO
PURCHASE COMMON STOCK FROM A MAJOR STOCKHOLDER
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April 20, 2000 -- Brookdale Living Communities, Inc. (Nasdaq: BLCI), a leading
provider of senior and assisted living services to the elderly, today announced
that The Prime Group, Inc. and certain of its affiliates have agreed to sell
3,916,850 of their shares of Brookdale common stock, representing approximately
39.8% of Brookdale's outstanding shares, in a privately negotiated transaction
to an affiliate of Fortress Investment Fund for an aggregate purchase price of
$58,752,750, or $15 per share. In addition, Fortress has agreed to purchase
from The Prime Group, Inc. and Michael W. Reschke, Brookdale's Chairman and the
principal shareholder of Prime, up to an additional 87,500 shares of Brookdale's
common stock which are subject to certain options for an aggregate purchase
price of up to $1,312,500, or $15 per share. Completion of the sale is subject
to certain customary closing conditions including satisfaction of the applicable
requirements of the Hart-Scott-Rodino Antitrust Improvements Act. Upon
completion of the sale, Mr. Reschke will resign from Brookdale's board of
directors, and two of Fortress' designees will be elected to Brookdale's board
to fill the vacancy created by Mr. Reschke's resignation and to fill the
currently existing vacancy on the Board.
The transaction was approved by an independent committee of Brookdale's board
based on, among other things, the execution of a standstill agreement by
Fortress. The standstill agreement provides that Fortress may not acquire
during its term additional Brookdale common stock or engage in other activity
designed to acquire control of Brookdale, except in the context of cash tender
offer for all of Brookdale's shares at not less than $15 per share, which cannot
occur without the board's consent prior to July 5, 2000. The standstill
agreement terminates after two years or earlier if Fortress acquires a majority
of Brookdale's common stock.
Brookdale Living Communities, Inc. is a leading national provider of senior and
assisted living services to the elderly, with 24 facilities in 14 states
containing an aggregate of approximately 5,328 units in up-scale urban and
suburban communities. Additional information is available on Brookdale's
website at www.brookdaleliving.com.
This news release contains certain forward-looking statements. When used in
this news release, the words "believes," "expects," "anticipates," "estimates"
and similar words or expressions are generally intended to identify forward-
looking statements. These forward-looking statements involve risks and
<PAGE>
uncertainties, such as the risks detailed in the Company's filings with the
Securities and Exchange Commission.
CONTACT: Mark J. Schulte, President and Chief Executive Officer, Brookdale
Living Communities, Inc., 312-977-3700, or Kenneth G. Trantowski, Executive Vice
President and General Manager, Edelman, 312-240-2625.
2
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EXHIBIT 99.2
STOCK PURCHASE AGREEMENT
by and among
Fortress Registered Investment Trust
and
Brookdale Living Communities, Inc.
and
Michael W. Reschke
The Prime Group, Inc.
Prime Group II, L.P.
Prime Group VI, L.P.
and
PGLP, Inc.
dated as of
April 20, 2000
<PAGE>
STOCK PURCHASE AGREEMENT
------------------------
This Stock Purchase Agreement (this "Agreement") is made and entered
into as of this 20th day of April, 2000, by and among Fortress Registered
Investment Trust (the "Purchaser"), Brookdale Living Communities, Inc. (the
"Company"), Mr. Michael W. Reschke ("Reschke"), PGLP, Inc. ("PGLP"), The Prime
Group, Inc. and the other parties signatory hereto (The Prime Group, Inc., Prime
Group II, L.P. and Prime Group VI, L.P., individually a "Stockholder," and
collectively, "Stockholders"; together with Reschke and PGLP, collectively, the
"Seller").
W I T N E S S E T H:
WHEREAS, the Stockholders are the owners, beneficially and of record,
of 3,929,350 shares (the "Shares"), in aggregate, constituting (i) 3,916,850
shares, which are not subject to any outstanding rights or agreements granted or
entered into by or binding upon the Seller (the "Prime Shares") and (ii) 12,500
shares, which are subject to an option to purchase in favor of Blackacre Bridge
Capital, LLC on the terms summarized in Exhibit A ("Blackacre Shares"; such
option the "Blackacre Option"), of the common stock, par value $0.01 per share
(the "Common Stock"), of the Company, as more specifically set forth in Exhibit
A attached hereto; and
WHEREAS, the Seller desires to sell, assign and convey to the
Purchaser, the Shares, and the Purchaser desires to purchase, acquire and accept
such Shares from the Seller on and subject to the terms and conditions of this
Agreement.
NOW, THEREFORE, in consideration of the respective representations and
warranties hereinafter set forth and of the mutual covenants and agreements
contained herein and other good and valuable consideration, the receipt and
sufficiently of which is hereby acknowledged, and intending to be legally bound,
the parties hereto agree as follows:
1. Sale and Purchase. On and subject to the terms and conditions
-----------------
contained herein, the Seller hereby agrees to sell, transfer, assign, convey and
deliver to the Purchaser, and the Purchaser hereby agrees to purchase, acquire
and accept from the Seller, (i) all of the Seller's right, title and interest
in and to the Shares, free and clear of any liens, pledges, security interests,
claims or encumbrance of any kind,
<PAGE>
and (ii) all rights of Seller under the Registration Rights Agreement dated as
of May 7, 1997, as amended (the "Registration Rights Agreement") by and among
the Company and the Seller, Reschke shall exercise options for 50,000 shares of
the Common Stock ("Reschke Option Shares"), which are vested and exercisable as
of the date hereof, and sell all such Reschke Option Shares to the Purchaser at
the Closing (as defined below) for Fifteen Dollars ($15) per share. If Reschke
is permitted to exercise options for 25,000 shares of the Common Stock, which
will vest on May 7, 2000 (the "Non-Vested Options"), Reschke shall exercise such
Non-Vested Options and sell all such shares to the Purchaser for Fifteen Dollars
($15) per share.
2. Purchase Price. The purchase price for the Prime Shares (the
--------------
"Purchase Price") shall be Fifteen Dollars ($15) per share (the "Purchase
Price"). The purchase price of the Blackacre Shares shall be Twelve Dollars
($12) per share, provided, however, that, if the Blackacre Option expires
without having been exercised on or prior to May 7, 2000 (the "Expiration
Date"), the Purchaser shall pay to the Seller $37,500 (the "Option Supplement")
as promptly as possible, but in any case no later than the 10th business day
after the Expiration Date. Within two business days from the date hereof, the
Purchaser shall deliver to the Seller via wire transfer of immediately available
funds to an account (or accounts) designated by the Seller the amount of
$1,000,000 as partial payment of the Purchase Price for the Prime Shares (the
"Deposit"); provided, however, that the Deposit shall be immediately returned or
otherwise refunded to an account (or accounts) designated by the Purchaser by
wire-transfer of immediately available funds, if this Agreement shall be
terminated for any reason other than the Purchaser's breach of material
agreements contained herein. On the date of the Closing, the Purchaser shall
deliver to the Seller via wire transfer of immediately available funds to an
account (or accounts) designated by the Seller the amount of (i) $57,752,750
(full payment of the Purchase Price for the Prime Shares minus the Deposit),
(ii) if the Blackacre Option shall not have been exercised, $150,000 as full
payment of the purchase price for the Blackacre Shares, subject to the
subsequent payment of the Option Supplement for such Blackacre Shares; (iii)
$750,000 for the Reschke Option Shares; plus (iv) $375,000 for the shares issued
pursuant to the Non-Vested Options, as the case may be.
3. Closing. On and subject to the terms and conditions set forth
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herein, the sale and transfer of the Shares by the Seller to the Purchaser (the
"Closing") shall take place at the offices of Skadden, Arps, Slate, Meagher &
Flom LLP, 333 West Wacker Drive, Chicago, Illinois at 10:00 a.m., on the later
of (i) the eleventh business day from the date hereof or (ii) the first business
day following the satisfaction and/or waiver of all conditions to effect the
Closing set forth in Section 6
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below, but in no event later than the later of (x) May 18, 2000 or (y) the
business day after the date of expiration or termination of the applicable
waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended (the "HSR Act") (the "Closing Date"), unless another date or place is
agreed in writing by each of the parties hereto. At the Closing, each
Stockholder shall deliver to the Purchaser (i) stock certificates representing
the number of Shares set opposite such Stockholder's name on Exhibit A attached
hereto, each such certificate to be duly and validly endorsed in favor of the
Purchaser or accompanied by a separate stock power duly and validly executed by
such Stockholder and otherwise sufficient to vest in the Purchaser good and
marketable title to such Shares; (ii) an assignment of all right, title and
interest of Seller under the Registration Rights Agreement; and (iii) all other
previously undelivered documents required to be delivered by the Seller to the
Purchaser at or prior to the Closing in connection with this Agreement.
4. Representations and Warranties of Seller and Company. The Seller
----------------------------------------------------
hereby, jointly and severally, and the Company, severally, as to Sections 4.1,
4.2 and 4.3 and only with respect to itself, represents and warrants to, and
agrees with, the other parties hereto as follows:
4.1 Organization and Good Standing. Each of PGLP and the
------------------------------
Stockholders and the Company is an entity duly organized, validly existing and
in good standing under the applicable laws of the State of Delaware, in the case
of the Company, and the State of Illinois, in the case of the others.
4.2 Authorization; Validity of Agreement. This Agreement has been
------------------------------------
duly authorized, executed and delivered by the Company and each Seller, and
constitutes a legal, valid and binding obligation against the Company and each
Seller in accordance with its terms.
4.3 No Conflict. None of the execution or delivery of this
-----------
Agreement, or the consummation of the transactions contemplated hereby, will
result in a breach, violation or default of, or give rise to an event which with
the giving of notice or after the passage of time, or both, would result in a
breach, violation or default of, or will require any consent, approval or notice
under, any of the terms or provisions of any constitutive documents of the
Company, PGLP, or any Stockholder, or of any note, bond, indenture, mortgage,
deed of trust, loan agreement or other material contract, agreement, instrument,
restriction or arrangement to which the Company or any Seller is a party or by
which the Company or such Seller or any of its assets may be bound or affected,
or any order, rule or regulation of any court or governmental agency or body
having jurisdiction over the Company or any Seller,
3
<PAGE>
except for any necessary filing under the HSR Act and the Securities Exchange
Act of 1934 (the "Exchange Act").
4.4 Ownership of Shares. The Shares are owned by the Seller free and
-------------------
clear of all liens, pledges, security interests, claims or encumbrances of any
kind, except as specified in Exhibit A attached hereto. Each Stockholder owns
such number of shares of the Common Stock as specified in Exhibit A attached
hereto. The Shares have been duly authorized and validly issued and are fully
paid and non-assessable. There are no outstanding rights or agreements granted
or entered into by or binding upon the Seller with respect to any of the Shares
except the Stockholders Agreement (as defined below). Delivery of the Shares at
the Closing together with necessary stock powers will give the Purchaser good
title to the Shares, free of any liens, pledges, security interests, claims or
encumbrances of any kind whatsoever.
5. Representations and Warranties of Purchaser. The Purchaser hereby
-------------------------------------------
represents and warrants to, and agrees with, the Seller as follows:
5.1 Organization and Good Standing. The Purchaser is a business
------------------------------
trust duly formed, validly existing and in good standing under the laws of the
State of Delaware.
5.2 Authorization; Validity of Agreement. This Agreement has been
------------------------------------
duly authorized, executed and delivered by the Purchaser, and constitutes a
legal, valid and binding obligation against the Purchaser in accordance with its
terms.
5.3 No Conflict. None of the execution and delivery of this
-----------
Agreement, and the consummation of the transactions contemplated hereby, will
result in a breach, violation or default of, or give rise to an event which with
the giving of notice or after the passage of time, or both, would result in a
breach, violation or default of, or will require any consent, approval or notice
under, any of the terms or provisions of the Purchaser's Declaration of Trust or
By-laws, or of any note, bond, indenture, mortgage, deed of trust, loan
agreement or other material contract, agreement, instrument, restriction or
arrangement to which the Purchaser is a party or by which the Purchaser or any
of its assets may be bound or affected, or any order, rule or regulation of any
court or governmental agency or body having jurisdiction over the Purchaser,
except for any necessary filing under the HSR Act and the Exchange Act.
5.4 Investment Representation. The Purchaser is acquiring the Shares
-------------------------
for investment for its own account, not as a nominee or agent, and not
4
<PAGE>
with a view to, or for resale in connection with, any distribution thereof in
violation of the Securities Act of 1933, as amended (the "Securities Act"). The
Purchaser understands and acknowledges that the sale by the Seller to the
Purchaser of the Prime Shares, the Blackacre Shares, the Reschke Option Shares,
and the shares issued pursuant to Non-Vested Options has not been, and will not
be, registered under the Securities Act or any other applicable securities law
and, unless so registered, may not be offered, sold or otherwise transferred
except in compliance with the registration requirements of the Securities Act or
any other applicable securities law, pursuant to or exemption therefrom or in a
transaction not subject thereto.
6. Conditions to Effect the Closing. The respective obligation of
--------------------------------
each party to effect the Closing shall be subject to the satisfaction at or
prior to the Closing Date of each of the following conditions (except that
Section 6.6 shall be a condition to closing by the Purchaser only):
6.1 Statutes; Court Orders. No statute, rule or regulation
----------------------
shall have been enacted or promulgated by any governmental authority which
prohibits the consummation of the Closing; and there shall be no order or
injunction of a court of competent jurisdiction in effect precluding
consummation of the Closing;
6.2 HSR Approval. The applicable waiting period under the HSR
------------
Act shall have expired or been terminated;
6.3 Representations and Warranties. The representations and
------------------------------
warranties of the other party or parties set forth in Sections 4 or 5,
respectively, shall be true in all material respects on the date of this
Agreement and as of the Closing.
6.4 Approval of the Board. The Board of the Directors of the
---------------------
Company (or the appropriate committee thereof) shall have approved (i) the
Purchaser (or any person controlling, controlled by or under common control with
Purchaser, including any person of which the Purchaser owns at least 50% of the
ownership interest) becoming an interested stockholder for purposes of Section
203 of the General Corporation Law of the State of Delaware, and (ii) the
Company's entrance into a standstill agreement (the "Standstill Agreement"),
substantially in the form attached hereto as Exhibit B.
6.5 Stockholders Agreement; Registration Rights Agreement. The
-----------------------------------------------------
Stockholders Agreement by and among the Company, the Stockholders and Health
Partners, dated May 14, 1999 (the "Stockholders Agreement"), shall have been
amended so that the Purchaser shall be deemed to be "Prime Holders" for
5
<PAGE>
purposes of the Stockholders Agreement, and otherwise the Stockholders Agreement
shall be in effect as if "Prime Holders" continued to be a party to the
Agreement; and the Purchaser agrees to be bound by the terms of the Stockholders
Agreement pursuant to Section 4.1 thereof. Notwithstanding the foregoing, it is
understood by the parties that nothing in the Stockholders Agreement shall
affect the obligations of the Purchaser pursuant to the Standstill Agreement.
The Company shall have consented to the assignment to the Purchaser of all
right, title and interest the Seller has under the Registration Rights
Agreement.
6.6 Board of Directors. Reschke shall have resigned, and two
------------------
designees of the Purchaser shall have been elected, as directors of the Company
to fill the vacancy resulting from Reschke's resignation and to fill the current
vacancy in the Board.
7. Acknowledgments and Agreements of the Parties.
---------------------------------------------
(1) The Seller hereby agrees that, except as set forth herein, it
will not convert, retire, sell, hypothecate or otherwise transfer any rights
relating to the Shares or the Blackacre Shares, including, but not limited to,
stock options, without the prior written consent of the Purchaser.
(2) The parties hereby agree to take promptly all actions
necessary to make the filings required of them or any of their affiliates under
the HSR Act. Concurrently with the filing of notifications under the HSR Act or
as soon thereafter as practicable, the Seller, the Purchaser and the Company
shall each request early termination of the HSR Act waiting period.
(3) The Seller shall use its best efforts to obtain the release
of any liens on, or any restriction on the sale of, the Prime Shares at or prior
to the Closing, including using the proceeds of the Sale to repay any
indebtedness secured by the applicable Prime Shares subject to such lien or
restriction.
8. Survival; Indemnification.
-------------------------
8.1 Survival; Remedy for Breach. The covenants, agreements,
---------------------------
representations, warranties and indemnities of the parties hereto contained
herein or in any certificate or other writing attached hereto, or required by
the terms hereof to be delivered by the Purchaser or the Seller, shall survive
the Closing.
8.2 Indemnification by Seller.
-------------------------
6
<PAGE>
(1) Each of Reschke, PGLP and the Stockholders hereby jointly and
severally indemnify the Purchaser, its shareholders, officers, directors and
affiliates (collectively, the "Indemnified Parties") against and agree to hold
each of them harmless from any and all damage, loss, liability, expense
(including, without limitation, reasonable out-of-pocket expenses of
investigation and attorneys' fees and expenses in connection with any action,
suit or proceeding brought against or involving any Indemnified Parties) and
costs (collectively, "Purchaser Indemnified Amounts") incurred or suffered by
any Indemnified Parties arising out of any misrepresentation or breach of
warranty, covenant or agreement made or to be performed by the Seller pursuant
to this Agreement.
(2) The agreements and indemnities of the Seller contained herein
shall be cumulative, except that an Indemnified Party shall not recover more
than once for the same Purchaser Indemnified Amount.
(3) The Indemnified Parties agree to give notice to the Seller
promptly after learning of the assertion of any claim, or the commencement of
any suit, action or proceeding, in respect of which indemnity may be sought
hereunder; provided, however, that the failure of any Indemnified Party to give
-------- -------
such notice shall not constitute a waiver of its rights hereunder in respect of
the claim, suit, action or proceeding with respect to which such notice was
required to have been given hereunder.
(4) The Seller shall not be liable under this Section 8.2 for any
settlement effected without its consent of any claim, litigation or proceeding
in respect of which indemnity may be sought hereunder. No investigation by the
Purchaser at or prior to the Closing shall relieve the Seller of any liability
hereunder.
(5) The amount required to be paid to an Indemnified Party by the
Seller for any Purchaser Indemnified Amounts hereunder shall be paid not later
than thirty (30) days after receipt by the Seller of written notice from an
Indemnified Party stating that such Purchaser Indemnified Amounts have been
incurred and the amount thereof and of the related indemnity payment.
8.3 Indemnification by the Purchaser.
--------------------------------
(1) The Purchaser hereby indemnifies the Seller, its shareholders,
officers, directors and affiliates (collectively, the "Seller Indemnified
Parties") against and agrees to hold each of them harmless from any and all
damages, loss, liability, expense (including, without limitation, reasonable
out-of-pocket
7
<PAGE>
expenses of investigation and reasonable attorneys' fees and expenses in
connection with any action, suit or proceeding brought against or involving the
Seller) and costs (collectively, "Seller Indemnified Amounts") incurred or
suffered by any of the Seller Indemnified Parties arising out of any
misrepresentation or breach of warranty, covenant or agreement made or to be
performed by the Purchaser pursuant to this Agreement.
(2) The agreements and indemnities of the Purchaser contained
herein shall be cumulative, except that any of the Seller Indemnified Parties
shall not recover more than once for the same Seller Indemnified Amount.
(3) The Seller Indemnified Parties agree to give notice to the
Purchaser promptly after learning of the assertion of any claim, or the
commencement of any suit, action or proceeding, in respect of which indemnity
may be sought hereunder, provided, however, that the failure of any of the
-------- -------
Seller Indemnified Parties to give such notice shall not constitute a waiver of
its rights hereunder in respect of the claim, suit, action or proceeding with
respect to which such notice was required to have been given hereunder.
(4) The Purchaser shall not be liable under this Section 8.3 for
any settlement effected without its consent of any claim, litigation or
proceeding in respect of which indemnity may be sought.
(5) The amount required to be paid to any of the Seller
Indemnified Parties by the Purchaser for any Seller Indemnified Amounts
hereunder shall be paid not later than thirty (30) days after receipt by the
Purchaser of written notice from such party, stating that such Seller
Indemnified Amounts have been incurred and the amount thereof and of the related
indemnity payment.
9. Notices. Any notices or other communications required or
-------
permitted hereunder shall be sufficiently given if sent by facsimile
transmission and confirmed by registered or certified mail, postage prepaid,
addressed as follows:
If to the Purchaser:
c/o Fortress Investment Group LLC
1301 Avenue of the Americas
42nd Floor
New York, New York 10019
Attention: Randal Nardone
Facsimile No.: (212)798-6133
Copy to:
8
<PAGE>
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, New York 10036-6522
Attention: Edmund C. Duffy, Esq.
Facsimile No.: (212)735-2000
If to Reschke/PGLP/Stockholders:
c/o The Prime Group, Inc.
77 West Wacker Drive, Suite 4200
Chicago, Illinois 60601
Attention: Michael W. Reschke
Facsimile No.: (312) 917-1511
Copy to:
c/o The Prime Group, Inc.
77 West Wacker Drive, Suite 4200
Chicago, Illinois 60601
Attention: Robert J. Rudnik, Esq.
Facsimile No.: (312) 917-8442
and to:
Winston & Strawn
35 West Wacker Drive
Chicago, Illinois 60601
Attention: Wayne D. Boberg, Esq.
Facsimile No.: (312) 558-5700
If to the Company:
Brookdale Living Communities, Inc.
330 North Wabash, Suite 1400
Chicago, Illinois 60611
Attention: Mark J. Schulte
Facsimile No.: (312) 977-3699
Copy to:
9
<PAGE>
Brookdale Living Communities, Inc.
330 North Wabash, Suite 1400
Chicago, Illinois 60611
Attention: Robert J. Rudnik
Facsimile No.: (312) 977-3769
and to:
Winston & Strawn
35 West Wacker Drive
Chicago, Illinois 60601
Attention: Wayne D. Boberg, Esq.
Facsimile No.: (312) 558-5700
or to such other addresses as shall be furnished by like notice by such party.
Any such notice or communication given by mail shall be effective upon receipt
thereof.
10. Further Assurances. The Seller agrees that, at any time
------------------
after the date hereof, upon the request of the Purchaser, it will do, execute,
acknowledge and deliver, or will cause to be done, executed, acknowledged and
delivered, all such further acknowledgments, deeds, assignments, bills of sale,
transfers, conveyances, instruments, consents and assurances as may reasonably
be required for the better assuring and confirming to the Purchaser, its
successors and assigns, absolute ownership to the Shares to be sold to the
Purchaser hereunder.
11. Entire Agreement; Modification. This Agreement (i)
------------------------------
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof and thereof and (ii) is not intended to confer upon any
person other than the parties hereto any rights or remedies hereunder. This
Agreement may not be modified or amended except by an instrument in writing duly
signed by or on behalf of the parties hereto and dated on or subsequent to the
date hereof.
12. Termination. This Agreement may be terminated or abandoned
-----------
at any time prior to the Closing Date:
(i) by the mutual written consent of the Purchaser and the Seller; or
10
<PAGE>
(ii) by the non-breaching party, if the Seller or the Purchaser shall
have breached in any material respect any of its representations, warranties,
covenants or other agreements contained in this Agreement, which breach cannot
be or has not been cured within 15 days after the giving of written notice by
the non-breaching party, specifying such breach.
Notwithstanding the foregoing, the Agreement shall be terminated by either party
if the Closing shall not have taken place by the later of (i) May 18, 2000, or
(ii) one business day following expiration or termination of the applicable
waiting period under HSR, unless the parties agree otherwise.
13. Governing Law. This Agreement shall be governed by and construed
-------------
and enforced in accordance with the laws of the State of New York applicable to
agreements made and to be performed entirely within the State.
14. Binding Effect; Assignment. This Agreement shall be binding upon
--------------------------
the parties hereto and shall not be assigned without the written consent of the
other parties, provided, however, that the Purchaser may assign this Agreement
to any persons directly or indirectly controlling, controlled by, or under
direct or indirect common control with, the Purchaser or any entity 50% or more
of the equity interest of which is owned by Purchaser, without the consent of
the other parties, only if such assignee agrees in writing to be bound to the
Standstill Agreement and this Agreement.
15. Counterparts. This Agreement may be executed simultaneously in
------------
any number of counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument.
16. Paragraph Headings. The paragraph headings in this Agreement are
------------------
for convenience of reference only and shall not be deemed to alter or affect any
provision hereof.
17. Transaction Expenses. Notwithstanding anything else to this
--------------------
Agreement to the contrary, the parties hereto shall each be responsible for the
payment of any and all of its or his own expenses, including, without
limitation, the fees and expenses of counsel, accountants and other advisers,
arising out of or relating directly or indirectly to the transactions
contemplated by this Agreement, whether or not such transactions are consummated
in whole or in part.
11
<PAGE>
18. Severability. If any provision of this Agreement is invalid,
------------
illegal, or unenforceable, the balance of this Agreement shall remain in effect,
and if any provision is inapplicable to any person or circumstance, it shall
nevertheless remain applicable to all other persons and circumstances.
19. Waiver. The waiver of one breach or default hereunder shall not
------
constitute the waiver of any other or subsequent breach or default.
20. No Agency. This Agreement shall not constitute any party the
---------
legal representative or agent of the other, nor shall any party have the right
or authority to assume, create, or incur any liability or any obligation of any
kind, express or implied, against or in the name of or on behalf of the other
party.
21. Adjustment upon Changes in Capitalization. In the case of any
-----------------------------------------
changes affecting the Company's capitalization, including, but not limited to,
stock dividends, cash dividends in excess of normal quarterly cash dividends
consistent with past practice, stock splits, recapitalization and the like, the
number of the Shares, the Purchase Price and any other items affected by such
change shall be appropriately adjusted.
[Signature page follows]
12
<PAGE>
IN WITNESS WHEREOF, the parties hereto duly executed this Agreement
the day and date first above written.
THE PURCHASER:
Fortress Registered Investment Trust
By:/s/ Randal Nardone
--------------------
Name: Randal Nardone
Title: Chief Operating Officer
THE COMPANY:
Brookdale Living Communities, Inc.
By:/s/ Mark J. Schulte
--------------------
Name: Mark J. Schulte
Title: President and Chief Executive Officer
THE PARTIES CONSTITUTING THE SELLER:
/s/ Michael W. Reschke
-----------------------
Michael W. Reschke
The Prime Group, Inc.
By:/s/ Michael W. Reschke
-----------------------
Name: Michael W. Reschke
Title: President
13
<PAGE>
Prime Group II, L.P.
By: PGLP, Inc., Managing General Partner
/s/ Michael W. Reschke
By:__________________________
Name: Michael W. Reschke
Title: President
Prime Group VI, L.P.
By: PGLP, Inc., Managing General Partner
/s/ Michael W. Reschke
By:__________________________
Name: Michael W. Reschke
Title: President
PGLP, Inc.
/s/ Michael W. Reschke
By:__________________________
Name: Michael W. Reschke
Title: President
14
<PAGE>
EXHIBIT A
Name of Stockholder(1) Number of Shares Owned
- ---------------------- ----------------------
The Prime Group, Inc. 31,784(2)
Prime Group II, L.P. 320,633(3)
Prime Group VI, L.P. 3,576,933(4)
- ---------------------------------------------------------------
Total 3,929,350(5)
___________________________
(1) Michael W. Reschke has the ability to control The Prime Group, Inc. and
PGLP, Inc., which is the managing general partner of Prime Group II, L.P. and
Prime Group VI, L.P.
(2) 12,500 shares are subject to an option, by which Blackacre Bridge Capital
LLC may purchase such shares at a price of $12 per share.
(3) The Shares owned by Prime Group II, L.P. are pledged to Kemper Investors
Life Insurance Company, which pledge shall be released on or prior to the
Closing.
(4) The shares owned by Prime Group VI, L.P. are pledged to LaSalle Bank
National Association, which pledge shall be released on or prior to the closing.
Subject to a no sale agreement in favor of FBR Assets Investment Corporation,
which shall be waived at the closing.
(5) All of the shares are subject to the terms of the Stockholders Agreements,
dated as of May 14, 1999, among the Company, the Stockholders and Health
Partners.
15
<PAGE>
EXHIBIT B
STANDSTILL AGREEMENT
--------------------
THIS STANDSTILL AGREEMENT (this "Standstill Agreement") dated as of
April 20, 2000, is entered into by and between Brookdale Living Communities,
Inc., a Delaware corporation (including its successors, the "Company"), and
Fortress Registered Investment Trust, a Delaware business trust (the
"Purchaser").
WHEREAS, the Purchaser wishes to acquire all of the common stock,
$0.01 par value, of the Corporation (the "Common Stock") currently owned
(including shares subject to currently outstanding options) by The Prime Group,
Inc. certain of its affiliates and Mr. Michael W. Reschke (collectively, the
"Seller") as set forth in Exhibit A (the "Prime Shares") pursuant to the Stock
Purchase Agreement by and among the Company, the Seller, and the Purchaser (the
"Stock Purchase Agreement");
WHEREAS, the Board of Directors of the Company approved the Purchaser
becoming an interested stockholder for purposes of Section 203 of the General
Corporation Law of the State of Delaware so as to eliminate any restriction
under such Section 203 on a subsequent business combination involving the
Corporation and the Purchaser (the "Section 203 Approval");
WHEREAS, as a condition to the Section 203 Approval, the Board of
Directors of the Company has required the Purchaser to execute this Agreement on
and subject to the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the respective representations and
warranties hereinafter set forth and of the mutual covenants and agreements
contained herein and other good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound,
the parties hereto agree as follows:
Section 1. Standstill. (a) For a period commencing upon the date of
----------
this Agreement and ending on May 14, 2002 (the "Expiration Day"), neither the
Purchaser, any persons controlling the Purchaser (the "Controlling Person"), nor
any of their affiliates shall (nor shall the Controlling Person permit the
Purchaser to), without the prior written consent of the Company (without
counting as a director for
<PAGE>
such purpose any director designated by the Purchaser or the Controlling
Person), directly or indirectly:
(i) purchase, offer to purchase, agree to acquire or otherwise acquire
Beneficial Ownership (as defined below) of additional Common Stock or any
equivalents to the Common Stock (the "Common Stock Equivalents"), except
pursuant to the Stock Purchase Agreement;
(ii) except as required by law, propose to enter into, or announce or
disclose any intention to propose to enter into, directly or indirectly, any
merger or business combination involving the Company of any of its subsidiaries
or to purchase, directly or indirectly, all or substantially all of the assets
of the Company and its subsidiaries, taken as a whole;
(iii) request the Company (or its directors, officers, employees or
agents), directly or indirectly, to take any action which would require the
Company to make a public announcement regarding the possibility of (A) a
business combination or merger involving the Company or any of its subsidiaries,
on the one hand, or Purchaser or any Controlling Person, or any affiliate, on
the other hand, or (B) the sale to the Purchaser or any Controlling Person, or
any affiliate thereof of all or substantially all of the assets of the Company
and its subsidiaries, taken as a whole;
(iv) make, or in any way participate in, directly or indirectly, any
"solicitation" of "proxies" (as such terms are defined or used in Regulation 14A
of the Securities Exchange Act of 1934, as amended (the "Exchange Act")), to
vote, or seek to advise or influence any person with respect to the voting of,
any Common Stock, or become a "participant" in any "election contest" (as such
terms are used or defined in Regulation 14A of the Exchange Act);
(v) form, join or in any way participate in a "group" (within the meaning
of Section 13(d)(3) of the Exchange Act) or otherwise act in concert with any
person for the purpose of circumventing the provisions of this Agreement;
(vi) nominate a slate of directors or seek to change the size of the Board
of Directors of the Company together or in connection with any other person or
group; or
(vii) challenge the legality of the foregoing restrictions; provided that
after July 5, 2000 the Purchaser or any of its affiliates may commence a cash
tender offer for not less than all shares of Common Stock not owned by it for a
price equal to the
2
<PAGE>
greater of $15 per share or the price paid to the Seller pursuant to the Stock
Purchase Agreement and may acquire all shares tendered pursuant thereto (it
being understood that the foregoing restrictions shall not prohibit or limit the
Purchaser from taking any appropriate action to disclose its intentions or
seeking the support of the Board of Directors of the Company with respect to
such tender offer), and, if the Purchaser shall thereafter Beneficially Own a
majority (not including for such purposes shares owned by or acquired from Cap Z
(as hereinafter defined)) of the Common Stock, the foregoing restrictions shall
no longer be applicable. Notwithstanding the foregoing, for the purposes of
calculating the number of shares of Common Stock and/or Common Stock Equivalents
Beneficially Owned by the Purchaser, the Controlling Person and their
affiliates, there shall be excluded from such calculation any shares owned by
any institution which is controlled by the Controlling Person as part of such
institution's investment portfolio (and not owned for the purpose of affecting
control of the Company). For purposes of this Agreement, "Beneficially Own" or
"Beneficial Ownership" means beneficial ownership determined in accordance with
Rule 13d-3 promulgated under the Exchange Act, and "Fully Diluted Common Stock"
means all outstanding shares of Common Stock and all shares of Common Stock
issuable upon the conversion or exchange of all then outstanding Common Stock
Equivalents.
(b) The provisions of this Section 1 shall terminate prior to the
Expiration Day, and the Purchaser, the Controlling Person or any of their
affiliates shall be free to acquire Common Stock and/or Common Stock Equivalents
without regard to the Standstill, at and following the earliest time that (A)
any person other than the Purchaser, the Controlling Person, Health Partners,
Capital Z Partners, Ltd. (the ultimate general partner of Health Partners,
hereinafter "Cap Z") or any of their affiliates (and other than a person acting
in concert with any of the foregoing) acquires Beneficial Ownership of Common
Stock and/or Common Stock Equivalents representing, together with any Common
Stock and/or Common Stock Equivalents already Beneficially Owned by such person
and its affiliates, at least 20% of the total Fully-Diluted Common Stock, (B)
any person other than the Purchaser, the Controlling Person or any of their
affiliates notifies in writing the Company or its Board of Directors or publicly
announces that it has acquired or has offered to acquire (including but not
limited to any offer to acquire by means of a tender offer) Beneficial Ownership
of Common Stock and/or Common Stock Equivalents representing, together with any
Common Stock and/or Common Stock Equivalents already Beneficially Owned (as
determined in accordance with Rule l3d-3 promulgated under the Exchange Act) by
such person and its affiliates, at least 20% of the total Fully-Diluted Common
Stock, (C) any person commences (or publicly announces its intention to
commence) a proxy contest pursuant to which such person
3
<PAGE>
seeks to defeat or otherwise challenge the election of the designees of the
Purchaser as directors of the Company, (D) the restrictions set forth in Article
2 "Health Partners Standstill" of the Stockholder Agreement, dated May 14, 1999,
shall be amended, modified, waived, or otherwise terminated without the prior
written consent of the Purchaser or (E) the Stock Purchase Agreement shall have
terminated without the Purchaser or any assignee thereof having acquired shares
of Common Stock pursuant thereto.
Section 2. Representations and Warranties of the Company. The
---------------------------------------------
Company hereby represents and warrants to, and agrees with, the Purchaser as
follows:
2.1 Organization and Good Standing. The Company is a
------------------------------
corporation duly formed, validly existing and in good standing under the laws of
the State of Delaware.
2.2 Authorization; Validity of Agreement. This Agreement has
------------------------------------
been duly authorized, executed and delivered by the Company, and constitutes a
legal, valid and binding obligations enforceable against the Company in
accordance with its terms.
2.3 No Conflict. None of the execution and delivery of this
-----------
Agreement, and the consummation of the transaction contemplated hereby, will
result in a breach, violation or default of, or give rise to an event which with
the giving of notice or after the passage of time, or both, would result in a
breach, violation or default of, or will require any consent, approval or notice
under, any of the terms or provisions of the Company's Certificate of
Incorporation or By-laws, or of any material note, bond, indenture, mortgage,
deed of trust, loan agreement or other material contract, agreement, instrument,
restriction, or arrangement to which the Company is a party or by which the
Company or any of its assets may be bound or affected, or any order, rule or
regulation of any court or governmental agency or body having jurisdiction over
the Company.
2.4 Approval of the Board. The Board of the Directors of the
---------------------
Company have approved the Purchaser (or any person controlling, controlled by or
under common control with Purchaser, including any person of which the Purchaser
owns, directly or indirectly, at least 50% of the ownership interest) becoming
an interested stockholder for purposes of Section 203 of the General Corporation
Law of the State of Delaware.
4
<PAGE>
Section 3. Representations and Warranties of the Purchaser. The
-----------------------------------------------
Purchaser hereby represents and warrants to, and agrees with, the Company as
follows:
3.1 Organization and Good Standing. The Purchaser is a
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business trust duly formed, validly existing and in good standing under the laws
of the State of Delaware.
3.2 Authorization; Validity of Agreement. This Agreement has
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been duly authorized, executed and delivered by the Purchaser, and constitutes a
legal, valid and binding obligation against the Purchaser in accordance with its
terms.
3.3 No Conflict. None of the execution and delivery of this
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Agreement, and the consummation of the transaction contemplated hereby, will
result in a breach, violation or default of, or give rise to an event which with
the giving of notice or after the passage of time, or both, would result in a
breach, violation or default of, or will require any consent, approval or notice
under, any of the terms or provisions of the Declaration of Trust and By-laws of
the Purchaser, or of any note, bond, indenture, mortgage, deed of trust, loan
agreement or other contract, agreement, instrument, restriction, or arrangement
to which the Purchaser is a party or by which the Purchaser or any of its assets
may be bound or affected, or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Purchaser.
Section 4. Entire Agreement; Modification. This Agreement (i)
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constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof and thereof and (ii) is not intended to confer upon any
person other than the parties hereto any rights or remedies hereunder. This
Agreement may not be modified or amended except by an instrument in writing duly
signed by or on behalf of the parties hereto and dated on or subsequent to the
date hereof.
Section 5. Governing Law. This Agreement shall be governed by and
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construed and enforced in accordance with the laws of the State of New York
applicable to agreements made and to be performed entirely within the State.
Section 6. Binding Effect. This Agreement shall be binding upon the
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parties and inure to the benefits of the successors and assigns of the
respective parties hereto.
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<PAGE>
Section 7. Counterparts. This Agreement may be executed
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simultaneously in any number of counterparts, each of which shall be deemed an
original but all of which together shall constitute one and the same instrument.
Section 8. Paragraph Headings. The paragraph headings in this
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Agreement are for convenience of reference only and shall not be deemed to alter
or affect any provision hereof.
Section 9. Transaction Expenses. Notwithstanding anything else in
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this Agreement to the contrary, the parties hereto shall each by responsible for
the payment of any and all of its or his own expenses, including, without
limitation, the fees and expenses of counsel, accountants and other advisers,
arising out of or relating directly or indirectly to the transactions
contemplated by this Agreement, whether or not such transactions are consummated
in whole or in part.
Section 10. Severability. If any provision of this Agreement is
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invalid, illegal, or unenforceable, the balance of this Agreement shall remain
in effect, and if any provision is inapplicable to any person or circumstance,
it shall nevertheless remain applicable to all other persons and circumstances.
Section 11. Waiver. The waiver of one breach or default hereunder
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shall not constitute the waiver of any other or subsequent breach or default.
Section 12. No Agency. This Agreement shall not constitute any party
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the legal representative or agent of the other, nor shall any party have the
right or authority to assume, create, or incur any liability or any obligation
of any kind, express or implied, against or in the name of or on behalf of the
other party.
Section 13. Adjustment upon Changes in Capitalization. In the case
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of any changes affecting the Company's capitalization, including, but not
limited to, stock dividends, cash dividends in excess of normal quarterly cash
dividends consistent with past practice, stock splits, recapitalization and the
like, the number of shares and any other items affected by such change shall be
appropriately adjusted.
Section 14. Interpretation. The words "hereof", "herein" and
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"herewith" and words of similar import shall, unless otherwise stated, be
construed to refer to this Agreement as a whole and not to any particular
provision of this Agreement, and article, section, paragraph, exhibit and
schedule references are to the articles, sections, paragraphs, exhibits and
schedules of this Agreement unless
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<PAGE>
otherwise specified. Whenever the words "include", "includes" or "including" are
used in this Agreement they shall be deemed to be followed by the words "without
limitation". The words describing the singular number shall include the plural
and vice versa, and words denoting any gender shall include all genders and
words denoting natural persons shall include corporations and partnerships and
vice versa. As used in this Agreement, the term "affiliate(s)" shall have the
meaning set forth in Rule l2b-2 of the Exchange Act. As used in this Agreement,
the term "person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint stock company, trust,
unincorporated organization or government or other agency or political
subdivision thereof. The parties have participated jointly in the negotiation
and drafting of this Agreement. In the event an ambiguity or question of intent
or interpretation arises, this Agreement shall be construed as if drafted
jointly by the parties and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any provisions
of this Agreement.
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<PAGE>
IN WITNESS WHEREOF, the Purchaser and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized as
of the date first written above.
FORTRESS REGISTERED
INVESTMENT TRUST
By:__________________________
Name:
Title:
BROOKDALE LIVING
COMMUNITIES, INC.
By:__________________________
Name:
Title:
