EXHIBIT 10.5
FORM OF
NON-COMPETE AGREEMENT
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This NON-COMPETE AGREEMENT (this "Agreement"), dated as of
_____________, 1997, is made and entered into by and among BROOKDALE LIVING
COMMUNITIES, INC., a Delaware corporation (the "Company"), THE PRIME GROUP,
INC., an Illinois corporation ("TPG"), PRIME HALLMARK, INC., an Illinois
corporation ("PHI"), PRIME GROUP LIMITED PARTNERSHIP, an Illinois limited
partnership (together with TPG, PHI, the "TPG Group"), and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
an individual ("▇▇▇▇▇▇▇").
RECITALS
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WHEREAS, the Company, through its subsidiaries and affiliates, is
engaged primarily in the business of the management, operation, acquisition and
development of senior and assisted living facilities and the provision of senior
and assisted living services at such facilities;
WHEREAS, on the date hereof the Company is entering into a series of
related transactions (the "Formation") pursuant to which it will acquire, among
other things, substantially all of the operations of the senior housing division
of TPG and the ownership interests of the TPG Group and its affiliates in a
portfolio of three senior and assisted living facilities located in Illinois;
WHEREAS, ▇▇▇▇▇▇▇ and the TPG Group, directly or through one or more
affiliates, will continue to engage in certain real estate-related activities
after the Formation including, without limitation, the continued ownership of
the senior and assisted living facility known as The Island on Lake ▇▇▇▇▇▇
located in Lago Vista, Texas (the "Island"); and
WHEREAS, as a condition to the consummation of the transactions
described above, and in an effort to eliminate potential conflicts of interest
that may arise in the future as a result of the continuing activities of ▇▇▇▇▇▇▇
and the TPG Group, the parties hereto desire, subject to certain conditions and
exceptions set forth herein, to enter into certain agreements restricting the
activities of ▇▇▇▇▇▇▇ and the TPG Group for a period expiring on the earlier of
(i) four (4) years from the effective date of the Company's initial public
offering of its Common Stock, $0.01 par value per share (the "IPO"), or (ii) one
(1) year from the date of a merger or sale of all or substantially all of the
stock or assets of the Company.
AGREEMENTS
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NOW, THEREFORE, in consideration of the recitals and the mutual
promises and covenants herein contained and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. Definitions.
(a) Previously Defined Terms. Each capitalized term defined in the
first paragraph and Recitals hereof shall have the meaning set forth above
whenever used herein, unless otherwise expressly provided or unless the context
clearly requires otherwise.
(b) Additional Definitions. In addition to the terms defined in the
first paragraph and Recitals hereof, whenever used herein, the following terms
shall have the meanings set forth below unless otherwise expressly provided or
unless the context clearly requires otherwise:
"Affiliate" means (i) any entity in which ▇▇▇▇▇▇▇ and the TPG Group
(either individually or collectively) own or control, directly or indirectly,
fifty percent (50%) or more of the outstanding equity interests, (ii) any entity
with respect to which ▇▇▇▇▇▇▇ and the TPG Group (either individually or
collectively) have the right or power, directly or indirectly, to cause such
entity to (x) develop or acquire an interest in any facilities of the type
included within the Primary Business of the Company or (y) manage or operate any
such facilities, in either case without the consent or approval of a third party
equity owner, and (iii) any entity with respect to which ▇▇▇▇▇▇▇ and the TPG
Group (either individually or collectively) have the right or power, directly or
indirectly, to withhold consent or approval of (x) the development of, or an
acquisition by such entity of an interest in, any facilities of the type
included within the Primary Business of the Company or (y) the engagement by
such entity in the management or operation of any such facilities, in either
case where such consent or approval is required as a condition to consummation
of such acquisition or the engagement in such activity.
"Primary Business of the Company" means the ownership, management,
operation, acquisition and development of senior and assisted living and semi-
acute care facilities.
2. Prohibitions.
(a) Subject to subsections 2(b) and 2(c) below, from and after the
date hereof and during the term of this Agreement, neither ▇▇▇▇▇▇▇, the TPG
Group nor any Affiliate will develop any facility or acquire any facility or any
direct or indirect interest therein, or manage or operate any such facility,
that is of the type included within the Primary Business of the Company;
provided, that the foregoing shall not prohibit any of ▇▇▇▇▇▇▇, the TPG Group or
any Affiliate from providing any mortgage financing, from acting as lessor in
any sale-leaseback transaction or from providing any other subordinated debt or
preferred equity financing with respect to any facilities of
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the type included within the Primary Business of the Company. It is expressly
acknowledged and agreed that, subject to subsections 2(b) and 2(c) below, the
prohibitions set forth in this subsection 2(a) shall apply only to any interest
in, or the development, management or operation of, any facility of the type
included within the Primary Business of the Company located anywhere within the
continental United States of America.
(b) Excluded from the restrictions set forth in subsection 2(a) are
the following properties and interests: (i) any interest in the Company; (ii)
the Island and any interest therein; (iii) any activity which a majority of the
independent members of the board of directors of the Company determines not to
be competitive with any facility which the Company owns or plans to acquire or
develop; (iv) less than 5% of any class of securities listed on a national
securities exchange or traded over-the-counter on the National Association of
Securities Dealers Automated Quotation System Market; and (v) subject to the
proviso at the end of this clause (v), any facilities acquired after the date of
this Agreement that are similar to those acquired, developed, managed or owned
by the Company, but only to the extent such facilities are acquired in
connection with the acquisition of a group of properties; provided, that in the
event of any such acquisition permitted by this clause (v), the Company shall
have the right and opportunity to purchase such similar facilities from ▇▇▇▇▇▇▇,
the TPG Group or any Affiliate, as applicable, at a price equal to the fair
market value of such similar facilities.
(c) The restrictions set forth in subsection 2(a) shall not prohibit
the sale, lease or other disposition, or any activities incident thereto, of any
property or facilities in which the TPG Group and/or ▇▇▇▇▇▇▇ has an interest on
the date hereof.
3. Term. This Agreement shall be in effect from and after the date
hereof and shall continue in effect for a period expiring on the earlier of (i)
four (4) years from the closing date of the IPO or (ii) one (1) year from the
date of a merger of the Company or the sale of all or substantially all of the
stock or assets of the Company.
4. Reasonable Limit. The parties hereto have attempted to set forth
certain restrictions only to the extent necessary to protect the interests of
the Company. Each of ▇▇▇▇▇▇▇ and the TPG Group expressly acknowledges that the
restrictive covenant contained in subsection 2(a) above along with the
exceptions thereto contained in subsections 2(b) and 2(c) above, constitutes a
reasonable restriction. If, however, the scope or enforceability of the
restrictive covenant contained in this Agreement is disputed at any time, a
court or other trier of fact may modify and enforce the covenant to the extent
that it believes is reasonable under the circumstances existing at the time.
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5. Breach of Agreement.
(a) A party aggrieved shall notify the other party in writing of any
conflicts, disputes or claims of breach arising under this Agreement. Within
ten (10) business days after such notice is sent, the parties shall meet, shall
develop, as fully as possible, the facts relating to the conflict, dispute or
alleged breach, and shall attempt to resolve the same, it being understood and
agreed that any such resolution shall be subject to the consent and approval of
a majority of the Company's independent directors. If resolution of the dispute
is not made to the satisfaction of the aggrieved party within thirty (30) days
after the notice is sent, the aggrieved party may pursue its legal and equitable
remedies.
(b) In the event of breach of this Agreement, each of ▇▇▇▇▇▇▇ and the
TPG Group acknowledges that the remedy at law would be inadequate and that, in
addition to monetary damages, the Company shall be entitled, after compliance
with the dispute mechanism described in subsection 5(a) above, to seek an
injunctive order restraining such breach.
6. Transferability. The parties hereto agree that this Agreement
shall inure to the benefit of the Company, and its successors and assigns and
shall be transferable and assignable by the Company in connection with the sale
or other transfer of an equity interest in the Company of greater than 50% to an
entity that is not an Affiliate. Upon any such transfer or assignment, and
subject to Section 3, this Agreement shall remain in full force and effect
between ▇▇▇▇▇▇▇ and the TPG Group, on one hand, and such transferees, assignees
or successors in interest, on the other hand. This Agreement shall automatically
terminate in the event Affiliates own, in the aggregate, equity interests in the
Company of greater than 50%. This Agreement shall be binding upon the successors
and assigns of all or substantially all of the business of the TPG Group.
7. Waiver. The waiver by any party to this Agreement of a breach by
any party or any provision of this Agreement shall not operate or be construed
as a waiver of any subsequent breach by any other party. No waiver of any
provision of this Agreement shall be effective, unless in writing and signed by
the party waiving its rights, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given,
provided further that no waiver by the Company shall be effective unless
accompanied by a certificate of an executive officer of the Company certifying
that a majority of the independent directors of the Company have consented to
and approved such waiver.
8. Notices. Any notices required or permitted to be sent hereunder
shall be delivered personally or mailed, certified mail, return receipt
requested, or delivered by overnight courier service guaranteeing next business
day delivery, to the following
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addresses, or such other addresses as shall be given by notice delivered
hereunder, in each case with applicable postage or delivery charges prepaid, and
shall be deemed to have been given upon delivery, if delivered personally, three
business days after mailing, if mailed, or one business day after delivery to
the courier, if delivery by overnight courier service:
If to the Company, to:
Brookdale Living Communities, Inc.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: President
With a copy to:
Winston & ▇▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
If to the TPG Group or any member thereof, to:
c/o The Prime Group, Inc.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
With a copy to:
The Prime Group, Inc.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
If to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, to:
c/o The Prime Group, Inc.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
9. Final Agreement. This Agreement constitutes the final agreement
of the parties concerning the matters referred to herein, and supersedes all
prior agreements and understandings.
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10. Severability. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
11. Descriptive Headings. The descriptive headings of this Agreement
are inserted for convenience of reference only and do not constitute a part of
and shall not be utilized in interpreting this Agreement.
12. Governing Law. All questions concerning the construction,
validity and interpretation of, and the performance of the obligations imposed
by, this Agreement shall be governed by and construed in accordance with the
laws of the State of Illinois (excluding the choice of law provisions thereof).
[signature page follows]
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IN WITNESS WHEREOF, the parties hereto have caused this Non-Compete
Agreement to be duly executed and delivered on their behalf as of the date first
above written.
THE COMPANY:
BROOKDALE LIVING COMMUNITIES, INC.,
a Delaware corporation
By:________________________________
Name:______________________________
Its:_______________________________
▇▇▇▇▇▇▇ AND THE TPG GROUP:
___________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
THE PRIME GROUP, INC.,
an Illinois corporation
By:________________________________
Name:______________________________
Its:_______________________________
PRIME HALLMARK, INC.,
an Illinois corporation
By:________________________________
Name:______________________________
Its:_______________________________
PRIME GROUP LIMITED PARTNERSHIP,
an Illinois limited partnership
By:________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Managing General Partner
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