EXHIBIT II
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CREDIT AGREEMENT
dated as of May 7, 1997
PRIME GROUP VI, L.P.,
as Borrower,
and
HEALTHCARE REALTY TRUST INCORPORATED,
as Lender
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TABLE OF CONTENTS
Page
Section 1. Definitions.............................................. 1
1.1 Certain Defined Terms.......................... 1
1.2 Interpretation................................. 6
Section 2. Loan..................................................... 7
2.1 The Loan....................................... 7
2.2 Note........................................... 7
2.3 Prepayment of Loan............................. 7
2.4 Facility Fees.................................. 7
Section 3. Payments of Principal and Interest....................... 7
3.1 Repayment of Loan.............................. 7
3.2 Interest....................................... 8
3.3 Certain Additional Obligations................. 8
Section 4. Payments................................................. 8
Section 5. Representations and Warranties........................... 9
5.1 Corporate Existence............................ 9
5.2 Litigation..................................... 9
5.3 No Breach...................................... 9
5.4 Partnership Action............................. 9
5.5 Approvals...................................... 10
5.6 Taxes.......................................... 10
5.7 Subsidiaries................................... 10
5.8 Pledged Stock.................................. 10
5.9 Brookdale Documents............................ 10
5.10 Solvency....................................... 10
5.11 Interest Rate.................................. 10
Section 6. Covenants of the Borrower................................ 10
6.1 Information.................................... 11
6.2 Litigation..................................... 11
6.3 Corporate Existence, Etc....................... 11
6.4 Prohibition of Fundamental Changes............. 11
6.5 Limitation on Liens............................ 11
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6.6 Indebtedness................................... 12
6.7 Investments.................................... 13
6.8 Use of Proceeds................................ 13
6.9 Modifications of Certain Documents............. 13
Section 7. Events of Default........................................ 13
Section 8. Miscellaneous............................................ 15
8.1 Waiver......................................... 15
8.2 Notices........................................ 16
8.3 Expenses....................................... 16
8.4 Amendments..................................... 16
8.5 Successors and Assigns......................... 16
8.6 Survival....................................... 16
8.7 Captions....................................... 17
8.8 Counterparts................................... 17
8.9 GOVERNING LAW.................................. 17
8.10 Non-Recourse................................... 17
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT dated as of May 7, 1997 (as amended, restated,
modified or supplemented from time to time, this "Agreement") is by and between
PRIME GROUP VI, L.P., a limited partnership duly organized and validly existing
under the laws of the State of Illinois (the "Borrower"), and HEALTHCARE REALTY
TRUST INCORPORATED, a real estate investment trust duly organized and validly
existing under the laws of the State of Maryland (the "Lender").
RECITALS:
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A. The Borrower has requested that the Lender extend credit to the
Borrower in an aggregate principal amount equal to $18,000,000.
B. To induce the Lender to extend such credit, the Borrower and the
Lender propose to enter into this Agreement pursuant to which the Lender will
make a loan to the Borrower, and the Borrower will agree to execute and deliver
security documents providing for security interests and liens to be granted by
the Borrower on certain shares of common stock of Brookdale Living Communities,
Inc., a Delaware corporation ("Brookdale"), owned by the Borrower and certain
rights of the Borrower under related agreements as collateral security for the
obligations of the Borrower to the Lender hereunder.
NOW, THEREFORE, the parties hereto hereby agree as follows:
Section 1. Definitions.
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1.1 Certain Defined Terms. As used herein, the following terms shall
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have the following meanings:
"Affiliate" means, as to any Person, any other Person which directly
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or indirectly controls, or is under common control with, or is controlled by,
such Person. As used in this definition, "control" (including, with its
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correlative meanings, "controlled by", and "under common control with") means
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possession, directly or indirectly, of power to direct or cause the direction of
management or policies (whether through ownership of securities or partnership
or other ownership interests, by contract or otherwise); provided that, in any
event, any Person which owns directly or indirectly 50% or more of the
securities having ordinary voting power for the election of directors or other
governing body of a corporation or 50% or more of the partnership or other
ownership interests of any other Person (other than as a limited partner of such
other Person) will be deemed to control such corporation or other Person.
"Basic Documents" means, collectively, this Agreement, the Note and
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the Security Documents.
"Borrower" shall have the meaning assigned to such term in the
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introductory paragraph of this Agreement.
"Borrower Security Agreement" means the Pledge and Security Agreement
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dated as of the date hereof between the Borrower and the Lender, as amended,
restated, modified or supplemented from time to time in accordance with the
terms thereof.
"Brookdale By-Laws" means the Amended and Restated By-Laws of
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Brookdale, adopted as of May 7, 1997, as may be further amended or modified from
time to time.
"Brookdale Charter" means the Restated Certificate of Incorporation of
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Brookdale, filed with the Secretary of State of the State of Delaware on March
21, 1997, as may be further amended or modified from time to time.
"Brookdale Documents" means, collectively, the Brookdale Charter, the
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Brookdale By-Laws, the Voting Agreement, the Lock-Up Agreement, the Registration
Rights Agreement, the Stock Option and Deposit Agreement dated as of May 7, 1997
between ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇. ("▇▇▇▇▇▇▇▇") and PGI and the Stock Purchase
Agreement and Agreement Concerning Option Shares dated as of May 7, 1997 among
▇▇▇▇▇▇▇▇, PGI and the Borrower.
"Brookdale Shares" means shares of the common stock, par value $.01
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per share, of Brookdale.
"Business Day" means any day, excluding Saturday, Sunday and any day
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which shall be a legal holiday or a day on which banking institutions are
authorized or permitted by law or other government action to be closed in the
State of Tennessee or the State of Illinois.
"Code" means the Internal Revenue Code of 1986 and the regulations
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promulgated and rulings issued thereunder.
"Collateral" means any collateral pledged to the Lender pursuant to
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the Security Documents, and any additional collateral pledged by Borrower to
secure the Obligations.
"Default" means any event, act or condition which, with notice,
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expiration of any applicable grace period, or both, would become an Event of
Default.
"Dollars" means lawful money of the United States of America.
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"Event of Default" shall have the meaning assigned to such term in
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Section 7.
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"Facility Fees" means the fees to be paid by the Borrower to the
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Lender in accordance with Section 2.4.
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"GAAP" means generally accepted accounting principles in the United
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States.
"Governmental Authorities" means all federal, state, county, city,
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local and municipal governments and all agencies, boards, commissions, bureaus,
departments, courts, authorities, officials and officers thereof.
"Guarantees" means, collectively, the Guarantees dated as of the date
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hereof, made by each of PGI, Prime Group II, L.P., an Illinois limited
partnership, Prime International, Inc., an Illinois corporation, PGLP, Inc., an
Illinois corporation, PGLP, and ▇▇▇▇▇▇▇ (each, a "Guarantor" and collectively,
the "Guarantors"), respectively, in favor of the Lender in connection with the
Loan.
"Indebtedness" means, as to any Person (without duplication): (a)
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indebtedness created, issued or incurred by such Person for borrowed money
(whether by loan or the issuance and sale of debt securities); (b) obligations
of such Person to pay the deferred purchase or acquisition price of property or
services, other than trade accounts payable (other than for borrowed money),
arising, and accrued expenses incurred, in the ordinary course of business and
paid in accordance with customary trade terms; (c) indebtedness of others
secured by a Lien on the property of such Person, whether or not the respective
indebtedness so secured has been assumed by such Person (but, for any Person
other than the Borrower, only if such indebtedness is recourse indebtedness);
(d) obligations of such Person in respect of letters of credit or similar
instruments issued or accepted by banks and other financial institutions for the
account of such Person; (e) capital lease obligations of such Person; and (f)
indebtedness of others guaranteed by such Person.
"Investment" in any Person means: (a) the acquisition (whether for
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cash, property, services or securities or otherwise) of capital stock, bonds,
notes, debentures, partnership or other ownership interests or other securities
of such Person; and (b) any deposit with, or advance, loan or other extension of
or credit to, such Person or guarantee of, or other contingent obligation with
respect to, Indebtedness or other liability of such Person and (without
duplication) any amount committed to be advanced, lent or extended to such
Person.
"Lender" shall have the meaning ascribed to that term in the
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introductory paragraph of this Agreement.
"Lien" means with respect to any asset, any mortgage, lien, pledge,
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charge, security interest or encumbrance of any kind in respect of such asset.
For purposes of this Agreement, the Borrower shall be deemed to own subject to a
Lien any asset which it has acquired or holds subject to the interest of a
vendor or lessor under any conditional sale agreement, capital lease or other
title retention agreement relating to such asset.
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"Loan" means the loan provided for by Section 2.1.
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"Loan Amount" means $18,000,000.
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"Lock-Up Agreement" means the Lock-Up Agreement dated as of May 7,
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1997 by and among PGI, PGLP and Friedman, Billings, ▇▇▇▇▇▇ & Co., Inc., as
representative of the underwriters identified therein, as amended, restated,
modified or supplemented from time to time in accordance with the terms thereof.
"Maturity Date" means February 1, 1998 or such later date elected by
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the Borrower in accordance with Section 3.1.
"Note" means the promissory Note provided for by Section 2.2.
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"Obligations" means, as at any date of determination thereof, the sum
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of the following (determined without duplication): (i) the principal amount of
the Loan outstanding hereunder, plus (ii) accrued and unpaid interest on the
Loan, plus (iii) all the other outstanding obligations under this Agreement or
any other Basic Document (including, without limitation, the Borrower's
obligations under Section 3.3).
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"Permitted Investments":
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(a) an account that is maintained by a depositary institution or trust
company incorporated under the laws of the United States of America or any
state thereof and subject to supervision and examination by federal or
state banking authorities, so long as at all times the commercial paper,
certificates of deposit or other short-term debt obligations of such
depository institution or trust company have a rating of either not less
than A-1 by Standard & Poor's or not less than P-1 by Moody's;
(b) demand and time deposits in, certificates of deposits of, or
bankers, acceptances of, in each case maturing in not more than 180 days
from the date of purchase, any depository institution or trust company
incorporated under the laws of the United States of America or any state
thereof and subject to supervision and examination by federal or state
banking authorities, so long as at the time of such investment or
contractual commitment providing for such investment the commercial paper,
certificates of deposit or other short-term debt obligations of such
depository institution or trust company have a rating of either not less
than A-1 by Standard & Poor's or not less than P-1 by Moody's;
(c) commercial paper having remaining maturities of not more than 180
days of any corporation incorporated under the laws of the United States or
any state thereof which on the date of acquisition has been rated either
not less than A-1 by Standard & Poor's or not less than P-1 by Moody's;
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(d) U.S. Treasury obligations maturing not more than six months from
the date of acquisition;
(e) repurchase agreements on U.S. Treasury obligations maturing not
more than six months from the date of acquisition, provided that the
unsecured obligations of the party agreeing to repurchase such obligations
are at the time rated either not less than A-1 by Standard & Poor's or not
less than P-1 by Moody's; and
(f) other obligations or securities that are approved by the Lender
and the Borrower.
"Person" means any individual, corporation, company, voluntary
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association, partnership, limited liability company, joint venture, trust,
unincorporated organization or Governmental Authority.
"PGI" means The Prime Group, Inc., an Illinois corporation.
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"PGI Security Agreement" means the Pledge and Security Agreement dated
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as of the date hereof between PGI and the Lender, as amended, restated, modified
or supplemented from time to time in accordance with the terms thereof.
"PGLP" means Prime Group Limited Partnership, an Illinois limited
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partnership.
"PGLP Security Agreement" means the Pledge and Security Agreement
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dated as of the date hereof between PGLP and the Lender, as amended, restated,
modified or supplemented from time to time in accordance with the terms thereof.
"Pledged Stock" means those Brookdale Shares pledged as Collateral
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from time to time by the Borrower pursuant to the Borrower Security Agreement.
"Post-Default Rate" means a rate equal to 12.25% per annum.
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"Registration Rights Agreement" means the Registration Rights
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Agreement dated as of May 7, 1997 among Brookdale, PGI and PGLP, as amended,
restated, modified or supplemented from time to time in accordance with the
terms thereof.
"▇▇▇▇▇▇▇" means ▇▇▇▇ ▇. ▇▇▇▇▇▇▇.
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"▇▇▇▇▇▇▇ Security Agreement" means the Pledge and Security Agreement
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dated as of the date hereof between ▇▇▇▇▇▇▇ and the Lender, as amended,
restated, modified or supplemented from time to time in accordance with the
terms thereof.
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"Security Agreements" means, collectively, (i) the Borrower Security
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Agreement, (ii) the PGI Security Agreement, (iii) the PGLP Security Agreement
and (iv) the ▇▇▇▇▇▇▇ Security Agreement.
"Security Documents" means, collectively, the Guarantees, the Security
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Agreements and all Uniform Commercial Code financing statements required by this
Agreement and by the Security Agreements.
"Solvent", when used with respect to any Person, means that at the
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time of determination: (i) the fair market value (i.e., the value of the
consideration obtainable in a sale of assets in the open market, assuming a sale
by a willing seller to a willing purchaser dealing at arm's length and arranged
in an orderly manner over a reasonable period of time, each having reasonable
knowledge of the nature and characteristics of such assets, neither being under
any compulsion to act, determined in good faith) of its assets is in excess of
the total amount of its liabilities (including, without limitation, probable
contingent liabilities); (ii) the present fair saleable value of its assets is
greater than its probable liability on its existing debts as such debts become
absolute and matured; (iii) it is then able and expects to be able to pay its
debts as they mature; and (iv) it has capital sufficient to carry on its
business as conducted and as proposed to be conducted.
"Specified Subsidiary" means any corporation, association or other
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business entity formed for the purpose of earning income not qualified as "rents
from real property" under applicable provisions of the Code, in which the Lender
owns substantially all of the economic interest but less than 10% of the voting
interests, and the remaining economic and voting interests are subject to
restrictions requiring that ownership of such interests be held by officers,
directors or employees of the Lender.
"Stock Offering" means the offering of common stock of Brookdale
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described in its final prospectus dated May 1, 1997.
"Subsidiary" means any corporation of which at least a majority of the
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outstanding shares of stock having by the terms thereof ordinary voting power to
elect a majority of the board of directors of such corporation (irrespective of
whether or not at the time stock of any other class or classes of such
corporation shall have or might have voting power by reason of the happening of
any contingency) is at the time directly or indirectly owned or controlled by
the Borrower, or any partnership or joint venture controlled by the Borrower and
of which at least a majority of the outstanding equity interests are at the
time, directly or indirectly, owned by the Borrower, other than as a limited
partner.
"Voting Agreement" means the Voting Agreement dated as of May 7, 1997
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among Brookdale, the Borrower, PGI and PGLP, as amended, restated, modified or
supplemented from time to time in accordance with the terms thereof.
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1.2 Interpretation. Unless otherwise expressly provided or unless
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the context requires otherwise, (a) all references in this Agreement to Sections
shall mean and refer to Sections of this Agreement; (b) all references to
statutes and related regulations shall include all amendments of the same and
any successor or replacement statutes and regulations; (c) words using the
singular or plural number also shall include the plural and singular number,
respectively; (d) references to "hereof", "herein", "hereby" and similar terms
shall refer to this entire Agreement; and (e) references to any Person shall be
deemed to mean and include the successors and permitted assigns of such Person
(or, in the case of a Governmental Authority, Persons succeeding to the relevant
functions of such Person).
Section 2. Loan.
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2.1 The Loan. The Lender agrees, on the terms of this Agreement, to
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make a Loan to the Borrower in Dollars in the principal amount equal to the Loan
Amount, by not later than 1:00 p.m. New York City time on the date hereof, in
immediately available funds, to an account of the Borrower in the United States
designated by the Borrower.
2.2 Note. The Loan made by the Lender shall be evidenced by a single
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promissory note of the Borrower dated the date hereof, payable to the Lender in
a principal amount equal to the Loan Amount. Each payment made on account of
the principal thereof shall be recorded by the Lender on its books and endorsed
by the Lender on the schedule attached to the Note or any continuation thereof.
2.3 Prepayment of Loan. The Borrower shall have the right at any
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time and from time to time to prepay the Loan, in whole or in part, at its
option, without premium or penalty; provided, that the Borrower shall give the
Lender at least 2 Business Days prior written notice of such prepayment.
2.4 Facility Fees.
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(a) The Borrower agrees to pay to the Lender, on the date hereof, a
non-refundable facility fee equal to two percent (2.0%) of the Loan Amount.
(b) The Borrower also agrees to pay to the Lender, in arrears, on each
of June 30, 1997, September 30, 1997, December 31, 1997 and, if the Borrower
elects to extend the Maturity Date in accordance with Section 3.1 to a date on
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or after February 1, 1998, March 31, 1998, an additional non-refundable facility
fee equal to one percent (1.0%) of the principal balance of the Loan outstanding
on such respective dates. Each such facility fee shall be deemed to be fully
earned for the period ending on such date and shall not be deemed to relate to
any other period.
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Section 3. Payments of Principal and Interest.
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3.1 Repayment of Loan. The Borrower will pay to the Lender the
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outstanding principal balance of the Loan on the Maturity Date or such earlier
day as the Loan shall become due and payable pursuant to the terms of this
Agreement; provided, however, that the Borrower may, in its sole discretion,
upon not less than three (3) days' prior written notice to the Lender, elect to
extend the Maturity Date to any date on or prior to the one year anniversary of
the date hereof. All payments received by the Lender shall first be applied to
pay accrued and unpaid interest pursuant to Section 3.2 and the balance shall be
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applied to repay the outstanding principal balance of the Loan.
3.2 Interest. The Borrower will pay to the Lender interest on the
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unpaid principal amount of the Loan in arrears on the first Business Day of each
month, beginning on June 1, 1997, and on the date of each payment or prepayment
of principal (but only on the principal amount so paid or prepaid), at a per
annum rate equal to 10.25%. Notwithstanding the foregoing, the Borrower will
pay to the Lender interest at the Post-Default Rate on the principal of the
Loan, and (to the fullest extent permitted by law) on interest and any other
amount payable by the Borrower hereunder or under the Note, which shall not be
paid in full when due (whether at stated maturity, by acceleration or
otherwise), for the period from and including the due date thereof to but
excluding the date the same is paid in full. Interest payable at the Post-
Default Rate shall be payable from time to time on demand. Interest shall be
computed on the basis of a year of 360 days and actual days elapsed.
3.3 Certain Additional Obligations. The Borrower will pay to the
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Lender, within thirty (30) days after the Borrower's receipt from the Lender of
a written request therefor, any and all federal income taxes computed at the
highest marginal federal income tax rate applicable to a Specified Subsidiary on
any gross income accrued by it with respect to the Loan for any period after
February 1, 1998; provided, however, that (A) the Borrower will not be obligated
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to pay any such taxes if the Loan is paid in full on or prior to February 1,
1998; and (B) in no event (unless an Event of Default has occurred) will the
Borrower be obligated to pay more than (i) $185,000 of any such taxes
attributable to the interest income accrued by such Specified Subsidiary on the
Loan for the period from and including February 2, 1998 to the one year
anniversary of the date hereof or (ii) $72,000 of any such taxes attributable to
the Facility Fee paid to such Specified Subsidiary on March 31, 1998, if
applicable. The Lender agrees that, upon request by the Borrower, it will
promptly provide to the Borrower a calculation of the amount of taxes for which
it is to be indemnified by the Borrower hereunder.
Section 4. Payments.
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(a) Except to the extent otherwise provided herein, all payments of
principal, interest, fees and other amounts to be made by the Borrower under
this Agreement and the Note shall be made in Dollars, in immediately available
funds, without deduction, set-off or counterclaim, to the Lender (at any account
specified in writing by the Lender to the Borrower) not later than 1:00 p.m. New
York City time on the date on which such payment shall become due (each such
payment made after such time on such due date to be deemed to have been made on
the next succeeding Business Day).
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(b) If the due date of any payment under this Agreement or the Note
would otherwise fall on a day which is not a Business Day, such date shall be
extended to the next succeeding Business Day and interest shall be payable for
any principal so extended for the period of such extension.
(c) Notwithstanding the foregoing, all unpaid principal and interest
on the Loan shall be repaid in full on the Maturity Date.
Section 5. Representations and Warranties. The Borrower represents
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and warrants to the Lender that:
5.1 Corporate Existence. The Borrower: (a) is a limited partnership
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duly organized, validly existing and in good standing under the laws of the
State of Illinois; (b) has all requisite partnership power, and has all material
governmental licenses, authorizations, consents and approvals necessary to own
its assets and carry on its business as now being or as proposed to be
conducted; and (c) is qualified to do business and is in good standing in all
jurisdictions in which the nature of the business conducted by it makes such
qualification necessary and where failure so to qualify could reasonably be
expected to have a material adverse effect on the financial condition,
operations, business or prospects taken as a whole of the Borrower.
5.2 Litigation. There is no legal or arbitral proceeding by or
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before any Governmental Authority, now pending or (to the knowledge of the
Borrower) threatened, against the Borrower with respect to which an order
adverse to the Borrower is reasonably likely and which, if adversely determined,
could reasonably be expected to have a material adverse effect on the financial
condition, operations, business or prospects of the Borrower.
5.3 No Breach. None of the execution and delivery by the Borrower of
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any of the Basic Documents to which the Borrower is a party, the consummation of
the transactions therein contemplated or compliance with the terms and
provisions thereof will conflict with or result in a breach of, or require any
consent (except such as has been obtained) under, or any applicable law or
regulation (including, without limitation, Regulation T promulgated by the
Federal Reserve System), or any order, writ, injunction or decree of any
Governmental Authority or any Brookdale Document, or any material agreement or
instrument to which the Borrower is a party or by which it is bound or to which
it is subject, or constitute a default under any such agreement or instrument,
or (except for the Liens created pursuant to or contemplated by this Agreement
or the Security Documents) result in the creation or imposition of any Lien upon
any of the assets of the Borrower pursuant to the terms of any such agreement or
instrument.
5.4 Partnership Action. The Borrower has all necessary partnership
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power and authority to execute, deliver and perform its obligations under each
of the Basic Documents to which the Borrower is a party; the execution, delivery
and performance by the Borrower of each of the Basic Documents to which the
Borrower is a party have been duly authorized by all necessary
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partnership action on its part; and this Agreement and each of the other Basic
Documents to which the Borrower is a party has been duly and validly executed
and delivered by the Borrower and constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles.
5.5 Approvals. No authorizations, approvals or consents of, and no
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filings or registrations with, any Governmental Authority are necessary for the
execution, delivery or performance by the Borrower of the Basic Documents to
which the Borrower is a party or for the validity or enforceability thereof,
except for Uniform Commercial Code filings in respect of the Liens created
pursuant to the Security Documents.
5.6 Taxes. The Borrower has filed all United States Federal income
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tax returns and all other material tax returns which are required to be filed by
it and has paid all taxes due pursuant to such returns.
5.7 Subsidiaries. The Borrower has no Subsidiaries. The Pledged
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Stock represents the only Investment held by the Borrower in any other Person.
5.8 Pledged Stock. The Borrower is the registered owner of the
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Pledged Stock free and clear of all Liens (other than the Liens created by the
Borrower Security Agreement and the Brookdale Documents), and has pledged under
the Borrower Security Agreement all Brookdale Shares owned by it.
5.9 Brookdale Documents. The Borrower has furnished to the Lender a
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true and complete copy of each Brookdale Document as in effect as of the date
hereof; such Brookdale Documents are in full force and effect; such Brookdale
Documents (other than the Brookdale By-Laws and the Brookdale Charter) are valid
and binding on each of the Borrower's Affiliates that are party thereto and, to
the best of Borrower's knowledge, on each of the other parties thereto; and
neither Borrower or any of its Affiliates, nor to the best of Borrower's
knowledge, any other party to any Brookdale Document, is in default thereunder.
5.10 Solvency. After giving effect to the Loan, the disbursement of
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the proceeds of the Loan in accordance with Section 6.8 and the other
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transactions contemplated by the Stock Offering and the Basic Documents to occur
on the date hereof, the Borrower is Solvent on the date hereof.
5.11 Interest Rate. The interest rate and the Facility Fees
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applicable to the obligations of the Borrower under this Agreement and the Note
do not violate any law, rule or regulation of the State of Illinois prescribing
a maximum rate of interest.
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Section 6. Covenants of the Borrower. The Borrower agrees that,
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until payment in full of the Obligations:
6.1 Information. The Borrower shall deliver, or shall use its good
-----------
faith efforts to cause to be delivered, to the Lender from time to time copies
of each document filed by Brookdale with the Securities and Exchange Commission
under the Securities and Exchange Act of 1934, as amended, each other document
sent to Brookdale's stockholders generally and such other information regarding
the business, affairs or financial condition of the Borrower, Brookdale or the
Brookdale Shares as the Lender may reasonably request.
6.2 Litigation. The Borrower will promptly give to the Lender notice
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of all legal or arbitral proceedings by or before any Governmental Authority,
and any material development in respect of such legal or other proceedings,
affecting the Borrower, except proceedings which are not reasonably likely to be
determined adversely to the Borrower or which, if determined adversely to the
Borrower, could not reasonably be expected to have a material adverse effect on
the financial condition, operations, business or prospects of the Borrower.
6.3 Corporate Existence, Etc. The Borrower will (a) preserve and
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maintain its existence and all of its material rights, privileges and
franchises; (b) comply with the requirements of all applicable laws, rules,
regulations and orders of Governmental Authorities if failure to comply with
such requirements could reasonably be expected to materially and adversely
affect the financial condition, operations, business or prospects of the
Borrower; (c) pay and discharge all taxes, assessments and governmental charges
or levies imposed on it or on its income or profits or on any of its property
prior to the date on which penalties attach thereto, except for any such tax,
assessment, charge or levy the payment of which is being contested in good faith
and by proper proceedings and against which adequate reserves are being
maintained; and (d) permit representatives of the Lender, upon 24 hours notice
during normal business hours, to examine, copy and make extracts from its books
and records, to inspect its properties and to discuss its business and affairs
with its officers, all to the extent reasonably requested by the Lender.
6.4 Prohibition of Fundamental Changes. The Borrower will not enter
----------------------------------
into any transaction of merger or consolidation or amalgamation, or liquidate,
wind-up or dissolve itself (or suffer any liquidation or dissolution). The
Borrower will not convey, sell, lease, transfer or otherwise dispose of, in one
transaction or a series of transactions, all or a substantial part of its
business or assets, whether now owned or hereafter acquired (including, without
limitation, Pledged Stock prior to any release thereof) without the prior
written consent of the Lender.
6.5 Limitation on Liens. The Borrower will not create, incur, assume
-------------------
or suffer to exist any Lien upon any of its property, assets or revenues,
whether now owned or hereafter acquired, except:
11
(a) Liens created pursuant to (or otherwise permitted under or
contemplated by) this Agreement or the Security Documents;
(b) Liens imposed by any Governmental Authority for taxes, assessments
or charges not yet due or which are being contested in good faith and by
appropriate proceedings and adequate reserves with respect thereto are
maintained on the books of the Borrower, in accordance with GAAP;
(c) carriers', warehousemen's, mechanics', materialmen's, repairmen's
or other like Liens arising in the ordinary course of business which are not
overdue for a period of more than 60 days or which are being contested in good
faith and by appropriate proceedings;
(d) pledges or deposits under worker's compensation, unemployment
insurance and other social security legislation;
(e) deposits to secure the performance of bids, trade contracts (other
than for borrowed money), leases, statutory obligations, surety and appeal
bonds, performance bonds and other obligations of a like nature incurred in the
ordinary course of business;
(f) Liens imposed wrongfully by, or by mistake or error on the part
of, a non-Affiliate of the Borrower and without the consent of the Borrower
which have not attached for a period of over 60 days and are being contested in
good faith and by appropriate proceedings; provided, however, that, if, during
the first 60 day period of attachment, the liens are being so contested,
Borrower shall have an additional 60 days thereafter to remove same;
(g) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business and encumbrances
consisting of zoning restrictions, easements, licenses, restrictions on the use
of property or minor imperfections in title thereto which, in the aggregate, are
not material in amount, and which do not in any case materially detract from the
value of the property subject thereto or interfere with the ordinary conduct of
the business of Borrower;
(h) Liens created by the Brookdale Documents; and
(i) other Liens incurred in the ordinary course of business which, in
the aggregate, are not material in amount and which do not in any case
materially detract from the value of the property subject thereto or interfere
with the ordinary conduct of the business of Borrower.
6.6 Indebtedness. The Borrower will not create, incur or suffer to
------------
exist any Indebtedness, except (i) Indebtedness to the Lender hereunder, (ii)
Indebtedness incurred in the ordinary course of business which is not, in the
aggregate, material in amount, (iii) Indebtedness the proceeds of which are
applied by the Borrower to the purchase of Brookdale Shares pursuant to the
Stock Offering, (iv) Indebtedness to Affiliates of the Borrower which is
incurred by the Borrower to
12
pay amounts due to the Lender under the Basic Documents and (v) Indebtedness
that is subordinated to all of the Obligations.
6.7 Investments. The Borrower will not make or permit to remain
-----------
outstanding any Investments, except:
(a) operating deposit accounts with banks;
(b) Permitted Investments; and
(c) Investments in Brookdale Shares.
6.8 Use of Proceeds. The Borrower will use the proceeds of the Loan
---------------
hereunder solely for the payment of the purchase price of Brookdale Shares to be
sold to the Borrower pursuant to the Stock Offering and the payment of all
reasonable fees, costs and expenses incurred in connection with such purchase
and the transactions contemplated by the Basic Documents (including the Facility
Fees).
6.9 Modifications of Certain Documents. The Borrower will not send
----------------------------------
any notice under, or request, or consent to, any modification, supplement or
waiver of any of the provisions of Brookdale Documents in a manner which
adversely affects the interests of the Borrower or the Lender without the prior
written consent of the Lender.
Section 7. Events of Default. If one or more of the following events
-----------------
(herein called "Events of Default") shall occur and be continuing:
(a) the Borrower shall fail to make payment of (i) the principal
amount of the Loan when due, or (ii) any interest on the Loan or any Facility
Fee, in any case, within three (3) Business Days after the same shall become
due, or (iii) any other amount payable by it hereunder within ten (10) Business
Days after the Borrower's receipt from the Lender of written notice of the
failure to pay such amount; or
(b) a default (after the receipt of notice and the expiration of all
applicable cure periods) shall have occurred with respect to any Indebtedness in
excess of $5,000,000 of Brookdale, any Guarantor (other than ▇▇▇▇▇▇▇) or the
Borrower (after the receipt of notice and the expiration of all applicable cure
periods); or
(c) any representation, warranty or certification made in any Basic
Document by the Borrower or any Guarantor shall prove to have been false or
misleading, as of the time made or furnished; provided, however, that (i) with
respect to that portion of the representations and warranties set forth in
Section 5.6 ("Taxes") hereof and Section 2.12 ("Taxes") of the Guarantees (other
-----------
than the Guarantee by ▇▇▇▇▇▇▇) that provides that the Borrower or the Guarantor,
as the case
13
may be, "has paid all taxes due pursuant to such returns", no Event of Default
shall be deemed to exist unless the failure to pay such taxes could reasonably
be expected to have a material adverse effect on the financial condition,
operations, business or prospects of the Borrower or such Guarantor, as the case
may be, or its ability to perform its obligations under this Agreement or such
Guarantee, as the case may be, (ii) with respect to the enforceability
representations and warranties set forth in Section 5.4 hereof, Section 2.9 of
-----------
the Guarantees (other than the Guarantee by ▇▇▇▇▇▇▇), Section 2.8 of the
Guarantee by ▇▇▇▇▇▇▇ and Section 5.1(v) of the Security Agreements, an Event of
Default shall be deemed to exist only to the extent that the Lender's rights and
remedies under any such Basic Document, taken in their entirety, are inadequate
for the practical realization of the benefits and/or security intended to be
provided thereby and (iii) with respect to the representation and warranty set
forth in clause (iii) of Section 2.7 of the Guarantees (other than the Guarantee
by ▇▇▇▇▇▇▇), no Event of Default shall be deemed to exist unless any such
representation and warranty is false or misleading in any material respect; or
(d) the Borrower or any Guarantor shall default in the performance of
any of its material obligations in any Basic Document to which it is a party and
such default shall continue unremedied for a period of thirty (30) days after
written notice thereof to the Borrower or any such Guarantor by the Lender
unless the Borrower or any such Guarantor is diligently attempting to cure such
default and, in any event, such default is remedied by no later than the 90th
day after written notice thereof to the Borrower or any such Guarantor by the
Lender; or
(e) PGLP, Inc., PGLP, PGI and Affiliates of the foregoing shall,
collectively, cease to own, directly or indirectly, 100% of the partnership
interests in the Borrower;
(f) Brookdale, any Guarantor (other than ▇▇▇▇▇▇▇) or the Borrower
shall admit in writing its inability to, or be generally unable to, pay its
debts as such debts become due, or shall be in default (after the receipt of
notice and the expiration of all applicable cure periods) with respect to
Indebtedness in excess of $5,000,000; or
(g) Brookdale, any Guarantor (other than ▇▇▇▇▇▇▇) or the Borrower
shall (i) apply for or consent to the appointment of, or the taking of
possession by, a receiver, custodian, trustee or liquidator of itself or of all
or a substantial part of its property, (ii) make a general assignment for the
benefit of its creditors, (iii) commence a voluntarily case under the U.S.
Bankruptcy Code (or any similar state statute), (iv) file a petition seeking to
take advantage of any other law relating to bankruptcy, insolvency,
reorganization, winding-up, or composition or readjustment of debts, or (v) take
any corporate or other action for the purpose of effecting any of the foregoing;
or
(h) a proceeding or case shall be commenced, without the application
or consent of Brookdale, any Guarantor (other than ▇▇▇▇▇▇▇) or the Borrower, in
any court of competent jurisdiction, seeking (i) its liquidation,
reorganization, dissolution or winding-up, or the composition or readjustment of
its debts, (ii) the appointment of a trustee, receiver, custodian, liquidator or
the like of Brookdale, any Guarantor (other than ▇▇▇▇▇▇▇) or the Borrower or of
all or any substantial part
14
of its respective assets, or (iii) similar relief in respect of Brookdale, any
Guarantor (other than ▇▇▇▇▇▇▇) or the Borrower under any law relating to
bankruptcy, insolvency, reorganization, winding-up, or composition or adjustment
of debts, and such proceeding or case shall continue undismissed, or an order,
judgment or decree approving or ordering any of the foregoing shall be entered
and continue unstayed and in effect, in any case, for a period of 60 or more
days; or an order for relief against Brookdale, any Guarantor (other than
▇▇▇▇▇▇▇) or the Borrower shall be entered in an involuntary case under the U.S.
Bankruptcy Code (or any similar state statute); or
(i) a final judgment or judgments for the payment of money in excess
of $5,000,000 in the aggregate (to the extent not covered by insurance) shall be
rendered by a court or courts against Brookdale, any Guarantor (other than
▇▇▇▇▇▇▇) or the Borrower and the same shall not be discharged (or provision
shall not be made for such discharge) or a stay of execution thereof shall not
be procured within 90 days from the date of entry thereof and the Borrower shall
not, within said period of 90 days, or such longer period during which execution
of the same shall have been stayed, appeal therefrom and cause the execution
thereof to be stayed during such appeal; or
(j) except for expiration in accordance with its terms, any of the
Security Documents shall be terminated or shall cease to be in full force and
effect, for whatever reason (other than due to the action or inaction of the
Lender) without the consent of the Lender; or
(k) Brookdale Shares shall cease to be listed on a nationally
recognized stock exchange or quoted on NASDAQ-NMS;
THEREUPON: (i) in the case of an Event of Default (other than one referred to in
clause (g) or (h) of this Section 7 with respect to the Borrower), the Lender
---------
may, by notice to the Borrower, declare the principal amount then outstanding
of, and the accrued interest on, the Loan and all other amounts payable by the
Borrower hereunder and under the Note to be forthwith due and payable, whereupon
such amounts shall be immediately due and payable without presentment, demand,
protest or other formalities of any kind, all of which are hereby expressly
waived by the Borrower to the extent permitted by applicable law; and (ii) in
the case of the occurrence of an Event of Default referred to in clause (g) or
(h) of this Section 7 with respect to the Borrower, the principal amount then
---------
outstanding of, and the accrued interest on, the Loan and all other amounts
payable by the Borrower hereunder and under the Note shall automatically become
immediately due and payable without presentment, demand, protest or other
formalities of any kind, all of which are hereby expressly waived by the
Borrower.
Section 8. Miscellaneous.
-------------
8.1 Waiver. No failure on the part of the Lender to exercise and no
------
delay in exercising, and no course of dealing with respect to, any right, power
or privilege under this Agreement or the Note or any Security Document shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, power or privilege under this Agreement, the Note or any
15
Security Document preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The remedies provided herein are
cumulative and not exclusive of any remedies provided by law.
8.2 Notices. All notices and other communications provided for
-------
herein and under the Security Documents (including, without limitation, any
modifications of, or waivers or consents under, this Agreement) shall be given
or made by telecopy, or in writing and telecopied (with confirmation), mailed,
sent by overnight courier or delivered to the intended recipient at the "Address
for Notices" specified below its name on the signature pages hereof (below the
name of the Borrower); or, as to any party, at such other address as shall be
designated by such party in a notice to each other party. Except as otherwise
provided in this Agreement, all such communications shall be deemed to have been
duly given when transmitted by telecopier (with confirmation of receipt), or
personally delivered or, in the case of a mailed or couriered notice, upon
receipt, in each case given or addressed as aforesaid.
8.3 Expenses. The Borrower agrees to reimburse the Lender for
--------
paying: (a) all reasonable out-of-pocket costs and expenses of the Lender
(including reasonable fees and disbursements of counsel for the Lender) actually
incurred in connection with (i) the negotiation, preparation, execution and
delivery of this Agreement and the other Basic Documents and the making of the
Loan hereunder (including the termination thereof or the release of Collateral
thereunder), and (ii) any amendment, modification or waiver of any of the terms
of this Agreement or any of the other Basic Documents; (b) all reasonable costs
and expenses of the Lender (including reasonable counsels' fees) in connection
with any Default and any enforcement or collection proceedings resulting
therefrom; and (c) all transfer, stamp, documentary or other similar taxes,
assessments or charges levied by any Governmental Authority in respect of this
Agreement or any of the other Basic Documents or any other document referred to
herein or therein and all reasonable costs, expenses, taxes, assessments and
other charges incurred in connection with any filing, registration, recording or
perfection of any security interest contemplated by this Agreement or any other
Basic Document or any document referred to herein or therein.
8.4 Amendments. Except as otherwise expressly provided in this
----------
Agreement, any provision of this Agreement may be amended or modified only by an
instrument in writing signed by the Borrower and the Lender.
8.5 Successors and Assigns. This Agreement shall be binding upon and
----------------------
inure to the benefit of the parties hereto and their respective successors and
permitted assigns. Neither the Borrower nor the Lender may assign its rights or
obligations hereunder or under the other Basic Documents without the prior
written consent of the other party; provided, however, that the Lender may at
any time assign all (but not less than all) of its rights and obligations under
the Basic Documents to a Specified Subsidiary, without the consent of the
Borrower.
16
8.6 Survival. Each representation and warranty made hereunder shall
--------
survive the making of the Loan.
8.7 Captions. The table of contents and section headings appearing
--------
herein are included solely for convenience of reference and are not intended to
affect the interpretation of any provision of this Agreement.
8.8 Counterparts. This Agreement may be executed in counterparts,
------------
all of which when taken together shall constitute one and the same instrument
and either of the parties hereto may execute this Agreement by signing any such
counterpart.
8.9 GOVERNING LAW.
-------------
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF ILLINOIS (EXCLUSIVE OF ANY RULES AS TO CONFLICT OF
LAWS).
(b) Under no circumstances shall the aggregate amount paid or agreed
to be paid hereunder by the Borrower exceed the highest lawful rate permitted
under applicable usury law (the "Maximum Rate") and the payment obligations of
the Borrower under this Agreement are hereby limited accordingly. If under any
circumstances the aggregate amounts paid under this Agreement shall include
amounts which by law are deemed interest and which would exceed the Maximum
Rate, the Borrower and the Lender stipulate that payment and collection of such
excess amounts shall have been and will be deemed to have been the result of a
mistake on the part of both the Borrower and the Lender, and the party receiving
such excess payments shall promptly credit such excess (to the extent only of
such interest payments in excess of the Maximum Rate) against the future lawful
interest to be paid on the Loan and then against the unpaid principal amount of
the Loan and any portion of such excess payments not capable of being so
credited shall be refunded to the Borrower.
8.1 Non-Recourse. Anything contained herein, in the Note or in any
------------
other Basic Document to the contrary notwithstanding, no recourse shall be had
for the Obligations against any partner, agent, director, officer, or employee
of the Borrower. It is understood that the preceding sentence shall not (A)
apply to the obligations of the Guarantors set forth in the Guarantees and (B)
in the event of any malfeasance, such as fraud, misappropriation of funds or
intentional material misrepresentation, estop the Lender from instituting or
prosecuting a legal action or proceeding or otherwise making a claim against the
Person or Persons committing such malfeasance.
[signature page follows]
IN WITNESS WHEREOF, the parties hereto have caused this Credit
Agreement to be duly executed as of the date first written above.
BORROWER:
PRIME GROUP VI, L.P.
By: PGLP, INC.,
its Managing General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------
Title: Vice President
-------------------------
Address for Notices:
c/o The Prime Group, Inc.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
with a copy to:
The Prime Group, Inc.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
and to:
Brookdale Living Communities, Inc.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
and to:
Winston & ▇▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
18
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
LENDER:
HEALTHCARE REALTY TRUST INCORPORATED
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------
Title: Exec. Vice President
---------------------------
Address for Notices:
Healthcare Realty Trust Incorporated
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier No.: ▇▇▇-▇▇▇-▇▇▇▇
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
