EXHIBIT 1.2
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 Xx. Xxxxxxx X. Xxxxxxx
(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 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 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 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.
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
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 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)
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 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 parties and inure to the benefits of the successors and assigns of the
respective parties hereto.
Section 7. 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.
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 shall not constitute the waiver of any other or subsequent breach
or default.
Section 12. 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.
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 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.
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: /s/ Xxxxxx Xxxxxxx
__________________________
Name: Xxxxxx Xxxxxxx
Title: Chief Operating Officer
BROOKDALE LIVING
COMMUNITIES, INC.
By: /s/ Xxxx X. Xxxxxxx
__________________________
Name: Xxxx X. Xxxxxxx
Title: President and Chief
Executive Officer
