CONDITIONAL INVESTMENT AGREEMENT
This CONDITIONAL INVESTMENT AGREEMENT (this "Agreement") is entered into
effective as of June 17, 1998 by and between BROOKDALE LIVING COMMUNITIES, INC.,
a Delaware corporation ("Brookdale") and BANC ONE CAPITAL FUNDING CORPORATION,
an Ohio corporation ("BOCFC").
STATEMENT OF AGREEMENT
In consideration of the premises and of the mutual covenants contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
1. DEFINITIONS
As used herein, the following terms have the following meanings:
"Business Day" means any day which is not a Saturday or Sunday or a day on
which the principal office of BOCFC is authorized or required by law to close or
a day on which banks in Chicago, Illinois are authorized or required by law to
close. Any payment due hereunder on a day that is not a Business Day shall be
due and payable on the next succeeding Business Day.
"Effective Date" means June 17, 1998 which is the date on which the
Initial Invested Moneys are transferred to BOCFC's account as provided in
Section 2.1 hereof.
"Initial Invested Moneys" means $3,815,677.
"Invested Moneys" means the Initial Invested Moneys delivered to BOCFC by
Brookdale pursuant to Section 2.1 less any amounts returned to Brookdale by
BOCFC hereunder.
"Redemption Date" means the date of a redemption of this Agreement and the
withdrawal by Brookdale of the Invested Moneys in accordance with the
requirements of Section 2.3.
"Stated Rate of Earnings" equals 9% per annum on the basis of a 365 or 366
day year, as the case may be.
"17.11% IRR" shall mean an internal rate of return of 17.11% per annum
compounded monthly, and computed using the methodology described in Schedule 1
attached hereto and incorporated herein by reference.
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2. INVESTMENT OF FUNDS.
2.1 Delivery of Funds.
(a) On the Effective Date, Brookdale shall deliver the Initial
Invested Moneys to BOCFC for the credit of Brookdale's account, and BOCFC shall
accept the Initial Invested Moneys from Bookdale.
(b) Unless otherwise agreed by BOCFC, all amounts delivered to BOCFC
for investment hereunder shall be delivered by wire transfer of same day funds
to an account specified by BOCFC.
2.2. Interest. Interest on the outstanding balance of the Invested Moneys
shall accrue at the Stated Rate of Earnings from and including the Effective
Date to but excluding the Redemption Date. No interest will accrue on or after
the Redemption Date. Accrued interest shall be payable to Brookdale in
accordance with, and subject to the conditions of, Section 2.3 hereof.
2.3. Redemption. Brookdale may redeem this Agreement and withdraw all, but
not less than all, Invested Moneys subject to the conditions set forth on
Exhibit 2.3 attached hereto and incorporated herein by this reference. Brookdale
shall deliver written notice to BOCFC at least one Business Day prior to the
proposed Redemption Date, specifying the Redemption Date and certifying that the
conditions set forth on Exhibit 2.3 have been satisfied. Upon the satisfaction
of the foregoing conditions, BOCFC shall pay to Brookdale an amount equal to the
aggregate of (i) the Invested Moneys, (ii) interest at the Stated Rate of
Earnings on the outstanding balance of the Invested Moneys in accordance with
the requirements of Section 2.2 hereof and (iii) such additional amount of
interest as may be necessary to produce a 17.11% IRR on the Initial Investment
Moneys. Upon redemption as hereinabove described, this Agreement, and all of the
obligations of the parties hereunder, shall terminate. In addition, this
Agreement, and all of the obligations of the parties hereunder, shall terminate
if Brookdale has not redeemed this Agreement and withdrawn the Invested Moneys
in accordance with the conditions of this Section 2.3 (including, without
limitation, Exhibit 2.3) on or before the date which is one hundred eighty (180)
days after the Option Termination Date, as such term is defined in that certain
Equity Option Agreement of even date herewith (the "Equity Option Agreement")
among AH Texas Investor, Inc. ("Corporate Investor"), AH Texas Subordinated, LLC
("Subordinated Borrower"), AH Texas CGP., Inc. ("General Partner"), AH Texas
Owner Limited Partnership ("Owner") and Brookdale.
3. DEFAULT
3.1 Events of Default. The following events shall constitute events of
default under this Agreement (each an "Event of Default"):
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(a) BOCFC fails to make the payments required by Section 2.3 hereof
when due pursuant to the provisions of this Agreement and such failure continues
for one Business Day thereafter.
(b) BOCFC commences a case in bankruptcy relating to it, is
adjudicated an insolvent or bankrupt, petitions or applies for the appointment
of any receiver or trustee for itself or any substantial part of its property or
initiates any proceeding relating to it seeking a court order for
reorganization, arrangement, conservation, liquidation or dissolution under
applicable bankruptcy or similar applicable laws; or, any such proceeding is
initiated against BOCFC and BOCFC indicates in writing its consent thereto or
such proceeding is not dismissed within 90 days, or such an order is entered
against BOCFC.
(c) Any representation or warranty of BOCFC under this Agreement is
determined to have been false or misleading when made.
3.2 Rights and Remedies upon an Event of Default. Upon the occurrence and
continuation of any Event of Default specified in Section 3.1 hereof, Brookdale
may:
(i) declare all Invested Moneys and accrued but unpaid interest
thereon to be due and payable immediately; and
(ii) exercise such rights for the enforcement of obligations
hereunder as are expressly provided in this Agreement or
are otherwise available under applicable law.
4. REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of BOCFC. BOCFC represents and warrants
to Brookdale that:
(a) it is duly authorized by its organizational documents and
applicable laws to enter into this Agreement and the transactions contemplated
hereby;
(b) this Agreement constitutes an unconditional general obligation of
BOCFC (except for the conditions to payment expressly set forth herein) which is
not subordinated to any other obligation of BOCFC and constitutes a legal, valid
and binding obligation of BOCFC enforceable against it in accordance with its
terms, subject to bankruptcy, insolvency and similar laws affecting creditors'
rights generally and subject, as to enforceability, to general principles of
equity; and
(c) the execution, delivery and performance of this Agreement by
BOCFC does not and will not conflict with any provision of the certificate of
incorporation or the by-laws of BOCFC nor result in a breach of, or constitute a
default under, any material agreement
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or other instrument to which BOCFC is a party or by which any of its property is
bound nor violate any judgment, order or decree applicable to BOCFC of any
governmental or regulatory body, administrative agency, court or arbitrator
having jurisdiction over BOCFC.
4.2 Representations and Warranties of Brookdale. Brookdale represents and
warrants to BOCFC that:
(a) it is duly authorized by its organizational documents and
applicable laws to enter into this Agreement and the transactions contemplated
hereby;
(b) this Agreement constitutes a legal, valid and binding obligation
of Brookdale enforceable against it in accordance with its terms, subject to
bankruptcy, insolvency and similar laws affecting creditors' rights generally
and subject, as to enforceability, to general principles of equity; and
(c) the execution, delivery and performance of this Agreement by
Brookdale does not and will not conflict with any provision of the certificate
of incorporation or the by-laws of Brookdale nor result in a breach of, or
constitute a default under, any material agreement or other instrument to which
Brookdale is a party or by which any of its property is bound nor violate any
judgment, order or decree applicable to Brookdale of any governmental or
regulatory body, administrative agency, court or arbitrator having jurisdiction
over Brookdale.
5. ROLE OF BOCFC
(a) It is expressly understood and agreed that for all purposes of
this Agreement and the transactions contemplated hereby, BOCFC has acted solely
as independent contractor and has not acted as a financial or investment
adviser, fiduciary or agent of or to Brookdale or any other person.
(b) Brookdale acknowledges that it has consulted with its own legal,
tax and investment advisors regarding its decision to enter into this Agreement.
6. MISCELLANEOUS
6.1. Amendment. None of the terms or provisions of this Agreement may be
modified or amended, except in writing duly signed by BOCFC and Brookdale.
6.2 Survival. All warranties and representations made by Brookdale or
BOCFC in this Agreement or in any of the instruments or documents delivered
pursuant to this Agreement regardless of any investigation made shall be
considered to have been relied upon by the other party hereto and shall survive
the delivery of any instruments or documents.
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6.3. Successors and Assigns. This Agreement and all obligations and rights
arising hereunder shall inure to the benefit of and be binding upon the parties
hereto and their respective successors, assigns and beneficiaries.
Notwithstanding the foregoing, this Agreement, and the obligations and rights
arising out of this Agreement or any part hereof or interest herein, shall not
be sold, pledged or assigned or otherwise transferred by Brookdale or BOCFC
without the prior written consent of the other party hereto and any such
attempted sale, pledge, assignment or transfer shall be void ab initio;
provided, however, that BOCFC may transfer this Agreement or any of its interest
or obligations hereunder to any subsidiary or affiliate of BOCFC if from and
after such transfer the obligations of the transferee hereunder shall be
guaranteed by BOCFC. Anything herein to the contrary notwithstanding, the
parties acknowledge and agree that Brookdale may pledge its interest in this
Agreement to Banc One Capital Partners IV, Ltd. ("BOCP IV") pursuant to a
certain Security Agreement - Pledge and Assignment of Investment Agreement of
even date herewith.
6.4 Severability of Provisions. If any one or more of the provisions
contained in this Agreement is declared invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein shall not in any way be affected or impaired thereby.
6.5 Counterparts. This Agreement may be executed in several counterparts
and, as so executed, shall constitute one agreement binding upon the parties
hereto.
6.6. Integration of Terms. This Agreement contains the entire agreement
between the parties relating to the subject matter hereof and supersedes all
oral statements and prior writings with respect thereto.
6.7 Interpretation. The headings of the articles and sections hereof are
for convenience of reference only and shall not affect the meaning or
construction of any provision hereof.
6.8. Notices. All notices, requests and demands to or upon the parties
hereto to be effective shall be in writing or by facsimile transmissions and,
unless otherwise expressly provided herein, shall be deemed to have been duly
given or made when delivered by hand or one Business Day following delivery to
an overnight delivery service guaranteeing next business day delivery, delivery
charge prepaid or, in the case of facsimile transmission, when sent (only if
sent on a Business Day) receipt by addressee acknowledged, addressed as follows
in the case of BOCFC and Brookdale or to such other address as may be hereafter
notified by the parties hereto:
Brookdale: Brookdale Living Communities, Inc.
00 Xxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn:Xxxxxx X. Xxxxxxxx, Xx.
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Xxxxxx X. Xxxxxx, Esq.
Fax No. (000) 000-0000
with a copy to:
Winston & Xxxxxx
00 Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq.
Fax No. (000) 000-0000
BOCFC: Banc One Capital Funding Corporation
000 Xxxx Xxx Xxxxxx, 00xx Xxxxx
Xxxxxxxx, Xxxx 00000
Attention: Xxxx X. Xxxxx
Fax No. (000) 000-0000
with a copy to:
Banc One Capital Markets, Inc.
000 Xxxx Xxx Xxxxxx, 00xx Xxxxx
Xxxxxxxx, Xxxx 00000
Attention: Legal Department
Fax No. (000) 000-0000
6.9 Applicable Law. BOCFC and Brookdale agree that the State of Ohio has a
substantial relationship to the transaction evidenced hereby and agree that this
Agreement and the rights and obligations of the parties hereunder shall be
governed by and construed in accordance with the laws of the State of Ohio
(without giving effect to the principles of conflicts of law).
6.10 Waiver of Jury Trial; Consent to Venue. BOCFC and Brookdale, after
consulting or having had the opportunity to consult with counsel, knowingly,
voluntarily and intentionally waive any right any of them may have to a trial by
jury in any litigation based upon or arising out of this Agreement, or any of
the transactions contemplated by this Agreement, or any course of conduct,
dealing, statements (whether oral or written) or actions of either of them in
connection with this Agreement. Neither BOCFC nor Brookdale shall seek to
consolidate, by counterclaim or otherwise, any action in which a jury trial has
been waived with any other action in which a jury trial cannot be or has not
been waived unless failure to so consolidate would result in a loss of such
claim. In the event of a dispute under this Agreement, the parties hereby agree
that jurisdiction and venue lies in a court of competent jurisdiction in
Franklin County, Ohio. These provisions shall not be deemed to have been
modified in any respect or
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relinquished by either BOCFC or Brookdale except by a written instrument
executed by each of them.
6.11 Payment in Full of Interim Conditional Investment Agreement. BOCFC
and Brookdale are parties to a certain Interim Conditional Investment Agreement
(the "Interim Agreement"). BOCFC and Brookdale acknowledge and agree that all
amounts owing by BOCFC to Brookdale pursuant to the Interim Agreement have been
paid in full and the Interim Agreement has been terminated effective as of the
Effective Date.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of June ___, 1998.
BROOKDALE LIVING COMMUNITIES, INC.,
a Delaware corporation
By:______________________________________
Xxxxxx X. Xxxxxxxx, Xx.
Title: Executive Vice President
BANC ONE CAPITAL FUNDING
CORPORATION,
an Ohio corporation
By:______________________________________
Xxxx X. Xxxxx
Title: Director
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Exhibit 2.3
Conditions to Redemption
The obligation of BOCFC to make any payments to Brookdale pursuant to
Section 2.3 of the Agreement shall, in addition to any other requirements set
forth in Section 2.3, be subject to the following conditions:
(1) Brookdale, or its designee, shall have exercised the Equity Option
Agreement in accordance with the terms, conditions and requirements
of (a) the Equity Option Agreement and (b) that certain Intercreditor
Agreement of even date herewith (the "Intercreditor Agreement") among
Corporate Investor, Subordinated Borrower, General Partner, Owner,
Brookdale, BOCP IV, BLC of Texas - II,
L.P., and Nomura Asset Capital Corporation.
(2) The proceeds from the exercise of the Equity Option Agreement and, if
applicable, the Property Option Agreement (as such term is defined in
the Equity Option Agreement) and any capital contribution to
Subordinate Borrower made by or on behalf of Brookdale to satisfy its
obligations pursuant to the Equity Option Agreement or the Property
Option Agreement, shall meet the requirements of "Subordinate Lender
Option Related Proceeds," as such term is defined in the
Intercreditor Agreement, and shall be permitted to be paid to, and
retained by, BOCP IV in accordance with the Intercreditor Agreement.
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