EXHIBIT 10.3
FORM OF
REGISTRATION RIGHTS AGREEMENT
-----------------------------
This REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated
, 1997, is made and entered into by and among BROOKDALE LIVING
COMMUNITIES, INC., a Delaware corporation (the "Corporation"), THE PRIME GROUP,
INC., an Illinois corporation ("Prime"), and PRIME GROUP LIMITED PARTNERSHIP, an
Illinois limited partnership ("PGLP"). Prime, PHI and PGLP are sometimes
referred to herein individually as a "Holder" and collectively as the "Holders."
RECITALS
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WHEREAS, the Corporation has filed a Registration Statement on Form
S-1 with the Securities and Exchange Commission (the "Commission") in connection
with the IPO (as hereinafter defined);
WHEREAS, pursuant to the terms of that certain Formation Agreement
dated , 1997, the Corporation has issued an aggregate of 2,071,334
shares (the "Common Shares") of its Common Stock (as hereinafter defined) to the
Holders; and
WHEREAS, the Corporation and the Holders deem it desirable to enter
into this Agreement in connection with the Holders' acquisition of the Common
Shares.
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, with respect to any Holder, any other Person that
(i) directly or indirectly, through one or more intermediaries, controls, or is
controlled by, or is under common control with, such Holder including, without
limitation, any subsidiary of such Holder or (ii) holds an equity interest (such
as a stock interest or a partnership interest) in such Holder or in a Person
described in clause (i) hereof. With respect to any other specified person
herein, "Affiliate" shall mean any other person that, directly or indirectly,
through one or more intermediaries, controls, or is controlled by, or under
common control with, such specified person.
"Common Stock" means the Common Stock, par value $0.01 per share, of
the Corporation.
"Demand Registrations" has the meaning given to such term in Section
2(a)(iii).
"IPO" means the Corporation's initial underwritten public offering of
shares of Common Stock consummated pursuant to a registration statement declared
effective under the Securities Act.
"Long-Form Demand Registration" has the meaning given to such term in
Section 2(a)(iii).
"Long-Form Registration" has the meaning given to such term in Section
2(a)(i).
"Person" means a natural person, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization or a governmental entity or any department, agency or political
subdivision thereof.
"Piggyback Registration" has the meaning given to such term in Section
3(a).
"Registrable Shares" means (i) the Common Shares; (ii) any shares of
Common Stock issued as, or where issued directly or indirectly upon the
conversion or exercise of or with respect to other securities issued as, a
dividend or other distribution with respect to or in exchange or in replacement
of the Common Shares; and (iii) any shares of Common Stock then issuable
directly or indirectly upon the conversion or exercise of or with respect to
other securities which were issued as a dividend or other distribution with
respect to or in exchange or in replacement of the Common Shares; provided,
however, that Registrable Shares shall not include any shares of Common Stock
the sale of which has been registered under the Securities Act pursuant to this
Agreement or sold to the public pursuant to Rule 144 promulgated by the
Commission under the Securities Act (except any sale, distribution or other
disposition by any Holder to any other Holder or an
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Affiliate of such Holder or an Affiliate of such other Holder). For purposes of
this Agreement, a Person will be deemed to be a Holder of Registrable Shares
whenever such Person holds a security exercisable for or convertible into such
Registrable Shares, whether or not such exercise or conversion has actually been
effected.
"Registration Expenses" has the meaning given to such term in Section
6(a).
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934,
as amended.
"Short-Form Demand Registration" has the meaning given to such term in
Section 2(a)(iii).
"Short-Form Registration" has the meaning in Section 2(a)(ii).
2. Demand Registrations.
(a) Requests for Registration. (i) Subject to the terms and conditions
of this Agreement, one or more Holders of outstanding Registrable Shares at any
time may request registration under the Securities Act of all or part of its or
their Registrable Shares on Form S-1 or any similar long-form registration
statement (a "Long-Form Registration") by delivering a written request to the
Corporation to that effect; provided, however, that, in the case of any such
Long-Form Registration, the Holders requesting the Long Form Registration must
be requesting registration of not less than five percent (5%) of the total
Registrable Shares then outstanding.
(ii) Subject to the terms and conditions of this Agreement, one or
more Holders of any of the then outstanding Registrable Shares at any time may
request registration under the Securities Act of all or part of its or their
Registrable Shares on Form S-2 or S-3 or any similar short-form registration
statement (a "Short-Form Registration"), if available, by delivering a written
request to the Corporation to that effect.
(iii) If the Holders initiating a registration pursuant to Section
2(a) intend to distribute the Registrable Shares by means of any underwriting,
they shall so advise the Corporation in their written notice. Within ten (10)
days after receipt of any such written request, the Corporation will give
written notice of such request to all holders of all registrable securities of
the Corporation (including all other Holders of Registrable Shares), if any, and
will include, subject to the terms of Section 2(d), in any such registration
that constitutes a Demand Registration (as
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hereinafter defined) all registrable securities with respect to which the
Corporation has received written requests for inclusion therein within fifteen
(15) days after the Corporation's notice has been given. Any Long-Form
Registration and Short-Form Registration requested pursuant to this Section
2(a), other than a registration in which the Corporation sells any of its
securities in a primary offering, are referred to herein, respectively, as a
"Long-Form Demand Registration" and a "Short-Form Demand Registration". All
Long-Form Demand Registrations and Short-Form Demand Registrations shall
collectively be referred to herein as "Demand Registrations". The Corporation
may elect to include its securities in a primary offering in any registration
requested pursuant to this Section 2(a), and such registrations requested
pursuant to this Section 2(a) in which the Corporation sells any of its
securities in a primary offering shall not be deemed to be Demand Registrations
and shall instead be considered Piggyback Registrations and will be governed by
Section 3.
(b) Long-Form Demand Registrations. The Holders of Registrable Shares
may request (i) up to three (3) Long-Form Demand Registrations pursuant to
Section 2(a)(i) during the first five (5) years following the date of the IPO
and (ii) until the Holders own in the aggregate less than ten percent (10%) of
the outstanding Common Stock, up to one (1) Long-Form Demand Registration each
year after the fifth anniversary of the date of the IPO, and the Corporation
will pay all Registration Expenses of the Corporation and the Holders of
Registrable Shares incurred in connection with each such registration; provided,
that in each case the number of Long-Form Demand Registrations otherwise
permitted by this Section 2(b) during a given period shall be reduced by the
number of Short-Form Demand Registrations effected during the corresponding
period pursuant to Section 2(c), if any. A registration will not count as a
Long-Form Demand Registration under this Section 2(b) until it has become
effective; provided that in any event the Corporation will pay the Registration
Expenses of the Corporation and the Holders of Registrable Shares incurred in
connection with any such registration initiated as a Long-Form Demand
Registration. Notwithstanding the immediately preceding sentence, a registration
which does not become effective after the Corporation has filed a registration
statement with respect thereto solely by reason of the refusal to proceed of the
Holders of Registrable Shares shall be deemed to have been effected by such
Holders and shall count as a Long-Form Demand Registration under this Section
2(b), unless the Holders of Registrable Shares making such demand shall have
elected to pay the Registration Expenses of the Corporation and of the Holders
of Registrable Shares incurred in connection therewith.
(c) Short-Form Demand Registrations. The Holders of Registrable Shares
may request (i) up to three (3) Short-Form Demand Registrations pursuant to
Section 2(a)(ii) during the first five (5) years following the date of the IPO
and (ii) until the Holders own in the aggregate less than ten percent (10%) of
the
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outstanding Common Stock, up to one (1) Short-Form Demand Registration each year
after the fifth anniversary of the date of the IPO, and the Corporation will pay
all Registration Expenses of the Corporation and the Holders of Registrable
Shares incurred in connection with each such registration; provided, that in
each case the number of Short-Form Demand Registrations otherwise permitted by
this Section 2(c) during a given period shall be reduced by the number of Long-
Form Demand Registrations effected during the corresponding period pursuant to
Section 2(b), if any. A registration will not count as a Short-From Demand
Registration under this Section 2(c) until it has become effective; provided
that in any event the Corporation will pay the Registration Expenses of the
Corporation and the Holders of Registrable Shares incurred in connection with
any such registration initiated as a Short-From Demand Registration.
Notwithstanding the immediately preceding sentence, a registration which does
not become effective after the Corporation has filed a registration statement
with respect thereto solely by reason of the refusal to proceed of the Holders
of Registrable Shares shall be deemed to have been effected by such Holders and
shall count as a Short-Form Demand Registration for which the Corporation paid
Registration Expenses under this Section 2(c), unless the Holders of Registrable
Shares making such demand shall have elected to pay the Registration Expenses of
the Corporation and of the Holders of Registrable Shares incurred in connection
therewith.
(d) Priority on Demand Registrations. If a Demand Registration is an
underwritten public offering and the managing underwriter(s) advise the
Corporation that in their opinion the number of Registrable Shares and other
securities (if any) requested to be included exceeds the number of Registrable
Shares and other securities which can be sold in such offering without having a
material adverse effect on the offering, the Corporation will include in such
registration (A) first, the number of Registrable Shares requested to be
included therein, which in the opinion of such underwriter(s) can be sold
without having a material adverse effect on the offering, allocated pro rata
among the Holders of such Registrable Shares on the basis of the number of
Registrable Shares owned by such Holders which such Holders have elected to
include in such registration, and (B) second, such other securities requested to
be included in such registration, if any, which in the opinion of such
underwriter(s) can be sold (after taking into account the Registrable Shares to
be sold pursuant to clause (A) above) without having a material adverse effect
on the offering.
(e) Restrictions on Registrations. (i) The Corporation may postpone
for a reasonable period, not to exceed sixty (60) days, the filing or the
effectiveness of a registration statement for a Demand Registration if the
Corporation has been advised by
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legal counsel that such filing would require disclosure of a material non-public
fact or non-public information that the Corporation determines reasonably and in
good faith would have a material adverse effect on the negotiation or completion
of any significant transaction that is being contemplated by the Corporation or
any of its subsidiaries at the time such right to delay is exercised. In
addition, the Corporation shall not be required to effect any registration in
accordance with the terms of this Agreement (other than on Form S-3 or any
successor form relating to "shelf" offerings) within one hundred twenty (120)
days after the effective date of any other registration statement of the
Corporation for the IPO or a primary offering (or combined primary and secondary
offering) of its securities (other than a registration statement on Form S-8, or
any successor form).
(ii) No Holder of Registrable Shares may make a request for a Demand
Registration until after the effective date of the IPO.
3. Piggyback Registrations.
(a) Right to Piggyback. Whenever (i) the Corporation intends to
sell its securities in a primary offering pursuant to a registration statement
filed with the Commission or whenever the securities of the Corporation then
issued and outstanding are to be registered under the Securities Act (in either
case, other than pursuant to a registration statement on Form S-8 or Form S-4,
or any successor forms) and (ii) the registration form to be used may also be
used for the registration of Registrable Shares (a "Piggyback Registration"),
the Corporation will give prompt written notice (in any event within ten (10)
business days after its receipt of notice of any exercise of demand registration
rights by holders of the Corporation's securities other than the Registrable
Shares) to all holders of registrable securities (including all Holders of
Registrable Shares) of its intention to effect such a registration and will
include in such registration, subject to the terms of paragraphs (b) and (c) of
this Section 3, all registrable securities with respect to which the Corporation
has received written requests for inclusion therein within thirty (30) days
after the Corporation's notice has been given. The Corporation shall have the
right to postpone or withdraw any Piggyback Registration without obligation or
liability to any holder of registrable securities (including any Holder of
Registrable Shares).
(b) Priority on Primary Registrations. If a Piggyback Registration
is an underwritten primary registration on behalf of the Corporation, and the
managing underwriter(s) advise the Corporation that in their opinion the number
of securities requested to be included in such registration exceeds the number
which can be sold in such offering without having a material adverse effect on
the offering, the Corporation will include in
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such registration (A) first, the securities the Corporation proposes to sell,
(B) second, the Registrable Shares requested to be included therein which in the
opinion of such underwriter(s) (after taking into account the securities to be
sold pursuant to clause (A) above) can be sold without having a material adverse
effect on the offering, allocated pro rata among the Holders of such Registrable
Shares on the basis of the number of Registrable Shares owned by such Holders
which such Holders have elected to include in such registration, and (C) third,
other securities requested to be included in such registration, if any, which in
the opinion of such underwriter(s) can be sold (after taking into account the
securities to be sold pursuant to clauses (A) and (B) above) without having a
material adverse effect on the offering.
(c) Priority on Secondary Registrations. (i) If a Piggyback
Registration is not an underwritten primary registration on behalf of the
Corporation and is an underwritten secondary registration on behalf of existing
holders of the Corporation's securities, and the managing underwriter(s) advise
the Corporation that in their opinion the number of securities requested to be
included in such registration exceeds the number which can be sold in such
offering without having a material adverse effect on the offering, the
Corporation will include in such registration (A) first, the securities
requested to be included therein by the holders requesting such registration
which in the opinion of such underwriter(s) can be sold without having a
material adverse effect on the offering, (B) second, the Registrable Shares
requested to be included therein which in the opinion of such underwriter(s) can
be sold (after taking into account the securities to be sold pursuant to clause
(A) above) without having a material adverse effect on the offering, allocated
pro rata among the Holders of Registrable Shares on the basis of the number of
Registrable Shares owned by such Holders which such Holders have elected to
include in such registration, and (C) third, other securities requested to be
included in such registration, if any, which in the opinion of such
underwriter(s) can be sold (after taking into account the securities to be sold
pursuant to clauses (A) and (B) above) without having a material adverse effect
on the offering.
(d) Other Registrations. If the Corporation has previously filed a
registration statement with respect to an underwritten registration of
Registrable Shares pursuant to Section 2 or a registration statement which is
not an underwritten primary registration on behalf of the Corporation and which
is an underwritten secondary registration on behalf of holders of the
Corporation's securities pursuant to this Section 3, and if such previous
registration has not been withdrawn or abandoned, the
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Corporation will not be required to file or cause to be effected any other
registration of any of its equity securities or securities convertible or
exchangeable into or exercisable for its equity securities under the Securities
Act (except on Form S-8, or any successor form), whether on its own behalf or at
the request of any holder or holders of such securities, until a period of one
hundred eighty (180) days has elapsed from the effective date of such previous
registration, unless the lead underwriter managing such previous registered
public offering otherwise agrees.
4. Holdback Agreements.
(a) Each of the Holders of Registrable Shares agrees not to effect
any public sale or distribution of equity securities of the Corporation,
including any public sale pursuant to Rule 144 under the Securities Act, or any
securities convertible into or exchangeable or exercisable for such securities,
during the period (i) commencing on the effective date of the IPO and ending one
hundred eighty (180) days after the effective date of the IPO, unless the
underwriter(s) managing the IPO otherwise agree or (ii) commencing seven (7)
days prior to and ending one hundred twenty (120) days after the effective date
of any underwritten Demand Registration or underwritten Piggyback Registration
in which such Holder sells Registrable Shares (except as part of such
underwritten registration), unless the lead underwriter managing such previous
registered public offering otherwise agrees.
(b) The Corporation agrees (i) not to effect any public sale or
distribution of its equity securities, or any securities convertible into or
exchangeable or exercisable for such securities, during the period commencing
seven days (7) prior to and ending one hundred eighty (180) days after the
effective date of any underwritten Demand Registration or any underwritten
Piggyback Registration (except as part of such underwritten registration or
pursuant to registrations on Form S-8 or Form S-4 or any successor forms),
unless the lead underwriter managing such previous offering otherwise agrees,
and (ii) to use its best efforts to cause each holder of at least 1% (on a
fully-diluted basis) of its equity securities, or any securities convertible
into or exchangeable or exercisable for such securities, purchased from the
Corporation at any time after the date of this Agreement (other than in a
registered public offering), if any, to agree not to effect any public sale or
distribution of any such securities during such period (except as part of such
underwritten registration, if otherwise permitted), unless the lead underwriter
managing the previous offering otherwise agrees.
5. Registration Procedures. Whenever the Holders of Registrable
Shares have requested that any Registrable Shares be registered pursuant to the
terms of this Agreement, the Corporation will use its best efforts to effect the
registration of such Registrable Shares under the Securities Act in accordance
with the
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intended method of disposition thereof, and pursuant thereto the Corporation
will as expeditiously as possible;
(a) prepare and file with the Commission a registration statement
with respect to such Registrable Shares and use its best efforts to cause such
registration statement to become and remain effective for such period as may be
reasonably necessary to effect the sale of such securities, not to exceed twelve
(12) months;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective for
such period as may be reasonably necessary to effect the sale of such
securities, not to exceed twelve (12) months, and otherwise as may be necessary
to comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such registration statement during such
period in accordance with the intended methods of disposition by the sellers
thereof as set forth in such registration statement;
(c) furnish to each seller of such Registrable Shares and the
underwriters of the securities being registered such number of copies of such
registration statement, each amendment and supplement thereto, the prospectus
included in such registration statement (including each preliminary prospectus)
and such other documents as such seller or underwriters may reasonably request
in order to facilitate the disposition of the Registrable Shares owned by such
seller or the sale of such securities by such underwriters;
(d) use its best efforts to register or qualify such Registrable
Shares under such other securities or blue sky laws of such jurisdictions as any
seller reasonably requests and do any and all other acts and things which may be
reasonably necessary or advisable to enable such seller to consummate the
disposition in such jurisdictions of the Registrable Shares owned by such seller
(provided that the Corporation will not be required to (i) qualify generally to
do business in any jurisdiction where it would not otherwise be required to
qualify but for this subparagraph, (ii) subject itself to taxation in any such
jurisdiction or (iii) consent to general service of process in any such
jurisdiction);
(e) use its best efforts to cause all such Registrable Shares to be
listed on each securities exchange in which similar securities issued by the
Corporation are then listed;
(f) provide a transfer agent and registrar for all such Registrable
Shares not later than the closing date of the sale of such shares;
(g) enter into such customary agreements (including underwriting
agreements in customary form and substance) and take
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all such other reasonable and customary actions as the Holders of at least a
majority of the Registrable Shares being sold or the underwriters, if any,
reasonably request in order to expedite or facilitate the disposition of such
Registrable Shares;
(h) make available for reasonable inspection during business hours by
the seller of such Registrable Shares, any managing underwriter participating in
any disposition pursuant to such registration statement, and any attorney,
accountant or other agent retained by any such seller or underwriter, to the
extent permitted by law, all financial and other records, pertinent corporate
documents and properties of the Corporation, and cause the Corporation's
officers, directors, employees and independent accountants to supply all
information reasonably requested by any such seller, underwriter, attorney,
accountant or agent in connection with such registration statement;
(i) notify each seller of such Registrable Shares, promptly after it
shall receive notice thereof, of the time when such registration statement has
become effective or a supplement to any prospectus forming a part of such
registration statement has been filed;
(j) notify each seller of such Registrable Shares of any request by
the Commission for the amendment or supplement of such registration statement or
prospectus or for additional information;
(k) prepare and file with the Commission, promptly upon the request
of any seller of such Registrable Shares, any amendments or supplements to such
registration statement or prospectus which is required under the Securities Act
or the rules and regulations thereunder in connection with the distribution of
Registrable Shares by such seller;
(l) prepare and promptly file with the Commission and promptly notify
each seller of such Registrable Shares of the filing of such amendment or
supplement to such registration statement or prospectus as may be necessary to
correct any statements or omissions if, at the time when a prospectus relating
to such securities is required to be delivered under the Securities Act, any
event shall have occurred, or facts became known, in either case as the result
of which any such prospectus of any other prospectus as then in effect would
include an untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein, in the light of the circumstances
in which they were made, not misleading;
(m) advise each seller of such Registrable Shares, promptly after it
shall receive notice or obtain knowledge thereof, of the issuance of any stop
order by the Commission suspending the effectiveness of such registration
statement or the initiation or threatening of any proceeding for such purpose
and promptly use all
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reasonable efforts to prevent the issuance of any stop order or to obtain its
withdrawal if such stop order shall be issued;
(n) at least twenty-four (24) hours prior to the filing of any
registration statement or prospectus or any amendment or supplement to such
registration statement or prospectus, furnish a copy thereof to each seller of
such Registrable Shares and refrain from filing any such registration statement,
prospectus, amendment or supplement to which counsel selected by the Holders of
at least a majority of the Registrable Shares being registered shall have
reasonably objected on the grounds that such amendment or supplement does not
comply in all material respects with the requirements of the Securities Act or
the rules and regulations thereunder, unless, in the case of an amendment or
supplement, in the opinion of counsel for the Corporation the filing of such
amendment or supplement is reasonably necessary to protect the Corporation from
any liabilities under any applicable federal or state law and such filing will
not violate applicable laws; and
(o) at the request of any seller of such Registrable Shares in
connection with an underwritten offering, furnish on the date or dates provided
for in the underwriting agreement, a signed counterpart, addressed to such
seller, of: (i) an opinion of counsel, and (ii) a letter or letters from the
independent certified public accountants of the Corporation, in each case
covering such matters as are customarily covered in opinions of issuer's counsel
and in accountants' letters delivered to underwriters in underwritten public
offerings and such other matters as any such seller may reasonably request.
6. Registration Expenses.
(a) In all circumstances in which the Corporation is obligated to pay
Registration Expenses pursuant to this Agreement, all expenses of the
Corporation incident to the Corporation's performance of or compliance with this
Agreement, including, without limitation, all registration and filing fees, fees
and expenses of compliance with securities or blue sky laws, printing expenses,
messenger and delivery expenses, the expenses and fees for listing the
securities to be registered on each securities exchange or other market on which
any shares of Common Stock are then listed, expenses in connection with the
preparation of the registration statement (preliminary or final) or any other
offering document, fees and expenses incurred in the preparation of any
underwriting agreement, expenses incurred to secure any required review by the
National Association of Securities Dealers, Inc., and fees and disbursements of
counsel for the Corporation and its experts and independent certified public
accountants, underwriters (excluding discounts and commissions attributable to
the Registrable Shares included in such registration) and other Persons retained
by the Corporation (all such expenses collectively being herein called
"Registration Expenses"), will be borne by the Corporation. In addition, the
Corporation will pay its internal expenses incident to the Corporation's
performance of or compliance with this Agreement (including, without limitation,
all salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit or quarterly
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review and the expense of any liability insurance obtained by the Corporation.
(b) In all circumstances in which the Corporation is obligated to pay
Registration Expenses of Holders of Registrable Shares pursuant to this
Agreement, the Corporation will reimburse the Holders of Registrable Shares
covered by such registration for the reasonable costs and expenses incurred by
such Holders in connection with such registration, including, without
limitation, the reasonable fees and disbursements of one counsel chosen by the
Holders of a majority of the Registrable Shares requested to be registered in
such registration, but excluding discounts and commissions attributable to the
Registrable Shares included in such registration.
7. Indemnification.
(a) The Corporation agrees to indemnify, to the fullest extent
permitted by law, each seller of Registrable Shares, its directors, officers and
employees and each Person who controls such seller (within the meaning of the
Securities Act or the Securities Exchange Act) against all losses, claims,
damages, liabilities and expenses (including, without limitation, reasonable
attorneys' fees except as limited by Section 7(c)) resulting from any untrue or
alleged untrue statement of a material fact contained in any registration
statement, any final prospectus contained therein or any amendment thereof or
supplement thereto or any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements thereto not
misleading, except insofar as the same are caused by or contained in any
information furnished in writing to the Corporation by such seller expressly for
use therein or by such seller's failure to deliver a copy of the registration
statement or final prospectus or any amendments or supplements thereto after the
Corporation has furnished such seller with a sufficient number of copies of the
same. The reimbursements required by this Section 7(a) will be made by periodic
payments during the course of the investigation or defense, as and when bills
are received or expenses incurred.
(b) In connection with any registration statement in which a seller
of Registrable Shares is participating, each such seller will furnish to the
Corporation in writing such information as the Corporation reasonably requests
for use in connection with any such registration statement or prospectus and, to
the fullest extent permitted by law, will indemnify the Corporation, its
directors and officers, each underwriter (if any) and each Person who controls
the Corporation or such underwriter (within the meaning of the Securities Act or
the Securities Exchange Act) against all losses, claims, damages, liabilities
and expenses (including, without limitation, reasonable attorneys' fees except
as limited by Section 7(c)) resulting from any untrue statement of a material
fact contained in the registration statement, final
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prospectus contained therein or any amendment thereof or supplement thereto or
any omission of a material fact required to be stated therein or necessary to
make the statements therein not misleading, but only to the extent that such
untrue statement or omission is contained in any information or affidavit so
furnished in writing by such seller expressly for use therein; provided that the
obligation to indemnify will be several, not joint and several, among such
sellers of Registrable Shares, and the liability of each such seller of
Registrable Shares will be in proportion to, and provided further that such
liability will be limited to, the net amount received by such seller from the
sale of Registrable Shares pursuant to such registration statement.
(c) Any Person entitled to indemnification hereunder will (i) give
prompt written notice to the indemnifying party of any claim with respect to
which it seeks indemnification and (ii) unless in such indemnified party's
reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist with respect to such claim, permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party. If such defense is assumed, the
indemnifying party will not be subject to any liability for any settlement made
by the indemnified party without the indemnifying party's consent (which consent
will not be unreasonably withheld). The indemnified party will not settle any
claim or liability without first providing the indemnifying party with a
reasonable opportunity to assume the defense. An indemnifying party who is not
entitled to, or elects not to, assume the defense of a claim will not be
obligated to pay the fees and expenses of more than one counsel for all parties
indemnified by such indemnifying party with respect to such claim, unless in the
reasonable judgment of any indemnified party a conflict of interest may exist
between such indemnified party and any other of such indemnified parties with
respect to such claim.
(d) The indemnification provided for under this Agreement will remain
in full force and effect regardless of any investigation made by or on behalf of
the indemnified party or any officer, director or controlling Person of such
indemnified party and will survive the transfer of securities.
(e) If the indemnification provided for in this Section 7 is
unavailable or insufficient to hold harmless an indemnified party in respect of
any losses, claims, damages, liabilities or expenses referred to herein, then
the indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities or
expenses in such proportion as is appropriate to reflect the relative fault of
the indemnifying party on the one hand, and the indemnified party on the other,
in connection with the statement or omission which resulted in such losses,
claims, damages, liabilities or expenses as well as any other relevant equitable
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considerations, including the failure to give the notice required hereunder.
The relative fault of the indemnifying party and the indemnified party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact relates to information supplied by the
indemnifying party or the indemnified party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Corporation and the Holders agree that it would not
be just and equitable if contributions pursuant to this Section 7(e) were
determined by pro rata allocation or by any other method of allocation which did
not take account of the equitable considerations referred to herein. The amount
paid or payable to an indemnified party as a result of the losses, claims,
damages, liabilities or expenses referred to above shall be deemed to include
any legal or other expenses reasonably incurred in connection with investigating
or defending the same. Notwithstanding the foregoing, in no event shall the
amount contributed by any Holder exceed the aggregate net offering proceeds
received by any such Holder from the sale of its Registrable Shares. No person
guilty of fraudulent misrepresentations (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who is not
guilty of such fraudulent misrepresentation.
8. Current Public Information. At all times after the Corporation
has filed a registration statement with the Commission pursuant to the
requirements of either the Securities Act or the Securities Exchange Act, the
Corporation will use its best efforts to file in a timely manner all reports and
other documents required to be filed by it under the Securities Act and the
Securities Exchange Act and the rules and regulations promulgated by the
Commission thereunder and will use its best efforts to take such further action
as any Holder or Holders of Registrable Shares may reasonably request, all to
the extent required to enable such holders to sell Registrable Shares pursuant
to (i) Rule 144 under the Securities Act (as such rule may be amended from time
to time) or any similar rule or regulation hereafter promulgated by the
Commission or (ii) a registration statement on Form S-2 or S-3 or any similar
registration form hereafter adopted by the Commission. Upon request, the
Corporation shall deliver to any Holder of Registrable Shares a written
statement as to whether it has complied with such requirements.
9. Participation in Underwritten Registrations. No Person may
participate in any registration hereunder which is underwritten unless such
Person (a) agrees to sell such Person's securities on the basis provided in any
underwriting arrangements approved by the Person or Persons entitled hereunder
to approve such arrangements and (b) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements and other documents
required under the terms of such underwriting arrangements. Subject to the
immediately succeeding sentence, the Holders of a
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majority of the Registrable Shares requested to be registered will have the
right to select the managing underwriter(s) to administer any Demand
Registration which managing underwriter(s) shall be reasonably acceptable to the
Corporation. Notwithstanding the foregoing, the Corporation will have the right
to select the managing underwriter(s) to administer any offering which is
covered by a Piggyback Registration; provided, however, that in any such case
the managing underwriters shall be nationally or regionally recognized
underwriter(s).
10. Implementation and Protection of Registration Rights. The
Corporation will at all times in good faith assist in carrying out all of the
provisions of this Agreement and in the taking of all such action as may be
reasonably necessary or appropriate in order to protect the registration rights
pursuant to this Agreement of the Holders of Registrable Shares.
11. Remedies. Any Person having rights under any provision of this
Agreement will be entitled to enforce such rights specifically, to recover
damages caused by reason of any breach of any provision of this Agreement and to
exercise all other rights granted by law.
12. Amendments and Waivers. Except as otherwise expressly provided
herein, the provisions of this Agreement may be amended or waived at any time
only by the written agreement of the Corporation and the Holders of all of the
then outstanding Registrable Shares. Any waiver, permit, consent or approval of
any kind or character on the part of any such Holders of any provision or
condition of this Agreement must be made in writing and shall be effective only
to the extent specifically set forth in writing.
13. Successors and Assigns. Except as otherwise expressly provided
herein, the provisions of this Agreement shall be binding upon and inure to the
benefit of the respective successors, assigns, heirs, executors and
administrators of the parties hereto, whether so expressed or not. In addition
and whether or not any express assignment has been made, the provisions of this
Agreement which are for the benefit of Holders of Registrable Shares are also
for the benefit of, and enforceable by, any subsequent holder of Registrable
Shares who consent in writing to be bound by this Agreement, and such Person
shall be considered a "Holder" hereunder.
14. Other Registration Rights. Except for the registration rights
granted hereunder, the Corporation will not grant to any Persons the right to
request the Corporation to register any equity securities of the Corporation, or
any securities convertible or exchangeable into or exercisable for such
securities, without the written consent of the Holders of a majority of the then
outstanding Registrable Shares, and except for registrations pursuant to
registration rights granted to the Holders of
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Registrable Shares hereunder or granted to other Persons pursuant to this
Section 14 or primary registrations of securities by the Corporation or
registrations of securities being resold by affiliates in a Rule 145 transaction
pursuant to registration rights granted to such affiliates that are subordinate
to the registration rights of the Registrable hereunder, the Corporation shall
not register any equity securities of the Corporation, or any securities
convertible or exchangeable into or exercisable for such securities, without the
written consent of the Holders of a majority of the then outstanding Registrable
Shares. The Corporation will not include in any Demand Registration any
securities which are not Registrable Shares without the written consent of the
Holders of a majority of the then outstanding Registrable Shares requesting such
registration. Notwithstanding the foregoing, the Corporation may grant and
register securities pursuant to (a) subordinate piggyback registration rights
not inconsistent with the registration rights granted hereunder to other Persons
and (b) demand registration rights which are subordinate to the rights of the
Holders with respect to Demand Registrations hereunder.
15. Final Agreement. This Agreement constitutes the final agreement
of the parties concerning the matters referred to herein, and supersedes all
prior agreements and understandings.
16. 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.
17. 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.
18. 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 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:
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If to the Holders, to:
c/o The Prime Group, Inc.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
With a copy (which shall not constitute notice) to:
The Prime Group, Inc.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
If to the Corporation, to:
Brookdale Living Communities, Inc.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: President
With a copy (which shall not constitute notice) to:
Winston & ▇▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
19. 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 [Delaware] (excluding the choice of law provisions
thereof).
20. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original, and such counterparts together shall constitute one instrument.
21. Termination of Rights. The registration rights provided by this
Agreement shall terminate on the earlier of (a) first date after the date of the
IPO on which the aggregate number of Registrable Shares then owned by the
Holders constitutes less than ten percent (10%) of the outstanding Common Stock,
and (b) with regard to each Holder of Registrable Shares, at such time as such
Holder shall have an unlimited right to sell all of its Registrable Shares in
the public market without restriction on volume or otherwise.
[signature page follows]
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IN WITNESS WHEREOF, the parties hereto have caused this Registration
Rights Agreement to be executed and delivered in their names and on their behalf
as of the date first set forth above.
THE CORPORATION:
BROOKDALE LIVING COMMUNITIES, INC.,
a Delaware corporation
By:
------------------------------------------
Name:
----------------------------------------
Its:
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THE HOLDERS:
THE PRIME GROUP, INC.,
an Illinois corporation
By:
-----------------------------------------
Name:
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Its:
----------------------------------------
PRIME GROUP LIMITED PARTNERSHIP,
an Illinois limited partnership
By:
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
President
S-1