Delaware
8050
20-3068069
(State or Other Jurisdiction
of
Incorporation or Organization)
(Primary Standard Industrial
Classification Code Number)
(I.R.S. Employer
Identification No.)
Joseph A. Coco, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP Four Times Square New York, New York 10036-6522 (212) 735-3000 |
Steven A. Seidman, Esq.
Willkie Farr & Gallagher LLP 787 Seventh Avenue New York, New York 10019-6099 (212) 728-8000 |
Proposed Maximum | Amount of | |||||
Title of Each Class of | Aggregate | Registration | ||||
Securities to be Registered | Offering Price(1)(2) | Fee(3) | ||||
Common Stock, par value
$0.01 per share
|
$241,923,200 | $28,474 | ||||
(1) | Estimated solely for purposes of calculating the registration fee in accordance with Rule 457(o) under the Securities Act of 1933, as amended. |
(2) | Includes offering price of shares that the underwriters have the option to purchase to cover over-allotments, if any. |
(3) | $23,540 of which has been previously paid. |
The information in this preliminary
prospectus is not complete and may be changed. These securities
may not be sold until the registration statement filed with the
Securities and Exchange Commission is effective. This
preliminary prospectus is not an offer to sell nor does it seek
an offer to buy these securities in any jurisdiction where the
offer or sale is not permitted.
Per Share | Total | |||||||
Initial public offering price
|
$ | $ | ||||||
Underwriting discount
|
$ | $ | ||||||
Proceeds, before expenses, to
Brookdale
|
$ | $ | ||||||
Proceeds, before expenses, to the
selling stockholders
|
$ | $ |
Goldman, Sachs & Co. | Lehman Brothers |
Citigroup | UBS Investment Bank |
Page
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176
F-1
EX-1.1: FORM OF UNDERWRITING AGREEMENT
EX-4.1: FORM OF CERTIFICATE
EX-5.1: OPINION OF SKADDEN ARPS, ET AL.
EX-10.87: STOCK INCENTIVE PLAN
EX-23.2: CONSENT OF ERNST & YOUNG LLP
EX-23.3: CONSENT OF KPMG LLP
1
2
3
4
Table of Contents
An increasing number of seniors with longer life
expectancies and financial resources to support a private pay
model.
As a result of the expected increase in the
number of seniors as a percentage of the total
U.S. population over the next 25 years, we believe
that the demand for service-based senior housing will increase
and that seniors increasingly will have the ability to afford
senior living services.
Fragmentation in the industry provides significant
acquisition and consolidation opportunities.
The senior
housing industry is highly fragmented and we believe that this
fragmentation provides significant acquisition and consolidation
opportunities.
Majority of independent and assisted living revenue growth
generated from private pay sources.
Favorable and improving supply and demand balance.
We believe that increasing life expectancies and the declining
amount of new senior living units under construction create a
favorable and improving supply and demand balance.
Table of Contents
Organic growth in our existing operations.
We plan
to grow our existing operations by:
increasing revenues through a combination of occupancy growth
and resident fee increases as a result of growing demand for
senior living facilities. For the 343 facilities we have owned,
leased or managed since 2003 (excluding four development
facilities), for the nine months ended September 30, 2005
our facility operating income has increased 8.2% on an
annualized basis and, including the four development facilities,
our facility operating income has increased approximately 9.4%
on an annualized basis; and
taking advantage of our sophisticated operating and marketing
expertise to retain existing residents and attract new residents
to our facilities.
Growth through operating efficiencies.
Our
geographic footprint and centralized infrastructure provide us
with a significant cost advantage over local and regional
operators of senior living facilities, which enables us to
achieve economies of scale with respect to the goods and
services we purchase. In connection with the combination of BLC
and Alterra, we have undertaken several cost initiatives which
we expect will result in recurring operating and general and
administrative expense savings, net of additional recurring
costs expected to be incurred as a public company, of between
approximately $11.0 million and $13.0 million per
year. We began to realize a portion of these savings prior to
the completion of our formation transactions in September 2005
and expect to realize the remainder following the combination.
Growth through the acquisition and consolidation of asset
portfolios and other senior living companies.
We plan to
selectively purchase existing operating companies and facilities
where we can improve service delivery, occupancy rates and cash
flow.
Expansion of existing facilities where economically
advantageous.
Skilled management team with extensive experience.
Our senior management team has extensive experience in
acquiring, operating and managing a broad range of senior living
assets.
Proven track record of successful acquisitions.
Our experience in acquiring senior living facilities enables us
to consider a wide range of acquisition targets, and we believe
our expertise enables us to integrate new facilities into our
operating platform with minimal disruption to our current
operations.
High-quality purpose-built facilities.
We operate
a nationwide base of 380 purpose-built facilities in
32 states, including 65 facilities in eight of the top
ten standard metropolitan statistical areas, or SMSAs. The
average age of our facilities is 9.9 years.
Ability to provide a broad spectrum of care.
Given
our diverse mix of independent and assisted living facilities
and CCRCs, we believe we are one of the few companies in the
senior living industry that is able to meet a wide range of our
customers needs.
The size of our business allows us to realize cost
efficiencies.
The size of our business allows us to
realize cost savings in the purchasing of goods and services and
also allows us to achieve increased efficiencies with respect to
various corporate functions, most of which
Table of Contents
have yet to be realized in our operating results. In addition,
our size and broad geographical footprint give us an advantage
in executing our acquisition strategy.
Table of Contents
5
Common stock offered by us in this offering
6,900,000 shares.
Common stock offered by selling stockholders in this
offering
4,172,000 shares. All shares of common stock being offered
by the selling stockholders pursuant to this prospectus are
being offered by Emeritus Corporation and NW Select LLC. Each of
the selling stockholders is selling all of its shares of common
stock pursuant to this offering. Following this offering,
neither Emeritus Corporation nor NW Select LLC will own any
shares of our common stock.
Common stock to be outstanding after this offering
((1))
64,900,000 shares.
Use of proceeds
We expect to use the net proceeds from the sale of the shares of
common stock we are offering for repayment of certain of our
outstanding indebtedness, acquisition of additional senior
living operating companies and facilities and other general
corporate purposes. See Use of Proceeds.
We will not receive any proceeds from the sale of shares of
common stock offered by the selling stockholders.
Dividend policy
On September 30, 2005, our board of directors declared our first
ordinary dividend of $0.25 per share of our common stock, or an
aggregate of $14.4 million, for the three months ended
September 30, 2005, which we paid on October 7, 2005.
We intend to continue to pay regular quarterly dividends to the
holders of our common stock. The payment of dividends is subject
to the discretion of our board of directors and will depend on
many factors, including our results of operations, financial
condition and capital requirements, earnings, general business
conditions, restrictions imposed by financing arrangements,
legal restrictions on the payment of dividends and other factors
the board of directors deems relevant. We expect that in certain
quarters we may pay dividends that exceed our net income amounts
for such period as calculated in accordance with generally
accepted accounting principals, or GAAP.
New York Stock Exchange symbol
BKD.
Risk Factors
Please read the section entitled Risk Factors
beginning on page 12 for a discussion of some of the factors you
should carefully consider before deciding to invest in shares of
our common stock.
(1)
Assumes that the underwriters will not exercise their over
allotment option to purchase up to 1,660,800 shares of our
common stock.
Table of Contents
6
7
8
9
10
11
Table of Contents
Pro Forma,
as adjusted
Pro Forma,
as adjusted
Three Months
Nine Months
Three Months Ended
Nine Months Ended
Year
Ended
Ended
September 30,
September 30,
Ended
Year Ended December 31,
September 30,
September 30,
December 31,
2005
2005
2005
2004
2005
2004
2004
2004
2003
2002
Statement of Operations
Data
(in thousands, except per share
data):
$
208,709
$
616,738
$
208,371
$
165,279
$
574,855
$
482,500
$
785,799
$
657,327
$
217,216
$
156,894
1,051
2,863
988
882
2,675
2,514
4,443
3,545
5,368
4,622
209,760
619,601
209,359
166,161
577,530
485,014
790,242
660,872
222,584
161,516
133,724
394,430
133,568
104,999
366,782
306,936
504,645
415,169
133,119
92,980
48,300
144,309
47,259
21,281
140,852
59,771
185,445
99,997
30,744
31,003
18,783
21,297
9,088
9,088
5,028
20,145
57,090
15,058
14,461
30,861
43,440
79,276
52,307
22,480
13,708
20,498
47,275
19,879
9,809
42,860
30,914
52,915
43,640
15,997
12,540
241,450
664,401
224,852
150,550
590,443
441,061
827,309
611,113
202,340
150,231
$
(31,690
)
$
(44,800
)
$
(15,493
)
$
15,611
$
(12,913
)
$
43,953
$
(37,067
)
$
49,759
$
20,244
$
11,285
$
(11,917
)
$
(35,639
)
$
(13,193
)
$
(21,131
)
$
(29,359
)
$
(51,784
)
$
(45,542
)
$
(60,458
)
$
(25,106
)
$
(9,490
)
$
(43,139
)
$
(78,678
)
$
(18,524
)
$
(1,657
)
$
(26,271
)
$
(3,318
)
$
(85,160
)
$
(9,794
)
$
(8,963
)
$
6,455
$
(0.71
)
$
(1.29
)
$
(1.40
)
$
(0.71
)
$
(1.29
)
$
(1.40
)
$
(1,684
)
$
18,271
$
(3,754
)
$
21,334
$
7,807
$
38,372
$
28,644
$
50,128
$
34,111
$
39,645
(6,128
)
(9,169
)
(23,272
)
(11,669
)
(481,772
)
19,305
(35,327
)
524,731
105,915
(47,270
)
(18
)
(24,266
)
26,911
8,551
446,858
(62,453
)
56,979
(544,469
)
(85,730
)
8,730
$
(7,830
)
$
(15,164
)
$
(115
)
$
18,216
$
(27,107
)
$
(4,776
)
$
50,296
$
30,390
$
54,296
$
1,105
$
21,643
$
58,760
$
21,750
$
30,727
$
48,755
87,654
$
60,127
$
104,394
$
43,287
$
28,600
7,116
15,767
5,046
8,708
5,303
24,729
$
4,584
$
27,870
$
27,784
$
33,823
74,970
222,290
74,788
60,280
208,055
175,564
$
279,201
$
242,158
$
84,097
$
63,914
380
380
380
368
380
368
381
367
359
60
30,048
30,048
30,048
26,299
30,048
26,299
30,281
26,208
24,423
11,334
88.9
%
87.9
%
88.9
%
87.9
%
89.4
%
87.5
%
91.0
%
$
2,946
$
2,831
$
2,910
$
2,823
$
2,827
$
2,660
$
2,516
Table of Contents
(1)
Adjusted EBITDA is a measure of operating performance that is
not calculated in accordance with GAAP. Adjusted EBITDA should
not be considered a substitute for net income, income from
operations or cash flows provided by or used in operations, as
determined in accordance with GAAP. Adjusted EBITDA is a key
measure of the Companys operating performance used by
management to focus on operating performance and management
without mixing in items of income and expense that relate to
long-term contracts and the financing and capitalization of the
business. We define Adjusted EBITDA as net income (loss) before
provision (benefit) for income taxes, non-operating income
(loss) items, depreciation and amortization, straight-line lease
expense (income), amortization of deferred entrance fees,
non-recurring combination expenses, acquisition transition costs
and bonuses in connection with the restricted stock grant paid
and accrued, and non-cash compensation expense and including
entrance fee receipts and refunds.
We use Adjusted EBITDA to assess our overall operating
performance on a periodic basis. We believe that Adjusted
EBITDA, as we have defined it, is a better measure of periodic
operating performance than the GAAP measures of performance
because Adjusted EBITDA focuses on the day-to-day items of
income and expense from operations. The GAAP measures of
performance aggregate operating as well as financial items of
income and expense and obscure the operational aspects of
performance. Adjusted EBITDA provides us with a measure of
operating performance exclusive of items that (1) are
beyond the control of management in the short-term, and
(2) relate to the financing and capitalization of the
Company, such as depreciation and amortization, straight-line
rent expense (income), taxation and interest expense. This
metric measures our performance based on operational factors
that management can impact in the short-term, namely the income
and cost structure or expenses of the organization. Adjusted
EBITDA is one of the metrics used by senior management and the
board of directors to review the operating performance of the
business on a period-to-period basis. Adjusted EBITDA is also
used by research analysts and investors to evaluate the
performance and value of companies in our industry. An investor
or potential investor should find this item important in
evaluating our performance, results of operations and financial
position. We use non-GAAP financial measures as a supplement to
our GAAP results in order to provide a more complete
understanding of the factors and trends affecting our business.
However, Adjusted EBITDA has limitations as an analytical tool.
Adjusted EBITDA is not an alternative to net income, income from
operations, or cash flows provided by or used in operations as
calculated and presented in accordance with GAAP. In addition,
because Adjusted EBITDA is not a measure of financial
performance under GAAP and is susceptible to varying
calculations. Adjusted EBITDA as presented in this prospectus,
may differ from and may not be comparable to similarly titled
measures used by other companies.
The table below shows the reconciliation of net income (loss)
to Adjusted EBITDA for the three and nine months ended
September 30, 2005 and 2004 and the years ended
December 31, 2004, 2003 and 2002.
Pro Forma as Adjusted
Three Months
Nine Months
Pro Forma
Three Months
Nine Months
Ended
Ended
as Adjusted
Ended
Ended
September 30,
September 30,
Year Ended
Year Ended December 31,
September 30,
September 30,
December 31,
2005
2005
2005
2004
2005
2004
2004
2004
2003
2002
$
(43,139
)
$
(78,678
)
$
(18,524
)
$
(1,657
)
$
(26,271
)
$
(3,318
)
$
(85,160
)
$
(9,794
)
$
(8,963
)
$
6,455
7,277
205
57
128
1,083
361
322
748
933
748
(580
)
933
2,180
3,921
11,111
139
8,666
114
114
(10,486
)
(3,495
)
(15,956
)
(7,950
)
(11,734
)
(1,284
)
5,262
196
641
196
327
641
797
931
931
(318
)
(584
)
453
(263
)
(1,051
)
(12,511
)
625
24,513
9,593
28,764
10,802
15,516
26,564
47,428
37,759
55,851
24,484
9,490
2,324
6,875
2,324
1,961
6,875
5,821
7,783
7,783
622
67
3,654
(4,080
)
(1,465
)
(3,176
)
(1,412
)
(3,960
)
(825
)
(172
)
(2,200
)
(623
)
(2,152
)
(637
)
(14,037
)
(18,004
)
(31,690
)
(44,800
)
(15,493
)
15,611
(12,913
)
43,953
(37,067
)
49,759
20,244
11,285
20,145
57,090
15,058
14,461
30,861
43,440
79,276
52,307
22,480
13,708
Table of Contents
(2)
Cash From Facility Operations is a measurement of liquidity that
is not calculated in accordance with GAAP, and should not be
considered a substitute for cash flows provided by or used in
operations, as determined in accordance with GAAP. We define
Cash From Facility Operations as cash flows provided by (used
in) operations adjusted for changes in operating assets and
liabilities, long-term deferred interest and fees added to
principal, refundable entrance fees received, entrance fees
disbursed, other, recurring capital expenditures and
non-recurring combination expenses, acquisition transition costs
and bonuses in connection with the restricted stock grant paid
and accrued.
We believe Cash From Facility Operations is a better measure of
liquidity that is useful to investors because it assists their
ability to meaningfully evaluate 1) our ability to service
our outstanding indebtedness, including our credit facilities
and capital and financing leases, 2) our ability to pay
dividends to stockholders, and 3) our ability to make
regular recurring capital expenditures to maintain and improve
our facilities. We expect our new credit facility to contain a
concept similar to Cash From Facility Operations as part of a
formula to calculate availability of borrowing under the credit
facility. This metric measures our liquidity based on
operational factors that management can impact in the
short-term. In addition, Cash From Facility Operations is one of
the metrics used by senior management and the board of directors
to review our ability to service our outstanding indebtedness,
including our credit facilities, our ability to pay dividends to
stockholders, our ability to make regular recurring capital
expenditures to maintain and improve our facilities on a
periodic basis for planning purposes, and the preparation of our
annual budget. We use non-GAAP financial measures as a
supplement to our GAAP financial measures in order to provide a
more complete understanding of the factors and trends affecting
our liquidity. However, Cash From Facility Operations has
limitations as an analytical tool. Cash From Facility Operations
is not an alternative to cash flows provided by or used in
operations as calculated and presented in accordance with GAAP.
Cash From Facility Operations does not represent cash available
for dividends or discretionary expenditures, since we may have
mandatory debt service requirements or other non-discretionary
expenditures not reflected in the measure. In addition, because
Cash From Facility Operations is not a measure of liquidity
under GAAP and is susceptible to varying calculations, Cash From
Facility Operations, as presented in this prospectus, may differ
from and may not be comparable to similarly titled measures used
by other companies.
Table of Contents
The table below shows the reconciliation of net cash provided by
(used in) operating activities to Cash From Facility Operations
for the three and nine months ended September 30, 2005 and
2004 and the years ended December 31, 2004, 2003 and 2002:
Pro Forma
as Adjusted
Pro Forma
Three Months
Nine Months
as Adjusted
Ended
Ended
Year Ended
September 30,
September 30,
December 31,
Three Months
Nine Months
Year Ended
Ended
Ended
December 31,
September 30,
September 30,
2005
2004
2005
2004
2004
2004
2003
2002
2005
2005
$
(1,684
)
$
18,271
$
(3,754
)
$
21,334
$
7,807
$
38,372
$
28,644
$
50,128
$
34,111
$
39,645
4,132
(257
)
4,132
(7,358
)
(257
)
(2,664
)
(7,465
)
(7,465
)
(1,095
)
(1,443
)
(697
)
(823
)
(1,380
)
(798
)
(1,088
)
1,285
2,957
1,285
2,957
2,389
(876
)
(1,670
)
(876
)
(1,670
)
(5,571
)
114
114
(4,614
)
(12,640
)
(4,614
)
(4,571
)
(12,640
)
(10,156
)
(13,527
)
(13,527
)
(4,434
)
(3,291
)
8,873
9,106
8,873
9,106
$
7,116
$
15,767
$
5,046
$
8,708
$
5,303
$
24,729
$
4,584
$
27,870
$
27,784
$
33,823
The above pro forma as adjusted information represents our
historical operations as adjusted to give effect to the planned
transactions upon completion of the initial public offering. See
Unaudited Pro Forma Condensed Consolidated Financial
Information.
(3)
Facility Operating Income is not a measurement of operating
performance calculated in accordance with GAAP and should not be
considered a substitute for net income, income from operations,
or cash flows provided by or used in operations, as determined
in accordance with GAAP. We define Facility Operating Income as
net income (loss) before provision (benefit) for income taxes,
non-operating income (loss) items, depreciation and
amortization, facility lease expense, general and administrative
expense, compensation expense, amortization of deferred entrance
fee revenue and management fees.
Table of Contents
Pro Forma
as Adjusted
Three
Nine
Three Months
Nine Months
Pro Forma
Months
Months
Ended
Ended
as Adjusted
Ended
Ended
September 30,
September 30,
Year Ended
Year Ended December 31,
September 30,
September 30,
December 31,
2005
2005
2005
2004
2005
2004
2004
2004
2003
2002
$
(43,139
)
$
(78,678
)
$
(18,524
)
$
(1,657
)
$
(26,271
)
$
(3,318
)
$
(85,160
)
$
(9,794
)
$
(8,963
)
$
6,455
7,277
205
57
128
1,083
361
322
748
(580
)
933
2,180
3,921
11,111
139
8,666
748
933
114
114
(10,486
)
(3,495
)
(15,956
)
(7,950
)
(11,734
)
(1,284
)
5,262
196
641
196
327
641
797
931
931
(318
)
(584
)
625
453
(263
)
(1,051
)
(12,511
)
24,513
9,593
28,764
10,802
15,516
26,564
47,428
37,759
55,851
24,484
9,490
2,324
6,875
2,324
1,961
6,875
5,821
7,783
7,783
622
67
3,654
(4,080
)
(1,465
)
(3,176
)
(1,412
)
(3,960
)
(825
)
(172
)
(2,200
)
(623
)
(2,152
)
(637
)
(14,037
)
(18,004
)
(31,690
)
(44,800
)
(15,493
)
15,611
(12,913
)
43,953
(37,067
)
49,759
20,244
11,285
20,145
57,090
15,058
14,461
30,861
43,440
79,276
52,307
22,480
13,708
48,300
144,309
47,259
21,281
140,852
59,771
185,445
99,997
30,744
31,003
18,783
21,297
9,088
9,088
5,028
20,498
47,275
19,879
9,809
42,860
30,914
52,915
43,640
15,997
12,540
(15
)
(18
)
(15
)
(18
)
(1,953
)
(1,051
)
(2,863
)
(988
)
(882
)
(2,675
)
(2,514
)
(4,443
)
(3,545
)
(5,368
)
(4,622
)
$
74,970
$
222,290
$
74,788
$
60,280
$
208,055
$
175,564
$
279,201
$
242,158
$
84,097
$
63,914
(4)
Excludes facilities held for sale.
(5)
Excludes facilities held for sale and facilities managed by us.
Pro Forma,
as adjusted
as of
As of
September 30, 2005
September 30, 2005
$
85,626
$
59,751
1,495,277
1,488,696
610,239
657,985
604,366
494,462
Table of Contents
12
13
14
We may have little or no cash flow apart from cash flow that is
dedicated to the payment of any interest, principal or
amortization required with respect to outstanding indebtedness
and lease payments with respect to our long-term operating
leases;
Increases in our outstanding indebtedness, leverage and
long-term operating leases will increase our vulnerability to
adverse changes in general economic and industry conditions, as
well as to competitive pressure;
Increases in our outstanding indebtedness may limit our ability
to obtain additional financing for working capital, capital
expenditures, acquisitions, general corporate and other
purposes; and
Our ability to satisfy our obligations with respect to holders
of our capital stock may be limited.
15
16
17
18
19
20
21
22
23
24
25
26
a staggered board of directors consisting of three classes of
directors, each of whom serve three-year terms;
removal of directors only for cause, and only with the
affirmative vote of at least 80% of the voting interest of
stockholders entitled to vote;
blank-check preferred stock;
provisions in our amended and restated certificate of
incorporation and amended and restated by-laws preventing
stockholders from calling special meetings (with the exception
of Fortress and its affiliates, so long as they collectively
beneficially own at least 50.1% of our issued and outstanding
common stock);
advance notice requirements for stockholders with respect to
director nominations and actions to be taken at annual
meetings; and
no provision in our amended and restated certificate of
incorporation for cumulative voting in the election of
directors, which means that the holders of a majority of the
outstanding shares of our common stock can elect all the
directors standing for election.
27
variations in our quarterly operating results;
changes in our earnings estimates;
the contents of published research reports about us or the
senior living industry or the failure of securities analysts to
cover our common stock after this offering;
additions or departures of key management personnel;
any increased indebtedness we may incur or lease obligations we
may enter into in the future;
actions by institutional stockholders;
changes in market valuations of similar companies;
announcements by us or our competitors of significant contracts,
acquisitions, strategic partnerships, joint ventures or capital
commitments;
speculation or reports by the press or investment community with
respect to the Company or the senior living industry in general;
increases in market interest rates that may lead purchasers of
our shares to demand a higher yield;
changes or proposed changes in laws or regulations affecting the
senior living industry or enforcement of these laws and
regulations, or announcements relating to these matters; and
general market and economic conditions.
28
29
30
31
Approximately $7.8 million to repay in full the debt
outstanding under a first mortgage loan encumbering our Westbury
Care Center facility. The loan bears interest at the rate of
prime plus 0.75% and is due March 31, 2008. The loan can be
prepaid without penalty.
Approximately $32.0 million to repay the notes B
portion of our $182.0 million first mortgage loan entered
into in March 2005 with Guaranty Bank, which is secured by five
facilities located in Illinois, North Carolina, Missouri, Ohio
and New York. BLC used the proceeds of the loan to refinance the
existing indebtedness on these five facilities, including
repayment in full of a first mortgage loan and a mezzanine loan
encumbering The Hallmark at Battery Park City in the amount of
$50.0 million and $8.5 million, respectively. The
notes B can be prepaid, subject to a prepayment fee equal
to 1% of the principal being repaid. The loan matures on
April 1, 2008, and may be extended for two additional
one-year periods, subject to certain covenants. The
$182.0 million loan is allocated between
$150.0 million in notes A, which bear interest at
LIBOR plus 3.05%, and $32.0 million in notes B, which
bear interest at LIBOR plus 5.60%. At the end of the 12th and
24th calendar months, the notes B can be resized to
notes A, in which case the notes A interest rate
increases to LIBOR plus 3.10%. If the borrowers do not meet
certain debt coverage ratios or facility occupancy ratios during
the first year of the loan, the Notes B interest rate
increases to LIBOR plus 6.60%. If the ratios remain unmet from
and after the second year of the loan, the Notes B interest
rate increases to LIBOR plus 7.60%.
Approximately $9.5 million to repay in full our term loan
from LaSalle Bank National Association that is payable interest
only monthly at the rate of prime plus 1.00% and the principal
of which is due in quarterly installments of $0.5 million
commencing July 1, 2005 until maturity on March 31,
2007. The loan can be prepaid without penalty.
Approximately $2.5 million to repay in full the debt
outstanding related to Assisted Living Residence Revenue Bonds
encumbering four Alterra facilities located in Kansas. The bonds
have an average interest rate of 7.39% and mature in 2009. The
bonds may be prepaid at 102% of the outstanding principal
balance plus accrued and unpaid interest.
Approximately $8.9 million to repay unsecured notes that
were issued in conjunction with Alterras acquisition of
joint venture partnership interests. The notes bear interest at
9.00% and mature in December 2008. The notes may be prepaid
without penalty, upon five days notice.
32
Approximately $2.2 million to repay in full lessor advances
to fund certain escrow deposits and costs in connection with the
Chambrel Portfolio, which amount can be repaid at any time
during the term of the lease. The current lease rate on this
amount is 15.86%.
33
on an actual basis (after giving effect to the formation
transactions described in Business
History); and
on a pro forma basis to give effect to the sale of shares of our
common stock in this offering at an assumed offering price of
$18.00, after deducting offering costs, underwriters
discount and sale of common shares by minority stockholders,
application of a portion of the proceeds from this offering
towards repayment of certain outstanding indebtedness and
exercise of our purchase option with respect to six facilities
as described in Use of Proceeds, and the formation
transactions described in Business
History.
As of
September 30, 2005
Pro Forma
Actual
(Dollars in thousands)
$
85,626
$
59,751
$
3,451
$
5,247
540,504
586,454
66,284
66,284
$
610,239
$
657,985
$
649
$
580
646,183
536,348
(41,930
)
(41,930
)
(536
)
(536
)
$
604,366
$
494,462
$
1,214,605
$
1,152,447
34
$
18.00
$
5.44
1.12
6.56
$
11.44
Shares Assuming
No Exercise of
Underwriters Over-
Cash/Book Value of
Allotment Option
Contributions (1)(2)
Average Price
Number
Percent
Amount
Percent
Per Share
(in thousands)
58,000,000
89.4%
$
377,732
75.3%
$
6.51
6,900,000
10.6%
124,200
24.7%
18.00
64,900,000
100.0%
$
501,932
100.0%
$
7.73
35
(1)
Total consideration and average price paid by the new investors
in the table above give effect to the $20.0 million cash
dividend paid by FEBC-ALT Investors in June 2005 and the
$14.4 million dividend which our board of directors
declared on September 30, 2005 and which we paid on
October 7, 2005.
(2)
Represents pro forma tangible book value as of
September 30, 2005, of the assets contributed in connection
with our formation transactions and the retirement of debt and
purchase of leased property but not to the effects of this
offering (in thousands).
$
1,495,277
(50,178
)
1,445,099
(890,911
)
(66,552
)
487,636
(109,904
)
$
377,732
36
Period from
Period from
Three Months
Nine Months
September 20,
January 1,
Ended
Ended
2000
2000
September 30,
September 30,
Year Ended December 31,
through
through
December 31,
September 19,
2005
2004
2005
2004
2004
2003
2002
2001
2000
2000
(unaudited)
(unaudited)
$
209,359
$
166,161
$
577,530
$
485,014
$
660,872
$
222,584
$
161,516
$
123,935
$
28,161
$
86,930
133,568
104,999
366,782
306,936
415,169
133,119
92,980
72,467
16,692
46,904
47,259
21,281
140,852
59,771
99,997
30,744
31,003
26,016
6,742
20,923
15,058
14,461
30,861
43,440
52,307
22,480
13,708
11,230
2,246
5,904
2,382
595
9,088
9,088
5,410
19,879
9,809
42,860
30,914
43,640
15,997
12,540
12,138
2,880
6,156
224,852
150,550
590,443
441,061
611,113
202,340
150,231
124,233
29,155
85,297
(15,493
)
15,611
(12,913
)
43,953
49,759
20,244
11,285
(298
)
(994
)
1,633
825
172
2,200
623
637
14,037
18,004
18,251
3,962
8,346
(13,126
)
(17,477
)
(33,439
)
(53,249
)
(63,634
)
(25,106
)
(9,490
)
(8,247
)
(2,613
)
(7,540
)
(67
)
(3,654
)
4,080
1,465
3,176
(24,513
)
(453
)
1,051
12,511
(196
)
(327
)
(641
)
(797
)
(931
)
318
584
984
(114
)
(28,057
)
(5,675
)
(41,166
)
(8,005
)
(10,056
)
(2,509
)
20,383
10,690
355
2,439
(748
)
580
(933
)
(2,180
)
(11,111
)
(139
)
(8,666
)
(4,503
)
(448
)
(2,150
)
(28,805
)
(5,095
)
(42,099
)
(10,185
)
(21,167
)
(2,648
)
11,717
6,187
(93
)
10,486
3,495
15,956
7,950
11,734
1,284
(5,262
)
(2,778
)
42
(18,319
)
(1,600
)
(26,143
)
(2,235
)
(9,433
)
(1,364
)
6,455
3,409
(51
)
289
(205
)
(57
)
(128
)
(1,083
)
(361
)
(322
)
(7,277
)
$
(18,524
)
$
(1,657
)
$
(26,271
)
$
(3,318
)
$
(9,794
)
$
(8,963
)
$
6,455
$
3,409
$
(51
)
$
289
380
368
380
368
367
359
60
51
26
30,048
26,299
30,048
26,299
26,208
24,423
11,334
9,266
5,567
88.9
%
87.9
%
88.9
%
87.9
%
89.4
%
87.5
%
91.0
%
82.2
%
78.0
%
$
2,946
$
2,831
$
2,910
$
2,823
$
2,827
$
2,660
$
2,516
$
2,445
$
2,361
37
As of
September 30,
As of December 31,
2005
2004
2003
2002
2001
2000
(unaudited)
$
59,751
$
86,858
$
56,468
$
2,172
$
1,067
$
440
1,448,696
746,625
1,656,582
730,298
570,323
531,742
657,985
371,037
1,044,736
290,483
171,236
136,653
494,462
40,091
237,744
183,807
177,352
173,943
38
39
40
41
42
43
44
45
46
47
Increase
% Increase
2005
2004
(Decrease)
(Decrease)
$
56,399
$
41,352
$
15,047
36.4
%
45,442
27,756
17,686
63.7
%
101,841
69,108
32,733
47.4
%
61,169
57,283
3,886
6.8
%
45,361
38,888
6,473
16.6
%
106,530
96,171
10,359
10.8
%
208,371
165,279
43,092
26.1
%
988
882
106
12.0
%
209,359
166,161
43,198
26.0
%
48
Increase
% Increase
2005
2004
(Decrease)
(Decrease)
29,376
21,476
7,900
36.8
%
34,886
20,025
14,861
74.2
%
64,262
41,501
22,761
54.8
%
34,382
32,690
1,692
5.2
%
34,924
30,808
4,116
13.4
%
69,306
63,498
5,808
9.1
%
133,568
104,999
28,569
27.2
%
47,259
21,281
25,978
122.1
%
19,879
9,809
10,070
102.7
%
9,088
9,088
N/A
15,058
14,461
597
4.1
%
224,852
150,550
74,302
49.4
%
(15,493
)
15,611
(31,104
)
(199.2
)%
825
172
653
379.7
%
(13,126
)
(17,477
)
4,351
24.9
%
(67
)
(3,654
)
3,587
98.2
%
(196
)
(327
)
131
40.1
%
(28,057
)
(5,675
)
(22,382
)
(394.4
)%
(748
)
580
(1,328
)
(229.0
)%
(28,805
)
(5,095
)
(23,710
)
(465.4
)%
10,486
3,495
6,991
200.0
%
(18,319
)
(1,600
)
(16,719
)
(1,044.9
)%
(205
)
(57
)
(148
)
(259.6
)%
$
(18,524
)
$
(1,657
)
$
(16,867
)
(1,017.9
)%
380
368
12
3.3
%
30,048
26,299
3.749
14.3
%
26,618
22,540
4,078
18.1
%
88.9
%
87.9
%
1.0
%
1.1
%
88.7
%
87.3
%
1.4
%
1.6
%
$
3,038
$
2,798
$
240
8.6
%
64
49
15
30.6
%
13,554
9,476
4,078
43.0
%
90.3
%
92.2
%
(1.9
)%
(2.1
)%
90.2
%
92.0
%
(1.8
)%
(2.0
)%
2,958
2,644
314
11.9
%
299
299
13,064
13,064
87.5
%
84.8
%
2.7
%
3.2
%
87.2
%
84.0
%
3.2
%
3.8
%
3,117
2,921
196
6.3
%
49
Increase
% Increase
2005
2004
(Decrease)
(Decrease)
17
20
(3
)
(15.0
)%
3,430
3,759
(329
)
(8.8
)%
89.9
%
83.2
%
6.7
%
8.1
%
89.2
%
84.3
%
4.9
%
5.8
%
2,321
2,365
(44
)
(1.9
)%
(1)
Although the Company does not allocate resources based on
further stratification by operating margin, the Company believes
that the following information may be useful to readers of the
financial statements because it highlights to the readers the
strength of its portfolio and the absence of a large number of
facilities that perform significantly below or above the
average. For the three months ended September 30, 2005,
Brookdale Living had an average margin of 36.9%. During that
period, three facilities had operating margins between negative
and 10%, representing revenues and facility operating income of
$4.6 million and $0.3 million, respectively, and 13
facilities had operating margins over 50%, representing revenues
and facility operating income of $24.6 million and $13.4
million, respectively. For the three months ended
September 30, 2004, Brookdale Living had an average margin
of 39.9%. During that period, no facilities had operating
margins between negative and 10%, and seven facilities had
operating margins over 50%, representing revenues and facility
operating income of $16.5 million and $9.0 million,
respectively. The overall decrease in operating margin was
primarily due to the addition in April 2005 of the Fortress CCRC
Portfolio, which had lower occupancy and margins, partially
offset by the addition in June/July 2005 of the Prudential
Portfolio, which had higher margins.
(2)
Although the Company does not allocate resources based on
further stratification by operating margin, the Company believes
that the following information may be useful to readers of the
financial statements because it highlights to the readers the
strength of its portfolio and the absence of a large number of
facilities that perform significantly below or above the
average. For the three months ended September 30, 2005,
Alterra had an average operating margin of 34.9%. During that
period, 30 facilities had operating margins between negative and
10%, representing revenues and facility operating income of
$5.4 million and ($0.2 million), respectively, and 14
facilities had operating margins over 50%, representing revenues
and facility operating income of $7.9 million and $4.2 million,
respectively. For the three months ended September 30, 2004,
Alterra had an average margin of 34.0%. During that period, 33
facilities had operating margins between negative and 10%,
representing revenues and facility operating income of $5.6
million and ($0.2 million), respectively, and 17 facilities had
operating margins over 50%, representing revenues and facility
operating income of $8.0 million and $4.3 million,
respectively. The increase in the average margin was primarily
due to the increase in rate of $196, or 6.3%, and average
occupancy of 3.2%.
(3)
Total units/beds operated represent the total units/beds
operated as of the end of the period. Occupancy rate is
calculated by dividing total occupied units/beds by total
units/beds operated as of the end of the period.
(4)
Average monthly revenue per unit/bed represents the average of
the total monthly revenues divided by occupied units/beds at the
end of the period averaged over the respective period presented
and for the period of time in operation during the period for
the same stores.
(5)
Includes facilities managed by us but excludes Town Village
Oklahoma City, which is currently under development.
50
The increased facility operating expenses of $28.6 million,
or 27.2%, were primarily due to increases in salaries, wages and
benefits and the addition of the Fortress CCRC Portfolio and the
Prudential Portfolio into our operations effective April and
June/ July 2005, respectively.
General and administrative expenses increased
$10.1 million, or 102.7%, primarily as a result of
$8.6 million of merger costs in connection with our
formation transactions and bonuses to reimburse key management
for their Federal and state income taxes in connection with our
51
restricted stock grant, an increase in salaries, wages and
benefits, and an increase in the number of employees due to the
addition of the new management agreements and the the addition
of the Fortress CCRC Portfolio and the Prudential Portfolio into
our operations effective April and June/ July 2005,
respectively. General and administrative expenses as a
percentage of total revenue, including revenue generated by the
facilities we manage, was 4.9% and 5.4% for the three months
ended September 30, 2005 and 2004, respectively, calculated
as follows:
Three Months Ended
September 30,
2005
2004
$
208,371
$
165,279
20,162
15,740
$
228,533
$
181,019
$
11,239
$
9,809
4.9
%
5.4
%
Lease expenses increased $26.0 million, or 122.1%,
primarily due to the Provident leases that we entered into
during the fourth quarter of 2004, including $5.9 million
of additional lease expense from straight-line rent expense,
partially offset by $2.2 million of deferred gain
amortization.
Total depreciation and amortization expense increased by
$0.6 million, or 4.1%, due to depreciation on capital
expenditures and leasehold improvements and the addition of the
Fortress CCRC Portfolio and the Prudential Portfolio into our
operations effective April and June/July 2005, respectively,
partially offset by the Provident sale-leaseback transaction in
the fourth quarter of 2004.
Interest income increased $0.7 million, or 379.7%,
primarily due to an increase in cash and cash equivalents
invested from the Provident transaction proceeds and interest
earned on the lease security deposit.
Interest expense decreased $7.9 million, or 37.6%,
primarily due to approximately $433.6 million of our debt
that was assumed by Provident or repaid using proceeds from the
sale-leaseback arrangements in the fourth quarter of 2004,
partially offset by an increase related to the addition of the
Fortress CCRC Portfolio and the Prudential Portfolio into our
operations effective April and June/ July 2005, respectively,
change in fair value of interest rate swaps and increased
interest rates on floating-rate debt.
Non-cash compensation expense of $9.1 million was incurred
in the three months ended September 30, 2005 as a result of
the restricted stock grant and our adoption of
SFAS No. 123R.
52
Increase
% Increase
2005
2004
(Decrease)
(Decrease)
$
140,178
$
113,315
$
26,863
23.7
%
121,223
80,305
40,918
51.0
%
261,401
193,620
67,781
35.0
%
187,265
173,404
13,861
8.0
%
126,189
115,476
10,713
9.3
%
313,454
288,880
24,574
8.5
%
574,855
482,500
92,355
19.1
%
2,675
2,514
161
6.4
%
577,530
485,014
92,516
19.1
%
71,050
59,425
11,625
19.6
%
90,326
57,969
32,357
55.8
%
161,376
117,394
43,982
37.5
%
107,451
99,440
8,011
8.1
%
97,955
90,102
7,853
8.7
%
205,406
189,542
15,864
8.4
%
366,782
306,936
59,846
19.5
%
140,852
59,771
81,081
135.7
%
42,860
30,914
11,946
38.6
%
9,088
9,088
N/A
%
30,861
43,440
(12,579
)
(29.0
)%
590,443
441,061
149,382
33.9
%
(12,913
)
43,953
(56,866
)
(129.4
)%
2,200
623
1,577
253.1
%
(33,439
)
(53,249
)
19,810
37.2
%
4,080
1,465
2,165
178.5
%
(453
)
(453
)
N/A
%
(641
)
(797
)
156
19.6
%
(41,166
)
(8,005
)
(33,161
)
(414.3
)%
(933
)
(2,180
)
1,247
57.2
%
(42,099
)
(10,185
)
(31,914
)
(313.3
)%
53
Increase
% Increase
2005
2004
(Decrease)
(Decrease)
15,956
7,950
8,006
100.7
%
(26,143
)
(2,235
)
(23,908
)
(1,069.7
)%
(128
)
(1,083
)
955
88.2
%
$
(26,271
)
$
(3,318
)
$
(22,953
)
(691.8
)%
380
368
12
3.3
%
30,048
26,299
3,749
14.3
%
26,618
22,540
4,078
18.1
%
88.9
%
87.9
%
1.0
%
1.1
%
88.5
%
87.3
%
1.2
%
1.4
%
$
2,972
$
2,725
$
247
9.1
%
64
49
15
30.6
%
13,554
9,476
4,078
43.0
%
90.3
%
92.2
%
(1.9
)%
(2.1
)%
90.6
%
93.1
%
(2.5
)%
(2.7
)%
2,857
2,606
251
9.6
%
299
299
13,064
13,064
87.5
%
85.7
%
1.8
%
2.1
%
86.7
%
83.9
%
2.8
%
3.3
%
3,076
2,929
147
5.0
%
17
20
(3
)
(15.0
)%
3,430
3,759
(329
)
(8.8
)%
89.9
%
83.2
%
6.7
%
8.1
%
89.7
%
86.5
%
3.2
%
3.7
%
2,286
2,492
(206
)
(8.3
)%
(1)
Although the Company does not allocate resources based on
further stratification by operating margin, the Company believes
that the following information may be useful to readers of the
financial statements because it highlights to the readers the
strength of its portfolio and the absence of a large number of
facilities that perform significantly below or above the
average. For the nine months ended September 30, 2005,
Brookdale Living had an average operating margin of 38.3%.
During that period, two facilities had operating margins between
negative and 10%, representing revenues and facility operating
income of $8.0 million and $0.6 million, respectively,
and 13 facilities had operating margins over 50%, representing
revenues and facility operating income of $58.3 million and
$32.3 million, respectively. For the nine months ended
September 30, 2004, Brookdale Living had an average
operating margin of 39.4%. During that period, two facilities
had operating margins between negative and 10%, representing
revenues and facility operating income of $6.4 million and
$0.5 million, respectively, and seven facilities had
operating margins over 50%, representing revenues and facility
operating income of $45.6 million and $24.5 million,
respectively. The overall decrease in operating margin was
primarily due to the addition in April 2005 of the Fortress CCRC
portfolio, which had lower occupancy and margins partially
offset by the addition in June/ July 2005 of the Prudential
portfolio with higher margins.
(2)
Although the Company does not allocate resources based on
further stratification by operating margin, the Company believes
that the following information may be useful to readers of the
financial statements because it highlights to the readers the
strength of its portfolio and the absence of a large number of
54
facilities that perform
significantly below or above the average. For the nine months
ended September 30, 2005, Alterra had an average operating
margin of 34.5%. During that period, 30 facilities had operating
margins between negative and 10%, representing revenues and
facility operating income of $15.7 million and
($0.5 million), respectively, and 14 facilities had
operating margins over 50%, representing revenues and facility
operating income of $15.5 million and $8.2 million,
respectively. For the nine months ended September 30, 2004,
Alterra had an average operating margin of 34.4%. During that
period, 33 facilities had operating margins between negative and
10%, representing revenues and facility operating income of
$13.5 million and $0.1 million, respectively, and 17
facilities had operating margins over 50%, representing revenues
and facility operating income of $12.1 million and
$6.3 million, respectively. The increase in average margin
was primarily due to an increase in rate and occupancy partially
offset be an increase in expenses. The increase in expenses was
primarily due to salaries, wages and benefits.
(3)
Total units/beds operated represent
the total units/beds operated as of the end of the period.
Occupancy rate is calculated by dividing total occupied
units/beds by total units/beds operated as of the end of the
period.
(4)
Average monthly revenue per
unit/bed represents the average of the total monthly revenues
divided by occupied units/beds at the end of the period averaged
over the respective period presented and for the period of time
in operation during the period for the same stores.
(5)
Includes facilities managed by us
but excludes Town Village Oklahoma City, which is currently
under development.
55
Of our increased facility operating expenses,
$13.1 million, or 4.1%, was attributable to the
347 facilities we operated during both periods. The
increase was primarily due to increases in salaries, wages and
benefits, the operations from the 14 facilities that we
leased from Ventas, and the addition of the Fortress CCRC
Portfolio and the Prudential Portfolio into our operations
effective April and June/July, 2005, respectively.
Brookdale Living operating expense increased $44.0 million,
or 37.5%, primarily due to the addition of the Fortress CCRC
Portfolio and the Prudential Portfolio into our operations
effective April and June/July 2005, respectively. The balance
was primarily due to increases in salaries, wages and benefits.
Alterra operating expense increased $15.9 million, or 8.4%,
primarily due to increased salaries, wages and benefits as a
result of increased occupancy and level of care provided to
residents.
General and administrative expenses increased
$11.9 million, or 38.6%, primarily as a result of
$8.9 million of merger costs in connection with our
formation, bonuses to reimburse key management for their Federal
and state income taxes in connection with our restricted stock
grant, an increase in salaries, wages and benefits, an increase
in the number of employees in anticipation of and in connection
with the addition of new management agreements and the addition
of the Fortress CCRC Portfolio and the Prudential Portfolio into
our operations effective April and June/July 2005, respectively.
General and administrative expenses as a percentage of total
revenue, including revenue generated by the facilities we
manage, was 5.4% and 6.0% for the nine months ended
September 30, 2005 and 2004, respectively, calculated as
follows:
Nine Months Ended
September 30,
2005
2004
$
574,855
$
482,500
57,815
34,788
$
632,670
$
517,288
$
33,988
$
30,914
5.4
%
6.0
%
Lease expenses increased $81.1 million, or 135.7%,
primarily due to payments under the Ventas operating leases that
we entered into during the first half of 2004 and the Provident
leases that we entered into during the fourth quarter of 2004,
including $17.9 million of additional lease expense from
straight-line rent expense, partially offset by
$6.8 million of deferred gain amortization.
Total depreciation and amortization expense decreased by
$12.6 million, or 29.0%, primarily due to sale-leaseback
arrangements entered into with respect to the 68 facilities sold
and leased
56
back from Provident in the fourth quarter of 2004, partially
offset by increased depreciation on capital expenditures and
leasehold improvements and the addition of the Fortress CCRC
Portfolio and the Prudential Portfolio into our operations
effective April and June/July 2005, respectively.
Interest income increased $1.6 million, or 253.1%,
primarily due to an increase in cash and cash equivalents
invested from the Provident transaction proceeds and interest
earned on the lease security deposit.
Interest expense decreased $22.4 million, or 42.4%,
primarily due to approximately $433.6 million of our debt
that was assumed by Provident or repaid using proceeds from the
sale-leaseback arrangements in the fourth quarter of 2004,
partially offset by an increase related to the addition of the
Fortress CCRC Portfolio and the Prudential Portfolio into our
operations effective April and June/July 2005, respectively,
change in fair value of interest rate swaps and increased
interest rates on floating-rate debt.
Non-cash compensation expense of $9.1 million was incurred in
the nine months ended September 30, 2005 as a result of the
restricted stock grant and our adoption of SFAS No. 123R.
57
Increase
% Increase
2004
2003
(Decrease)
(Decrease)
$
159,844
$
109,835
$
50,009
45.5
%
103,765
74,599
29,166
39.1
%
263,609
184,434
79,175
42.9
%
237,529
20,236
217,293
1,073.8
%
156,189
12,546
143,643
1,144.9
%
393,718
32,782
360,936
1,101.0
%
657,327
217,216
440,111
202.6
%
3,545
5,368
(1,823
)
(34.0
)%
660,872
222,584
438,288
196.9
%
83,739
53,801
29,938
55.6
%
74,905
56,628
18,277
32.3
%
158,644
110,429
48,215
43.7
%
135,384
12,327
123,057
998.3
%
121,141
10,363
110,778
1,069.0
%
256,525
22,690
233,835
1,030.6
%
415,169
133,119
282,050
211.9
%
99,997
30,744
69,253
225.3
%
43,640
15,997
27,643
172.8
%
52,307
22,480
29,827
132.7
%
611,113
202,340
408,773
202.0
%
49,759
20,244
29,515
145.8
%
637
14,037
(13,400
)
(95.5
)%
(63,634
)
(25,106
)
(38,528
)
(153.5
)%
3,176
3,176
N/A
(24,513
)
24,513
100.0
%
1,051
12,511
(11,460
)
(91.6
)%
(931
)
318
(1,249
)
(392.8
)%
(114
)
(114
)
N/A
(10,056
)
(2,509
)
(7,547
)
(300.8
)%
(11,111
)
(139
)
(10,972
)
(7,893.5
)%
(21,167
)
(2,648
)
(18,519
)
(699.4
)%
11,734
1,284
10,450
813.9
%
(9,433
)
(1,364
)
(8,069
)
(591.6
)%
(361
)
(322
)
(39
)
(12.1
)%
(7,277
)
7,277
100.0
%
$
(9,794
)
$
(8,963
)
$
(831
)
(9.3
)%
367
359
8
2.2
%
26,208
24,423
1,785
7.3
%
22,540
20,324
2,216
10.9
%
89.4
%
87.5
%
1.9
%
2.2
%
87.4
%
88.0
%
(0.6
)%
(0.7
)%
$
2,827
$
2,660
$
167
6.3
%
58
Increase
% Increase
2004
2003
(Decrease)
(Decrease)
49
34
15
46.9
%
9,476
7,260
2,216
30.3
%
92.8
%
89.7
%
3.1
%
3.5
%
91.5
%
91.8
%
(0.3
)%
2,655
2,720
(65
)
(2.4
)%
299
299
n/a
n/a
13,064
13,064
n/a
n/a
86.9
%
85.4
%
1.5
%
1.8
%
84.4
%
86.4
%
(2.0
)%
(2.3
)%
2,976
2,848
128
4.5
%
19
26
(7
)
(26.9
)%
3,668
4,099
(431
)
(10.5
)%
79.8
%
89.2
%
(9.4
)%
(10.5
)%
84.6
%
83.6
%
1.0
%
1.2
%
2,581
2,263
318
14.1
%
(1)
Although the Company does not allocate resources based on
further stratification by operating margin, the Company believes
that the following information may be useful to readers of the
financial statements because it highlights to the readers the
strength of its portfolio and the absence of a large number of
facilities that perform significantly below or above the
average. For the year ended December 31, 2004, Brookdale
Living had an average margin of 39.8%. During that period, two
facilities had operating margins between negative and 10%,
representing revenues and facility operating income of
$8.8 million and $0.7 million, respectively, and seven
facilities had operating margins over 50%, representing revenues
and facility operating income of $62.3 million and
$33.8 million, respectively. For the year ended
December 31, 2003, Brookdale Living had an average margin
of 40.1%. During that period, two facilities had operating
margins between negative and 10%, representing revenues and
facility operating income of $6.7 million and
$0.3 million, respectively, and four facilities had
operating margins over 50%, representing revenues and facility
operating income of $38.4 million and $20.9 million,
respectively. The decrease in the average margin was primarily
due to the addition of the 15 Ventas facilities that had lower
overall margins than the 34 properties we operated during both
periods.
(2)
Although the Company does not allocate resources based on
further stratification by operating margin, the Company believes
that the following information may be useful to readers of the
financial statements because it highlights to the readers the
strength of its portfolio and the absence of a large number of
facilities that perform significantly below or above the
average. For the year ended December 31, 2004, Alterra had
an average margin of 34.8%. During that period,
27 facilities had operating margins between negative and
10%, representing revenues and facility operating income of
$19.4 million and $0.4 million, respectively, and
12 facilities had operating margins over 50%, representing
revenues and facility operating income of $21.9 million and
$11.5 million, respectively. For the year ended
December 31, 2003, Alterra had an average margin of 30.8%.
During that period, 33 facilities had operating margins
between negative and 10%, representing revenues and facility
operating income of $2.5 million and ($0.1 million),
respectively, and ten facilities had operating margins over 50%,
representing revenues and facility operating income of
$1.1 million and $0.6 million, respectively. The
increase in average margin was primarily due to a full years
operations of Alterra verses one month of operations in 2003.
(3)
Total units/beds operated represent the total units/beds
operated as of the end of the period. Occupancy rate is
calculated by dividing total occupied units/beds by total
units/beds operated as of the end of the period.
(4)
Average monthly revenue per unit/bed represents the average of
the total monthly revenues divided by occupied units/beds at the
end of the period averaged over the respective period presented
and for the period of time in operation during the period for
the same stores.
(5)
Includes facilities managed by us but excludes Town Village
Oklahoma City, which is currently under development.
59
Of our increased facility operating expenses, $4.6 million,
or 4.4%, was attributable to the 29 facilities we operated
during both periods. The remaining increase was primarily a
result of the inclusion of Alterra into our operations for a
full year following the Effective Date in December 2003, the
consolidation of the five facilities pursuant to FIN 46R
developed and managed by us and expenses associated with
operating an additional 15 facilities leased from Ventas in the
first half of 2004.
General and administrative expenses increased
$27.6 million, or 172.8%, primarily as a result of the
inclusion of Alterra into our operations for a full year
following the Effective Date in
60
December 2003, and an increase in salaries, wages and number of
personnel (due to wage and salary increases and an additional
nine properties we managed during the second half of 2004).
General and administrative expense as a percentage of total
revenue, including revenue generated by the facilities we manage
was 6.0% and 4.9% for the years ended December 31, 2004 and
2003, respectively, calculated as follows ($ in 000s):
Year Ended
December 31,
2004
2003
$
657,327
$
217,216
64,191
108,320
$
721,518
$
325,536
$
43,640
$
15,997
6.0
%
4.9
%
Lease expense increased $69.3 million, or 225.3%, primarily
due to lease expense associated with a full years
operation of Alterra following the Effective Date in December
2003, the addition of 15 operating leases executed during the
first half of 2004 for the Ventas facilities, and the addition
of 68 operating leases executed during the fourth quarter 2004
for the Provident facilities, including $3.5 million of
additional straight-line rent expense, partially offset by
$1.7 million of additional deferred gain amortization.
Total depreciation and amortization expense increased by
$29.8 million, or 132.7%, primarily due to depreciation and
amortization on Alterras owned facilities, taking into
account a full years operation of Alterra following the
Effective Date in December 2003, capital additions (including
capital additions from 15 additional facilities leased from
Ventas in 2004); the purchase of 15 facilities previously leased
by us and the consolidation of five facilities pursuant to
FIN 46R developed and managed by us at December 31,
2003.
Interest income decreased $13.4 million, or 95.5%,
primarily due to the reduction in lease security deposits
resulting from the purchase of 15 facilities in 2003 and one
facility in 2002 that were previously leased by us.
Interest expense increased $35.4 million, or 140.8%,
primarily due to the cost of servicing Alterras debt
obligations for a full year following the Effective Date in
December 2003, five facilities consolidated at December 31,
2003, pursuant to FIN 46R, and interest expense from 15
facilities purchased in 2003 and one facility purchased in 2002
that were previously leased by us. This increase was partially
offset by a $3.2 million decrease in the fair value
liability of the interest rate swaps from December 31, 2003
to December 31, 2004.
61
Increase
% Increase
2003
2002
(Decrease)
(Decrease)
$
109,835
$
83,800
$
26,035
31.1
%
74,599
73,094
1,505
2.1
%
184,434
156,894
27,540
17.6
%
20,236
20,236
N/A
12,546
12,546
N/A
32,782
32,782
N/A
217,216
156,894
60,322
38.4
%
5,368
4,622
746
16.1
%
222,584
161,516
61,068
37.8
%
53,801
41,388
12,413
30.0
%
56,628
51,592
5,036
9.8
%
110,429
92,980
17,449
18.8
%
12,327
12,327
N/A
10,363
10,363
N/A
22,690
22,690
N/A
133,119
92,980
40,139
43.2
%
30,744
31,003
(259
)
(0.8
)%
15,997
12,540
3,457
27.6
%
22,480
13,708
8,772
64.0
%
202,340
150,231
52,109
34.7
%
20,244
11,285
8,959
79.4
%
14,037
18,004
(3,967
)
(22.0
)%
(25,106
)
(9,490
)
(15,616
)
(164.6
)%
(24,513
)
(24,513
)
N/A
12,511
12,511
N/A
318
584
(266
)
(45.5
)%
(2,509
)
20,383
(22,892
)
(112.3
)%
(139
)
(8,666
)
8,527
98.4
%
(2,648
)
11,717
(14,365
)
(122.6
)%
1,284
(5,262
)
6,546
124.4
%
(1,364
)
6,455
(7,819
)
(121.1
)%
(322
)
(322
)
N/A
(7,277
)
(7,277
)
N/A
$
(8,963
)
$
6,455
$
(15,418
)
(238.9
)%
62
Increase
% Increase
2003
2002
(Decrease)
(Decrease)
359
60
299
498.3
%
24,423
11,334
13,089
115.5
%
20,324
6,591
13,733
208.4
%
87.5
%
91.0
%
(3.5
)%
(3.8
)%
88.0
%
90.0
%
(2.0
)%
(2.2
)%
$
2,660
$
2,516
$
144
5.7
%
34
25
9
36.0
%
7,260
6,591
669
10.2
%
89.7
%
91.0
%
(1.3
)%
(1.4
)%
91.8
%
91.9
%
(0.1
)%
(0.1
)%
2,720
2,568
152
5.9
%
299
N/A
N/A
N/A
13,064
N/A
N/A
N/A
85.4
%
N/A
N/A
N/A
86.4
%
N/A
N/A
N/A
2,848
N/A
N/A
N/A
26
26
4,099
4,743
(644
)
(13.6
)%
89.2
%
79.8
%
9.4
%
11.8
%
83.6
%
80.3
%
3.3
%
4.1
%
2,263
2,107
156
7.4
%
(1)
Although the Company does not allocate resources based on
further stratification by operating margin, the Company believes
that the following information may be useful to readers of the
financial statements because it highlights to the readers the
strength of its portfolio and the absence of a large number of
facilities that perform significantly below or above the
average. For the year ended December 31, 2003, Brookdale
Living had an average margin of 40.1%. During that period, two
facilities had operating margins between negative and 10%,
representing revenues and facility operating income of
$6.7 million and $0.3 million, respectively, and four
facilities had operating margins over 50%, representing revenues
and facility operating income of $38.4 million and
$20.9 million, respectively. For the year ended
December 31, 2002, Brookdale Living had an average margin
of 40.7%. During that period, two facilities had operating
margins between negative and 10%, representing revenues and
facility operating income of $5.5 million and
$0.2 million, respectively, and four facilities had
operating margins over 50%, representing revenues and facility
operating income of $33.6 million and $18.7 million,
respectively. The decrease in average margin was primarily due
to a decrease in average occupancy of 0.1% and a full
years operations of the Chambrel facilities (leased May
2002), which had lower overall margins, partially offset by a
5.9% increase in average monthly rent per unit/bed.
(2)
Although the Company does not allocate resources based on
further stratification by operating margin, the Company believes
that the following information may be useful to readers of the
financial statements because it highlights to the readers the
strength of its portfolio and the absence of a large number of
facilities that perform significantly below or above the
average. For the year ended December 31, 2003, Alterra had
an average margin of 31.7% representing one month of operations.
During that period, 33 facilities had operating margins
between negative and 10%, representing revenues and facility
operating income of $2.5 million and ($0.1 million),
respectively, and ten facilities had operating margins over 50%,
representing revenues and facility operating income of
$1.1 million and $0.6 million, respectively.
(3)
Total units/beds operated represent the total units/beds
operated as of the end of the period. Occupancy rate is
calculated by dividing total occupied units/beds by total
units/beds operated as of the end of the period.
(4)
Average monthly revenue per unit/bed represents the average of
the total monthly revenues divided by occupied units/beds at the
end of the period averaged over the respective period presented
and for the period of time in operation during the period for
the same stores.
63
Of our increased facility operating expenses, $2.1 million,
or 3.0%, was attributable to the 21 facilities we operated
during both periods. The remaining increase was primarily due to
the inclusion of Alterra into our operations following the
Effective Date, the leasing of the Chambrel portfolio effective
May 1, 2002 and the purchase of the three facilities in
November 2002.
Brookdale Living operating expense increased $17.5 million,
or 30.0%, primarily due to a full years operations for the
six Chambrel facilities leased by us on May 1, 2002 and the
purchase of three development facilities previously managed by
us.
Alterra operating expense increased by $22.7 million due to
the inclusion of Alterra in our operations effective
December 1, 2003.
General and administrative expenses increased $3.5 million,
or 27.6%, primarily due to the inclusion of Alterra into our
operations following the Effective Date and an increase in
salaries, wages and number of personnel, due to the leasing of
the Chambrel portfolio and an additional 12 facilities managed
by us. General and administrative expenses as a percentage of
total revenue, including those generated by the facilities we
manage, was 4.9%
64
and 5.2% for the years ended December 31, 2003 and 2002,
respectively, calculated as follows ($ in 000s):
Year Ended
December 31,
2003
2002
$
217,216
$
156,894
108,320
83,206
$
325,536
$
240,100
$
15,997
$
12,540
4.9
%
5.2
%
Lease expenses decreased $0.3 million, or 0.8%, primarily
due the purchase of 14 facilities and one facility in 2003 and
2002, respectively, that were previously leased by us, offset by
the inclusion of Alterra into our operations following the
Effective Date in December 2003 and the leasing of the Chambrel
portfolio effective May 1, 2002, including
$2.7 million of reduced straight-line rent expense and an
additional $0.3 million of deferred gain amortization.
Total depreciation and amortization expenses increased by
$8.8 million, or 64.0%, primarily due to the purchase of 14
facilities and one facility in 2003 and 2002, respectively, that
were previously leased by us and the inclusion of Alterra into
our operations following the Effective Date in December 2003.
Interest income decreased $4.0 million, or 22.0%, primarily
due to the reduction in lease security deposits resulting from
the purchase of 14 facilities and one facility in 2003 and 2002,
respectively, that were previously leased by us.
Interest expense increased $15.6 million, or 164.6%,
primarily due to the financing of the purchase of 14 facilities
and one facility in 2003 and 2002, respectively, that were
previously leased by us and the purchase of three facilities in
November 2002 that were previously managed by us.
65
66
Net cash provided by operating activities for the nine months
ended September 30, 2005 totaled approximately
$7.8 million, compared to approximately $38.4 million
for the nine months ended September 30, 2004, primarily due
to increased facility lease expense related to the Provident
sale-leaseback that occurred in the fourth quarter of 2004
partially offset by reduced interest expense for the properties
related to the Provident sale-leaseback;
Net cash (used in) provided by investing activities for the nine
months ended September 30, 2005 totaled approximately
$(481.3 million) million, compared to approximately
$19.3 million for the nine months ended September 30,
2004, primarily due to the 2005 purchase of the Fortress CCRC
Portfolio and the Prudential Portfolio compared to the 2004 sale
of the Grand Court partnerships facilities, the proceeds
of which were used to repay loans and amounts due from the
partnerships and to pay distributions to the general and limited
partners (of which we owned interests through our investment in
GFB-AS Investors, LLC), and the release of cash from cash and
investments-restricted; and
Net cash (used in) provided by financing activities for the nine
months ended September 30, 2005 totaled approximately
$446.9 million, compared to approximately
$(62.3 million) for the nine months ended
September 30, 2004, primarily due the financing of the
purchase of the Fortress CCRC Portfolio and the Prudential
Portfolio as compared to repayment of outstanding indebtedness
related to the sale of properties in the first quarter of 2004.
Net cash provided by operating activities for the year ended
December 31, 2004 totaled approximately $50.1 million,
compared to approximately $34.1 million for the year ended
December 31, 2003, primarily due to the inclusion of
Alterra into our operations following the Effective Date in
December 2003 and improved operations and partially offset by
the consolidation of five facilities pursuant to FIN 46R,
effective December 31, 2003, that were still in lease up
and generating operating deficits;
Net cash provided by investing activities for the year ended
December 31, 2004 totaled approximately
$524.7 million, compared to approximately
$105.9 million for the year ended
67
December 31, 2003, primarily due to the receipt of proceeds
from the Provident sale-leaseback transaction, partially offset
by the inclusion of Alterra effective December 1, 2003; and
Net cash used in financing activities for the year ended
December 31, 2004 totaled approximately
$544.5 million, compared to approximately
$85.7 million for the year ended December 31, 2003,
primarily due to payment of a dividend of $304.6 million to
our stockholders, of which $254.6 million was paid in
connection with the Provident sale-leaseback in the fourth
quarter 2004, and the repayment of approximately
$312.4 million of outstanding indebtedness.
Net cash provided by operating activities for the year ended
December 31, 2003 totaled approximately $34.1 million,
compared to approximately $39.6 million for the year ended
December 31, 2002, primarily due to the inclusion of
Alterra into our operations following the Effective Date in
December 2003, the purchase of three facilities in November 2002
that were previously managed by us and were still in lease up
and generating operating deficits and additional interest
expense related to stockholder loans;
Net cash provided by (used in) investing activities for the year
ended December 31, 2003 totaled approximately
$105.9 million, compared to approximately
($47.3 million) for the year ended December 31, 2002,
primarily due to the receipt of proceeds from the sale of
properties and additional receipts from cash and
investments-restricted during 2003; and
Net cash (used in) provided by financing activities for the year
ended December 31, 2003 totaled approximately
($85.7 million), compared to approximately
$8.7 million for the year ended December 31, 2002, due
to formation of our joint venture with Northwestern Mutual Life
Insurance Co., or Northwestern, and repayment of outstanding
indebtedness from the sale of two of the facilities to the joint
venture and refinancing of the third facility during 2003.
68
Total
2005
2006
2007
2008
2009
Thereafter
($ in 000s)
$
500,410
$
29,296
$
27,236
$
27,155
$
206,860
$
92,837
$
117,026
348,610
10,002
14,861
14,861
14,861
14,861
279,164
107,615
7,944
7,944
7,944
7,944
7,944
67,895
2,904,284
169,255
173,952
178,088
180,703
183,763
2,018,523
2,546
1,108
956
438
44
$
3,863,465
$
217,605
$
224,949
$
228,486
$
410,412
$
299,405
$
2,482,608
(1)
Includes contractual interest for all fixed-rate obligations and
assumes interest on variable rate instruments at the
December 31, 2004 rate.
(2)
Represents the long-term debt related to the acquisitions of the
Fortress CCRC Portfolio and the Prudential Portfolio.
(3)
Reflects future cash payments after giving effect to lease
escalators and assumes payments on variable rate instruments at
the December 31, 2004 rate.
(4)
Represents minimum purchase commitments pursuant to contracts
with suppliers.
69
70
71
72
73
74
75
Weighted
Average
Expected Maturity Date Year Ended December 31,
Interest
Rate
Total
2005
2006
2007
2008
2009
Thereafter
6.42%
$
24,288
$
176
$
470
$
480
$
6,740
$
16,422
$
8.45%
75,037
333
1,391
1,378
1,570
67,078
3,287
6.615%
105,756
105,756
5.38%
171,000
171,000
9,500
500
2,000
7,000
8.14%
182,000
182,000
11.83%
66,284
66,284
(1
)
12,739
12,739
7.36%
2,555
330
345
385
415
1,080
9.00%
8,826
228
1,129
1,234
6,235
$
657,985
$
1,237
$
5,320
$
10,437
$
302,686
$
83,915
$
254,390
(1)
Payable to the extent of all available net cash flow (as
defined).
provision (benefit) for income taxes;
non-operating (income) loss items;
depreciation and amortization;
straight-line rent expense (income);
amortization of deferred entrance fees;
non-recurring combination expenses, acquisition transition costs
and bonuses in connection with the restricted stock grant paid
and accrued;
and non-cash compensation expense;
entrance fee receipts and refunds.
76
the cash portion of interest expense, income tax (benefit)
provision and non-recurring charges related to gain (loss) on
sale of facilities and extinguishment of debt activities
generally represent charges (gains), which may significantly
affect our financial results; and
depreciation and amortization, though not directly affecting our
current cash position, represent the wear and tear and/or
reduction in value of our facilities, which affects the services
we provide to our residents and may be indicative of future
needs for capital expenditures.
77
changes in operating assets and liabilities;
deferred interest and fees added to principal;
non refundable entrance fees;
entrance fees disbursed;
other;
recurring capital expenditures; and
non-recurring combination, acquisition transition costs and
bonuses in connection with the restricted stock grant paid and
accrued.
78
the cash portion of interest expense, income tax (benefit)
provision and non-recurring charges related to gain (loss) on
sale of facilities and extinguishment of debt activities
generally represent charges (gains), which may
significantly affect our financial results; and
depreciation and amortization, though not directly affecting our
current cash position, represent the wear and tear and/or
reduction in value of our facilities, which affects the services
we provide to our residents and may be indicative of future
needs for capital expenditures.
provision (benefit) for income taxes;
non-operating (income) loss items;
depreciation and amortization;
facility lease expense;
general and administrative expense;
compensation expense;
amortization of deferred entrance fee revenue; and
management fees.
79
interest expense, income tax (benefit) provision and
non-recurring charges related to gain (loss) on sale of
facilities and extinguishment of debt activities generally
represent charges (gains), which may significantly affect our
financial results; and
depreciation and amortization, though not directly affecting our
current cash position, represent the wear and tear and/or
reduction in value of our facilities, which affects the services
we provide to our residents and may be indicative of future
needs for capital expenditures.
80
Independent living
is designed for seniors who choose to
live in an environment surrounded by their peers where they pay
for certain services such as housekeeping, meals and activities
as part of their monthly resident fee, but are generally not
reliant on assistance with activities of daily living, or ADLs,
such as bathing, eating, toileting, transferring and dressing;
some residents however, may contract with outside providers for
those services. Independent living residents tend to move into a
facility by choice, oftentimes to be in a metropolitan area that
is closer to their adult children. According to ASHA, there are
approximately 6,200 independent living facilities nationwide
with approximately 723,300 units.
Assisted living
is designed for seniors who seek housing
with supportive care and services, including assistance with
activities of daily living, memory care and other services (for
example, housekeeping, meals and activities). Assisted living
residents tend to move into a facility both by choice and by
necessity. According to ASHA, there are approximately 7,270
assisted living facilities nationwide with approximately 543,450
beds.
Memory care
is designed for seniors who suffer from
Alzheimers disease or other forms of dementia or memory
impairment. Memory care facilities are designed to provide a
safe and secure physical environment while providing assisted
living services together with programming appropriate to the
needs of those with Alzheimers disease or other forms of
dementia.
Skilled nursing
is designed for seniors whose care needs
require 24-hour skilled nursing services or who are receiving
certain medical services.
Continuing Care Retirement Communities
offer a variety of
living arrangements and services to accommodate residents of
varying levels of physical ability and health. The goal of a
CCRC is to accommodate changing lifestyle preferences and health
care needs. Generally, CCRCs make independent living, assisted
living and skilled nursing available all on one campus location.
An increasing number of seniors with longer life
expectancies and financial resources to support a private pay
model.
According to the U.S. Census Bureau, the
population greater than 65 years old is expected to
increase to approximately 20% of the overall
U.S. population during the next 25 years, from
approximately 12% in 2000. As life expectancy continues to
increase and the elderly continue to become a higher percentage
of
81
the total U.S. population, we believe the demand for
service-based senior housing will increase. In addition, seniors
in the areas in which we operate tend to have a significant
amount of assets generated from savings, pensions and, due to
strong national housing markets, the sale of private homes. We
believe seniors increasingly will have the ability to afford
senior living services.
Fragmentation in the industry provides significant
acquisition and consolidation opportunities.
The senior
living industrys independent living and assisted living
segments are large and fragmented, characterized predominantly
by numerous local and regional operators. According to ASHA and
public filings, the top five operators of senior living
facilities measured by total resident capacity control only 9%
of the total capacity. In addition, according to ASHA, only the
top seven managers operate more than 14,000 senior living
units/beds. We believe that this fragmentation provides
significant acquisition and consolidation opportunities.
Majority of independent and assisted living revenue growth
generated from private pay sources.
Because we generate
over 97% of our revenues from private pay customers, our
resident fees are not constrained by regulatory or other
governmental considerations. Independent and assisted living
services are not generally reimbursable under government
reimbursement programs such as Medicare and Medicaid and thus we
have limited exposure to reimbursement risk.
Favorable and improving supply and demand balance.
We believe that the number of vacant senior living units has
declined steadily over the past several years. According to
ASHA, the number of new senior housing units identified as under
construction has declined approximately 60% from
65,879 units in 1999 to 26,355 units in 2004. Combined
with increasing life expectancies, we believe there is a
favorable and improving supply and demand balance.
82
83
Pro Forma(1)(5)
Three Months
Nine Months
Ended
Ended
Year Ended
September 30,
September 30,
December 31,
2005
2005
2004
($ in millions)
$
209.8
$
619.6
$
790.2
(241.5
)
(664.4
)
(827.3
)
$
(31.7
)
$
(44.8
)
$
(37.1
)
$
(43.1
)
$
(78.7
)
$
(85.2
)
$
(1.7
)
$
18.3
$
28.6
$
75.0
$
222.3
$
279.2
$
21.6
$
58.8
$
60.1
$
7.1
$
15.8
$
4.6
(1)
See Summary Combined Financial Information and
Unaudited Pro Forma Condensed Consolidated Financial
Information for a more detailed description of the
adjustments included in the pro forma results.
(2)
Facility Operating Income is a non-GAAP financial measure we use
in evaluating our performance. See Summary Combined
Financial Information for a description of why we believe
such measure is useful, the material limitations of such measure
and a computation of this measure and Managements
Discussion and Analysis of Financial Condition and Results of
Operations Non-GAAP Financial Measures
Facility Operating Income for a more detailed description
of why we believe such measure is useful and the material
limitations of such measure.
(3)
Adjusted EBITDA is a non-GAAP financial measure we use in
evaluating our performance. See Summary Combined Financial
Information for a description of why we believe such
measure is useful, the material limitations of such measure and
a reconciliation of this measure to net income and
Managements Discussion and Analysis of Financial
Condition and Results of Operations Non-GAAP
Financial Measures Adjusted EBITDA for a more
detailed description of why we believe such measure is useful
and the material limitations of such measure.
(4)
Cash From Facility Operations is a non-GAAP financial measure we
use in evaluating our liquidity. See Summary Combined
Financial Information for a description of why we believe
such measure is useful, the material limitations of such measure
and a reconciliation of this
84
measure to cash flows provided by or used in operations and
Managements Discussion and Analysis of Financial
Condition and Results of Operations Non-GAAP
Financial Measures Cash From Facility
Operations, for a more detailed description of why we
believe such measure is useful and the material limitations of
such measure.
(5)
Included in the pro forma financials are certain historical
facility operating and general and administrative expenses
incurred by the former owners or managers of the Prudential and
Fortress CCRC Portfolios which we will not incur in the future.
See Footnote (7) to 2(C) Acquisitions
Adjustments Statements of Operations on
page F-11. In addition, the pro forma financials exclude
the facility operating and corporate general and administrative
expense reductions that result from signed contracts with
vendors (e.g. food and insurance) and identified corporate
office positions and function to be eliminated or consolidated
as a result of our formation transaction. See Footnote (F)
to Other Adjustments Pro Forma Condensed
Consolidated Statement of Operation on page F-15.
Organic growth in our existing operations.
We plan
to grow our existing operations by:
increasing revenues through a combination of occupancy growth
and resident fee increases as a result of growing demand for
senior living facilities. For the 343 facilities we owned,
leased or managed since 2003 (excluding four development
facilities), for the nine months ended September 30, 2005
our facility operating income has increased approximately 8.2%
on an annualized basis and, including the four development
facilities, our facility operating income has increased
approximately 9.4% on an annualized basis; and
taking advantage of our sophisticated operating and marketing
expertise to retain existing residents and attract new residents
to our facilities. As of September 30, 2005, our facilities
were on average 89.0% occupied.
Growth through operating efficiencies.
We intend
to utilize our expertise and size to capitalize on economies of
scale resulting from our national platform. Our geographic
footprint and centralized infrastructure provide us with a
significant operational advantage over local and regional
operators of senior living facilities. As a result, we are able
to achieve economies of scale with respect to the goods and
services we purchase. In connection with the combination of BLC
and Alterra, we have negotiated new contracts for food,
insurance and other services. In addition, we will reduce the
size of our corporate workforce through a consolidation of
corporate functions such as accounting, finance, human resources
and legal. Collectively, we expect these initiatives to result
in recurring operating and general and administrative expense
savings, net of additional recurring costs expected to be
incurred as a public company, of between approximately
$11.0 million and $13.0 million per year. We began to
realize a portion of these savings prior to the completion of
our formation transactions in September 2005 and expect to
realize the remainder following the combination. See
Managements Discussion and Analysis of Financial
Condition and Results of Operations Formation
Transaction. As we continue to grow both organically and
through acquisitions, we expect to have further opportunities to
realize other synergies and operating efficiencies.
Growth through the acquisition and consolidation of asset
portfolios and other senior living companies.
We plan to
take advantage of the fragmented independent living and assisted
living sectors by selectively purchasing existing operating
companies and facilities. Since January 2001, we have begun
leasing or acquired the ownership or management of 53 senior
living facilities with approximately 11,100 units/beds. In
2005, we acquired the
85
ownership or management of 15 senior living facilities with
4,077 units/beds (including 825 resident-owned cottages on
our CCRC campuses managed by us) and an additional two
facilities with an aggregate of 422 units/beds, which were
sold in the third quarter of 2005, one of which we continue to
manage. Our acquisition strategy will continue to focus
primarily on facilities where we can improve service delivery,
occupancy rates and cash flow. We expect to finance our
acquisitions, on a long-term basis, by using primarily equity
issuances combined with fixed- and floating-rate debt.
Expansion of existing facilities where economically
advantageous.
Certain of our facilities with stabilized
occupancies and excess demand in their respective markets may
benefit from additions and expansions (which additions and
expansions may be subject to landlord, lender and other third
party consents) offering increased capacity, as well as
additional levels of service for residents requiring higher
levels of care. Furthermore, the expansion of existing
facilities allows us to enhance our facility-level return on
investment by increasing the revenue base at a facility with
lower incremental operating costs.
Skilled management team with extensive experience.
Our senior management team has extensive experience in
acquiring, operating and managing a broad range of senior living
assets. Our chairman and top five executive officers have over
115 years of combined experience in the senior living,
hospitality and real estate industries. In addition, as
stockholders, our management team is incentivized to continue to
grow our business. Following this offering, our senior
management team will own approximately 4.4% of our common stock
on a fully diluted basis.
Proven track record of successful acquisitions.
Since January 2001, we have begun leasing or acquired the
ownership or management of 53 senior living facilities with
approximately 11,100 units/beds. Our experience in
acquiring senior living facilities enables us to consider a wide
range of acquisition targets in the senior living industry. In
addition, we believe our expertise in integrating these
facilities onto our operating platform enables us to acquire
facilities while causing minimal disruption to either the
residents or facility operating staff.
High-quality purpose-built facilities.
We operate
a nationwide base of 380 purpose-built facilities in
32 states, including 65 facilities in eight of the top
ten SMSAs. The average age of our facilities is 9.9 years.
We have experienced significant facility operating income growth
and occupancy growth over the past year. Our facility operating
income increased 24%, from $60.3 million for the three
months ended September 30, 2004 to $74.8 million for
the three months ended September 30, 2005, and our
occupancy rate increased 1.6%, from 87.4% as of
September 30, 2004 to 89.0% as of September 30, 2005.
Ability to provide a broad spectrum of care.
Given
our diverse mix of independent and assisted living facilities
and CCRCs, we are able to meet a wide range of our
customers needs. We believe that we are one of the few
companies in the senior living industry with this capability. We
believe that our multiple product offerings create marketing
synergies and cross-marketing opportunities.
The size of our business allows us to realize cost
efficiencies.
We are the third largest operator of
senior living facilities in the United States based on total
capacity. The size of our business allows us to realize cost
savings in the purchasing of goods and services and also allows
us to achieve increased efficiencies with respect to various
corporate functions, most of which have yet to be realized in
our operating results given the recent combination of BLC and
Alterra in September 2005. In addition, our size and broad
geographical footprint gives
86
us an advantage in executing our acquisition strategy. When we
acquire a facility in a location where we already operate, we
are able to integrate the additional facility with limited or no
incremental cost. This allows us to acquire assets more
efficiently and to better compete against other operators for
acquisitions with a more geographically limited presence.
87
(1)
Consists of approximately 22.8% held by FIT-ALT Investor LLC
(FIT-ALT), 34.5% held by Fortress Investment
Trust II (FIT II) and 17.1% held by
Fortress Brookdale Acquisition LLC (FBA). Fortress
Investment Holdings LLC (FIH) has beneficial
ownership of and control over all shares held by such entities
by virtue of the following relationships:
Prior to the combination transaction, Fortress Investment Group
LLC (FIG), a wholly-owned subsidiary of FIH,
controlled each of BLC, Alterra, Fortress CCRC and FIT REN
through its ability to exercise voting, financial and investment
control over, and its economic interest in, each of Fortress
Registered Investment Trust (FRIT) and FIT II,
which are wholly-owned subsidiaries of Fortress Investment Fund
(FIF) and Fortress Investment Fund II
(FIF II), respectively. FRIT owned 50.51% of
FBA, which owned 90.91% of BLC, and FIT II owned 100% of
FIT-ALT, which owned 73.49% of FEBC-ALT Investors LLC, the
indirect parent of Alterra. FIT II also owned 100% of
Fortress CCRC and FIT REN. FIG controls FRIT and
FIT II through contractual control relationships with and
investment advisory control over each of FRIT and FIT II.
Pursuant to various agreements, Fortress Fund MM LLC
(Fund MM) and Fortress Fund MM II LLC
(Fund MM II), as managing member of FIF
and FIF II, respectively, have the full, exclusive
and absolute right, power and authority to manage and
control each of FIF and FIF II, and the
property, assets, affairs and business thereof. In
addition, the formulation of investment policy of
FIF and FIF II is vested exclusively in each of
Fund MM and Fund MM II, and any and all
rights, including voting rights, pertaining to any Portfolio
Investments (as defined in the agreements) may be
exercised only by each of Fund MM and
Fund MM II. In addition, pursuant to these agreements,
the control vested in each of Fund MM and
Fund MM II is irrevocably delegated to FIG, which
serves as the managing member of each of these funds. Finally,
FIG, through its wholly-owned subsidiary, FIG Advisors LLC,
further exercises control over each of FRIT and FIT II in
its capacity as investment advisor to each of these funds.
88
A wholly-owned subsidiary of ours merged with and into BLC. In
connection with the merger, FBA, an affiliate of Capital Z
Partners and certain members of our management, including our
chief executive officer, received an aggregate of
20,000,000 shares of our common stock, representing 34.5%
of our outstanding common stock prior to this offering, for all
of their outstanding common stock of BLC or membership interests
in FBA, as applicable. As a result of the merger, BLC became our
wholly-owned subsidiary.
FEBC-ALT Investors purchased from Fortress Investment
Trust II, an affiliate of Fortress, all of the outstanding
membership interests of FIT REN, which had recently acquired
certain senior living facilities from Prudential Financial,
Inc., as described in Acquisition and History
of Alterra Healthcare Corporation, for an aggregate
purchase price of approximately $282.4 million before
closing costs (including the assumption of approximately
$171.0 million of debt). Immediately after the purchase,
the membership interests of FIT REN were contributed to
Alterra. As a result, FIT REN became a wholly-owned subsidiary
of Alterra and Fortress Investment Trust II became a member
of FEBC-ALT Investors, Alterras indirect parent company.
In connection with the merger of FEBC-ALT Investors described
below, Fortress Investment Trust II received
11,750,000 shares of our common stock, representing 20.3%
of our outstanding common stock prior to this offering, for its
interest in FIT REN.
A wholly-owned subsidiary of ours merged with and into FEBC-ALT
Investors, Alterras indirect parent company. In the
merger, FIT-ALT Investor, Fortress Investment Trust II,
Emeritus, NW Select and certain members of our management, each
of which was a member of FEBC-ALT Investors, received an
aggregate of 29,750,000 shares of our common stock,
representing 51.3% of our outstanding common stock prior to this
offering, for all of the outstanding membership interests of
FEBC-ALT Investors. FIT-ALT Investor and Fortress Investment
Trust II are affiliates of Fortress. As a result of the merger,
Alterra became our wholly-owned subsidiary.
A wholly-owned subsidiary of ours merged with and into Fortress
CCRC. In the merger, Fortress Investment Trust II received
an aggregate of 8,250,000 shares of our common stock,
representing 14.2% of our outstanding common stock prior to this
offering, for all of the outstanding membership interests of
Fortress CCRC. Fortress CCRC owns, through its wholly-owned
subsidiaries, six senior living facilities. As a result of the
merger, Fortress CCRC became our wholly-owned subsidiary.
89
90
91
92
93
94
95
Independent Living Facilities
Assisted Living Facilities
96
Memory Care Facilities
CCRCs
97
98
99
Occupancy
Ownership Status at
at September 30, 2005
September 30, 2005
State
Units/Beds
Occupancy
Leased
Owned
Managed
Total
222
75.2
%
1
1
661
88.8
%
8
1
9
2,031
89.5
%
3
9
12
1,522
88.3
%
16
1
17
292
99.0
%
2
2
3,907
90.8
%
36
9
2
47
280
98.6
%
1
1
228
93.4
%
3
3
2,306
92.1
%
9
2
11
1,150
87.5
%
12
2
14
139
88.5
%
1
1
1,227
86.3
%
11
7
2
20
180
90.6
%
1
1
282
97.2
%
1
1
1,851
87.0
%
25
3
3
31
643
90.2
%
16
16
948
85.5
%
1
2
3
306
98.0
%
3
3
343
87.5
%
6
6
344
95.6
%
2
2
1,196
92.7
%
10
6
16
743
93.9
%
12
1
13
1,657
86.3
%
25
3
28
1,324
81.2
%
27
2
29
823
89.2
%
12
12
541
76.0
%
3
3
1
7
336
86.9
%
8
8
390
95.6
%
5
1
6
2,537
86.4
%
27
3
3
33
353
99.2
%
2
2
864
90.7
%
8
2
10
422
92.2
%
13
2
15
30,048
89.0
%
307
56
17
380
Number of Units/Beds
Independent
Assisted
Memory
Skilled
Equity
Facility Name
Location
Living
Living
Care
Nursing
Homes
Total
Brookdale Living
Communities(1)
Chicago, IL
341
341
New York, NY
197
20
217
Lisle, IL
296
25
321
West Palm Beach, FL
237
64
301
San Jose, CA
291
291
Quincy, MA
282
282
Roswell, GA
224
24
32
280
Overland Park, KS
276
276
Redwood City, CA
177
93
270
Longwood, FL
213
40
16
269
Chicago, IL
220
44
264
100
Number of Units/Beds
Independent
Assisted
Memory
Skilled
Equity
Facility Name
Location
Living
Living
Care
Nursing
Homes
Total
Hoffman Estates, IL
228
34
262
Garland, TX
176
68
16
260
Williamsburg, VA
201
54
255
Des Plaines, IL
226
29
255
Glen Ellyn, IL
190
44
234
Aurora, CO
153
65
218
Richland, WA
128
128
Tacoma, WA
119
119
Kenmore, NY
113
113
Richboro, PA
113
113
Niskayuna, NY
100
100
Medford, OR
95
95
Sparks, NV
90
90
Forest Grove, OR
88
88
McMinnville, OR
87
87
Clinton, NY
84
84
Syracuse, NY
84
84
Boulder, CO
82
82
Boise, ID
80
80
Manlius, NY
80
80
Santa Rosa, CA
250
250
Scotts Valley, CA
126
70
196
Torrance, CA
134
134
Irvine, CA
70
64
134
Anaheim Hills, CA
85
42
127
Rancho Mirage, CA
94
31
125
Santa Monica, CA
50
67
117
Ventura, CA
56
58
114
Monrovia, CA
41
23
64
Jacksonville, FL
364
39
60
60
292
815
Raymore, MO
141
62
50
58
246
557
Colorado Springs, CO
347
86
13
57
59
562
Indianapolis, IN
199
24
60
228
511
San Antonio, TX
162
10
60
232
Des Moines, IA
10
51
24
54
139
(1)
Operate within our Brookdale Living segment.
(2)
Operate within our Alterra segment.
101
102
103
104
105
106
107
108
109
110
111
112
113
114
115
116
117
118
119
120
121
122
123
124
125
126
127
128
129
130
131
132
Name
Age
Position
44
Chairman of the Board of Directors
52
Chief Executive Officer
45
Co-President
52
Co-President
53
Executive Vice President and Chief
Financial Officer
32
Executive Vice President and
Treasurer
53
Executive Vice President, Secretary
and General Counsel
39
Vice Chairman
43
Director
39
Director
47
Director
59
Director
69
Director
133
134
135
reviews the audit plans and findings of our independent
registered public accounting firm and our internal audit and
risk review staff, as well as the results of regulatory
examinations, and tracks managements corrective action
plans where necessary;
reviews our financial statements, including any significant
financial items and/or changes in accounting policies, with our
senior management and independent registered public accounting
firm;
reviews our risk and control issues, compliance programs and
significant tax and legal matters;
has the sole discretion to appoint annually our independent
registered public accounting firm, evaluate its independence and
performance and set clear hiring policies for employees or
former employees of the independent registered public accounting
firm; and
reviews our risk management processes.
reviews the performance of our board of directors and makes
recommendations to the board regarding the selection of
candidates, qualification and competency requirements for
service on the board and the suitability of proposed nominees as
directors;
136
advises the board with respect to the corporate governance
principles applicable to Brookdale; and
oversees the evaluation of the board and Brookdales
management.
reviews and recommends to the board the salaries, benefits and
stock option and other equity-related grants for all employees,
consultants, officers, directors and other individuals we
compensate;
reviews and approves corporate goals and objectives relevant to
Chief Executive Officer compensation, evaluates the Chief
Executive Officers performance in light of those goals and
objectives, and determines the Chief Executive Officers
compensation based on that evaluation; and
oversees our compensation and employee benefit and incentive
compensation plans.
Annual Compensation
Other Annual
All Other
Fiscal
Salary
Bonus
Compensation
Compensation(1)
Name and Principal Position
Year
($)
($)
($)
($)
2004
390,150
774,588
3,250
2004
395,186
318,800
27,050
(2)
2004
364,140
774,588
3,250
2004
260,100
649,776
3,250
2004
215,922
115,900
2,050
2004
255,000
316,319
(1) | Unless indicated otherwise, represents the employer matching contribution to the 401(k) plan. |
(2) | Representing a contribution of $25,000 in the form of premiums for a split dollar life insurance policy and $2,050 as the employer matching contribution to the 401(k) plan. |
137
138
Mark W. Ohlendorf
|
1.67 | % | ||
Kristin A. Ferge
|
0.63 | % |
139
140
221.1
221.1
189.5
94.7
141
142
143
144
Annual Base
Target
Name/ Title
Salary
Bonus
$
200,000
$
200,000
$
200,000
$
300,000
$
200,000
$
200,000
$
175,000
$
150,000
$
175,000
$
150,000
$
150,000
$
100,000
145
146
so long as the Fortress Stockholders beneficially own
(i) more than 50% of the voting power of the Company, four
directors designated by FIG Advisors LLC, an affiliate of
Fortress (FIG Advisors), or such other party
designated by Fortress; (ii) between 25% and 50% of the
voting power of the Company, three directors designated by FIG
Advisors; (iii) between 10% and 25% of the voting power of
the Company, two directors designated by FIG Advisors; and
(iv) between 5% and 10% of the voting power of the Company,
one director designated by FIG Advisors; and
so long as the HP Stockholders beneficially own more than 5% of
the voting power of the Company, one director designated by
Health Partners.
147
148
149
150
151
152
153
Shares
Shares
Beneficially
Beneficially
Owned Before
Owned After
Offering
Offering
Shares
Number
Being
Number
Name of Beneficial Owner
of Shares(2)
Percent
Offered
of Shares
Percent
43,157,000
74.4
%
43,157,000
66.5
%
690,829
1.2
%
690,829
1.1
%
300,000
*
300,000
*
442,106
*
442,106
*
378,939
*
378,939
*
189,479
*
189,479
*
112,500
*
112,500
*
*
7,844,625
13.5
%
7,844,625
12.1
%
*
*
*
53,115,478
91.6
%
53,115,478
81.8
%
43,157,000
74.4
%
43,157,000
66.5
%
7,844,625
13.5
%
7,844,625
12.1
%
2,086,000
3.6
%
2,086,000
2,086,000
3.6
%
2,086,000
*
|
Less than 1% | |
(1)
|
The address of each officer or director listed in the table below, except Mark W. Ohlendorf and Kristin A. Ferge, is: c/o Brookdale Senior Living Inc., 330 North Wabash, Suite 1400, Chicago, Illinois 60611. The address of Mark W. Ohlendorf and Kristin A. Ferge is c/o Brookdale Senior Living Inc., 6737 W. Washington St., Suite 2300, Milwaukee, Wisconsin 53214. | |
(2)
|
Consists of shares held, including restricted shares. | |
(3)
|
Includes 13,228,000 shares held by FIT-ALT Investor LLC, 20,000,000 shares held by Fortress Investment Trust II and 9,929,000 shares held by Fortress Brookdale Acquisition LLC. FIT-ALT Investor LLC is a wholly-owned subsidiary of Fortress Investment Trust II, which is a wholly-owned subsidiary of Fortress Investment Fund II LLC. Fortress Investment Fund II LLC is managed by its managing member, Fortress Fund MM II LLC, which is managed by its managing member Fortress Investment Group LLC. Fortress Brookdale Acquisition LLC is majority owned by Fortress Registered Investment Trust, which is 100% owned by Fortress Investment Fund LLC. Fortress Investment Fund LLC is managed by its managing member, Fortress Fund MM LLC, which is managed by its managing member Fortress Investment Group LLC. Fortress Investment Group LLC is 100% owned by Fortress Investment Holdings LLC. Fortress Investment Holdings LLC is an entity that is owned by certain individuals, including Wesley R. Edens, our Chairman of the board. By virtue of his ownership interests in Fortress Investment Holdings LLC, Mr. Edens may be deemed to beneficially own the shares listed as beneficially owned by Fortress Investment Holdings LLC. Mr. Edens disclaims beneficial ownership of such shares. | |
(4)
|
The address of Fortress Investment Holdings LLC is 1251 Avenue of the Americas, 16th Floor, New York, New York 10020. The address of Health Partners is c/o Capital Z Management, LLC, 54 Thompson Street, New York, New York 10012. | |
(5)
|
Bradley E. Cooper, who is one of our directors, is a shareholder of Capital Z Partners, Ltd., the ultimate general partner of Capital Z Financial Services Fund II, L.P., which is the managing partner of Health Partners. Mr. Cooper owns 5.7% of the voting capital stock of Capital Z Partners, Ltd. Mr. Cooper disclaims beneficial ownership of all shares of our common stock that are beneficially owned by Capital Z. | |
(6)
|
Consists of 7,844,625 shares held by Health Partners. Health Partners is managed by its managing partner, Capital Z Financial Services Fund II, L.P. Capital Z Partners Ltd. is the general partner of Capital Z Financial Services Fund II, L.P. Bob Spass, Bradley E. Cooper and Mark Gormley are shareholders of Capital Z Partners, Ltd. By virtue of their ownership interests in Capital Z Partners, Ltd., Messrs. Spass, Cooper, and Gormley may be deemed to beneficially own the shares listed as beneficially owned by Health Partners. | |
(7)
|
The address of Emeritus Corporation is 3131 Elliot Avenue, Suite 500, Seattle, Washington 98121. The address of NW Select LLC is 600 University Street, Suite 2500, Seattle, Washington 98101. | |
(8)
|
Consists of 2,086,000 shares held by Emeritus Corporation. Daniel R. Baty is the chairman and chief executive officer of Emeritus Corporation and beneficially owns 28.5% of Emeritus Corporation common stock. By virtue of his positions with and ownership interest in Emeritus Corporation, Mr. Baty may be deemed to beneficially own the shares listed as beneficially owned by Emeritus Corporation. | |
(9)
|
Consists of 2,086,000 shares held by NW Select LLC. NW Select LLC is managed by its managing member, Daniel R. Baty. By virtue of his management control of NW Select LLC, Mr. Baty may be deemed to beneficially own the shares listed as beneficially owned by NW Select LLC. |
154
155
156
157
158
159
160
161
162
200,000,000 shares of common stock, par value
$0.01 per share; and
50,000,000 shares of preferred stock, par value
$0.01 per share.
163
restricting dividends in respect of our common stock;
diluting the voting power of our common stock or providing that
holders of preferred stock have the right to vote on matters as
a class;
impairing the liquidation rights of our common stock; or
delaying or preventing a change of control of Brookdale.
164
any breach of the directors duty of loyalty to us or our
stockholders;
intentional misconduct or a knowing violation of law;
liability under Delaware corporate law for an unlawful payment
of dividends or an unlawful stock purchase or redemption of
stock; or
any transaction from which the director derives an improper
personal benefit.
165
166
167
1% of the total number of such issuers shares of common
stock then outstanding, which, in our case, will equal
approximately 649,000 shares immediately after this
offering; or
the average weekly trading volume of the common stock on the New
York Stock Exchange during the four calendar weeks preceding the
filing of notice on Form 144 with respect to the sale
168
dealers in securities or currencies;
financial institutions;
regulated investment companies;
real estate investment trusts;
tax-exempt entities;
insurance companies;
persons holding common stock as part of a hedging, integrated,
conversion or constructive sale transaction or a straddle;
traders in securities that elect to use a mark-to-market method
of accounting for their securities holdings;
persons liable for alternative minimum tax;
U.S. expatriates;
partnerships or entities or arrangements treated as a
partnership or other pass-through entity for U.S. federal
tax purposes (or investors therein); or
U.S. Holders (as defined below).
a citizen or an individual resident of the United States;
a corporation (or other entity taxable as a corporation) created
or organized in or under the laws of the United States or any
state thereof or the District of Columbia;
an estate, the income of which is subject to U.S. federal
income taxation regardless of its source; or
a trust if it (i) is subject to the primary supervision of
a court within the United States and one or more
U.S. persons have the authority to control all substantial
decisions of the trust, or (ii) has a valid election in
effect under applicable U.S. Treasury regulations to be
treated as a U.S. person.
169
Dividends
Sale, Exchange or Other Taxable Disposition of Common
Stock
the gain is effectively connected with your conduct of a trade
or business in the United States, or, if certain tax treaties
apply, is attributable to a permanent establishment you maintain
in the United States;
if you are an individual and hold shares of our common stock as
a capital asset, you are present in the United States for 183 or
more days in the taxable year of the sale, exchange or other
taxable disposition, and you have a tax home in the
United States; or
170
we are or have been a United States real property holding
corporation for U.S. federal income tax purposes at
any time during the shorter of the five-year period preceding
such disposition and your holding period in the common stock,
and (i) you beneficially own, or have owned, more than 5%
of the total fair market value of our common stock at any time
during the five-year period preceding such disposition, or
(ii) our common stock has ceased to be traded on an
established securities market prior to the beginning of the
calendar year in which the sale or disposition occurs.
U.S. Federal Estate Tax
Information Reporting and Backup Withholding
If the proceeds are paid to or through the U.S. office of a
broker (U.S. or foreign), they generally will be subject to
backup withholding and information reporting, unless you certify
that you are not a U.S. person under penalties of perjury
(usually on an IRS Form W-8BEN) or otherwise establish an
exemption;
If the proceeds are paid to or through a non-U.S. office of
a broker that is not a U.S. person and is not a foreign
person with certain specified U.S. connections, or a
U.S. Related Person, they will not be subject to backup
withholding or information reporting; and
If the proceeds are paid to or through a non-U.S. office of
a broker that is a U.S. person or a U.S. Related
Person, they generally will be subject to information reporting
(but not backup withholding), unless you certify that you are
not a U.S. person under penalties of perjury (usually on an
IRS Form W-8BEN) or otherwise establish an exemption.
171
Underwriters
Number of Shares
Paid by the Company | No Exercise | Full Exercise | ||||||
Per Share
|
$ | $ | ||||||
Total
|
$ | $ |
Paid by the Selling Stockholders | No Exercise | Full Exercise | ||||||
Per Share
|
$ | $ | ||||||
Total
|
$ | $ |
172
173
174
175
176
F-2
F-3
F-4
F-5
F-6
F-7
F-19
F-20
F-21
F-36
F-37
F-38
F-39
F-40
F-44
F-75
F-76
F-77
F-78
F-79
F-81
F-88
F-89
F-90
F-91
F-92
F-94
F-99
F-100
F-101
F-102
F-103
F-105
F-1
F-2
pro forma adjustments to give effect to the Provident
sale-leaseback and Ventas operating lease on the combined
statement of operations as if these transactions closed on
January 1, 2004;
pro forma adjustments to give effect to the refinancing of five
facilities, tax effect of the purchase of four of these
facilities and termination of forward interest rate swaps as if
these transactions closed on January 1, 2005 and 2004;
pro forma adjustments to give effect to the Fortress CCRC
Portfolio and the Prudential Portfolio acquisitions on the
combined statements of operations as if these transactions
closed on January 1, 2004;
pro forma adjustment to give effect to the September 30,
2005 step-up in basis of non-controlling ownership (ownership
interests not controlled or owned by affiliates of Fortress
Investment Group LLC, Minority Shareholders) due to
the exchanges of Brookdale Facility Group minority ownership for
Company ownership as if the transaction was completed on
January 1, 2004;
pro forma adjustment to give effect to the compensation expense
in connection with the grants under the restricted stock plan;
incremental general and administrative expenses related to
operating as a public company; and
our initial public offering, repayment of indebtedness and other
use of proceeds.
Brookdale
Initial
Pro
Senior
Other
Public
Forma, as
Living
Adjustments
Pro Forma
Offering(D)
Adjusted
$
59,751
$
(14,355
)(M)
$
45,396
$
40,230
$
85,626
43,076
43,076
43,076
11,540
11,540
11,540
16,623
16,623
16,623
130,990
(14,355
)
116,635
40,230
156,865
1,193,878
1,193,878
20,700
1,214,578
25,211
25,211
(1,000
)
24,211
13,929
13,929
13,929
6,582
6,582
6,582
78,106
78,106
1,006
79,112
$
1,448,696
$
(14,355
)
$
1,434,341
$
60,936
$
1,495,277
$
5,247
$
$
5,247
$
(1,796
)
$
3,451
7,445
7,445
7,445
25,257
25,257
25,257
132,535
(14,355
)(M)
118,180
118,180
170,484
(14,355
)
156,129
(1,796
)
154,333
586,454
586,454
(45,950
)
540,504
66,284
66,284
66,284
66,552
66,552
66,552
25,126
25,126
25,126
39,334
39,334
(1,222
)
38,112
954,234
(14,355
)
939,879
(48,968
)
890,911
494,462
494,462
109,904
604,366
$
1,448,696
$
(14,355
)
$
1,434,341
$
60,936
$
1,495,277
F-3
Brookdale
Historical
Facility
Brookdale
Group
Initial
Facility
Transaction
Other
Public
Pro Forma,
Group
Adjustments
Acquisitions
Pro Forma
Offering
as
(A)
(B)
(C)
Adjustments
Pro Forma
(D)
Adjusted
$
657,327
$
9,760
$
118,712
$
$
785,799
$
$
785,799
3,545
648
250
(I)
4,443
4,443
660,872
10,408
118,712
250
790,242
790,242
415,169
5,968
83,508
(F)
504,645
504,645
43,640
6,799
2,476
(F)(G)
52,915
52,915
5,028
(H)
5,028
5,028
99,997
80,382
1,008
181,387
4,058
185,445
52,307
(25,039
)
29,623
1,000
(E)
57,891
21,385
79,276
611,113
61,311
120,938
8,504
801,866
25,443
827,309
49,759
(50,903
)
(2,226
)
(8,254
)
(11,624
)
(25,443
)
(37,067
)
637
1,515
(K)
2,152
2,152
(55,851
)
30,389
(16,196
)
(83
)(E)
(41,741
)
3,982
(37,759
)
(7,783
)
(7,783
)
(7,783
)
3,176
(3,176
)(J)
1,051
(788
)(E)
263
263
(931
)
(931
)
(931
)
(114
)
(114
)
(114
)
(10,056
)
(20,514
)
(18,422
)
(10,786
)
(59,778
)
(21,461
)
(81,239
)
(11,111
)
7,190
(L)
(3,921
)
(3,921
)
(21,167
)
(13,324
)
(18,422
)
(10,786
)
(63,699
)
(21,461
)
(85,160
)
11,734
11,734
(11,734
)
$
(9,433
)
$
(13,324
)
$
(18,422
)
$
(10,786
)
$
(51,965
)
$
(33,195
)
$
(85,160
)
60,877
60,877
64,900
$
(1.40
)
$
(1.40
)
$
(1.31
)
F-4
Historical
Brookdale
Other
Initial
Facility
Pro Forma
Public
Pro Forma,
Group(A)
Acquisitions(C)
Adjustments
Pro Forma
Offering(D)
as Adjusted
$
208,371
$
338
$
$
208,709
$
$
208,709
988
63
(M)
1,051
1,051
209,359
338
63
209,760
209,760
133,568
156
(F)
133,724
133,724
19,879
619
(F),(G)
20,498
20,498
9,088
9,695
(H)
18,783
18,783
47,259
83
47,342
958
48,300
15,058
(275
)
(E)
14,783
5,362
20,145
224,852
(36
)
10,314
235,130
6,320
241,450
(15,493
)
374
(10,251
)
(25,370
)
(6,320
)
(31,690
)
825
587
(K)
1,412
1,412
(10,802
)
17
189
(E)
(10,596
)
1,003
(9,593
)
(2,324
)
(2,324
)
(2,324
)
(67
)
67
(J)
(196
)
(196
)
(196
)
(28,057
)
391
(9,408
)
(37,074
)
(5,317
)
(42,391
)
(748
)
(L)
(748
)
(748
)
(28,805
)
391
(9,408
)
(37,822
)
(5,317
)
(43,139
)
10,486
10,486
(10,486
)
$
(18,319
)
$
391
$
(9,408
)
$
(27,336
)
$
(15,803
)
$
(43,139
)
60,877
60,877
64,900
$
(0.71
)
$
(0.71
)
$
(0.66
)
F-5
Historical
Brookdale
Other
Initial
Facility
Pro Forma
Public
Pro Forma,
Group(A)
Acquisitions(C)
Adjustments
Pro Forma
Offering(D)
as Adjusted
$
574,855
$
41,883
$
$
616,738
$
$
616,738
2,675
188
(I)
2.863
2,863
577,530
41,883
188
619,601
619,601
366,782
27,648
(F)
394,430
394,430
42,860
2,558
1,857
(F),(G)
47,275
47,275
9,088
12,209
(H)
21,297
21,297
140,852
583
141,435
2,874
144,309
30,861
10,149
41
(E)
41,051
16,039
57,090
590,443
40,938
14,107
645,488
18,913
664,401
(12,913
)
945
(13,919
)
(25,887
)
(18,913
)
(44,800
)
2,200
1,760
(K)
3,960
3,960
(26,564
)
(6,016
)
811
(E)
(31,769
)
3,005
(28,764
)
(6,875
)
(6,875
)
(6,875
)
4,080
(4,080
)(J)
(453
)
(172
)(E)
(625
)
(625
)
(641
)
(641
)
(641
)
(41,166
)
(5,071
)
(15.600
)
(61,837
)
(15,908
)
(77,745
)
(933
)
(L)
(933
)
(933
)
(42,099
)
(5,071
)
(15.600
)
(62,770
)
(15,908
)
(78,678
)
15,956
15.956
(15,956
)
$
(26,143
)
$
(5,071
)
$
(15.600
)
$
(46,814
)
$
(31,864
)
$
(78,678
)
60,877
60,877
64,900
$
(1.29
)
$
(1.29
)
$
(1.21
)
F-6
F-7
1.
Basis of Presentation
2.
Adjustments to Pro Forma Condensed Consolidated Balance Sheet
and Statement of Operations
(A)
Historical Financial Statements
(B)
Brookdale Facility Group Transaction Adjustments
(C)
Acquisitions Adjustments
Fortress CCRC Portfolio(4)
Prudential Portfolio(4)
Pro Forma
Pro Forma
Historical(1)
Adjustments
Net
Historical(1)
Adjustments
Net
Total
$
83,206
$
(11,861
)(2)
$
71,345
$
47,367
$
$
47,367
$
118,712
83,206
(11,861
)
71,345
47,367
47,367
118,712
68,079
(11,108
)(2)
56,971
26,537
26,537
83,508
3,467
3,467
3,332
3,332
6,799
(7)
1,008
1,008
1,008
7,885
8,020
15,905
5,087
8,631
13,718
29,623
(8)
9,063
(9,063
)(5)
88,494
(12,151
)
76,343
35,964
8,631
44,595
120,938
(5,288
)
290
(4,998
)
11,403
(8,631
)
2,772
(2,226
)
3,389
(3,389
)(5)
1,590
(1,590
)(5)
75
(75
)(5)
(5,329
)
(1,667
)(6)
(6,996
)
(4,827
)
(4,373
)
(9,200
)(6)
(16,196
)(6)
(2,090
)
2,090
(5)
(290
)
290
(5)
$
(7,943
)
$
(4,051
)
$
(11,994
)
$
6,576
$
(13,004
)
$
(6,428
)
$
(18,422
)
$
$
$
$
338
$
$
338
$
338
338
338
338
156
156
156
83
83
83
(7)
(275
)
(275
)
(275
)(8)
239
(275
)
(36
)
(36
)
99
275
374
374
17
17
17
(6)
99
292
391
391
F-8
Fortress CCRC Portfolio(4)
Prudential Portfolio(4)
Pro Forma
Pro Forma
Historical(1)
Adjustments
Net
Historical(1)
Adjustments
Net
Total
20,266
(1,908
)(2)
18,358
23,525
23,525
41,883
20,266
(1,908
)
18,358
23,525
23,525
41,883
16,574
(1,986
)(2)
14,588
14,210
(1,150
)(3)
13,060
27,648
868
868
1,690
1,690
2,558
(7)
500
83
583
583
1,990
1,733
3,723
2,396
4,030
6,426
10,149
(8)
19,432
(253
)
19,179
18,796
2,963
21,759
40,938
834
(1,655
)
(821
)
4,729
(2,963
)
1,766
945
71
(71
)(5)
455
(455
)(5)
(158
)
158
(5)
(1,013
)
(620
)(6)
(1,633
)
(2,715
)
(1,668
)(6)
(4,383
)
(6,016
)(6)
(675
)
675
(5)
123,678
(123,678
)(5)
(72
)
72
(5)
$
(558
)
$
(1,896
)
$
(2,454
)
$
125,692
$
(128,309
)
$
(2,617
)
$
(5,071
)
(1) | Represents the historical operations at all eight Fortress CCRC Portfolio facilities purchased in April and May 2005 and eight Prudential Portfolio facilities purchased in June and July 2005 for the periods presented. See the historical financial statements included elsewhere in the Registration Statement. | |
(2) | Represents the historical property revenue and facility operating expenses for the two Fortress CCRC Portfolio facilities (Heritage Crossings and Heatherwood Village) that were sold in the third quarter of 2005 by the Brookdale Facility Group. | |
F-9
(3)
Represents non-recurring operating expenses such as incentive
bonus payments and professional fees that were incurred in the
first and second quarter of 2005 as results of the sale of the
facilities:
Nine Months
Ended
September
30, 2005
$
14,210
(1,150
)
$
13,060
(4) | See the historical financial statements of Fortress CCRC Portfolio and Prudential Portfolio included elsewhere in the prospectus. Revenue and operating expenses for these facilities subsequent to their purchase are included in the combined financial statements of Brookdale Facility Group. | |
(5) | Reflects historical operations that would not be consistent for our ownership for the year ended December 31, 2004 and the three and nine months ended September 30, 2005, including the permanent impairment charge recognized by the prior owner of the Fortress CCRC Portfolio (impairment was recognized based upon FIGs offer to purchase the facilities and the related purchase price); contributions and deferred gifts since we are not a non-profit entity, investment income and net unrealized and realized gains (losses) on investments since we did not purchase the investments, amortization of deferred financing costs related to the prior owners debt, and gain on sale of real estate recognized by the prior owner of the Prudential Portfolio related to FIGs purchase of the facilities. | |
(6) | The following represents the additional costs of the Acquisition facilities under our ownership: |
F-10
Nine Months
Three Months
Year Ended
Ended
Ended
December 31,
September 30,
September 30,
2004
2005
2005
(7) General and Administrative
Expense:
The pro forma statements of
operations reflect actual general and administrative expense
(management fees) under prior owner. Brookdale Facility Group
did not hire any management or any corporate employees from the
prior owner. We hired new employees for both the Fortress CCRC
Portfolio and Prudential Portfolio subsequent to their purchase.
As a result, general and administrative expenses are expected to
be reduced significantly for the Fortress CCRC Portfolio and
Prudential Portfolio under our ownership and management. Our
estimated expenses will primarily consist of additional salaries
and wages for new employees as follows:
Fortress CCRC Portfolio
$
1,300
$
325
$
Prudential Portfolio
700
350
$
2,000
$
625
$
(8) Depreciation and
Amortization Expense:
Reflects depreciation and amortization expense on the purchase of the Fortress CCRC Portfolio and Prudential Portfolio, based on the purchase price allocation as follows: |
Nine Months | Three Months | |||||||||||||||||||
Year Ended | Ended | Ended | ||||||||||||||||||
Estimated | December 31, | September 30, | September 30, | |||||||||||||||||
Amount | Life | 2004 | 2005(b) | 2005(b) | ||||||||||||||||
Land
|
$ | 58.3 million | n/a | $ | | $ | | $ | | |||||||||||
Building and improvements
|
$ | 390.8 million | 40 years | 9,769 | 3,493 | (236 | ) | |||||||||||||
Furniture, fixtures and equipment
|
$ | 8.6 million | 7 years | 1,234 | 387 | (39 | ) | |||||||||||||
Lease Intangible(a)
|
$ | 18.0 million | 1 year | 18,000 | 6,058 | | ||||||||||||||
Amortization of deferred costs
|
620 | 211 | | |||||||||||||||||
$ | 29,623 | $ | 10,149 | $ | (275 | ) | ||||||||||||||
(a) | Reflects purchase price allocated to in-place tenant leases at each of the acquired facilities based upon a vacancy component. Purchase price allocated represent the fair value assigned to the in place leases at date of acquisition. We typically do not pay commissions or provide incentives in leasing our units. The individual leases were considered at market rate due to the short-term nature (one year or less in duration). |
F-11
(b)
Depreciation expense adjustment is net of amounts recorded in
the combined historical financial statements of Brookdale
Facility Group.
(D)
Initial Public Offering Adjustments
$
199,296
(75,096
)
(14,296
)
109,904
(60,746
)
(2,228
)
$
(20,700
)
13,000
1,000
(6,700
)
(69,674
)
$
40,230
(1) | The amount is classified into two accounts in the condensed consolidated balance sheet: Other Assets for $1,006 representing payments made by the lessor pursuant to the case that will be deferred and amortized by us and Other Liabilities for $1,222 representing repayment of funds advanced to us. | |
(2) | The mortgage and other debt is classified as follows in the condensed consolidated balance sheet: |
Retired debt
|
$ | (60,746 | ) | ||
Estimated new debt
|
13,000 | ||||
Net retired debt
|
(47,746 | ) | |||
Less-current portion retired
|
1,796 | ||||
Long-term debt retired
|
$ | (45,950 | ) | ||
In connection with our offering, Brookdale Facility Group was contributed to the Company on September 30, 2005 with affiliates of FIG and the Minority Shareholders receiving common stock of the Company as follows: |
Brookdale
|
20,000,000 | |||
Alterra
|
18,000,000 | |||
Fortress CCRC Portfolio
|
8,250,000 | |||
Prudential Portfolio
|
11,750,000 |
F-12
(D)
Initial Public Offering
Adjustments Statements of Operations
Nine Months
Three Months
Ended
Ended
Year Ended
September 30,
September 30,
December 31, 2004
2005
2005
Reflects net reduction in actual
historical lease expense from our offering related transactions:
$
(1,528
)
$
(1,308
)
$
(436
)
(351
)
(266
)
(89
)
706
525
175
5,231
3,923
1,308
$
4,058
$
2,874
$
958
Amount | ||||||||||||||||||||||||||||
Minority | Nine Months | Three Months | ||||||||||||||||||||||||||
Purchased | Shareholders | Year Ended | Ended | Ended | ||||||||||||||||||||||||
Leased | Interest | Estimated | December 31, | September 30, | September 30, | |||||||||||||||||||||||
Facilities | Adjustment(4) | Total | Life | 2004(3) | 2005(3) | 2005(3) | ||||||||||||||||||||||
Land
|
$ | 1,976 | $ | 2,206 | $ | 4,182 | N/A | $ | | $ | | $ | | |||||||||||||||
Buildings and improvements
|
17,196 | 18,242 | 35,438 | 40 years | 886 | 665 | 222 | |||||||||||||||||||||
Furniture, fixtures and equipment
|
593 | 2,939 | 3,532 | 7 years | 504 | 378 | 126 | |||||||||||||||||||||
Lease intangibles(1)
|
935 | 6,459 | 7,394 | 1 year | 7,394 | 5,546 | 1,849 | |||||||||||||||||||||
Operating lease costs(2)
|
| 134,396 | 134,396 | (2 | ) | 8,928 | 6,694 | 2,255 | ||||||||||||||||||||
Alterra Minority Adjustment(3)
|
| | | | 4,217 | 3,163 | 1,054 | |||||||||||||||||||||
Other
|
| | | N/A | (544 | ) | (407 | ) | (144 | ) | ||||||||||||||||||
$ | 20,700 | $ | 164,242 | $ | 184,942 | $ | 21,385 | $ | 16,039 | $ | 5,362 | |||||||||||||||||
(1) | Reflects costs allocated to in-place tenant leases of each facility based upon a vacancy component. Costs allocated represent the fair value assigned to the in-place leases at the date of acquisition. We typically do not pay commissions or provide incentives in leasing our units. The individual leases were considered at market due to their short-term nature (one year or less in duration). |
F-13
(2)
Reflects costs allocated to the facilities we operate under
long-term operating leases. Fair value was determined based on
discounted future cash flows for the initial term of each lease.
Costs are amortized over the term of the lease.
(3)
In June 2005, Fortress purchased 50% of a Minority
Shareholders ownership in Alterra. The purchase adjustment
has been reflected in the historical financial statements from
the date of purchase. The adjustment represents depreciation
expense for periods prior to the purchase based upon building
and improvements of $8,075, furniture and equipment of $1,258,
lease intangibles of $1,675 and operating leases of $30,055 over
the estimated lives described above.
(4)
Reflects the amounts recorded in the Companys historical
consolidated balance sheet as of September 30, 2005,
related to the value of common stock issued to the Minority
Shareholders for their contributed interest in the Brookdale
Facility Group. See note 1 to the historical financial
statements of Brookdale Senior Living Inc.
Nine Months
Three Months
Year Ended
Ended
Ended
Effective
December 31,
September 30,
September 30,
Amount
Rate
2004
2005
2005
Retirement of existing debt
$
60,746
7.53
%
$
4,717
$
3,556
$
1,186
$
13,000
5.65
%
(735
)
(551
)
(183
)
$
3,982
$
3,005
$
1,003
(D) | Other Adjustments Statements of Operations |
(E) Reflects net interest expense in connection with the refinancing of facilities that closed December 2004 and March 30, 2005, respectively, interest rate swaps that closed March 2005 and elimination of other interest: |
Nine Months | Three Months | |||||||||||||||||||
Year Ended | Ended | Ended | ||||||||||||||||||
Effective | December 31, | September 30, | September 30, | |||||||||||||||||
Amount | Rate | 2004 | 2005 | 2005 | ||||||||||||||||
New mortgage loans
|
$ | 182.0 million | 8.15% | (1) | $ | (14,823 | ) | $ | (3,706 | ) | $ | | ||||||||
Mortgage loans repaid
|
$ | 178.8 million | 9.61% | 17,189 | 4,404 | | ||||||||||||||
Additional interest expense on
refinancing and interest rate swap that closed December 2004 and
March 2005, respectively
|
(2,449 | ) | (325 | ) | | |||||||||||||||
Other
|
| 438 | 189 | |||||||||||||||||
$ | (83 | ) | $ | 811 | $ | 189 | ||||||||||||||
F-14
Nine Months
Three Months
Year Ended
Ended
Ended
Effective
December 31,
September 30,
September 30,
Amount
Rate
2004
2005
2005
$
(788
)
$
(172
)
$
$
1,000
$
41
$
(1) | Reflects interest rate under terms of a swap agreement. |
Nine Months | Three Months | |||||||||||||||||||
Year Ended | Ended | Ended | ||||||||||||||||||
December 31, | September 30, | September 30, | ||||||||||||||||||
2004 | 2005 | 2005 | ||||||||||||||||||
(F) Reflects operating and general and administrative expense reductions not included in the accompanying unaudited pro forma condensed consolidated financial statements: | ||||||||||||||||||||
Operating expense reductions as a result of signed contracts with vendors such as food and insurance | $ | (8,747 | ) | $ | (6,560 | ) | $ | (2,187 | ) | |||||||||||
General and administrative expense reductions as a result of identified corporate office positions and function to be eliminated or consolidated and signed information technology contracts | (5,135 | ) | (3,851 | ) | (1,284 | ) | ||||||||||||||
$ | (13,882 | ) | $ | (10,411 | ) | $ | (3,471 | ) | ||||||||||||
F-15
Nine Months
Three Months
Year Ended
Ended
Ended
December 31,
September 30,
September 30,
2004
2005
2005
(G) Reflects general and
administration expense expected to be incurred to operate as a
public company including salaries, wages and benefits for
additional staff, professional fees and other corporate level
activity. Such amounts are based on estimates of staffing levels
and services from third parties or quotes from our vendors. We
have included a pro forma adjustment as our best estimate of
these additional costs
$
2,476
$
1,857
$
619
(H) Reflects compensation
expense in connection with grants under the Restricted Stock
Plan. Certain executives of Brookdale and Alterra were granted
shares or member interests that will be converted to
2.5 million shares of the Companys common stock upon
completion of the merger. The shares initially vested on the
grant date (August 2005) in the range of 0-50% for a total
of 973,684 shares subject to the employees remaining
continuously employed through our offering and the remaining
1,551,721 shares will vest over a five-year period following the
offering. The estimated compensation expense to be recognized on
the vested shares of $17.5 million based on an initial
value of $18.00 per share (mid-point of the offering range per
share) is recorded as compensation expense from the date of
grant to the expected initial public offering date (estimated to
be in the fourth quarter 2005). For the three and nine months
ended September 30, 2005, the Company recognized
$9.1 million of compensation expense for the initial vested
shares. Actual compensation expense will be adjusted based on
the actual offering price.
Additional compensation
expense for initial grant
$
$
8,438
$
8,438
Annual compensation
expense for the remaining shares to vest, recognized on a
straight-line basis (five year vesting period), net
of estimated forfeitures
5,028
3,771
1,257
Total
compensation expense
$
5,028
$
12,209
$
9,695
F-16
Nine Months
Three Months
Year Ended
Ended
Ended
December 31,
September 30,
September 30,
2004
2005
2005
(I) Reflects estimated
management fees for managing one Fortress CCRC Portfolio
facility sold July 1, 2005 and now under a management
agreement. Fee is based on 5% of gross revenues and entrance fee
receipts.
$
250
$
188
$
63
(J) Reflects elimination of
change in fair value of derivatives for forward interest rate
swaps terminated and replaced by new interest rate swaps on
March 30, 2005 (note (E))
$
(3,176
)
$
(4,080
)
$
67
(K) Reflects estimated
additional interest income from cash and cash equivalents and
cash and investments restricted held in interest
bearing accounts pursuant to the terms of the related
agreement.
$
1,515
$
1,760
$
587
(L) The net effect of the
acquisition, initial public offering and other pro forma
adjustments results in additional losses for GAAP purposes. The
net effect of these losses would result in no tax provision
(benefit) as all losses would be included in the valuation
allowance as we are in a net deferred tax asset position
primarily due to loss carryforwards. We have applied a valuation
allowance against the deferred tax assets.
Other Adjustments Balance Sheet: | ||||||||||||||||||||
(M) On September 30, 2005, the Company declared and paid on October 7, 2005, a dividend of $14,355. |
F-17
Historical
Offering
Pro Forma
56,448
4,429
60,877
56,448
4,429
60,877
2,471
2,471
56,448
6,900
63,348
(1) | A total of 1,551,721 shares related to the unvested portion of managements restricted stock plan have been excluded since their inclusion would be antidilutive. |
F-18
F-19
/s/ Ernst & Young LLP
September 30,
July 1,
2005
2005
(Unaudited)
(Audited)
$
59,751
$
1
43,076
11,540
16,623
130,990
1
1,251,189
(57,311
)
1,193,878
25,211
13,929
43,596
26,657
14,435
$
1,448,696
$
1
$
5,247
$
7,445
86,623
25,257
16,225
15,332
14,355
170,484
652,738
66,552
15,061
25,126
24,273
954,234
580
536,348
1
(41,930
)
(536
)
494,462
1
$
1,448,696
$
1
F-20
F-21
1.
Organization
20,000
18,000
11,750
29,750
8,250
58,000
Fair Value
Adjustment
$
164,243
(1,985
)
(503
)
34,635
$
196,390
(59,923
)
Fair Value
Adjustment
(12,398
)
25,126
(47,195
)
243,585
$
196,390
2. | Summary of Significant Accounting Policies |
F-22
F-23
F-24
Resident fee revenue is recorded when services are rendered and
consists of fees for basic housing, support services and fees
associated with additional services such as personalized health
and assisted living care. Residency agreements are generally for
a term of one year.
Three facilities have residency agreements which require the
resident to pay an upfront fee prior to occupying the facility.
Generally we have no further obligation to provide healthcare or
reduce the future monthly fee paid by the tenant. In two of our
facilities a portion of the entrance fee is refundable and a
portion non-refundable. In the third facility the entrance fee
is refundable to the resident pro rata over a 67-month period.
The non-refundable portion of the entrance fee is recorded as
deferred revenue and amortized over the estimated stay of the
resident. The estimated stay is currently based on the
historical average stay. The refundable portion is generally
refundable upon the sale of the unit, or in certain agreements
upon the resale of a comparable unit or 12 months after the
resident vacates the unit. All amounts due to residents are
classified as current liabilities.
Management Fee Revenue
Management fee revenue is recorded as services provided to the
owners of the facilities. Revenues are determined by an agreed
upon percentage of gross revenues (as defined).
September 30,
2005
(Unaudited)
$
13,447
11,945
17,684
43,076
5,382
17,329
2,500
25,211
$
68,287
F-25
F-26
Asset Category
Estimated Useful Life
40 years
1 - 18 years
3 - 7 years
1 year
F-27
F-28
3.
Investment in Unconsolidated Ventures
September 30,
2005
(Unaudited)
$
453
12,739
49,635
1,070
$
63,897
1,338
30,355
32,204
$
63,897
$
35,973
277
(4,046
)
$
32,204
4. | Property, Plant and Equipment |
September 30, | ||||
2005 | ||||
(Unaudited) | ||||
Land
|
$ | 105,767 | ||
Buildings and improvements
|
889,684 | |||
Furniture and equipment
|
60,651 | |||
Resident and operating lease
intangibles
|
195,087 | |||
1,251,189 | ||||
Accumulated depreciation and
amortization
|
(57,311 | ) | ||
Property, plant and equipment, net
|
$ | 1,193,878 | ||
5. | Debt |
F-29
F-30
September 30,
2005
(Unaudited)
$
24,288
75,037
182,000
171,000
105,756
9,500
66,284
12,739
2,555
8,826
657,985
5,247
$
652,738
(a)
Annually the Series A and B notes payable can be resized,
as defined, to convert the Series B note to a Series A
note. On the first anniversary date Series A interest rate
is LIBOR plus 3.10% and Series B is LIBOR plus 6.60%
increasing 1.00% annually thereafter. The notes can also be
extended to two one-year terms based on meeting certain
covenants.
(b)
Certain of our debt agreements require us to maintain financial
ratios, including debt service coverage and occupancy ratios and
are guaranteed by us.
F-31
6.
Derivative Financial Instruments
7.
Accrued Expenses
September 30,
2005
(Unaudited)
$
10,137
4,075
19,175
15,910
764
5,558
2,332
6,311
21,411
$
85,673
8.
Income Taxes
September 30,
2005
(Unaudited)
$
51,122
1,078
10,888
1,594
18,187
4,236
87,105
(18,967
)
68,138
85,335
5,412
2,517
93,264
$
25,126
9. | Facility Operating Leases |
F-32
F-33
10.
Commitments and Contingencies
Capital/
Financing
Operating
Year Ending December 31,
Leases
Leases
Total
$
2,010
$
42,553
$
44,563
7,944
173,952
181,896
7,944
178,088
186,032
7,944
180,703
188,647
7,944
183,763
191,707
67,895
2,018,523
2,086,418
101,681
2,777,582
2,879,263
(35,397
)
(35,397
)
$
66,284
$
2,777,582
$
2,843,866
F-34
F-35
11.
Insurance, Benefits and Employee Loan
F-36
/s/ Ernst & Young LLP
December 31,
2004
2003
Assets
$
86,858
$
56,468
20,528
29,787
8,062
9,472
2,925
2,964
23,572
16,891
18,554
135,303
140,778
557,293
1,434,789
(33,674
)
(33,628
)
523,619
1,401,161
27,459
24,975
14,805
19,484
8,961
44,650
26,233
6,824
10,245
18,710
$
746,625
$
1,656,582
Liabilities and Owners
Equity
$
3,888
$
113,315
20,577
15,400
7,437
6,588
77,333
73,146
14,756
11,793
14,588
15,191
11,833
118,002
267,843
367,149
895,444
138,402
9,886
9,527
4,939
51,365
42,055
33,779
675,135
1,263,256
31,399
155,582
40,091
237,744
40,091
237,744
$
746,625
$
1,656,582
F-37
Three Months
Nine Months
Ended
Ended
Years Ended
September 30,
September 30,
December 31,
2005
2004
2005
2004
2004
2003
2002
(Unaudited)
(Unaudited)
$
208,371
$
165,279
$
574,855
$
482,500
$
657,327
$
217,216
$
156,894
988
882
2,675
2,514
3,545
5,368
4,622
209,359
166,161
577,530
485,014
660,872
222,584
161,516
133,568
104,999
366,782
306,936
415,169
133,119
92,980
19,879
9,809
42,860
30,914
43,640
15,997
12,540
47,259
21,281
140,852
59,771
99,997
30,744
31,003
15,058
14,461
30,861
43,440
52,307
22,480
13,708
9,088
9,088
224,852
150,550
590,443
441,061
611,113
202,340
150,231
(15,493
)
15,611
(12,913
)
43,953
49,759
20,244
11,285
825
172
2,200
623
637
14,037
18,004
(13,126
)
(17,477
)
(33,439
)
(53,249
)
(63,634
)
(25,106
)
(9,490
)
(67
)
(3,654
)
4,080
1,465
3,176
(24,513
)
(453
)
1,051
12,511
(196
)
(327
)
(641
)
(797
)
(931
)
318
584
(114
)
(28,057
)
(5,675
)
(41,166
)
(8,005
)
(10,056
)
(2,509
)
20,383
(748
)
580
(933
)
(2,180
)
(11,111
)
(139
)
(8,666
)
(28,805
)
(5,095
)
(42,099
)
(10,185
)
(21,167
)
(2,648
)
11,717
10,486
3,495
15,956
7,950
11,734
1,284
(5,262
)
(18,319
)
(1,600
)
(26,143
)
(2,235
)
(9,433
)
(1,364
)
6,455
(205
)
(57
)
(128
)
(1,083
)
(361
)
(322
)
(7,277
)
$
(18,524
)
$
(1,657
)
$
(26,271
)
$
(3,318
)
$
(9,794
)
$
(8,963
)
$
6,455
F-38
Accumulated
Other
Total
Comprehensive
Owners
Equity
(Loss)
Equity
$
177,352
$
$
177,352
6,455
6,455
183,807
183,807
62,900
62,900
(8,963
)
(8,963
)
237,744
237,744
(190,253
)
(190,253
)
(9,794
)
(9,794
)
2,394
2,394
40,091
40,091
(34,355
)
(34,355
)
47,457
47,457
199,423
199,423
4,936
4,936
275
275
(26,271
)
(26,271
)
(666
)
(666
)
(231,556
)
666
(230,890
)
$
$
$
F-39
Nine Months Ended
Years Ended
September 30,
December 31,
2005
2004
2004
2003
2002
(Unaudited)
$
(26,271
)
$
(3,318
)
$
(9,794
)
$
(8,963
)
$
6,455
24,513
453
(1,051
)
(12,511
)
7,277
30,861
43,440
52,307
22,480
13,708
(15,956
)
(7,950
)
(11,734
)
(1,284
)
5,262
641
797
931
(318
)
(584
)
128
1,083
842
751
(6,786
)
(404
)
(2,260
)
(539
)
(230
)
(18
)
700
933
2,037
10,630
(290
)
8,666
17,857
665
4,588
1,102
3,837
(4,080
)
(1,465
)
(3,176
)
9,088
823
1,380
798
1,088
(3,478
)
1,108
1,457
887
(396
)
703
4,500
1,057
1,146
(2,461
)
5,192
(615
)
3,865
(1,901
)
2,115
1,715
1,712
1,938
13
1,268
(3,875
)
(4,041
)
(852
)
950
917
7,807
38,372
50,128
34,111
39,645
F-40
Nine Months Ended
Years Ended
September 30,
December 31,
2005
2004
2004
2003
2002
(Unaudited)
265
265
254
(70
)
(6,518
)
(7,730
)
(8,266
)
9,459
5,421
5,891
(6,185
)
(5,004
)
(7,441
)
15,446
19,497
24,023
80,622
(489,206
)
(22,948
)
(37,951
)
(7,291
)
(3,554
)
520,043
57,972
(11,139
)
(21,210
)
(10,533
)
3,804
3,772
1,915
(1,150
)
9,228
9,228
(481,772
)
19,305
524,731
105,915
(47,270
)
468,756
29,726
79,809
29,161
8,370
(182,558
)
(84,972
)
(312,355
)
(111,220
)
(5,264
)
(20,000
)
(304,577
)
83,100
94,200
96,500
92,398
(88,800
)
(99,200
)
(109,702
)
(98,350
)
10,633
1,150
(3,425
)
(1,507
)
(2,346
)
(1,102
)
(1,451
)
2,530
(1,670
)
(14,065
)
10,655
F-41
Nine Months Ended
Years Ended
September 30,
December 31,
2005
2004
2004
2003
2002
(Unaudited)
500
196,790
1,222
446,858
(62,453
)
(544,469
)
(85,730
)
8,730
(27,107
)
(4,776
)
30,390
54,296
1,105
86,858
56,468
56,468
2,172
1,067
(59,751
)
$
$
51,692
$
86,858
$
56,468
$
2,172
$
32,896
$
48,732
$
61,844
$
25,656
$
8,183
$
2,377
$
183
$
836
$
149
$
109
$
$
$
$
10,846
$
$
4,403
$
$
$
$
$
453
$
$
$
$
$
$
$
$
415,761
$
183,942
1,300
1,300
14,023
47
47
22
22
485
(156,787
)
(17,642
)
112
112
F-42
Nine Months Ended
Years Ended
September 30,
December 31,
2005
2004
2004
2003
2002
(Unaudited)
(454
)
(454
)
(117
)
(117
)
(1,036
)
(1,036
)
(139
)
(139
)
(274,641
)
(119,855
)
(1,088
)
(974
)
2,247
704
(32,459
)
(12,405
)
$
$
(265
)
$
(265
)
$
$
1,311
$
$
$
$
300,405
$
8,789
(58,484
)
(9,000
)
(42,584
)
(191,543
)
(2,912
)
(768
)
(2,415
)
(1,488
)
$
$
$
$
$
$
$
$
$
12,641
$
(1,926
)
(182
)
$
$
$
$
10,533
$
$
$
$
$
15,229
$
F-43
F-44
1.
Organization
F-45
F-46
$
57,972
8,014
52,537
15,446
8,881
142,850
392,298
17,556
$
552,704
Liabilities and
Stockholders Equity
$
68,951
49,214
4,880
74,777
12,381
210,203
264,256
2,245
476,704
76,000
$
552,704
$
9,964
31,730
(645
)
5,142
1,266
$
47,457
F-47
2.
Summary of Significant Accounting Policies
F-48
Facilities
Total Units
(Unaudited)
234
219
217
216
218
1,104
F-49
Resident fee revenue is recorded when services are rendered and
consists of fees for basic housing, support services and fees
associated with additional services such as personalized health
and assisted living care. Residency agreements are generally for
a term of one year.
Three facilities have residency agreements which require the
resident to pay an upfront fee prior to occupying the facility.
Generally we have no further obligation to provide healthcare or
reduce the future monthly fee paid by the tenant. In two of our
facilities a portion of the entrance fee is refundable and a
portion non-refundable. In the third facility the entrance fee
is refundable to the resident pro rata over a 67-month period.
The non-refundable portion of the entrance fee is recorded as
deferred revenue and amortized over the estimated stay of the
resident. The estimated stay is currently based on the
historical average stay. The refundable portion is generally
refundable upon the sale of the unit,
or in certain agreements upon the resale of a comparable unit or
12 months after the resident vacates the unit. All amounts
due to residents are classified as current liabilities.
Three Months Ended
September 30, 2005
Refundable
Nonrefundable
Current
(Deferred
Liabilities
Revenue)
Total
$
25,126
$
270
$
25,396
1,544
427
1,971
(15
)
(15
)
(1,413
)
(1,413
)
$
25,257
$
682
$
25,939
Nine Months Ended | ||||||||||||
September 30, 2005 | ||||||||||||
Refundable | Nonrefundable | |||||||||||
Current | (Deferred | |||||||||||
Liabilities | Revenue) | Total | ||||||||||
Beginning balance (assumed at
closing)
|
$ | 24,397 | $ | | $ | 24,397 | ||||||
Additions
|
2,530 | 700 | 3,230 | |||||||||
Amortization
|
| (18 | ) | (18 | ) | |||||||
Refunds
|
(1,670 | ) | | (1,670 | ) | |||||||
Ending balance
|
$ | 25,257 | $ | 682 | $ | 25,939 | ||||||
Management fee revenue is recorded as services provided to the owners of the facilities. Revenues are determined by an agreed upon percentage of gross revenues (as defined). |
F-50
December 31
2004
2003
$
8,281
$
4,616
5,089
17,611
3,139
7,560
4,019
20,528
29,787
8,004
6,565
17,918
16,247
1,537
2,163
27,459
24,975
$
47,987
$
54,762
F-51
F-52
Asset Category
Estimated Useful Life
40 years
1 - 18 years
3 - 7 years
1 year
F-53
F-54
Three Months
Nine Months
Ended
Ended
September 30,
September 30,
December 31,
2005
2004
2005
2004
2004
2003
2002
(Unaudited)
(Unaudited)
$
43,577
$
20,627
$
129,781
$
59,510
$
97,669
$
30,181
$
27,426
5,882
789
17,857
665
4,588
1,102
3,837
(2,200
)
(135
)
(6,786
)
(404
)
(2,260
)
(539
)
(230
)
$
47,259
$
21,281
$
140,852
$
59,771
$
99,997
$
30,744
$
31,033
3. | Investment in Unconsolidated Ventures |
F-55
F-56
F-57
Three Months
Nine Months
Ended
Ended
September 30,
September 30,
December 31,
2005
2004
2005
2004
2004
2003
2002
(Unaudited)
$
2,804
$
2,712
$
8,316
$
7,923
$
10,701
$
3,977
$
2,977
2,268
2,031
6,642
6,213
8,208
2,047
431
409
606
1,220
1,811
2,216
690
1,035
516
515
1,532
1,534
2,049
522
213
(428
)
(400
)
(1,594
)
(1,279
)
(1,602
)
(423
)
10
10
35
168
2,765
2,762
7,800
8,289
10,906
3,004
1,679
$
39
$
(50
)
$
516
$
(366
)
$
(205
)
$
973
$
1,298
December 31, | ||||||||||
2004 | 2003 | |||||||||
Balance Sheet Data:
|
||||||||||
Cash and cash equivalents
|
$ | 1,017 | $ | 881 | ||||||
Notes receivable
|
12,739 | 12,739 | ||||||||
Property, plant and equipment, net
|
50,777 | 52,853 | ||||||||
Other
|
967 | 425 | ||||||||
Total assets
|
$ | 65,500 | $ | 66,898 | ||||||
Liabilities accounts
payable and accrued expenses
|
$ | 1,467 | $ | 1,264 | ||||||
Long-term debt
|
30,355 | 30,355 | ||||||||
Members equity
|
33,678 | 35,279 | ||||||||
Total liabilities and members
equity
|
$ | 65,500 | $ | 66,898 | ||||||
Members equity consists of:
|
||||||||||
Invested capital
|
$ | 35,973 | $ | 35,973 | ||||||
Cumulative net loss
|
(239 | ) | (34 | ) | ||||||
Cumulative distributions
|
(2,056 | ) | (660 | ) | ||||||
Members equity
|
$ | 33,678 | $ | 35,279 | ||||||
F-58
4.
Property, Plant and Equipment
December 31,
2004
2003
$
44,062
$
136,266
463,490
1,232,117
40,083
49,473
9,658
16,933
557,293
1,434,789
(33,674
)
(33,628
)
$
523,619
$
1,401,161
Purchase | Debt | Lease Security | |||||||||||||||
2003 Facilities Purchased | Date | Price | Assumed | Deposit | |||||||||||||
The Gables at Farmington
|
April 22 | $ | 18,128 | $ | 12,525 | $ | 5,603 | ||||||||||
The Kenwood of Lake View
|
April 22 | 21,807 | 14,225 | 7,582 | |||||||||||||
The Atrium
|
April 22 | 45,022 | 30,000 | 15,022 | |||||||||||||
Chatfield
|
July 1 | 18,232 | 11,368 | 6,864 | |||||||||||||
Berkshire of Castleton
|
September 30 | 9,462 | 4,914 | 4,548 | |||||||||||||
Brookdale Place of San Marcos
|
September 30 | 25,704 | 18,054 | 7,650 | |||||||||||||
The Hallmark
|
September 30 | 96,324 | 62,388 | 33,936 | |||||||||||||
The Springs of East Mesa
|
September 30 | 20,319 | 11,376 | 8,943 | |||||||||||||
The Gables at Brighton
|
September 30 | 9,178 | 4,355 | 4,823 | |||||||||||||
Park Place
|
September 30 | 16,561 | 9,765 | 6,796 | |||||||||||||
Ponce de Leon
|
November 1 | 18,202 | 11,611 | 6,591 | |||||||||||||
The Devonshire of Hoffman Estates
|
December 19 | 39,331 | 14,250 | 25,081 | |||||||||||||
The Classic at West Palm Beach
|
December 31 | 26,794 | 18,948 | 7,846 | |||||||||||||
Brendenwood
|
December 31 | 21,246 | 11,288 | 9,958 | |||||||||||||
River Bay Club(1)
|
December 31 | 45,118 | 39,574 | 5,544 | |||||||||||||
Total facilities purchased
|
$ | 431,428 | $ | 274,641 | $ | 156,787 | |||||||||||
(1) | River Bay Club debt assumed includes $13,222 of debt due February 2004 and secured by a restricted cash deposit of $14,023 at December 31, 2003. On February 2, 2004, the lease security deposit was returned to the Company and the corresponding debt was repaid. |
F-59
F-60
5.
Assets Sold or Held for Sale
Three Months
Nine Months
Ended
Ended
September 30,
September 30,
December 31,
2005
2004
2005
2004
2004
2003
(Unaudited)
(Unaudited)
$
1,389
$
4,472
$
4,676
$
17,852
$
15,265
$
2,669
2,049
4,445
5,642
18,549
16,533
3,059
(660
)
27
(966
)
(697
)
(1,268
)
(390
)
(580
)
897
(141
)
1,321
(1,470
)
65
(102
)
481
429
237
(114
)
355
(2,167
)
(722
)
(643
)
(442
)
57
(483
)
1,084
361
321
$
(205
)
$
(57
)
$
(128
)
$
(1,083
)
$
(361
)
$
(322
)
F-61
6.
Other Assets
7.
Debt
December 31,
2004
2003
$
24,578
$
343,481
75,903
263,080
179,248
191,542
December 31,
2004
2003
66,284
76,967
12,739
12,739
2,865
3,144
9,420
10,048
13,222
94,290
19,553
1,270
371,037
1,029,336
3,888
133,892
$
367,149
$
895,444
(a) | Annually the Series A and B notes payable can be resized, as defined, to convert the Series B note to a Series A note. On the first anniversary date Series A interest rate is LIBOR plus 3.10% and Series B is LIBOR plus 6.60% increasing 1.00% annually thereafter. The notes can also be extended to two one-year terms based on meeting certain covenants. | |
(b) | The tax-exempt Qualified Residential Rental Bonds (the Bonds) require a portion of the units at the facilities financed with the proceeds generated from the sale of the Bonds to be leased to qualified individuals based on income levels specified by the U.S. Government. The interest rate payable on the Bonds is adjusted weekly based upon the remarketing rate for the Bonds. The credit enhancement for the Bonds is provided by the Federal Home Loan Mortgage Corporation. The annual interest rate on the Bonds cannot exceed 15%. These obligations were assumed by Provident (note 11). | |
(c) | We guaranteed the reimbursement obligation to the credit enhancer on $65,000 of the tax-exempt debt, which guaranty is limited to $4,000 and terminates when the amount in the principal reserve fund equals or exceeds $4,000 (principal reserve fund balance of $2,635 at December 31, 2003, included in cash and investments restricted in the accompanying consolidated balance sheet). These obligations were assumed by Provident (note 11). | |
(d) | Includes first mortgage and mezzanine loan payable to a shareholder of FBA with a balance, including accrued long-term interest, of $51,238 and $14,458, respectively, at December 31, 2004 originally due December 31, 2005. The first mortgage loan is guaranteed by BLC and |
F-62
F-63
bears interest at LIBOR plus 2.70% payable interest only monthly
and net cash flow (as defined). The mezzanine loan accrues
interest at 19.5% payable at maturity.
In connection with the Provident transaction the Company posted
$4,000 in an interest bearing account as collateral for one
construction loan maturing March 2005. Upon completion of the
refinancing the collateral was released.
(e)
Certain of our debt agreements require us to maintain financial
ratios, including debt service coverage and occupancy ratios and
are guaranteed by us.
Year Ending December 31,
Amount
$
3,888
3,320
3,437
193,087
83,915
83,390
$
371,037
8.
Derivative Financial Instruments
F-64
9.
Accrued Expenses
December 31,
2004
2003
$
13,521
$
13,547
3,622
6,649
15,795
11,844
11,877
11,235
2,173
117
5,406
6,435
2,936
10,675
6,614
1,248
15,389
11,396
$
77,333
$
73,146
10. | Income Taxes |
Three | |||||||||||||||||||||||||||||
Months | Nine Months | ||||||||||||||||||||||||||||
Ended | Ended | ||||||||||||||||||||||||||||
September 30, | September 30, | December 31, | |||||||||||||||||||||||||||
2005 | 2004 | 2005 | 2004 | 2004 | 2003 | 2002 | |||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||||||
Federal:
|
|||||||||||||||||||||||||||||
Current
|
$ | (273 | ) | $ | | $ | (273 | ) | $ | | $ | (5,032 | ) | $ | | $ | | ||||||||||||
Deferred
|
| 558 | | (1,618 | ) | (2,895 | ) | 340 | (6,904 | ) | |||||||||||||||||||
(273 | ) | 558 | (273 | ) | (1,618 | ) | (7,927 | ) | 340 | (6,904 | ) | ||||||||||||||||||
State:
|
|||||||||||||||||||||||||||||
Current
|
(475 | ) | | (660 | ) | (233 | ) | (2,368 | ) | (127 | ) | (44 | ) | ||||||||||||||||
Deferred
|
| 22 | | (329 | ) | (335 | ) | 77 | (1,718 | ) | |||||||||||||||||||
(475 | ) | 22 | (660 | ) | (562 | ) | (2,703 | ) | (50 | ) | (1,762 | ) | |||||||||||||||||
Total
|
$ | (748 | ) | $ | 580 | $ | (933 | ) | $ | (2,180 | ) | $ | (10,630 | ) | $ | 290 | $ | (8,666 | ) | ||||||||||
F-65
Three Months
Nine Months
Ended
Ended
September 30,
September 30,
December 31,
2005
2004
2005
2004
2004
2003
2002
(Unaudited)
rate
$
9,820
$
1,906
$
14,408
$
3,384
$
3,721
$
1,241
$
(6,931
)
(4,070
)
(2,244
)
(5,902
)
(7,153
)
(10,342
)
tax
1,191
15
1,070
(548
)
(1,444
)
73
(1,163
)
(7,689
)
903
(10,509
)
2,137
(2,565
)
(1,024
)
(572
)
$
(748
)
$
580
$
(933
)
$
(2,180
)
$
(10,630
)
$
290
$
(8,666
)
December 31, | |||||||||
2004 | 2003 | ||||||||
Deferred income tax assets:
|
|||||||||
Operating loss carryforwards
|
$ | 34,106 | $ | 80,301 | |||||
Prepaid revenue
|
1,171 | 594 | |||||||
Accrued expenses
|
10,650 | 15,701 | |||||||
Property, plant and equipment
|
13,829 | | |||||||
Fair value of swaps (a cumulative
effect of a change in accounting principal in 2003, note 8)
|
6,833 | 8,095 | |||||||
Deferred gain on sale leaseback
|
41,186 | | |||||||
Other
|
2,332 | 716 | |||||||
Total gross deferred income tax
asset
|
110,107 | 105,407 | |||||||
Valuation allowance
|
(89,282 | ) | (46,276 | ) | |||||
Net deferred income tax assets
|
20,825 | 59,131 | |||||||
Deferred income tax liabilities:
|
|||||||||
Property, plant and equipment
|
(12,352 | ) | (99,873 | ) | |||||
Investment in Brookdale Senior
Housing, LLC
|
(5,402 | ) | (5,802 | ) | |||||
Other
|
(3,071 | ) | (1,896 | ) | |||||
Total gross deferred income tax
liability
|
(20,825 | ) | (107,571 | ) | |||||
Net deferred income tax liability
|
$ | | $ | (48,440 | ) | ||||
F-66
F-67
December 31,
2004
2003
$
$
(51,365
)
2,925
$
$
(48,440
)
11.
Facility Operating Leases
F-68
$
982,798
(856,339
)
(11,663
)
(35,689
)
51,669
$
130,776
$
982,798
(461,248
)
(114,202
)
(10,494
)
(20,000
)
(254,577
)
$
122,277
12. | Commitments and Contingencies |
F-69
Capital/
Financing
Operating
Year Ending December 31,
Leases
Leases
Total
$
7,944
$
169,255
$
177,199
7,944
173,952
181,896
7,944
178,088
186,032
7,944
180,703
188,647
7,944
183,763
191,707
67,895
2,018,523
2,086,418
107,615
2,904,284
3,011,899
(41,331
)
(41,331
)
$
66,284
$
2,904,284
$
2,970,568
F-70
F-71
13.
Insurance, Benefits and Employee Loan
14.
Segment Information
F-72
Three Months Ended
Nine Months Ended
September 30,
September 30,
Year Ended December 31,
2005
2004
2005
2004
2004
2003
2002
$
56,399
$
41,352
$
140,178
$
113,315
$
149,871
$
100,342
$
83,800
45,442
27,756
121,223
80,305
113,738
84,092
73,094
101,841
69,108
261,401
193,620
263,609
184,434
156,894
61,169
57,283
187,265
173,404
238,344
20,046
45,361
38,888
126,189
115,476
155,374
12,736
106,530
96,171
313,454
288,880
393,718
32,782
988
882
2,675
2,514
3,545
5,368
4,622
$
209,359
$
166,161
$
577,530
$
485,014
$
660,872
$
222,584
$
161,516
27,023
19,876
69,128
53,890
72,199
49,397
42,412
10,556
7,731
30,897
22,336
32,766
24,608
21,502
37,579
27,607
100,025
76,226
104,965
74,005
63,914
36.9%
39.9%
38.3%
39.4%
39.8
%
40.1
%
40.7
%
26,787
24,593
79,814
73,964
102,200
7,909
10,437
8,080
28,234
25,374
34,993
2,183
37,224
32,673
108,048
99,338
137,193
10,092
34.9%
34.0%
34.5%
34.4%
34.8
%
30.8
%
n/a
692
617
1,872
1,760
2,482
3,758
3,235
$
75,495
$
60,897
$
209,945
$
177,324
$
244,640
$
87,855
$
67,149
19,583
9,544
42,057
30,160
42,577
14,387
11,153
47,259
21,281
140,852
59,771
99,997
30,744
31,003
15,058
14,461
30,861
43,440
52,307
22,480
13,708
9,088
9,088
$
(15,493)
$
15,611
$
(12,913)
$
43,953
$
49,759
$
20,244
$
11,285
1,018,406
1,099,731
1,018,406
1,099,731
$
467,320
$
1,147,469
$
730,298
397,532
491,900
397,532
491,900
279,305
509,113
$
1,415,938
$
1,591,631
$
1,415,938
$
1,591,631
$
746,625
$
1,656,582
$
730,298
(1) | Segment operating income defined as segment revenues less segment operating expenses (excluding depreciation and amortization). |
F-73
F-74
(2)
Net of general and administrative costs allocated to management
services reporting segment.
(3)
All revenue is earned from external third parties in the United
States.
Additions
Balance at
Charged to
Charged
Balance at
Beginning of
costs and
to other
Combination
End of
Description
Period
expenses
accounts
of Alterra
Deductions
Period
$
317
$
344
$
$
$
361
$
300
$
300
$
560
$
$
7,374
$
588
$
7,646
$
7,646
$
831
$
$
$
5,614
$
2,863
$
13,573
$
$
$
$
$
13,573
$
13,573
$
$
$
32,703
$
$
46,276
$
46,276
$
$
43,006
$
$
$
89,282
F-75
F-76
/s/ Ernst & Young LLP
December 31,
March 31
2005
2004
2003
(Unaudited)
Assets
$
3,213
$
3,873
$
1,962
4,570
4,254
3,448
7,024
16,309
18,816
434
651
455
15,241
25,087
24,681
225,814
225,143
230,855
(75,995
)
(74,065
)
(66,586
)
149,819
151,078
164,269
7,276
7,673
12,685
2,499
2,499
2,151
2,341
2,363
2,451
3,706
3,778
4,068
530
539
572
$
181,412
$
193,017
$
210,877
Liabilities and Net Asset
(Deficit)
$
183,079
$
183,053
$
182,946
5,611
4,624
2,538
5,298
4,391
3,737
43,863
8,302
12,039
237,851
200,370
201,260
29,786
30,197
35,013
1,758
1,759
1,639
269,395
232,326
237,912
(91,217
)
(42,573
)
(30,008
)
736
766
823
2,498
2,498
2,150
(87,983
)
(39,309
)
(27,035
)
$
181,412
$
193,017
$
210,877
F-77
Three Months
Ended March 31,
Year Ended December 31,
2005
2004
2004
2003
2002
(Unaudited)
$
19,706
$
19,992
$
80,776
$
75,856
$
71,467
560
612
2,430
2,841
3,093
20,266
20,604
83,206
78,697
74,560
16,574
16,562
68,079
64,746
63,051
868
842
3,467
3,320
3,187
1,990
1,959
7,885
7,753
7,550
9,063
19,432
19,363
88,494
75,819
73,788
834
1,241
(5,288
)
2,878
772
71
604
3,389
2,736
3,383
455
266
1,590
1,503
1,619
(158
)
150
75
(457
)
(2,643
)
341
90
(1,013
)
(1,508
)
(5,329
)
(11,410
)
(10,993
)
(675
)
(447
)
(2,090
)
(1,252
)
(821
)
(72
)
(73
)
(290
)
(298
)
(293
)
(558
)
233
(7,943
)
(5,959
)
(8,886
)
(48,116
)
(797
)
(4,331
)
(1,590
)
(305
)
(48,674
)
(564
)
(12,274
)
(7,549
)
(9,191
)
(39,309
)
(27,035
)
(27,035
)
(19,486
)
(10,295
)
$
(87,983
)
$
(27,599
)
$
(39,309
)
$
(27,035
)
$
(19,486
)
F-78
Three Months
Ended March 31,
Year Ended December 31,
2005
2004
2004
2003
2002
(Unaudited)
$
(558
)
$
233
$
(7,943
)
$
(5,959
)
$
(8,886
)
(560
)
(612
)
(2,430
)
(2,841
)
(3,093
)
1,990
1,959
7,885
7,753
7,550
9,063
158
(150
)
(75
)
457
2,643
72
73
290
298
293
26
27
107
110
105
(341
)
(90
)
(316
)
(362
)
(806
)
(638
)
(86
)
217
(1,810
)
(196
)
332
201
9
14
33
(31
)
58
987
770
2,086
171
(63
)
907
2,004
654
(3,315
)
1,496
(1
)
121
120
601
(161
)
2,931
2,267
8,788
(3,403
)
(33
)
397
1,054
5,012
1,840
(575
)
9,127
3,926
2,234
10,008
(6,859
)
(709
)
(552
)
(3,669
)
(3,540
)
(3,816
)
362
123
8,815
4,428
3,577
8,670
(11,127
)
(2,844
)
(3,682
)
(48,116
)
(797
)
(4,331
)
(1,590
)
(305
)
35,561
(2,613
)
(3,737
)
(1,838
)
10,964
(100
)
149
(3,381
)
(2,386
)
738
4,585
(12,406
)
(6,791
)
(10,454
)
(5,534
)
11,462
F-79
Three Months
Ended March 31,
Year Ended December 31,
2005
2004
2004
2003
2002
(Unaudited)
(660
)
(96
)
1,911
(267
)
302
3,873
1,962
1,962
2,229
1,927
$
3,213
$
1,866
$
3,873
$
1,962
$
2,229
$
$
1,339
$
3,136
$
12,381
$
11,772
F-80
F-81
1.
Description of Business
Facilities
Location
Total Units
Jacksonville, FL
523
Indianapolis, IN
283
Colorado Springs, CO
503
Des Moines, IA
139
San Antonio, TX
232
Raymore, MO
311
Edmond, OK
233
Newton, KS
189
2,413
2.
Bankruptcy Filing
F-82
3.
Summary of Significant Accounting Policies
F-83
Asset Category
Estimated Useful Life
25 - 40 years
3 - 10 years
F-84
4.
Investments in Marketable Securities
Marketable
Long-Term
Securities
Investments
Total Market Value
$
7,024
$
2,499
$
9,523
$
16,309
$
2,499
$
18,808
$
18,816
$
2,151
$
20,967
5. | Property and Equipment |
December 31, | ||||||||||||
March 31, | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
Land
|
$ | 5,745 | $ | 5,745 | $ | 6,138 | ||||||
Buildings and improvements
|
200,460 | 200,460 | 206,645 | |||||||||
Furniture and equipment
|
18,216 | 18,082 | 17,570 | |||||||||
Construction in progress
|
1,393 | 856 | 502 | |||||||||
225,814 | 225,143 | 230,855 | ||||||||||
Accumulated depreciation and
amortization
|
(75,995 | ) | (74,065 | ) | (66,586 | ) | ||||||
Property and equipment, net
|
$ | 149,819 | $ | 151,078 | $ | 164,269 | ||||||
F-85
6.
Bonds Payable
December 31,
March 31,
2005
2004
2003
$
137,825
$
137,825
$
137,825
46,605
46,605
46,605
184,430
184,430
184,430
(1,351
)
(1,377
)
(1,484
)
$
183,079
$
183,053
$
182,946
7. | Related Party Transactions |
F-86
8.
Unearned Entrance Fees
December 31,
March 31,
2005
2004
2003
$
30,197
$
35,013
$
37,116
686
3,185
7,212
(560
)
(2,430
)
(2,841
)
(537
)
(5,571
)
(6,474
)
$
29,786
$
30,197
$
35,013
9. | Commitments and Contingencies |
F-87
F-88
/s/ Ernst & Young LLP
December 31,
June 30,
2005
2004
2003
(Unaudited)
Assets
$
934
$
1,571
$
1,762
156
632
633
235
199
207
700
560
221
2,025
2,962
2,823
9,739
161,159
159,993
(1,842
)
(21,924
)
(17,121
)
7,897
139,235
142,872
5
385
655
556
534
468
$
10,483
$
143,116
$
146,818
Liabilities and Members
Equity
$
6,176
$
64,819
$
2,032
893
1,561
1,325
797
950
7,069
67,177
4,307
38,752
103,546
7,069
105,929
107,853
3,414
37,187
38,965
$
10,483
$
143,116
$
146,818
F-89
Three Months
Six Months Ended
Ended June 30,
June 30,
Year Ended December 31,
2005
2004
2005
2004
2004
2003
2002
(Unaudited)
$
10,467
$
11,139
$
22,087
$
22,059
$
45,118
$
41,853
$
40,227
520
546
1,100
1,091
2,249
2,270
2,095
10,987
11,685
23,187
23,150
47,367
44,123
42,322
7,274
6,403
14,054
12,625
26,537
25,035
24,777
248
251
500
503
1,008
1,008
1,008
887
815
1,690
1,577
3,332
2,867
2,320
1,128
1,258
2,396
2,509
5,087
4,994
4,702
9,537
8,727
18,640
17,214
35,964
33,904
32,807
1,450
2,958
4,547
5,936
11,403
10,219
9,515
(1,348
)
(1,156
)
(2,715
)
(2,318
)
(4,827
)
(5,000
)
(5,629
)
123,678
123,678
$
123,780
$
1,802
$
125,510
$
3,618
$
6,576
$
5,219
$
3,886
F-90
Total
Members
Equity
$
47,962
3,886
(6,155
)
468
46,161
5,219
(15,240
)
2,825
38,965
6,576
(8,599
)
245
37,187
125,510
(159,283
)
$
3,414
F-91
Six Months Ended
June 30,
Year Ended December 31,
2005
2004
2004
2003
2002
(Unaudited)
$
125,510
$
3,618
$
6,576
$
5,219
$
3,886
(123,678
)
2,396
2,509
5,087
4,994
4,702
476
1
35
185
(36
)
39
8
(42
)
24
(22
)
(33
)
(66
)
(87
)
(109
)
231
(409
)
(339
)
92
2
(663
)
(245
)
236
(92
)
(177
)
(797
)
(82
)
(153
)
50
302
3,417
5,397
11,350
10,169
8,815
(232
)
(627
)
(1,180
)
(916
)
(842
)
252,856
252,624
(627
)
(1,180
)
(916
)
(842
)
34
37
40,200
14,650
(97,395
)
(1,046
)
(2,044
)
(36,555
)
(15,951
)
(159,283
)
(4,027
)
(8,599
)
(15,240
)
(6,155
)
245
2,825
468
(494
)
(211
)
(256,678
)
(5,039
)
(10,361
)
(9,264
)
(7,199
)
(637
)
(269
)
(191
)
(11
)
774
1,571
1,762
1,762
1,773
999
$
934
$
1,493
$
1,571
$
1,762
$
1,773
F-92
Six Months Ended
June 30,
Year Ended December 31,
2005
2004
2004
2003
2002
(Unaudited)
$
$
$
14
$
$
$
$
370
$
904
$
$
$
2,715
$
2,318
$
4,829
$
4,906
$
5,703
F-93
F-94
1.
Description of Business
Facilities
Location
Total Units
(Unaudited)
Irvine
134
Anaheim Hills
127
Rancho Mirage
125
Torrance
134
Santa Monica
117
Monrovia
64
Ventura
114
Scotts Valley
196
Santa Rosa
250
1,261
2.
Summary of Significant Accounting Policies
F-95
Asset Category
Estimated Useful Life
30 years
3 - 7 years
F-96
December 31,
June 30,
2005
2004
2003
$
$
33,872
$
33,872
9,070
123,676
123,279
669
3,611
2,842
9,739
161,159
159,993
(1,842
)
(21,924
)
(17,121
)
$
7,897
$
139,235
$
142,872
December 31,
June,
2005
2004
2003
$
$
53,740
$
54,604
6,176
49,771
50,923
60
51
6,176
103,571
105,578
(6,176
)
(64,819
)
(2,032
)
$
$
38,752
$
103,546
Year Ending December 31 | Amount | |||
2005
|
$ | 64,819 | ||
2006
|
727 | |||
2007
|
753 | |||
2008
|
37,272 | |||
$ | 103,571 | |||
F-97
F-98
Year
Amount
$
920
942
966
990
1,015
4,129
$
8,962
Year
Amount
$
1,000
1,000
1,000
1,000
1,000
6,958
$
11,958
F-99
/s/ KPMG LLP
Assets
$
13,797
10,253
57,243
14,672
12,803
108,768
492,125
2,188
35,515
33,509
$
672,105
Liabilities and
Stockholders Deficit
$
722,689
79,108
7,144
6,812
92,151
58,500
14,840
981,244
171,510
2,147
6,132
221
(163
)
179,526
(668,512
)
(488,928
)
$
672,105
F-100
11 Months
Fiscal Year
Ended
Ended
November 30,
December 31,
2003
2002
$
378,672
$
413,553
824
2,601
546
561
380,042
416,715
264,069
285,171
3,693
2,263
57,846
58,658
(6,204
)
(3,811
)
(13,755
)
33,703
46,541
9,569
(22,914
)
21,292
25,766
2,859
4,773
389,220
380,299
(9,178
)
36,416
(29,851
)
(50,556
)
(2,648
)
(4,967
)
13,683
622,357
(3,656
)
(25,824
)
(667
)
(4,856
)
(28,697
)
(39,363
)
(9,487
)
531,158
(95,690
)
521,980
(59,274
)
(119
)
(100
)
521,861
(59,374
)
(32,933
)
(116,762
)
(45,866
)
$
488,928
$
(222,002
)
F-101
Common Stock,
Treasury Stock,
and Additional
Paid-in Capital
Shares
Accumulated
Predecessor Company
Outstanding
Amounts
Deficit
Total
22,266
179,584
(446,510
)
(266,926
)
(222,002
)
(222,002
)
22,266
179,584
(668,512
)
(488,928
)
(94,066
)
(94,066
)
22,266
$
179,584
(762,578
)
(582,994
)
582,994
582,994
(22,266
)
(179,584
)
179,584
F-102
11 Months
Fiscal Year
Ended
Ended
November 30,
December 31,
2003
2002
$
488,928
$
(222,002
)
45,866
(13,683
)
(622,357
)
39,363
21,292
25,766
3,693
2,263
3,656
25,824
2,648
4,967
9,569
(22,914
)
2,859
14,260
32,933
116,762
119
100
667
4,856
(2,890
)
(4,261
)
4,269
6,057
(1,932
)
3,467
8,908
12,165
(1,621
)
10,373
1,496
(2,672
)
(22,083
)
20,877
(6,832
)
(8,544
)
26,760
60,280
62,368
39,825
500
1,121
(159
)
(1,400
)
83,417
90,502
F-103
11 Months
Fiscal Year
Ended
Ended
November 30,
December 31,
2003
2002
(6,724
)
(3,609
)
(14,870
)
(100,877
)
(111,314
)
31,870
(2,558
)
(2,655
)
76,000
(17,159
)
(117,578
)
44,175
(6,199
)
13,797
19,996
$
57,972
$
13,797
$
35,739
$
55,574
7,298
92
(333
)
1,000
189,221
174,534
F-104
F-105
(1)
Nature of Business and Reorganization and Emergence From
Chapter 11
F-106
$
7,319
13,860
24,202
58,500
16,008
420
253,892
187,248
54,682
6,226
$
622,357
$
13,899
9,401
2,967
2,430
$
28,697
(2) | Fresh Start Accounting |
F-107
Predecessor
Successor
Company
Company
November 30,
Debt
New
Fresh start
December 1,
2003
discharge
capital
adjustments
2003
$
11,925
76,000
(b)
(29,953
)(b)
57,972
8,014
8,014
30,683
21,854
(c)
52,537
24,679
(9,233
)(d)
15,446
8,919
(38
)(e)
8,881
84,220
76,000
(17,370
)
142,850
385,232
7,066
392,298
32,257
(32,257
)(g)
36,020
(18,464
)(h)
17,556
$
537,729
76,000
(61,025
)
552,704
$
207,027
(138,076
)(i)
68,951
27,157
22,057
(i)
49,214
4,595
(4,595
)(j)
4,763
117
(e)
4,880
86,593
(11,816
)(k)
74,777
12,381
12,381
342,516
(132,313
)
210,203
152,950
111,306
(i)
264,256
2,900
(655
)(e)
2,245
622,357
(622,357
)(a)
1,120,723
(622,357
)
(21,662
)
476,704
(582,994
)
622,357
76,000
(b)
(39,363
)
76,000
$
537,729
76,000
(61,025
)
552,704
F-108
F-109
(3)
Summary of Significant Accounting Policies
(a)
Business
(b)
Principles of Consolidation
F-110
(c)
Use of Estimates
(d)
Recent Accounting Pronouncements
(e)
Cash Equivalents
(f)
Supply Inventory
F-111
(g)
Long-lived Assets
(h)
Assets Held For Sale
(i)
Deferred Financing Costs
F-112
(j)
Revenue
(k)
Income Taxes
(l)
Stock Options
11 Months Ended
Year Ended
November 30, 2003
December 31, 2002
$
488,928
(222,002
)
(37
)
(40
)
$
488,891
(222,042
)
F-113
(4)
Joint Venture Activity
In January 2002 the Company closed on the buyout of joint
venture partner interests in one residence with an aggregate
capacity of 42 residents in connection with a modification and
settlement agreement with one investor group. The Company paid
$600,000 in consideration for these acquired interests.
In October 2002 the Company closed on the buyout of joint
venture partner interests in one residence with an aggregate
capacity of 40 residents. In consideration for the acquired
interests the Company paid $800,000 in cash and issued a
$1.0 million note.
In December 2002 the Company entered into an agreement with one
joint venture partner pursuant to which the Company agreed to
purchase all the remaining joint venture interests not held by
the Company in eight residences and to acquire promissory notes
previously issued by the Company aggregating approximately
$3.6 million in exchange for the issuance of a five year
promissory note for $7.2 million from the Company. This
settlement was effective with the Plan confirmation and the
consummation of the merger.
In October 2003 the Company entered into an agreement with the
Companys remaining joint venture partner group pursuant to
which the Company agreed to purchase all of the remaining joint
venture interests not held by the Company in 32 residences and
to secure the release of the Company with respect to all claims
held by these joint venture partners. Pursuant to this
settlement agreement approved by the Court, the limited partners
are entitled to receive from the Company an aggregate of
$2.9 million of five-year promissory notes. This settlement
was effective with the Plan confirmation and consummation of the
merger.
(5)
Assets Held for Sale
F-114
11 Months Ended
Fiscal Year Ended
November 30, 2003
December 31, 2002
$
(1,824
)
(8,559
)
(5,213
)
(12,942
)
(58,500
)
(24,060
)
5,954
(25,896
)
(9,826
)
(8,829
)
$
(32,933
)
(116,762
)
(6)
Property and Equipment
2002
$
61,490
444,880
88,457
594,827
(102,702
)
$
492,125
F-115
(7)
Unconsolidated Affiliates and Managed Residences
11 Months Ended
Fiscal Year Ended
November 30, 2003
December 31, 2002
$
14,872
41,586
10,800
30,337
4,072
11,249
704
2,311
3,603
8,338
$
(235
)
600
(8)
Restricted Cash and Investments
(9)
Goodwill
11 Months
Fiscal Year
Ended
Ended
November 30,
December 31,
2003
2002
$
521,861
(59,374
)
$
521,861
(59,374
)
(10) | Other Assets |
2002 | |||||
Deferred financing costs, net
|
$ | 18,710 | |||
Lease security deposits
|
7,443 | ||||
Deposits and other
|
7,356 | ||||
Total other assets
|
$ | 33,509 | |||
F-116
(11)
Long-term Debt, Capital Leases, Redeemable Preferred Stock,
and Financing Obligations
2002
$
112,043
40,355
34,850
42,500
155,167
54,762
439,677
131,719
76,967
3,405
15,286
306,253
973,307
801,797
$
171,510
F-117
F-118
(a)
Series A Stock
(b)
Series A Debentures
(c)
Series B Debentures
(d)
Series C Debentures
(12)
Short-term Notes Payable
F-119
(13)
Accrued Expenses
2002
$
13,520
30,440
20,098
6,373
4,751
955
9,407
766
5,841
$
92,151
(14)
Stockholders Equity
(15)
Stock Options
Number
Weighted Average
of shares
Exercise Price
965,187
$
12.65
1,000,000
1.31
267,170
14.06
1,698,017
5.75
569,477
1.31
1,128,540
$
7.04
Number | Average | Number | ||||||||||||||||||||
Range of | Outstanding at | Remaining | Weighted | Exercisable at | Weighted | |||||||||||||||||
Exercise | December 31, | Contractual | Average | December 31, | Average | |||||||||||||||||
Prices | 2002 | Life | Price | 2002 | Price | |||||||||||||||||
$ 0.09 - 1.40 | 501,229 | 6.0 | $ | 1.31 | 167,896 | $ | 1.30 | |||||||||||||||
1.40 - 8.69 | 354,313 | 4.2 | 5.80 | 324,249 | 5.81 | |||||||||||||||||
8.70 - 17.94 | 55,807 | 4.4 | 15.66 | 55,807 | 15.66 | |||||||||||||||||
17.95 - 20.81 | 190,895 | 6.0 | 18.80 | 189,517 | 18.81 | |||||||||||||||||
20.82 - 29.56 | 26,296 | 5.3 | 29.34 | 26,296 | 29.34 | |||||||||||||||||
Total | 1,128,540 | 5.2 | $ | 7.04 | 763,765 | $ | 9.57 | |||||||||||||||
(16) | Income Taxes |
11 Months | Fiscal Year | ||||||||||
Ended | Ended | ||||||||||
November 30, | December 31, | ||||||||||
2003 | 2002 | ||||||||||
Income tax expense (benefit):
|
|||||||||||
Current:
|
|||||||||||
Federal
|
$ | | $ | | |||||||
State
|
119 | 100 | |||||||||
Total current
|
119 | 100 | |||||||||
Deferred:
|
|||||||||||
Federal
|
| | |||||||||
State
|
| | |||||||||
Total deferred
|
| | |||||||||
Total
|
$ | 119 | $ | 100 | |||||||
F-120
2002
$
163,566
2,250
27,352
12,593
1,017
22,815
741
230,334
(218,899
)
$
11,435
$
4,550
5,170
1,715
$
11,435
During 2000, a valuation allowance was established because the Company was uncertain that such deferred tax assets in excess of the applicable reversing deferred tax liabilities would be realized in future years. The valuation allowance established to reduce deferred tax assets as of December 31, 2002 was $218.9 million. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion of all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. |
11 Months | Fiscal Year | |||||||
Ended | Ended | |||||||
November 30, | December 31, | |||||||
2003 | 2002 | |||||||
Statutory rate
|
35.0 | % | 35.0 | % | ||||
State taxes, net
|
4.0 | 4.0 | ||||||
Valuation allowance
|
(59.4 | ) | (25.9 | ) | ||||
PIK interest
|
| (4.1 | ) | |||||
Stock transfer
|
23.6 | (7.1 | ) | |||||
Other
|
(3.3 | ) | (1.9 | ) | ||||
Effective rate
|
(0.1 | )% | 0.0 | % | ||||
F-121
F-122
(17)
Disclosures About Fair Value of Financial Instruments
(a)
Cash and Cash Equivalents
(b)
Restricted Cash
(c)
Short-term Notes Payable, Mortgages Payable,
Convertible Subordinated Debentures Payable
(18)
Sale Leasebacks, Lease Commitments and Contingencies
F-123
Capital
Operating
$
19,410
$
59,673
7,728
59,243
7,728
58,548
7,728
55,951
7,728
51,308
142,076
508,828
192,398
$
793,551
115,431
$
76,967
(19) | Subsequent Events |
F-124
Item 13.
Other Expenses of Issuance and Distribution
$
28,474
$
24,692
$
244,300
$
500,000
$
3,500,000
$
1,000,000
$
3,500
$
301,034
$
5,602,000
Item 14. | Indemnification of Directors and Officers |
II-1
II-2
Item 15.
Recent Sales of Unregistered Securities
A wholly-owned subsidiary of ours merged with and into BLC. In
connection with the merger, FBA, an affiliate of Capital Z
Partners, and certain members of our management, including our
chief executive officer, received an aggregate of
20,000,000 shares of our common stock, representing 34.5%
of our outstanding common stock prior to this offering, for all
of their
II-3
outstanding common stock of BLC or membership interests in FBA,
as applicable. As a result of the merger, BLC became our
wholly-owned subsidiary.
FEBC-ALT Investors purchased from Fortress Investment
Trust II, an affiliate of Fortress, all of the outstanding
membership interests of FIT REN, which had recently acquired
certain senior living facilities from Prudential Financial,
Inc., for an aggregate purchase price of approximately
$282.4 million (including the assumption of approximately
$171.0 million of debt). Immediately after the purchase,
the membership interests of FIT REN were contributed to Alterra.
As a result FIT REN became a wholly-owned subsidiary of Alterra
and Fortress Investment Trust II became a member of
FEBC-ALT Investors, Alterras indirect parent company. In
connection with the merger of FEBC-ALT Investors described
below, Fortress Investment Trust II received
11,750,000 shares of our common stock, representing 20.3%
of our outstanding common stock prior to this offering, for its
interest in FIT REN.
A wholly-owned subsidiary of ours merged with and into FEBC-ALT
Investors, Alterras indirect parent company. In the
merger, FIT-ALT Investor, Fortress Investment Trust II,
Emeritus, NW Select and certain members of our management, each
of which was a member of FEBC-ALT Investors, received an
aggregate of 29,750,000 shares of our common stock,
representing 51.3% of our outstanding common stock prior to this
offering, for all of the outstanding membership interests of
FEBC-ALT Investors. FIT-ALT Investor is an affiliate of
Fortress. As a result of the merger, Alterra became our
wholly-owned subsidiary.
A wholly-owned subsidiary of ours merged with and into Fortress
CCRC. In the merger, Fortress Investment Trust II received
an aggregate of 8,250,000 shares of our common stock,
representing 14.2% of our outstanding common stock prior to this
offering, for all of the outstanding membership interests of
Fortress CCRC. Fortress CCRC owns, through its wholly-owned
subsidiaries, six senior living facilities. As a result of the
merger, Fortress CCRC became our wholly-owned subsidiary.
Item 16.
Exhibits and Financial Statement Schedules
A.
Exhibits
Exhibit No.
Description
1
.1
Form of Underwriting Agreement
2
.1.1**
Stock Purchase Agreement, dated
June 18, 2004, by and among Fortress Brookdale Acquisition
LLC, Provident Senior Living Trust and BLC Senior Holdings, Inc.
2
.1.2**
Amendment No. 1 to Stock
Purchase Agreement dated August 2, 2004, by and among
Fortress Brookdale Acquisition LLC, Provident Senior Living
Trust and BLC Holdings Inc.
2
.1.3**
Amendment No. 2 to Stock
Purchase Agreement dated October 17, 2004, by and among
Fortress Brookdale Acquisition LLC, Provident Senior Living
Trust and BLC Holdings Inc.
2
.2.1**
Asset Purchase Agreement, dated as
of September 3, 2004, by and among Fortress CCRC
Acquisition LLC, as purchaser, Fortress Investment Fund II
LLC, as guarantor, and The National Benevolent Association of
the Christian Church (Disciples of Christ) and certain of its
affiliated entities, as sellers.
2
.2.2**
Letter Agreement, dated
March 9, 2005, by and among The National Benevolent
Association of the Christian Church (Disciples of Christ),
Fortress CCRC Acquisition LLC and Fortress Investment
Fund II LLC, regarding amendment of the Asset Purchase
Agreement, dated as of September 3, 2004
2
.2.3**
Letter Agreement dated
April 6, 2005, by and among The National Benevolent
Association of the Christian Church (Disciples of Christ),
Fortress CCRC Acquisition, LLC, and Fortress Investment
Fund II LLC, regarding Asset Purchase Agreement, dated as
of September 3, 2004
2
.2.4**
Letter Agreement, dated
April 14, 2005, by and among The National Benevolent
Association of the Christian Church (Disciples of Christ),
Fortress NBA Acquisition LLC, and Fortress Investment
Fund II LLC, regarding Asset Purchase Agreement, dated as
of September 3, 2004
2
.2.5**
Supplemental Agreement with Respect
to the Asset Purchase Agreement, dated as of September 30,
2004, by and among Fortress CCRC Acquisition LLC, Fortress
Investment Fund II LLC, The National Benevolent Association
of the Christian Church (Disciples of Christ) and certain of its
affiliated entities and the Official Committee of Residents
appointed in Chapter 11 Case of The National Benevolent
Association of the Christian Church (Disciples of Christ)
2
.3.1**
Purchase and Sale Agreement, dated
March 16, 2005, by and among SHP Pacific Inn, LLC; SHP Nohl
Ranch, LLC; SHP Gables, LLC; SHP Oak Tree Villa, LLC; SHP
Lexington, LLC; SHP Inn at the Park, LLC; SHP Paulin Creek, LLC;
SHP Mirage Inn, LLC; SHP Ocean House, LLC, as sellers, and FIT
REN LLC, as purchaser
2
.3.2**
First Amendment to Purchase and
Sale Agreement, dated June 10, 2005, by and between SHP
Pacific Inn, LLC; SHP Nohl Ranch, LLC; SHP Gables, LLC; SHP Oak
Tree Villa, LLC; SHP Lexington, LLC; SHP Inn at the Park, LLC;
SHP Paulin Creek, LLC; SHP Mirage Inn, LLC; and SHP Ocean House,
LLC, as seller, and FIT REN LLC, as buyer.
2
.4**
Amended and Restated Stock Purchase
Agreement, dated October 19, 2004, between Alterra
Healthcare Corporation and Provident Senior Living Trust,
related to the Brookdale Tax Matters Agreement
2
.5**
Purchase and Sale Agreement, dated
as of February 28, 2003, by and among ALS Venture II,
Inc. and Wynwood of Chapel Hill LLC, as sellers, and SNH ALT
Leased Properties Trust, as purchaser
2
.6
Reserved.
2
.7**
Membership Interest Purchase
Agreement (Creve Coeur), dated as of March 1, 2005, between
Brookdale Development, LLC and DBF Consulting, LLC
2
.8**
Stock Purchase Agreement (Raleigh),
dated as of March 1, 2005, between Brookdale Development,
LLC and DBF Consulting, LLC
2
.9**
Stock Purchase Agreement (Glen
Ellyn), dated as of March 1, 2005, between Brookdale
Development, LLC and DBF Consulting, LLC
II-4
Exhibit No. | Description | |||
2 | .10** | Membership Interest Purchase Agreement (Trillium Place), dated as of March 1, 2005, between Brookdale Development, LLC and DBF Consulting, LLC | ||
2 | .11** | Membership Interest Purchase Agreement, dated June 29, 2005, by and among NW Select LLC, Emeritus Corporation, FIT-ALT Investor LLC and Brookdale Senior Living Inc. | ||
2 | .12** | Conveyance Agreement, dated as of September 30, 2005, by and among Brookdale Senior Living Inc., Brookdale Living Communities, Inc., BSL Brookdale Merger Inc., BSL CCRC Merger Inc., BSL FEBC Merger Inc., Emeritus Corporation, FEBC-ALT Investors LLC, FIT-ALT Investor LLC, Fortress CCRC Acquisition LLC, Fortress Investment Trust II, Fortress Registered Investment Trust, Fortress Brookdale Acquisition LLC, Health Partners and NW Select LLC | ||
3 | .1** | Amended and Restated Certificate of Incorporation of the Company | ||
3 | .2** | Amended and Restated By-laws of the Company | ||
4 | .1 | Form of Certificate for common stock | ||
4 | .2** | Form of Stockholders Agreement among Brookdale Senior Living Inc., Fortress Brookdale Acquisition LLC, Fortress Investment Trust II and Health Partners | ||
4 | .3** | Governance Agreement, dated as of September 30, 2005, among Brookdale Senior Living Inc., Fortress Brookdale Acquisition LLC, Fortress Investment Trust II and Health Partners | ||
4 | .4** | Stockholders and Voting Agreement, dated as of June 29, 2005, by and among Brookdale Senior Living Inc., FIT-ALT Investor LLC, Emeritus Corporation and NW Select LLC | ||
5 | .1 | Opinion of Skadden, Arps, Slate, Meagher & Flom LLP relating to the validity of the common stock | ||
10 | .1.1** | Agreement Regarding Leases, dated October 19, 2004, by and between Brookdale Provident Properties, LLC and PSLT-BLC Properties Holdings, LLC | ||
10 | .1.2** | Letter Agreement, dated March 28, 2005, regarding the Agreement Regarding Leases, dated October 19, 2004, by and between Brookdale Provident Properties, LLC and PSLT-BLC Properties Holdings, LLC | ||
10 | .2** | Guaranty of Agreement Regarding Leases, dated October 19, 2004, by Brookdale Living Communities, Inc., in favor of PSLT-BLC Properties Holdings, LLC | ||
10 | .3.1** | Tax Matters Agreement, dated as of June 18, 2004, by and among Fortress Brookdale Acquisition LLC, Provident Senior Living Trust and Brookdale Living Communities, Inc. | ||
10 | .3.2** | Letter Agreement, dated March 28, 2005, amending the Tax Matters Agreement, dated as of June 18, 2004, by and among Fortress Brookdale Acquisition LLC, Provident Senior Living Trust and Brookdale Living Communities, Inc., related to the Brookdale Agreement Regarding Leases | ||
10 | .4.1** | Master Lease Agreement, dated January 28, 2004, between Ventas Realty, Limited Partnership, BLC Adrian-GC, LLC, BLC Albuquerque-GC, LLC, BLC Dayton-GC, LLC and BLC Fort Myers-GC, LLC | ||
10 | .4.2** | First Amendment to Master Lease Agreement, dated February 20, 2004, by and between Ventas Realty, Limited Partnership; BLC Adrian-GC, LLC; BLC Albuquerque-GC, LLC; BLC Dayton-GC, LLC; BLC Fort Myers-GC, LLC; BLC Bristol-GC, LLC; and BLC Tavares-GC, LLC | ||
10 | .4.3** | Second Amendment to Master Lease Agreement, dated March 30, 2004, by and between Ventas Realty, Limited Partnership; BLC Adrian-GC, LLC; BLC Albuquerque-GC, LLC; BLC Dayton-GC, LLC; BLC Fort Myers-GC, LLC; BLC Bristol-GC, LLC; BLC Tavares-GC, LLC; BLC Las Vegas-GC, LLC; BLC Lubbock-GC, L.P.; and BLC Overland Park-GC, LLC | ||
10 | .4.4** | Third Amendment to Master Lease Agreement, dated May 13, 2004, by and between Ventas Realty, Limited Partnership; BLC Adrian-GC, LLC; BLC Albuquerque-GC, LLC; BLC Dayton-GC, LLC; BLC Fort Myers-GC, LLC; BLC Bristol-GC, LLC; BLC Tavares-GC, LLC; BLC Las Vegas-GC, LLC; BLC Lubbock-GC, L.P.; BLC Overland Park-GC, LLC; and Brookdale Living Communities of Illinois-GV, LLC |
II-5
Exhibit No. | Description | |||
10 | .4.5** | Fourth Amendment to Master Lease Agreement, dated October 19, 2004, by and among Ventas Realty, Limited Partnership; BLC Adrian-GC, LLC; BLC Albuquerque-GC, LLC; BLC Dayton-GC, LLC; BLC Fort Myers-GC, LLC; BLC Bristol-GC, LLC; BLC Tavares-GC, LLC; BLC Las Vegas-GC, LLC; BLC Lubbock-GC, L.P.; BLC Overland Park-GC, LLC; and Brookdale Living Communities of Illinois-GV, LLC | ||
10 | .4.6** | Fifth Amendment to Master Lease Agreement, dated May 18, 2005, effective as of April 30, 2005, by and between Ventas Realty, Limited Partnership, BLC Adrian-GC, LLC, BLC Albuquerque-GC, LLC, BLC Dayton-GC, LLC, BLC Fort Myers-GC, LLC, BLC Bristol-GC, LLC, BLC Tavares-GC, LLC, BLC Las Vegas-GC, LLC, BLC Lubbock-GC, L.P., BLC Overland Park-GC, LLC, Brookdale Living Communities Of Illinois-GV, LLC, BLC Belleville-GC, LLC, BLC Findlay-GC, LLC, and BLC Springfield-GC, LLC | ||
10 | .5** | Form of Property Lease Agreement with respect to the Provident-Brookdale properties | ||
10 | .6** | Form of Lease Guaranty with respect to the Provident-Brookdale properties | ||
10 | .7.1** | Guaranty of Lease, dated as of January 28, 2004, by Brookdale Living Communities, Inc., for the benefit of Ventas Realty, Limited Partnership | ||
10 | .7.2** | First Amendment to Guaranty of Lease, dated as of February 20, 2004, by Brookdale Living Communities, Inc. for the benefit of Ventas Realty, Limited Partnership | ||
10 | .7.3** | Second Amendment to Guaranty of Lease, dated as of February 26, 2004, by Brookdale Living Communities, Inc. for the benefit of Ventas Realty, Limited Partnership | ||
10 | .7.4** | Third Amendment to Guaranty of Lease, dated as of March 10, 2004, by Brookdale Living Communities, Inc. for the benefit of Ventas Realty, Limited Partnership and Ventas Kansas City I, LLC | ||
10 | .7.5** | Fourth Amendment to Guaranty of Lease, dated as of March 30, 2004, by Brookdale Living Communities, Inc. for the benefit of Ventas Realty, Limited Partnership; Ventas Kansas City I, LLC; Ventas Belleville, LLC; and Ventas Springfield/Findlay, LLC | ||
10 | .7.6** | Fifth Amendment to Guaranty of Lease, dated as of May 13, 2004, by Brookdale Living Communities, Inc. for the benefit of Ventas Realty, Limited Partnership; Ventas Kansas City I, LLC; Ventas Belleville, LLC; Ventas Farmington Hills, LLC; and Ventas Springfield/Findlay, LLC | ||
10 | .7.7** | Sixth Amendment to Guaranty of Lease, dated as of June 18, 2004, by Brookdale Living Communities, Inc. for the benefit of Ventas Realty, Limited Partnership; Ventas Kansas City I, LLC; Ventas Belleville, LLC; Ventas Springfield/Findlay, LLC; and Ventas Farmington Hills, LLC | ||
10 | .7.8** | Seventh Amendment to Guaranty of Lease, dated as of April 30, 2005, by Brookdale Living Communities, Inc. for the benefit of Ventas Realty, Limited Partnership; Ventas Kansas City I, LLC; Ventas Belleville, LLC; Ventas Springfield/Findlay, LLC; and Ventas Farmington Hills, LLC | ||
10 | .8** | Master Lease Agreement, dated May 1, 2002, by and between CMCP Properties, Inc., BLC Properties I, LLC and, for certain limited purposes, Brookdale Management Holding, LLC | ||
10 | .9** | Property Lease Agreement, dated May 1, 2002, by and between CMCP-Club Hill, LP, BLC-Club Hill, L.P. and, for certain limited purposes, Brookdale Management of Texas, L.P. | ||
10 | .10** | Property Lease Agreement, dated May 1, 2002, by and between CMCP-Roswell, LLC, BLC-Roswell, LLC and, for certain limited purposes, Brookdale Management-II, LLC | ||
10 | .11** | Property Lease Agreement, dated May 1, 2002, by and between CMCP-Pinecastle, LLC, BLC-Pinecastle, LLC and, for certain limited purposes, Brookdale Management-II, LLC | ||
10 | .12** | Property Lease Agreement, dated May 1, 2002, by and between CMCP-Williamsburg, LLC, BLC-Williamsburg, LLC and, for certain limited purposes, Brookdale Management-II, LLC | ||
10 | .13** | Property Lease Agreement, dated May 1, 2002, by and between CMCP-Montrose, LLC, BLC-Montrose, LLC and, for certain limited purposes, Brookdale Management Akron, LLC |
II-6
Exhibit No. | Description | |||
10 | .14** | Property Lease Agreement, dated as of May 1, 2002, by and between CMCP Island Lake, LLC and BLC Island Lake, LLC and, for certain limited purposes, Brookdale Management-II, LLC | ||
10 | .15** | Lease Guaranty, dated as of May 1, 2002, by BLC Properties I, LLC in favor of CMCP-Roswell, LLC | ||
10 | .16** | Indemnity and Guaranty Agreement, dated May 1, 2002, by Capstead Mortgage Corporation, Brookdale Living Communities, Inc., BLC Properties I, LLC, BLC Island Lake, LLC, BLC- Windsong, LLC, BLC-Williamsburg, LLC, BLC-Montrose, LLC and BLC-Pinecastle, LLC | ||
10 | .17** | Amended and Restated Limited Liability Company Agreement of Brookdale Senior Housing, LLC, dated October 19, 2004, among The Northwestern Mutual Life Insurance Company, AH Michigan Owner Limited Partnership, and AH Pennsylvania Owner Limited Partnership | ||
10 | .18** | Master Agreement regarding Brookdale Senior Housing, LLC and related matters, dated September 30, 2003, by and among The Northwestern Mutual Life Insurance Company, Brookdale Senior Housing, LLC, AH Michigan Owner Limited Partnership, AH Pennsylvania Owner Limited Partnership, AH Texas Owner Limited Partnership and Brookdale Living Communities, Inc. | ||
10 | .19** | Guarantee, dated September 30, 2003, by Brookdale Living Communities, Inc. on behalf of AH Pennsylvania Owner Limited Partnership and AH Michigan Owner Limited Partnership | ||
10 | .20** | Guarantee, dated September 30, 2003, by AH Pennsylvania Owner Limited Partnership, in favor of Brookdale Senior Housing, LLC | ||
10 | .21** | Southfield Guarantee of Recourse Obligations (Single Guarantor), dated September 30, 2003, by Brookdale Living Communities, Inc. in connection with the loan made by Northwestern Mutual Life Insurance Company to Brookdale Senior Housing, LLC | ||
10 | .22** | Guarantee of Member Obligations, dated September 30, 2003, among The Northwestern Mutual Life Insurance Company, AH Michigan Owner Limited Partnership, and AH Pennsylvania Owner Limited Partnership for Brookdale Senior Housing, LLC | ||
10 | .23** | Devonshire First Open-End Mortgage and Security Agreement, dated September 30, 2003, between Brookdale Senior Housing, LLC and The Northwestern Mutual Life Insurance Company | ||
10 | .24** | Devonshire Second Open-End Mortgage and Security Agreement, dated September 30, 2003, between Brookdale Senior Housing, LLC and The Northwestern Mutual Life Insurance Company | ||
10 | .25** | Southfield First Mortgage and Security Agreement, dated September 30, 2003, between Brookdale Senior Housing, LLC and The Northwestern Mutual Life Insurance Company | ||
10 | .26** | Southfield Second Mortgage and Security Agreement, dated September 30, 2003, between Brookdale Senior Housing, LLC and The Northwestern Mutual Life Insurance Company | ||
10 | .27** | Gaines Ranch First Deed of Trust and Security Agreement, dated September 30, 2003, between AH Texas Owner Limited Partnership, Henry F. Lange, and The Northwestern Mutual Life Insurance Company | ||
10 | .28** | Gaines Ranch Second Deed of Trust and Security Agreement, dated September 30, 2003, among AH Texas Owner Limited Partnership, Henry F. Lange, and Brookdale Senior Housing, LLC | ||
10 | .29** | Gaines Ranch Third Deed of Trust and Security Agreement, dated September 30, 2003, among AH Texas Owner Limited Partnership, Henry F. Lange and The Northwestern Mutual Life Insurance Company | ||
10 | .30** | Loan Agreement, dated March 30, 2005, among AH Battery Park Owner, LLC, KG Missouri-CC Owner, LLC, AH Illinois Owner, LLC, AH North Carolina, Owner, LLC, AH Ohio-Columbus Owner, LLC, Guarantee Bank, GMAC Commercial Mortgage Corporation and GMAC Commercial Mortgage Bank |
II-7
Exhibit No. | Description | |||
10 | .31** | Guaranty, dated March 30, 2005, among Brookdale Living Communities, Inc., Guarantee Bank, GMAC Commercial Mortgage Corporation and GMAC Commercial Mortgage Bank | ||
10 | .32.1** | Loan Agreement, dated October 19, 2004, between LaSalle Bank National Association and Brookdale Living Communities, Inc. | ||
10 | .32.2** | Amendment No. 1 to Loan Agreement, dated March 1, 2005, between LaSalle National Bank National Association and Brookdale Living Communities, Inc. | ||
10 | .32.3** | Amendment No. 2 to Loan Agreement, dated March 24, 2005, between LaSalle National Bank National Association and Brookdale Living Communities, Inc. | ||
10 | .32.4** | Amendment No. 3 to Loan Agreement, dated May 26, 2005, between LaSalle National Bank National Association and Brookdale Living Communities, Inc. | ||
10 | .33** | Agreement for Management Services, dated July 13, 2004, effective as of August 1, 2004 by and between Cyprus Senior Management Services Limited Partnership and Brookdale Cyprus Management LLC | ||
10 | .34** | Loan Agreement, dated as of April 6, 2005, among General Electric Capital Corporation, Merrill Lynch Capital, FIT NBA Cypress Village LLC, FIT NBA Foxwood Springs LLC, FIT NBA Kansas Christian LLC, FIT NBA Patriot Heights LP, FIT NBA Ramsey LLC, FIT NBA Robin Run LP, and FIT NBA Skyline LLC | ||
10 | .35** | Assumption Agreement, dated September 30, 2005, by FIT Cypress Village LLC (F/K/A FIT NBA Cypress Village LLC), FIT Foxwood Springs LLC (F/K/A FIT NBA Foxwood Springs LLC), FIT Patriot Heights LP (F/K/A FIT NBA Patriot Heights LP), FIT Ramsey LLC (F/K/A FIT NBA Ramsey LLC), FIT Robin Run LP (F/K/A FIT NBA Robin Run LP), and FIT Skyline LLC (F/K/A FIT NBA Skyline LLC), Fortress Investment Trust II, Brookdale Senior Living Inc., Fortress CCRC Acquisition LLC (F/K/A Fortress NBA Acquisition, LLC), FIT Patriot Heights GP, Inc. (F/K/A FIT NBA Patriot Heights GP, Inc.), FIT Robin Run GP, Inc. (F/K/A FIT NBA Robin Run GP, Inc.), BLC-Cypress Village, LLC, BLC-Foxwood Springs, LLC, BLC-Ramsey, LLC, BLC-Village At Skyline, LLC, BLC-Patriot Heights, L.P., BLC-Robin Run, L.P., General Electric Capital Corporation, and Merrill Lynch Capital | ||
10 | .36** | Loan Agreement, dated December 31, 2004, by and between AHC Purchaser, Inc. and Merrill Lynch Capital | ||
10 | .37** | Guaranty, dated as of December 31, 2004, by Alterra Healthcare Corporation and AHC Purchaser Holding, Inc. for the benefit of Merrill Lynch Capital | ||
10 | .38** | Loan Agreement, dated as of December 31, 2004, by and between AHC Purchaser Holding II, Inc. and Merrill Lynch Capital | ||
10 | .39** | Guaranty, dated as of December 31, 2004, by Alterra Healthcare Corporation for the benefit of Merrill Lynch Capital | ||
10 | .40** | Cross-Collateralization, Cross-Default and Cross-Guaranty Agreement, dated May 31, 2005, among AHC Purchaser, Inc., AHC Purchaser Holding II, Inc., Alterra Healthcare Corp., Ithaca Bundy Tenant, Inc., Ithaca Sterling Cottage Operator, Inc., Niagara Sterling Cottage Operator, Inc., Niagara Nash Tenant, Inc., and Clinton Sterling Cottage Operator, Inc., AHC Purchaser Holding, Inc. and Alternative Living Services New York, Inc., and Merrill Lynch Capital | ||
10 | .41.1** | Amended and Restated Master Lease Agreement, dated as of July 1, 2001, by and among Health Care REIT, Inc.; HCRI North Carolina Properties, LLC; HCRI Tennessee Properties, Inc.; HCRI Texas Properties, Ltd. and Alterra Healthcare Corporation | ||
10 | .41.2** | First Amendment to the Amended and Restated Master Lease Agreement, dated as of July 16, 2001, by and among Health Care REIT, Inc.; HCRI North Carolina Properties, LLC; HCRI Tennessee Properties, Inc.; HCRI Texas Properties, Ltd. and Alterra Healthcare Corporation |
II-8
Exhibit No. | Description | |||
10 | .41.3** | Second Amendment to the Amended and Restated Master Lease Agreement, dated as of December 21, 2001, by and among Health Care REIT, Inc.; HCRI Indiana Properties, LLC; HCRI North Carolina Properties, LLC; HCRI Tennessee Properties, Inc.; HCRI Texas Properties, Ltd.; HCRI Wisconsin Properties, LLC; and Alterra Healthcare Corporation | ||
10 | .41.4** | Third Amendment to the Amended and Restated Master Lease Agreement, dated as of March 19, 2002, by and among Health Care REIT, Inc.; HCRI Indiana Properties, LLC; HCRI North Carolina Properties, LLC; HCRI Tennessee Properties, Inc.; HCRI Texas Properties, Ltd.; HCRI Wisconsin Properties, LLC; and Alterra Healthcare Corporation | ||
10 | .41.5** | Fourth Amendment to the Amended and Restated Master Lease Agreement, dated as of December 27, 2002, by and among Health Care REIT, Inc.; HCRI Indiana Properties, LLC; HCRI North Carolina Properties, LLC; HCRI Tennessee Properties, Inc.; HCRI Texas Properties, Ltd.; HCRI Wisconsin Properties, LLC; and Alterra Healthcare Corporation. | ||
10 | .41.6** | Fifth Amendment to Amended and Restated Master Lease Agreement, dated as of December 4, 2003, by and among Health Care REIT, Inc.; HCRI Indiana Properties, LLC; HCRI North Carolina Properties, LLC; HCRI Tennessee Properties, Inc.; HCRI Texas Properties, Ltd.; HCRI Wisconsin Properties, LLC; and Alterra Healthcare Corporation | ||
10 | .41.7** | Sixth Amendment to Amended and Restated Master Lease Agreement, dated as of June 30, 2004, by and among Health Care REIT, Inc.; HCRI Indiana Properties, LLC; HCRI North Carolina Properties III, Limited Partnership; HCRI Tennessee Properties, Inc.; HCRI Texas Properties, Ltd.; HCRI Wisconsin Properties, LLC; and Alterra Healthcare Corporation | ||
10 | .42.1** | Master Lease, dated as of April 9, 2002, by and between Alterra Healthcare Corporation and Nationwide Health Properties, Inc. and its affiliates | ||
10 | .42.2** | First Amendment to Master Lease and Consent to Transfer, dated as of December 2, 2003, by and among Alterra Healthcare Corporation; Nationwide Health Properties, Inc.; NH Texas Properties Limited Partnership; MLD Delaware trust; MLD Properties, LLC; NHP Silverwood Investments, Inc.; and NHP Westwood Investments, Inc. | ||
10 | .42.3** | Second Amendment to Master Lease, dated as of June 28, 2005, by and among Alterra Healthcare Corporation and Nationwide Health Properties, Inc., NH Texas Properties Limited Partnership, MLD Delaware Trust, MLD Properties, LLC, NHP Silverwood Investments, Inc., and NHP Westwood Investments, Inc. | ||
10 | .43.1** | Master Lease, dated as of April 9, 2002, by and among JER/NHP Senior Living Acquisition, LLC, JER/NHP Senior Living Texas, L.P., JER/NHP Senior Living Wisconsin, LLC, JER/NHP Senior Living Kansas, Inc., ALS Leasing, Inc. and Assisted Living Properties, Inc. | ||
10 | .43.2** | First Amendment to Master Lease, Affirmation of Guaranty and Consent to Transfer, dated as of September 12, 2003, by and among ALS Leasing, Inc., Assisted Living Properties, Inc., JER/NHP Senior Living Acquisition, LLC, JER/NHP Senior Living Texas, LP, JER/NHP Senior Living Wisconsin, LLC, JER/NHP Senior Living Kansas, Inc., and Alterra Healthcare Corporation | ||
10 | .43.3** | Second Amendment to Master Lease, dated as of February 23, 2004, by and among ALS Leasing, Inc., Assisted Living Properties, Inc., JER/NHP Senior Living Acquisition, LLC, JER/NHP Senior Living Texas, LP, JER/NHP Senior Living Wisconsin, LLC, JER/NHP Senior Living Kansas, Inc., and Alterra Healthcare Corporation | ||
10 | .44** | Guaranty of Lease and Letter of Credit Agreement dated as of April 9, 2002 by and among Alterra Healthcare Corporation, JER/NHP Senior Living Acquisition, LLC, JER/NHP Senior Living Texas, L.P., JER/NHP Senior Living Wisconsin, LLC, and JER/NHP Senior Living Kansas, Inc. | ||
10 | .45.1** | Master Lease (Alterra Pool 2), dated as of October 7, 2002, by and between JER/NHP Senior Living Acquisition, LLC and ALS Leasing, Inc. |
II-9
Exhibit No. | Description | |||
10 | .45.2** | First Amendment to Master Lease, Affirmation of Guaranty and Consent to Transfer, dated September 12, 2003, by and among ALS Leasing, Inc., JER/NHP Senior Living Acquisition, LLC and Alterra Healthcare Corporation | ||
10 | .46** | Guaranty of Lease and Letter of Credit Agreement, dated as of October 7, 2002, by and between Alterra Healthcare Corporation and JER/NHP Senior Living Acquisition, LLC | ||
10 | .47** | Amended and Restated Lease, dated December 15, 2002, between LTC-K1 Inc., as lessor and Alterra Healthcare Corporation, as lessee | ||
10 | .48** | Amended and Restated Lease, dated December 15, 2002, between LTC-K2 Limited Partnership, as lessor and Alterra Healthcare Corporation, as lessee | ||
10 | .49** | Master Lease Agreement, dated December 15, 2002, between Kansas-LTC Corporation, as lessor, and Alterra Healthcare Corporation, as lessee | ||
10 | .50** | Master Lease Agreement, dated December 15, 2002 among LTC Properties, Inc., Texas-LTC Limited Partnership, and North Carolina Real Estate Investments, LLC, as lessor, and Alterra Healthcare Corporation, as lessee | ||
10 | .51.1** | Lease Agreement, dated as of February 28, 2003, by AHC Trailside, Inc. in favor of SNH ALT Leased Properties Trust | ||
10 | .51.2** | First Amendment to Lease Agreement, dated as of December 4, 2003, by and between AHC Trailside, Inc., and SNH ALT Leased Properties Trust | ||
10 | .52.1** | Guaranty Agreement, dated as of February 28, 2003, by Alterra Healthcare Corporation in favor of SNH ALT Leased Properties Trust | ||
10 | .52.2** | First Amendment to Guaranty Agreement, dated as of December 4, 2003, by Alterra Healthcare Corporation in favor of SNH ALT Leased Properties Trust | ||
10 | .53** | Tri-Party Agreement, dated December 4, 2003, by and among SNH ALT Mortgaged Properties Trust, SNH ALT Leased Properties Trust, FIT-ALT SNH Loan LLC, Pomacy Corporation, AHC Trailside, Inc., and Alterra Healthcare Corporation | ||
10 | .54.1** | Property Lease Agreement, dated October 20, 2004, by and between PSLT-ALS Properties I, LLC, and ALS Properties Tenant I, LLC | ||
10 | .54.2** | Amended and Restated Property Lease Agreement, dated as of December 16, 2004, by and between PSLT-ALS Properties II, LLC and ALS Properties Tenant II, LLC | ||
10 | .55** | Sublease Agreement, dated October 21, 2004, by and between ALS Properties Tenant I, LLC and Alterra Healthcare Corporation | ||
10 | .56** | Agreement Regarding Leases, dated October 20, 2004, by and between ALS Properties Holding Company, LLC and PSLT-ALS Properties Holdings, LLC | ||
10 | .57** | Guaranty of Agreement Regarding Leases, dated October 20, 2004, by Alterra Healthcare Corporation in favor of PSLT-ALS Properties Holdings, LLC | ||
10 | .58** | Form of Property Lease Agreement with respect to the Provident-Alterra properties | ||
10 | .59** | Form of Lease Guaranty with respect to the Provident-Alterra Properties | ||
10 | .60.1** | Multifamily Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing (California), dated June 21, 2005, by FIT REN Park LP, as borrower, to Fidelity National Title Company, as trustee, for the benefit of GMAC Commercial Mortgage Bank, as lender | ||
10 | .60.2** | Multifamily Note in the amount of $22,545,000, dated June 21, 2005, from FIT REN Park, LP to GMAC Commercial Mortgage Bank | ||
10 | .60.3** | Exceptions to Non Recourse Guaranty, dated June 21, 2005, by Fortress Investment Trust II for the benefit of GMAC Commercial Mortgage Bank | ||
10 | .60.4** | Consent to Transfer and Release Agreement, dated September 30, 2005, by and among Fortress Investment Trust II, Alterra Healthcare Corporation, Brookdale Senior Living Inc., FIT REN Park LP and Fannie Mae | ||
10 | .61.1** | Multifamily Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing (California), dated June 21, 2005, by FIT REN Nohl Ranch LP, as borrower, to Fidelity National Title Company, as trustee, for the benefit of GMAC Commercial Mortgage Bank, as lender |
II-10
Exhibit No. | Description | |||
10 | .61.2** | Multifamily Note in the amount of $7,920,000, dated June 21, 2005, from FIT REN Nohl Ranch, LP to GMAC Commercial Mortgage Bank | ||
10 | .61.3** | Exceptions to Non Recourse Guaranty, dated June 21, 2005, by Fortress Investment Trust II for the benefit of GMAC Commercial Mortgage Bank | ||
10 | .61.4** | Consent to Transfer and Release Agreement, dated September 30, 2005, by and among Fortress Investment Trust II, Alterra Healthcare Corporation, Brookdale Senior Living Inc., FIT REN Nohl Ranch LP and Fannie Mae | ||
10 | .62.1** | Multifamily Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing (California), dated June 21, 2005, by FIT REN Mirage Inn LP, as borrower, to Fidelity National Title Company, as trustee, for the benefit of GMAC Commercial Mortgage Bank, as lender | ||
10 | .62.2** | Multifamily Note in the amount of $15,000,000, dated June 21, 2005, from FIT REN Mirage Inn, LP to GMAC Commercial Mortgage Bank | ||
10 | .62.3** | Exceptions to Non Recourse Guaranty, dated June 21, 2005, by Fortress Investment Trust II for the benefit of GMAC Commercial Mortgage Bank | ||
10 | .62.4** | Consent to Transfer and Release Agreement, dated September 30, 2005, by and among Fortress Investment Trust II, Alterra Healthcare Corporation, Brookdale Senior Living Inc., FIT REN Mirage Inn LP and Fannie Mae | ||
10 | .63.1** | Multifamily Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing (California), dated June 21, 2005, by FIT REN Pacific Inn LP, as borrower, to Fidelity National Title Company, as trustee, for the benefit of GMAC Commercial Mortgage Bank, as lender | ||
10 | .63.2** | Multifamily Note in the amount of $25,775,000, dated June 21, 2005, from FIT REN Pacific Inn, LP to GMAC Commercial Mortgage Bank | ||
10 | .63.3** | Exceptions to Non Recourse Guaranty, dated June 21, 2005, by Fortress Investment Trust II for the benefit of GMAC Commercial Mortgage Bank | ||
10 | .63.4** | Consent to Transfer and Release Agreement, dated September 30, 2005, by and among Fortress Investment Trust II, Alterra Healthcare Corporation, Brookdale Senior Living Inc., FIT REN Pacific Inn LP and Fannie Mae | ||
10 | .64.1** | Multifamily Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing (California), dated June 21, 2005, by FIT REN The Gables LP, as borrower, to Fidelity National Title Company, as trustee, for the benefit of GMAC Commercial Mortgage Bank, as lender | ||
10 | .64.2** | Multifamily Note in the amount of $5,255,000, dated June 21, 2005, from FIT REN The Gables, LP to GMAC Commercial Mortgage Bank | ||
10 | .64.3** | Exceptions to Non Recourse Guaranty, dated June 21, 2005, by Fortress Investment Trust II for the benefit of GMAC Commercial Mortgage Bank | ||
10 | .64.4** | Consent to Transfer and Release Agreement, dated September 30, 2005, by and among Fortress Investment Trust II, Alterra Healthcare Corporation, Brookdale Senior Living Inc., FIT REN The Gables LP and Fannie Mae | ||
10 | .65.1** | Multifamily Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing (California), dated June 21, 2005, by FIT REN The Lexington LP, as borrower, to Fidelity National Title Company, as trustee, for the benefit of GMAC Commercial Mortgage Bank, as lender | ||
10 | .65.2** | Multifamily Note in the amount of $10,867,974.00, dated June 21, 2005 from FIT REN The Lexington, LP to GMAC Commercial Mortgage Bank | ||
10 | .65.3** | Exceptions to Non Recourse Guaranty, dated June 21, 2005, by Fortress Investment Trust II for the benefit of GMAC Commercial Mortgage Bank | ||
10 | .65.4** | Consent to Transfer and Release Agreement, dated September 30, 2005, by and among Fortress Investment Trust II, Alterra Healthcare Corporation, Brookdale Senior Living Inc., FIT REN The Lexington LP and Fannie Mae |
II-11
Exhibit No. | Description | |||
10 | .66.1** | Multifamily Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing (California), dated June 21, 2005, by FIT REN Oak Tree LP, as borrower, to Fidelity National Title Company, as trustee, for the benefit of GMAC Commercial Mortgage Bank, as lender | ||
10 | .66.2** | Multifamily Note in the amount of $23,305,026, dated June 21, 2005, from FIT REN Oak Tree, LP to GMAC Commercial Mortgage Bank | ||
10 | .66.3** | Exceptions to Non Recourse Guaranty, dated June 21, 2005, by Fortress Investment Trust II for the benefit of GMAC Commercial Mortgage Bank | ||
10 | .66.4** | Consent to Transfer and Release Agreement, dated September 30, 2005, by and among Fortress Investment Trust II, Alterra Healthcare Corporation, Brookdale Senior Living Inc., FIT REN Oak Tree LP and Fannie Mae | ||
10 | .67.1** | Multifamily Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing (California), dated June 21, 2005, by FIT REN Paulin Creek LP, as borrower, to Fidelity National Title Company, as trustee, for the benefit of GMAC Commercial Mortgage Bank, as lender | ||
10 | .67.2** | Multifamily Note in the amount of $40,732,000, dated June 21, 2005, from FIT REN Paulin Creek, LP to GMAC Commercial Mortgage Bank | ||
10 | .67.3** | Exceptions to Non Recourse Guaranty, dated June 21, 2005, by Fortress Investment Trust II for the benefit of GMAC Commercial Mortgage Bank | ||
10 | .67.4** | Consent to Transfer and Release Agreement, dated September 30, 2005, by and among Fortress Investment Trust II, Alterra Healthcare Corporation, Brookdale Senior Living Inc., FIT REN Paulin Creek LP and Fannie Mae | ||
10 | .68.1** | Multifamily Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing (California), dated July 22, 2005, by FIT REN Ocean House LP, as borrower, to Fidelity National Title Company, as trustee, for the benefit of GMAC Commercial Mortgage Bank, as lender | ||
10 | .68.2** | Multifamily Note in the amount of $19,600,000, dated July 22, 2005, from FIT REN Ocean House, LP to GMAC Commercial Mortgage Bank | ||
10 | .68.3** | Exceptions to Non Recourse Guaranty, dated July 22, 2005, by Fortress Investment Trust II for the benefit of GMAC Commercial Mortgage Bank | ||
10 | .68.4** | Consent to Transfer and Release Agreement, dated September 30, 2005, by and among Fortress Investment Trust II, Alterra Healthcare Corporation, Brookdale Senior Living Inc., FIT REN Ocean House LP and Fannie Mae | ||
10 | .69** | Employment Agreement dated August 9, 2005, by and between Brookdale Senior Living Inc., Brookdale Living Communities, Inc. and Mark J. Schulte | ||
10 | .70** | Employment Agreement dated September 8, 2005, by and between Brookdale Senior Living Inc., Alterra Healthcare Corporation and Mark W. Ohlendorf | ||
10 | .71** | Employment Agreement dated August 9, 2005, by and between Brookdale Senior Living Inc., Brookdale Living Communities, Inc. and John P. Rijos | ||
10 | .72** | Employment Agreement dated August 9, 2005, by and between Brookdale Senior Living Inc., Brookdale Living Communities, Inc. and R. Stanley Young | ||
10 | .73** | Employment Agreement dated September 8, 2005, by and between Brookdale Senior Living Inc., a Delaware corporation, Alterra Healthcare Corporation and Kristin A. Ferge | ||
10 | .74** | Employment Agreement dated August 9, 2005, by and between Brookdale Senior Living Inc., Brookdale Living Communities, Inc. and Deborah C. Paskin | ||
10 | .75** | Brookdale Living Communities, Inc. Employee Restricted Stock Plan | ||
10 | .76** | Award Agreement dated August 9, 2005, by and between Brookdale Living Communities, Inc. and Mark J. Schulte | ||
10 | .77** | Award Agreement dated August 9, 2005, by and between Brookdale Living Communities, Inc. and John P. Rijos | ||
10 | .78** | Award Agreement dated August 9, 2005, by and between Brookdale Living Communities, Inc. and R. Stanley Young |
II-12
Exhibit No. | Description | |||
10 | .79** | Award Agreement dated August 9, 2005, by and between Brookdale Living Communities, Inc. and Deborah C. Paskin | ||
10 | .80** | FEBC-ALT Investors LLC Employee Restricted Securities Plan | ||
10 | .81** | Award Agreement dated August 9, 2005, by and between FEBC-ALT Investors LLC and Mark W. Ohlendorf | ||
10 | .82** | Award Agreement dated August 9, 2005, by and between FEBC-ALT Investors LLC and Kristin A. Ferge | ||
10 | .83.1** | ISDA Master Agreement, dated as of December 3, 2004, between Merrill Lynch Capital Services, Inc. and Fortress NBA Acquisition LLC | ||
10 | .83.2** | Confirmation Letter, dated December 3, 2004, from Merrill Lynch Capital Services, Inc. to Fortress NBA Acquisition LLC | ||
10 | .83.3** | Confirmation Letter, dated December 3, 2004, from Merrill Lynch Capital Services, Inc. to Fortress NBA Acquisition LLC | ||
10 | .83.4** | Confirmation Letter, dated December 8, 2004, from Merrill Lynch Capital Services, Inc. to Fortress NBA Acquisition LLC | ||
10 | .84.1** | ISDA Master Agreement, dated as of March 18, 2005, between Merrill Lynch Capital Services, Inc. and Alterra Healthcare Corporation | ||
10 | .84.2** | Confirmation Letter, dated March 28, 2005, from Merrill Lynch Capital Services, Inc. to Alterra Healthcare Corporation | ||
10 | .85.1** | ISDA Master Agreement, dated as of March 18, 2005, between LaSalle Bank National Association and Brookdale Living Communities, Inc. | ||
10 | .85.2** | Confirmation Letter, dated March 18, 2005, from LaSalle Bank National Association to Brookdale Living Communities, Inc. | ||
10 | .85.3** | Confirmation Letter, dated March 24, 2005, from LaSalle Bank National Association to Brookdale Living Communities, Inc. | ||
10 | .85.4** | Confirmation Letter, dated March 24, 2005, from LaSalle Bank National Association to Brookdale Living Communities, Inc. | ||
10 | .86** | Exchange and Stockholder Agreement, dated September 30, 2005, by and among Brookdale Senior Living Inc., Fortress Brookdale Acquisition LLC and Mark J. Schulte. | ||
10 | .87 | Brookdale Senior Living Omnibus Stock Incentive Plan | ||
21 | .1** | Subsidiaries of the registrant | ||
23 | .1 | Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included in Exhibit 5.1) | ||
23 | .2 | Consent of Ernst & Young LLP | ||
23 | .3 | Consent of KPMG LLP | ||
23 | .4** | Consent of Cohen & Steers Capital Advisors, LLC | ||
24 | .1** | Powers of Attorney (included on the signature pages hereto) |
** | Previously filed. |
B. | Financial Statement Schedules |
Item 17. | Undertakings |
II-13
II-14
(a) For purposes of determining any liability under the
Securities Act, the information omitted from the form of
prospectus filed as part of this Registration Statement in
reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities
Act shall be deemed to be part of this Registration Statement as
of the time it was declared effective.
(b) For the purpose of determining any liability under the
Securities Act, each post-effective amendment that contains a
form of prospectus shall be deemed to be a new Registration
Statement relating to the securities offered therein, and this
offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
II-15
BROOKDALE SENIOR LIVING INC.
By:
/s/
Mark J. Schulte
Name: Mark J. Schulte
Title:
Chief Executive Officer
Signature
Title
Date
*
Chairman of the Board
November 7, 2005
/s/
Mark J. Schulte
Chief Executive Officer
November 7, 2005
*
Executive Vice President, Chief
Financial Officer and Chief Accounting Officer
November 7, 2005
*
Director
November 7, 2005
*
Director
November 7, 2005
*By
/s/
Mark J. Schulte
Attorney-in-fact
II-16
Exhibit No.
Description
1
.1
Form of Underwriting Agreement
2
.1.1**
Stock Purchase Agreement, dated
June 18, 2004, by and among Fortress Brookdale Acquisition
LLC, Provident Senior Living Trust and BLC Senior Holdings, Inc.
2
.1.2**
Amendment No. 1 to Stock
Purchase Agreement dated August 2, 2004, by and among
Fortress Brookdale Acquisition LLC, Provident Senior Living
Trust and BLC Holdings Inc.
2
.1.3**
Amendment No. 2 to Stock
Purchase Agreement dated October 17, 2004, by and among
Fortress Brookdale Acquisition LLC, Provident Senior Living
Trust and BLC Holdings Inc.
2
.2.1**
Asset Purchase Agreement, dated as
of September 3, 2004, by and among Fortress CCRC
Acquisition LLC, as purchaser, Fortress Investment Fund II
LLC, as guarantor, and The National Benevolent Association of
the Christian Church (Disciples of Christ) and certain of its
affiliated entities, as sellers.
2
.2.2**
Letter Agreement, dated
March 9, 2005, by and among The National Benevolent
Association of the Christian Church (Disciples of Christ),
Fortress CCRC Acquisition LLC and Fortress Investment
Fund II LLC, regarding amendment of the Asset Purchase
Agreement, dated as of September 3, 2004
2
.2.3**
Letter Agreement dated
April 6, 2005, by and among The National Benevolent
Association of the Christian Church (Disciples of Christ),
Fortress CCRC Acquisition, LLC, and Fortress Investment
Fund II LLC, regarding Asset Purchase Agreement, dated as
of September 3, 2004
2
.2.4**
Letter Agreement, dated
April 14, 2005, by and among The National Benevolent
Association of the Christian Church (Disciples of Christ),
Fortress NBA Acquisition LLC, and Fortress Investment
Fund II LLC, regarding Asset Purchase Agreement, dated as
of September 3, 2004
2
.2.5**
Supplemental Agreement with Respect
to the Asset Purchase Agreement, dated as of September 30,
2004, by and among Fortress CCRC Acquisition LLC, Fortress
Investment Fund II LLC, The National Benevolent Association
of the Christian Church (Disciples of Christ) and certain of its
affiliated entities and the Official Committee of Residents
appointed in Chapter 11 Case of The National Benevolent
Association of the Christian Church (Disciples of Christ)
2
.3.1**
Purchase and Sale Agreement, dated
March 16, 2005, by and among SHP Pacific Inn, LLC; SHP Nohl
Ranch, LLC; SHP Gables, LLC; SHP Oak Tree Villa, LLC; SHP
Lexington, LLC; SHP Inn at the Park, LLC; SHP Paulin Creek, LLC;
SHP Mirage Inn, LLC; SHP Ocean House, LLC, as sellers, and FIT
REN LLC, as purchaser
2
.3.2**
First Amendment to Purchase and
Sale Agreement, dated June 10, 2005, by and between SHP
Pacific Inn, LLC; SHP Nohl Ranch, LLC; SHP Gables, LLC; SHP Oak
Tree Villa, LLC; SHP Lexington, LLC; SHP Inn at the Park, LLC;
SHP Paulin Creek, LLC; SHP Mirage Inn, LLC; and SHP Ocean House,
LLC, as seller, and FIT REN LLC, as buyer.
2
.4**
Amended and Restated Stock Purchase
Agreement, dated October 19, 2004, between Alterra
Healthcare Corporation and Provident Senior Living Trust,
related to the Brookdale Tax Matters Agreement
2
.5**
Purchase and Sale Agreement, dated
as of February 28, 2003, by and among ALS Venture II,
Inc. and Wynwood of Chapel Hill LLC, as sellers, and SNH ALT
Leased Properties Trust, as purchaser
2
.6
Reserved
2
.7**
Membership Interest Purchase
Agreement (Creve Coeur), dated as of March 1, 2005, between
Brookdale Development, LLC and DBF Consulting, LLC
2
.8**
Stock Purchase Agreement (Raleigh),
dated as of March 1, 2005, between Brookdale Development,
LLC and DBF Consulting, LLC
Exhibit No. | Description | |||
2 | .9** | Stock Purchase Agreement (Glen Ellyn), dated as of March 1, 2005, between Brookdale Development, LLC and DBF Consulting, LLC | ||
2 | .10** | Membership Interest Purchase Agreement (Trillium Place), dated as of March 1, 2005, between Brookdale Development, LLC and DBF Consulting, LLC | ||
2 | .11** | Membership Interest Purchase Agreement, dated June 29, 2005, by and among NW Select LLC, Emeritus Corporation, FIT-ALT Investor LLC and Brookdale Senior Living Inc. | ||
2 | .12** | Conveyance Agreement, dated as of September 30, 2005, by and among Brookdale Senior Living Inc., Brookdale Living Communities, Inc., BSL Brookdale Merger Inc., BSL CCRC Merger Inc., BSL FEBC Merger Inc., Emeritus Corporation, FEBC-ALT Investors LLC, FIT-ALT Investor LLC, Fortress CCRC Acquisition LLC, Fortress Investment Trust II, Fortress Registered Investment Trust, Fortress Brookdale Acquisition LLC, Health Partners and NW Select LLC | ||
3 | .1** | Amended and Restated Certificate of Incorporation of the Company | ||
3 | .2** | Amended and Restated By-laws of the Company | ||
4 | .1 | Form of Certificate for common stock | ||
4 | .2** | Form of Stockholders Agreement among Brookdale Senior Living Inc., Fortress Brookdale Acquisition LLC, Fortress Investment Trust II and Health Partners | ||
4 | .3** | Governance Agreement, dated as of September 30, 2005, among Brookdale Senior Living Inc., Fortress Brookdale Acquisition LLC, Fortress Investment Trust II and Health Partners | ||
4 | .4** | Stockholders and Voting Agreement, dated as of June 29, 2005, by and among Brookdale Senior Living Inc., FIT-ALT Investor LLC, Emeritus Corporation and NW Select LLC | ||
5 | .1 | Opinion of Skadden, Arps, Slate, Meagher & Flom LLP relating to the validity of the common stock | ||
10 | .1.1** | Agreement Regarding Leases, dated October 19, 2004, by and between Brookdale Provident Properties, LLC and PSLT-BLC Properties Holdings, LLC | ||
10 | .1.2** | Letter Agreement, dated March 28, 2005, regarding the Agreement Regarding Leases, dated October 19, 2004, by and between Brookdale Provident Properties, LLC and PSLT-BLC Properties Holdings, LLC | ||
10 | .2** | Guaranty of Agreement Regarding Leases, dated October 19, 2004, by Brookdale Living Communities, Inc., in favor of PSLT-BLC Properties Holdings, LLC | ||
10 | .3.1** | Tax Matters Agreement, dated as of June 18, 2004, by and among Fortress Brookdale Acquisition LLC, Provident Senior Living Trust and Brookdale Living Communities, Inc. | ||
10 | .3.2** | Letter Agreement, dated March 28, 2005, amending the Tax Matters Agreement, dated as of June 18, 2004, by and among Fortress Brookdale Acquisition LLC, Provident Senior Living Trust and Brookdale Living Communities, Inc., related to the Brookdale Agreement Regarding Leases | ||
10 | .4.1** | Master Lease Agreement, dated January 28, 2004, between Ventas Realty, Limited Partnership, BLC Adrian-GC, LLC, BLC Albuquerque-GC, LLC, BLC Dayton-GC, LLC and BLC Fort Myers-GC, LLC | ||
10 | .4.2** | First Amendment to Master Lease Agreement, dated February 20, 2004, by and between Ventas Realty, Limited Partnership; BLC Adrian-GC, LLC; BLC Albuquerque-GC, LLC; BLC Dayton-GC, LLC; BLC Fort Myers-GC, LLC; BLC Bristol-GC, LLC; and BLC Tavares-GC, LLC | ||
10 | .4.3** | Second Amendment to Master Lease Agreement, dated March 30, 2004, by and between Ventas Realty, Limited Partnership; BLC Adrian-GC, LLC; BLC Albuquerque-GC, LLC; BLC Dayton-GC, LLC; BLC Fort Myers-GC, LLC; BLC Bristol-GC, LLC; BLC Tavares-GC, LLC; BLC Las Vegas-GC, LLC; BLC Lubbock-GC, L.P.; and BLC Overland Park-GC, LLC |
II-17
Exhibit No. | Description | |||
10 | .4.4** | Third Amendment to Master Lease Agreement, dated May 13, 2004, by and between Ventas Realty, Limited Partnership; BLC Adrian-GC, LLC; BLC Albuquerque-GC, LLC; BLC Dayton-GC, LLC; BLC Fort Myers-GC, LLC; BLC Bristol-GC, LLC; BLC Tavares-GC, LLC; BLC Las Vegas-GC, LLC; BLC Lubbock-GC, L.P.; BLC Overland Park-GC, LLC; and Brookdale Living Communities of Illinois-GV, LLC | ||
10 | .4.5** | Fourth Amendment to Master Lease Agreement, dated October 19, 2004, by and among Ventas Realty, Limited Partnership; BLC Adrian-GC, LLC; BLC Albuquerque-GC, LLC; BLC Dayton-GC, LLC; BLC Fort Myers-GC, LLC; BLC Bristol-GC, LLC; BLC Tavares-GC, LLC; BLC Las Vegas-GC, LLC; BLC Lubbock-GC, L.P.; BLC Overland Park-GC, LLC; and Brookdale Living Communities of Illinois-GV, LLC | ||
10 | .4.6** | Fifth Amendment to Master Lease Agreement, dated May 18, 2005, effective as of April 30, 2005, by and between Ventas Realty, Limited Partnership, BLC Adrian-GC, LLC, BLC Albuquerque-GC, LLC, BLC Dayton-GC, LLC, BLC Fort Myers-GC, LLC, BLC Bristol-GC, LLC, BLC Tavares-GC, LLC, BLC Las Vegas-GC, LLC, BLC Lubbock-GC, L.P., BLC Overland Park-GC, LLC, Brookdale Living Communities Of Illinois-GV, LLC, BLC Belleville-GC, LLC, BLC Findlay-GC, LLC, and BLC Springfield-GC, LLC | ||
10 | .5** | Form of Property Lease Agreement with respect to the Provident-Brookdale properties | ||
10 | .6** | Form of Lease Guaranty with respect to the Provident-Brookdale properties | ||
10 | .7.1** | Guaranty of Lease, dated as of January 28, 2004, by Brookdale Living Communities, Inc., for the benefit of Ventas Realty, Limited Partnership | ||
10 | .7.2** | First Amendment to Guaranty of Lease, dated as of February 20, 2004, by Brookdale Living Communities, Inc. for the benefit of Ventas Realty, Limited Partnership | ||
10 | .7.3** | Second Amendment to Guaranty of Lease, dated as of February 26, 2004, by Brookdale Living Communities, Inc. for the benefit of Ventas Realty, Limited Partnership | ||
10 | .7.4** | Third Amendment to Guaranty of Lease, dated as of March 10, 2004, by Brookdale Living Communities, Inc. for the benefit of Ventas Realty, Limited Partnership and Ventas Kansas City I, LLC | ||
10 | .7.5** | Fourth Amendment to Guaranty of Lease, dated as of March 30, 2004, by Brookdale Living Communities, Inc. for the benefit of Ventas Realty, Limited Partnership; Ventas Kansas City I, LLC; Ventas Belleville, LLC; and Ventas Springfield/Findlay, LLC | ||
10 | .7.6** | Fifth Amendment to Guaranty of Lease, dated as of May 13, 2004, by Brookdale Living Communities, Inc. for the benefit of Ventas Realty, Limited Partnership; Ventas Kansas City I, LLC; Ventas Belleville, LLC; Ventas Farmington Hills, LLC; and Ventas Springfield/Findlay, LLC | ||
10 | .7.7** | Sixth Amendment to Guaranty of Lease, dated as of June 18, 2004, by Brookdale Living Communities, Inc. for the benefit of Ventas Realty, Limited Partnership; Ventas Kansas City I, LLC; Ventas Belleville, LLC; Ventas Springfield/Findlay, LLC; and Ventas Farmington Hills, LLC | ||
10 | .7.8** | Seventh Amendment to Guaranty of Lease, dated as of April 30, 2005, by Brookdale Living Communities, Inc. for the benefit of Ventas Realty, Limited Partnership; Ventas Kansas City I, LLC; Ventas Belleville, LLC; Ventas Springfield/Findlay, LLC; and Ventas Farmington Hills, LLC | ||
10 | .8** | Master Lease Agreement, dated May 1, 2002, by and between CMCP Properties, Inc., BLC Properties I, LLC and, for certain limited purposes, Brookdale Management Holding, LLC | ||
10 | .9** | Property Lease Agreement, dated May 1, 2002, by and between CMCP-Club Hill, LP, BLC-Club Hill, L.P. and, for certain limited purposes, Brookdale Management of Texas, L.P. | ||
10 | .10** | Property Lease Agreement, dated May 1, 2002, by and between CMCP-Roswell, LLC, BLC-Roswell, LLC and, for certain limited purposes, Brookdale Management-II, LLC | ||
10 | .11** | Property Lease Agreement, dated May 1, 2002, by and between CMCP-Pinecastle, LLC, BLC-Pinecastle, LLC and, for certain limited purposes, Brookdale Management-II, LLC |
II-18
Exhibit No. | Description | |||
10 | .12** | Property Lease Agreement, dated May 1, 2002, by and between CMCP-Williamsburg, LLC, BLC-Williamsburg, LLC and, for certain limited purposes, Brookdale Management-II, LLC | ||
10 | .13** | Property Lease Agreement, dated May 1, 2002, by and between CMCP-Montrose, LLC, BLC-Montrose, LLC and, for certain limited purposes, Brookdale Management Akron, LLC | ||
10 | .14** | Property Lease Agreement, dated as of May 1, 2002, by and between CMCP Island Lake, LLC and BLC Island Lake, LLC and, for certain limited purposes, Brookdale Management-II, LLC | ||
10 | .15** | Lease Guaranty, dated as of May 1, 2002, by BLC Properties I, LLC in favor of CMCP-Roswell, LLC | ||
10 | .16** | Indemnity and Guaranty Agreement, dated May 1, 2002, by Capstead Mortgage Corporation, Brookdale Living Communities, Inc., BLC Properties I, LLC, BLC Island Lake, LLC, BLC- Windsong, LLC, BLC-Williamsburg, LLC, BLC-Montrose, LLC and BLC-Pinecastle, LLC | ||
10 | .17** | Amended and Restated Limited Liability Company Agreement of Brookdale Senior Housing, LLC, dated October 19, 2004, among The Northwestern Mutual Life Insurance Company, AH Michigan Owner Limited Partnership, and AH Pennsylvania Owner Limited Partnership | ||
10 | .18** | Master Agreement regarding Brookdale Senior Housing, LLC and related matters, dated September 30, 2003, by and among The Northwestern Mutual Life Insurance Company, Brookdale Senior Housing, LLC, AH Michigan Owner Limited Partnership, AH Pennsylvania Owner Limited Partnership, AH Texas Owner Limited Partnership and Brookdale Living Communities, Inc. | ||
10 | .19** | Guarantee, dated September 30, 2003, by Brookdale Living Communities, Inc. on behalf of AH Pennsylvania Owner Limited Partnership and AH Michigan Owner Limited Partnership | ||
10 | .20** | Guarantee, dated September 30, 2003, by AH Pennsylvania Owner Limited Partnership, in favor of Brookdale Senior Housing, LLC | ||
10 | .21** | Southfield Guarantee of Recourse Obligations (Single Guarantor), dated September 30, 2003, by Brookdale Living Communities, Inc. in connection with the loan made by Northwestern Mutual Life Insurance Company to Brookdale Senior Housing, LLC | ||
10 | .22** | Guarantee of Member Obligations, dated September 30, 2003, among The Northwestern Mutual Life Insurance Company, AH Michigan Owner Limited Partnership, and AH Pennsylvania Owner Limited Partnership for Brookdale Senior Housing, LLC | ||
10 | .23** | Devonshire First Open-End Mortgage and Security Agreement, dated September 30, 2003, between Brookdale Senior Housing, LLC and The Northwestern Mutual Life Insurance Company | ||
10 | .24** | Devonshire Second Open-End Mortgage and Security Agreement, dated September 30, 2003, between Brookdale Senior Housing, LLC and The Northwestern Mutual Life Insurance Company | ||
10 | .25** | Southfield First Mortgage and Security Agreement, dated September 30, 2003, between Brookdale Senior Housing, LLC and The Northwestern Mutual Life Insurance Company | ||
10 | .26** | Southfield Second Mortgage and Security Agreement, dated September 30, 2003, between Brookdale Senior Housing, LLC and The Northwestern Mutual Life Insurance Company | ||
10 | .27** | Gaines Ranch First Deed of Trust and Security Agreement, dated September 30, 2003, between AH Texas Owner Limited Partnership, Henry F. Lange, and The Northwestern Mutual Life Insurance Company | ||
10 | .28** | Gaines Ranch Second Deed of Trust and Security Agreement, dated September 30, 2003, among AH Texas Owner Limited Partnership, Henry F. Lange, and Brookdale Senior Housing, LLC |
II-19
Exhibit No. | Description | |||
10 | .29** | Gaines Ranch Third Deed of Trust and Security Agreement, dated September 30, 2003, among AH Texas Owner Limited Partnership, Henry F. Lange and The Northwestern Mutual Life Insurance Company | ||
10 | .30** | Loan Agreement, dated March 30, 2005, among AH Battery Park Owner, LLC, KG Missouri-CC Owner, LLC, AH Illinois Owner, LLC, AH North Carolina, Owner, LLC, AH Ohio-Columbus Owner, LLC, Guarantee Bank, GMAC Commercial Mortgage Corporation and GMAC Commercial Mortgage Bank | ||
10 | .31** | Guaranty, dated March 30, 2005, among Brookdale Living Communities, Inc., Guarantee Bank, GMAC Commercial Mortgage Corporation and GMAC Commercial Mortgage Bank | ||
10 | .32.1** | Loan Agreement, dated October 19, 2004, between LaSalle Bank National Association and Brookdale Living Communities, Inc. | ||
10 | .32.2** | Amendment No. 1 to Loan Agreement, dated March 1, 2005, between LaSalle National Bank National Association and Brookdale Living Communities, Inc. | ||
10 | .32.3** | Amendment No. 2 to Loan Agreement, dated March 24, 2005, between LaSalle National Bank National Association and Brookdale Living Communities, Inc. | ||
10 | .32.4** | Amendment No. 3 to Loan Agreement, dated May 26, 2005, between LaSalle National Bank National Association and Brookdale Living Communities, Inc. | ||
10 | .33** | Agreement for Management Services, dated July 13, 2004, effective as of August 1, 2004 by and between Cyprus Senior Management Services Limited Partnership and Brookdale Cyprus Management LLC | ||
10 | .34** | Loan Agreement, dated as of April 6, 2005, among General Electric Capital Corporation, Merrill Lynch Capital, FIT NBA Cypress Village LLC, FIT NBA Foxwood Springs LLC, FIT NBA Kansas Christian LLC, FIT NBA Patriot Heights LP, FIT NBA Ramsey LLC, FIT NBA Robin Run LP, and FIT NBA Skyline LLC | ||
10 | .35** | Assumption Agreement, dated September 30, 2005, by FIT Cypress Village LLC (F/K/A FIT NBA Cypress Village LLC), FIT Foxwood Springs LLC (F/K/A FIT NBA Foxwood Springs LLC), FIT Patriot Heights LP (F/K/A FIT NBA Patriot Heights LP), FIT Ramsey LLC (F/K/A FIT NBA Ramsey LLC), FIT Robin Run LP (F/K/A FIT NBA Robin Run LP), and FIT Skyline LLC (F/K/A FIT NBA Skyline LLC), Fortress Investment Trust II, Brookdale Senior Living Inc., Fortress CCRC Acquisition LLC (F/K/A Fortress NBA Acquisition, LLC), FIT Patriot Heights GP, Inc. (F/K/A FIT NBA Patriot Heights GP, Inc.), FIT Robin Run GP, Inc. (F/K/A FIT NBA Robin Run GP, Inc.), BLC-Cypress Village, LLC, BLC-Foxwood Springs, LLC, BLC-Ramsey, LLC, BLC-Village At Skyline, LLC, BLC-Patriot Heights, L.P., BLC-Robin Run, L.P., General Electric Capital Corporation, and Merrill Lynch Capital | ||
10 | .36** | Loan Agreement, dated December 31, 2004, by and between AHC Purchaser, Inc. and Merrill Lynch Capital | ||
10 | .37** | Guaranty, dated as of December 31, 2004, by Alterra Healthcare Corporation and AHC Purchaser Holding, Inc. for the benefit of Merrill Lynch Capital | ||
10 | .38** | Loan Agreement, dated as of December 31, 2004, by and between AHC Purchaser Holding II, Inc. and Merrill Lynch Capital | ||
10 | .39** | Guaranty, dated as of December 31, 2004, by Alterra Healthcare Corporation for the benefit of Merrill Lynch Capital | ||
10 | .40** | Cross-Collateralization, Cross-Default and Cross-Guaranty Agreement, dated May 31, 2005, among AHC Purchaser, Inc., AHC Purchaser Holding II, Inc., Alterra Healthcare Corp., Ithaca Bundy Tenant, Inc., Ithaca Sterling Cottage Operator, Inc., Niagara Sterling Cottage Operator, Inc., Niagara Nash Tenant, Inc., and Clinton Sterling Cottage Operator, Inc., AHC Purchaser Holding, Inc. and Alternative Living Services New York, Inc., and Merrill Lynch Capital | ||
10 | .41.1** | Amended and Restated Master Lease Agreement, dated as of July 1, 2001, by and among Health Care REIT, Inc.; HCRI North Carolina Properties, LLC; HCRI Tennessee Properties, Inc.; HCRI Texas Properties, Ltd. and Alterra Healthcare Corporation |
II-20
Exhibit No. | Description | |||
10 | .41.2** | First Amendment to the Amended and Restated Master Lease Agreement, dated as of July 16, 2001, by and among Health Care REIT, Inc.; HCRI North Carolina Properties, LLC; HCRI Tennessee Properties, Inc.; HCRI Texas Properties, Ltd. and Alterra Healthcare Corporation | ||
10 | .41.3** | Second Amendment to the Amended and Restated Master Lease Agreement, dated as of December 21, 2001, by and among Health Care REIT, Inc.; HCRI Indiana Properties, LLC; HCRI North Carolina Properties, LLC; HCRI Tennessee Properties, Inc.; HCRI Texas Properties, Ltd.; HCRI Wisconsin Properties, LLC; and Alterra Healthcare Corporation | ||
10 | .41.4** | Third Amendment to the Amended and Restated Master Lease Agreement, dated as of March 19, 2002, by and among Health Care REIT, Inc.; HCRI Indiana Properties, LLC; HCRI North Carolina Properties, LLC; HCRI Tennessee Properties, Inc.; HCRI Texas Properties, Ltd.; HCRI Wisconsin Properties, LLC; and Alterra Healthcare Corporation | ||
10 | .41.5** | Fourth Amendment to the Amended and Restated Master Lease Agreement, dated as of December 27, 2002, by and among Health Care REIT, Inc.; HCRI Indiana Properties, LLC; HCRI North Carolina Properties, LLC; HCRI Tennessee Properties, Inc.; HCRI Texas Properties, Ltd.; HCRI Wisconsin Properties, LLC; and Alterra Healthcare Corporation. | ||
10 | .41.6** | Fifth Amendment to Amended and Restated Master Lease Agreement, dated as of December 4, 2003, by and among Health Care REIT, Inc.; HCRI Indiana Properties, LLC; HCRI North Carolina Properties, LLC; HCRI Tennessee Properties, Inc.; HCRI Texas Properties, Ltd.; HCRI Wisconsin Properties, LLC; and Alterra Healthcare Corporation | ||
10 | .41.7** | Sixth Amendment to Amended and Restated Master Lease Agreement, dated as of June 30, 2004, by and among Health Care REIT, Inc.; HCRI Indiana Properties, LLC; HCRI North Carolina Properties III, Limited Partnership; HCRI Tennessee Properties, Inc.; HCRI Texas Properties, Ltd.; HCRI Wisconsin Properties, LLC; and Alterra Healthcare Corporation | ||
10 | .42.1** | Master Lease, dated as of April 9, 2002, by and between Alterra Healthcare Corporation and Nationwide Health Properties, Inc. and its affiliates | ||
10 | .42.2** | First Amendment to Master Lease and Consent to Transfer, dated as of December 2, 2003, by and among Alterra Healthcare Corporation; Nationwide Health Properties, Inc.; NH Texas Properties Limited Partnership; MLD Delaware trust; MLD Properties, LLC; NHP Silverwood Investments, Inc.; and NHP Westwood Investments, Inc. | ||
10 | .42.3** | Second Amendment to Master Lease, dated as of June 28, 2005, by and among Alterra Healthcare Corporation and Nationwide Health Properties, Inc., NH Texas Properties Limited Partnership, MLD Delaware Trust, MLD Properties, LLC, NHP Silverwood Investments, Inc., and NHP Westwood Investments, Inc. | ||
10 | .43.1** | Master Lease, dated as of April 9, 2002, by and among JER/NHP Senior Living Acquisition, LLC, JER/NHP Senior Living Texas, L.P., JER/NHP Senior Living Wisconsin, LLC, JER/NHP Senior Living Kansas, Inc., ALS Leasing, Inc. and Assisted Living Properties, Inc. | ||
10 | .43.2** | First Amendment to Master Lease, Affirmation of Guaranty and Consent to Transfer, dated as of September 12, 2003, by and among ALS Leasing, Inc., Assisted Living Properties, Inc., JER/NHP Senior Living Acquisition, LLC, JER/NHP Senior Living Texas, LP, JER/NHP Senior Living Wisconsin, LLC, JER/NHP Senior Living Kansas, Inc., and Alterra Healthcare Corporation | ||
10 | .43.3** | Second Amendment to Master Lease, dated as of February 23, 2004, by and among ALS Leasing, Inc., Assisted Living Properties, Inc., JER/NHP Senior Living Acquisition, LLC, JER/NHP Senior Living Texas, LP, JER/NHP Senior Living Wisconsin, LLC, JER/NHP Senior Living Kansas, Inc., and Alterra Healthcare Corporation |
II-21
Exhibit No. | Description | |||
10 | .44** | Guaranty of Lease and Letter of Credit Agreement dated as of April 9, 2002 by and among Alterra Healthcare Corporation, JER/NHP Senior Living Acquisition, LLC, JER/NHP Senior Living Texas, L.P., JER/NHP Senior Living Wisconsin, LLC, and JER/NHP Senior Living Kansas, Inc. | ||
10 | .45.1** | Master Lease (Alterra Pool 2), dated as of October 7, 2002, by and between JER/NHP Senior Living Acquisition, LLC and ALS Leasing, Inc. | ||
10 | .45.2** | First Amendment to Master Lease, Affirmation of Guaranty and Consent to Transfer, dated September 12, 2003, by and among ALS Leasing, Inc., JER/NHP Senior Living Acquisition, LLC and Alterra Healthcare Corporation | ||
10 | .46** | Guaranty of Lease and Letter of Credit Agreement, dated as of October 7, 2002, by and between Alterra Healthcare Corporation and JER/NHP Senior Living Acquisition, LLC | ||
10 | .47** | Amended and Restated Lease, dated December 15, 2002, between LTC-K1 Inc., as lessor and Alterra Healthcare Corporation, as lessee | ||
10 | .48** | Amended and Restated Lease, dated December 15, 2002, between LTC-K2 Limited Partnership, as lessor and Alterra Healthcare Corporation, as lessee | ||
10 | .49** | Master Lease Agreement, dated December 15, 2002, between Kansas-LTC Corporation, as lessor, and Alterra Healthcare Corporation, as lessee | ||
10 | .50** | Master Lease Agreement, dated December 15, 2002 among LTC Properties, Inc., Texas-LTC Limited Partnership, and North Carolina Real Estate Investments, LLC, as lessor, and Alterra Healthcare Corporation, as lessee | ||
10 | .51.1** | Lease Agreement, dated as of February 28, 2003, by AHC Trailside, Inc. in favor of SNH ALT Leased Properties Trust | ||
10 | .51.2** | First Amendment to Lease Agreement, dated as of December 4, 2003, by and between AHC Trailside, Inc., and SNH ALT Leased Properties Trust | ||
10 | .52.1** | Guaranty Agreement, dated as of February 28, 2003, by Alterra Healthcare Corporation in favor of SNH ALT Leased Properties Trust | ||
10 | .52.2** | First Amendment to Guaranty Agreement, dated as of December 4, 2003, by Alterra Healthcare Corporation in favor of SNH ALT Leased Properties Trust | ||
10 | .53** | Tri-Party Agreement, dated December 4, 2003, by and among SNH ALT Mortgaged Properties Trust, SNH ALT Leased Properties Trust, FIT-ALT SNH Loan LLC, Pomacy Corporation, AHC Trailside, Inc., and Alterra Healthcare Corporation | ||
10 | .54.1** | Property Lease Agreement, dated October 20, 2004, by and between PSLT-ALS Properties I, LLC, and ALS Properties Tenant I, LLC | ||
10 | .54.2** | Amended and Restated Property Lease Agreement, dated as of December 16, 2004, by and between PSLT-ALS Properties II, LLC and ALS Properties Tenant II, LLC | ||
10 | .55** | Sublease Agreement, dated October 21, 2004, by and between ALS Properties Tenant I, LLC and Alterra Healthcare Corporation | ||
10 | .56** | Agreement Regarding Leases, dated October 20, 2004, by and between ALS Properties Holding Company, LLC and PSLT-ALS Properties Holdings, LLC | ||
10 | .57** | Guaranty of Agreement Regarding Leases, dated October 20, 2004, by Alterra Healthcare Corporation in favor of PSLT-ALS Properties Holdings, LLC | ||
10 | .58** | Form of Property Lease Agreement with respect to the Provident-Alterra properties | ||
10 | .59** | Form of Lease Guaranty with respect to the Provident-Alterra Properties | ||
10 | .60.1** | Multifamily Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing (California), dated June 21, 2005, by FIT REN Park LP, as borrower, to Fidelity National Title Company, as trustee, for the benefit of GMAC Commercial Mortgage Bank, as lender | ||
10 | .60.2** | Multifamily Note in the amount of $22,545,000, dated June 21, 2005, from FIT REN Park, LP to GMAC Commercial Mortgage Bank | ||
10 | .60.3** | Exceptions to Non Recourse Guaranty, dated June 21, 2005, by Fortress Investment Trust II for the benefit of GMAC Commercial Mortgage Bank |
II-22
Exhibit No. | Description | |||
10 | .60.4** | Consent to Transfer and Release Agreement, dated September 30, 2005, by and among Fortress Investment Trust II, Alterra Healthcare Corporation, Brookdale Senior Living Inc., FIT REN Park LP and Fannie Mae | ||
10 | .61.1** | Multifamily Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing (California), dated June 21, 2005, by FIT REN Nohl Ranch LP, as borrower, to Fidelity National Title Company, as trustee, for the benefit of GMAC Commercial Mortgage Bank, as lender | ||
10 | .61.2** | Multifamily Note in the amount of $7,920,000, dated June 21, 2005, from FIT REN Nohl Ranch, LP to GMAC Commercial Mortgage Bank | ||
10 | .61.3** | Exceptions to Non Recourse Guaranty, dated June 21, 2005, by Fortress Investment Trust II for the benefit of GMAC Commercial Mortgage Bank | ||
10 | .61.4** | Consent to Transfer and Release Agreement, dated September 30, 2005, by and among Fortress Investment Trust II, Alterra Healthcare Corporation, Brookdale Senior Living Inc., FIT REN Nohl Ranch LP and Fannie Mae | ||
10 | .62.1** | Multifamily Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing (California), dated June 21, 2005, by FIT REN Mirage Inn LP, as borrower, to Fidelity National Title Company, as trustee, for the benefit of GMAC Commercial Mortgage Bank, as lender | ||
10 | .62.2** | Multifamily Note in the amount of $15,000,000, dated June 21, 2005, from FIT REN Mirage Inn, LP to GMAC Commercial Mortgage Bank | ||
10 | .62.3** | Exceptions to Non Recourse Guaranty, dated June 21, 2005, by Fortress Investment Trust II for the benefit of GMAC Commercial Mortgage Bank | ||
10 | .62.4** | Consent to Transfer and Release Agreement, dated September 30, 2005, by and among Fortress Investment Trust II, Alterra Healthcare Corporation, Brookdale Senior Living Inc., FIT REN Mirage Inn LP and Fannie Mae | ||
10 | .63.1** | Multifamily Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing (California), dated June 21, 2005, by FIT REN Pacific Inn LP, as borrower, to Fidelity National Title Company, as trustee, for the benefit of GMAC Commercial Mortgage Bank, as lender | ||
10 | .63.2** | Multifamily Note in the amount of $25,775,000, dated June 21, 2005, from FIT REN Pacific Inn, LP to GMAC Commercial Mortgage Bank | ||
10 | .63.3** | Exceptions to Non Recourse Guaranty, dated June 21, 2005, by Fortress Investment Trust II for the benefit of GMAC Commercial Mortgage Bank | ||
10 | .63.4** | Consent to Transfer and Release Agreement, dated September 30, 2005, by and among Fortress Investment Trust II, Alterra Healthcare Corporation, Brookdale Senior Living Inc., FIT REN Pacific Inn LP and Fannie Mae | ||
10 | .64.1** | Multifamily Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing (California), dated June 21, 2005, by FIT REN The Gables LP, as borrower, to Fidelity National Title Company, as trustee, for the benefit of GMAC Commercial Mortgage Bank, as lender | ||
10 | .64.2** | Multifamily Note in the amount of $5,255,000, dated June 21, 2005, from FIT REN The Gables, LP to GMAC Commercial Mortgage Bank | ||
10 | .64.3** | Exceptions to Non Recourse Guaranty, dated June 21, 2005, by Fortress Investment Trust II for the benefit of GMAC Commercial Mortgage Bank | ||
10 | .64.4** | Consent to Transfer and Release Agreement, dated September 30, 2005, by and among Fortress Investment Trust II, Alterra Healthcare Corporation, Brookdale Senior Living Inc., FIT REN The Gables LP and Fannie Mae | ||
10 | .65.1** | Multifamily Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing (California), dated June 21, 2005, by FIT REN The Lexington LP, as borrower, to Fidelity National Title Company, as trustee, for the benefit of GMAC Commercial Mortgage Bank, as lender |
II-23
Exhibit No. | Description | |||
10 | .65.2** | Multifamily Note in the amount of $10,867,974.00, dated June 21, 2005 from FIT REN The Lexington, LP to GMAC Commercial Mortgage Bank | ||
10 | .65.3** | Exceptions to Non Recourse Guaranty, dated June 21, 2005, by Fortress Investment Trust II for the benefit of GMAC Commercial Mortgage Bank | ||
10 | .65.4** | Consent to Transfer and Release Agreement, dated September 30, 2005, by and among Fortress Investment Trust II, Alterra Healthcare Corporation, Brookdale Senior Living Inc., FIT REN The Lexington LP and Fannie Mae | ||
10 | .66.1** | Multifamily Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing (California), dated June 21, 2005, by FIT REN Oak Tree LP, as borrower, to Fidelity National Title Company, as trustee, for the benefit of GMAC Commercial Mortgage Bank, as lender | ||
10 | .66.2** | Multifamily Note in the amount of $23,305,026, dated June 21, 2005, from FIT REN Oak Tree, LP to GMAC Commercial Mortgage Bank | ||
10 | .66.3** | Exceptions to Non Recourse Guaranty, dated June 21, 2005, by Fortress Investment Trust II for the benefit of GMAC Commercial Mortgage Bank | ||
10 | .66.4** | Consent to Transfer and Release Agreement, dated September 30, 2005, by and among Fortress Investment Trust II, Alterra Healthcare Corporation, Brookdale Senior Living Inc., FIT REN Oak Tree LP and Fannie Mae | ||
10 | .67.1** | Multifamily Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing (California), dated June 21, 2005, by FIT REN Paulin Creek LP, as borrower, to Fidelity National Title Company, as trustee, for the benefit of GMAC Commercial Mortgage Bank, as lender | ||
10 | .67.2** | Multifamily Note in the amount of $40,732,000, dated June 21, 2005, from FIT REN Paulin Creek, LP to GMAC Commercial Mortgage Bank | ||
10 | .67.3** | Exceptions to Non Recourse Guaranty, dated June 21, 2005, by Fortress Investment Trust II for the benefit of GMAC Commercial Mortgage Bank | ||
10 | .67.4** | Consent to Transfer and Release Agreement, dated September 30, 2005, by and among Fortress Investment Trust II, Alterra Healthcare Corporation, Brookdale Senior Living Inc., FIT REN Paulin Creek LP and Fannie Mae | ||
10 | .68.1** | Multifamily Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing (California), dated July 22, 2005, by FIT REN Ocean House LP, as borrower, to Fidelity National Title Company, as trustee, for the benefit of GMAC Commercial Mortgage Bank, as lender | ||
10 | .68.2** | Multifamily Note in the amount of $19,600,000, dated July 22, 2005, from FIT REN Ocean House, LP to GMAC Commercial Mortgage Bank | ||
10 | .68.3** | Exceptions to Non Recourse Guaranty, dated July 22, 2005, by Fortress Investment Trust II for the benefit of GMAC Commercial Mortgage Bank | ||
10 | .68.4** | Consent to Transfer and Release Agreement, dated September 30, 2005, by and among Fortress Investment Trust II, Alterra Healthcare Corporation, Brookdale Senior Living Inc., FIT REN Ocean House LP and Fannie Mae | ||
10 | .69** | Employment Agreement dated August 9, 2005, by and between Brookdale Senior Living Inc., Brookdale Living Communities, Inc. and Mark J. Schulte | ||
10 | .70** | Employment Agreement dated September 8, 2005, by and between Brookdale Senior Living Inc., Alterra Healthcare Corporation and Mark W. Ohlendorf | ||
10 | .71** | Employment Agreement dated August 9, 2005, by and between Brookdale Senior Living Inc., Brookdale Living Communities, Inc. and John P. Rijos | ||
10 | .72** | Employment Agreement dated August 9, 2005, by and between Brookdale Senior Living Inc., Brookdale Living Communities, Inc. and R. Stanley Young | ||
10 | .73** | Employment Agreement dated September 8, 2005, by and between Brookdale Senior Living Inc., a Delaware corporation, Alterra Healthcare Corporation and Kristin A. Ferge |
II-24
Exhibit No. | Description | |||
10 | .74** | Employment Agreement dated August 9, 2005, by and between Brookdale Senior Living Inc., Brookdale Living Communities, Inc. and Deborah C. Paskin | ||
10 | .75** | Brookdale Living Communities, Inc. Employee Restricted Stock Plan | ||
10 | .76** | Award Agreement dated August 9, 2005, by and between Brookdale Living Communities, Inc. and Mark J. Schulte | ||
10 | .77** | Award Agreement dated August 9, 2005, by and between Brookdale Living Communities, Inc. and John P. Rijos | ||
10 | .78** | Award Agreement dated August 9, 2005, by and between Brookdale Living Communities, Inc. and R. Stanley Young | ||
10 | .79** | Award Agreement dated August 9, 2005, by and between Brookdale Living Communities, Inc. and Deborah C. Paskin | ||
10 | .80** | FEBC-ALT Investors LLC Employee Restricted Securities Plan | ||
10 | .81** | Award Agreement dated August 9, 2005, by and between FEBC-ALT Investors LLC and Mark W. Ohlendorf | ||
10 | .82** | Award Agreement dated August 9, 2005, by and between FEBC-ALT Investors LLC and Kristin A. Ferge | ||
10 | .83.1** | ISDA Master Agreement, dated as of December 3, 2004, between Merrill Lynch Capital Services, Inc. and Fortress NBA Acquisition LLC | ||
10 | .83.2** | Confirmation Letter, dated December 3, 2004, from Merrill Lynch Capital Services, Inc. to Fortress NBA Acquisition LLC | ||
10 | .83.3** | Confirmation Letter, dated December 3, 2004, from Merrill Lynch Capital Services, Inc. to Fortress NBA Acquisition LLC | ||
10 | .83.4** | Confirmation Letter, dated December 8, 2004, from Merrill Lynch Capital Services, Inc. to Fortress NBA Acquisition LLC | ||
10 | .84.1** | ISDA Master Agreement, dated as of March 18, 2005, between Merrill Lynch Capital Services, Inc. and Alterra Healthcare Corporation | ||
10 | .84.2** | Confirmation Letter, dated March 28, 2005, from Merrill Lynch Capital Services, Inc. to Alterra Healthcare Corporation | ||
10 | .85.1** | ISDA Master Agreement, dated as of March 18, 2005, between LaSalle Bank National Association and Brookdale Living Communities, Inc. | ||
10 | .85.2** | Confirmation Letter, dated March 18, 2005, from LaSalle Bank National Association to Brookdale Living Communities, Inc. | ||
10 | .85.3** | Confirmation Letter, dated March 24, 2005, from LaSalle Bank National Association to Brookdale Living Communities, Inc. | ||
10 | .85.4** | Confirmation Letter, dated March 24, 2005, from LaSalle Bank National Association to Brookdale Living Communities, Inc. | ||
10 | .86** | Exchange and Stockholder Agreement, dated September 30, 2005, by and among Brookdale Senior Living Inc., Fortress Brookdale Acquisition LLC and Mark J. Schulte. | ||
10 | .87 | Brookdale Senior Living Omnibus Stock Incentive Plan | ||
21 | .1** | Subsidiaries of the registrant | ||
23 | .1 | Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included in Exhibit 5.1) | ||
23 | .2 | Consent of Ernst & Young LLP | ||
23 | .3 | Consent of KPMG LLP | ||
23 | .4** | Consent of Cohen & Steers Capital Advisors, LLC | ||
24 | .1** | Powers of Attorney (included on the signature pages hereto) |
** | Previously filed. |
II-25
Exhibit 1.1
BROOKDALE SENIOR LIVING INC.
Shares
COMMON STOCK
FORM OF UNDERWRITING AGREEMENT
dated , 2005
Goldman, Sachs & Co.,
Lehman Brothers Inc.
As representatives of the several Underwriters
named in Schedule I hereto,
c/o Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
and
Lehman Brothers Inc.
399 Park Avenue, 8th Floor
New York, New York 10022
Ladies and Gentlemen:
Brookdale Senior Living Inc., a Delaware corporation (the "Company"), proposes, subject to the terms and conditions stated herein, to issue and sell to the Underwriters named in Schedule I hereto (the "Underwriters") an aggregate of shares and, at the election of the Underwriters, up to additional shares of Common Stock ("Stock") of the Company and the stockholders of the Company named in Schedule II hereto (the "Selling Stockholders") propose, subject to the terms and conditions stated herein, to sell to the Underwriters an aggregate of shares. The aggregate of shares to be sold by the Company and the Selling Stockholders is herein called the "Firm Shares" and the aggregate of additional shares to be sold by the Company is herein called the "Optional Shares". The Firm Shares and the Optional Shares that the Underwriters elect to purchase pursuant to Section 2 hereof are herein collectively called the "Shares".
It is understood that approximately of the Firm Shares (the "Directed Shares") will initially be reserved by the several Underwriters for offer and sale upon the terms and conditions set forth in the Prospectus and in accordance with the rules and regulations of the National Association of Securities Dealers, Inc. (the "NASD") to employees of the Company and its subsidiaries and persons having business relationships with the Company and its subsidiaries who have heretofore delivered to Lehman Brothers Inc. offers or indications of interest to purchase Firm Shares in form satisfactory to Lehman Brothers Inc. (such program, the "Directed Share Program") and that any allocation of such Firm Shares among such persons will be made in accordance with timely directions received by Lehman Brothers Inc. from the Company; provided, that under no circumstances will Lehman Brothers Inc. or any Underwriter be liable to the Company or to any such person for any action taken or omitted in good faith in connection
with such Directed Share Program. It is further understood that any Firm Shares which are not purchased by such persons will be offered by the Underwriters to the public upon the terms and conditions set forth in the Prospectus.
The Company agrees to pay all fees and disbursements incurred by the Underwriters in connection with the Directed Share Program and any stamp duties or other taxes incurred by the Underwriters in connection with the Directed Share Program.
1. (a) The Company represents and warrants to, and agrees with, each of the Underwriters that:
(i) A registration statement on Form S-1 (File No. 333-127372) (the
"Initial Registration Statement") in respect of the Shares has been filed
with the Securities and Exchange Commission (the "Commission"); the
Initial Registration Statement and any post-effective amendment thereto,
each in the form heretofore delivered to you, and, excluding exhibits
thereto, to you for each of the other Underwriters, have been declared
effective by the Commission in such form; other than a registration
statement, if any, increasing the size of the offering (a "Rule 462(b)
Registration Statement"), filed pursuant to Rule 462(b) under the
Securities Act of 1933, as amended (the "Act"), which became effective
upon filing, no other document with respect to the Initial Registration
Statement has heretofore been filed with the Commission; and no stop order
suspending the effectiveness of the Initial Registration Statement, any
post-effective amendment thereto or the Rule 462(b) Registration
Statement, if any, has been issued and no proceeding for that purpose has
been initiated or threatened by the Commission (any preliminary prospectus
included in the Initial Registration Statement or filed with the
Commission pursuant to Rule 424(a) of the rules and regulations of the
Commission under the Act is hereinafter called a "Preliminary Prospectus";
the various parts of the Initial Registration Statement and the Rule
462(b) Registration Statement, if any, including all exhibits thereto and
including the information contained in the form of final prospectus filed
with the Commission pursuant to Rule 424(b) under the Act in accordance
with Section 5(a) hereof and deemed by virtue of Rule 430A under the Act
to be part of the Initial Registration Statement at the time it was
declared effective, each as amended at the time such part of the Initial
Registration Statement became effective or such part of the Rule 462(b)
Registration Statement, if any, became or hereafter becomes effective, are
hereinafter collectively called the "Registration Statement"; and such
final prospectus, in the form first filed pursuant to Rule 424(b) under
the Act, is hereinafter called the "Prospectus");
(ii) No order preventing or suspending the use of any Preliminary Prospectus has been issued by the Commission, and each Preliminary Prospectus, at the time of filing thereof, conformed in all material respects to the requirements of the Act and the rules and regulations of the Commission thereunder, and did not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided,
however, that this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with information furnished in writing to the Company by an Underwriter through Goldman, Sachs & Co. or Lehman Brothers Inc. or a Selling Stockholder expressly for use therein;
(iii) The Registration Statement conforms, and the Prospectus and any further amendments or supplements to the Registration Statement or the Prospectus will conform, in all material respects to the requirements of the Act and the rules and regulations of the Commission thereunder and do not and will not, as of the applicable effective date as to the Registration Statement and any amendment thereto and as of the applicable filing date as to the Prospectus and any amendment or supplement thereto, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, that this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with information furnished in writing to the Company by an Underwriter through Goldman, Sachs & Co. or Lehman Brothers Inc. or a Selling Stockholder expressly for use therein;
(iv) Neither the Company nor any of its subsidiaries has sustained since the date of the latest audited financial statements included in the Prospectus any material loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as set forth or contemplated in the Prospectus; and, since the respective dates as of which information is given in the Registration Statement and the Prospectus, there has not been any change in the capital stock or long-term debt of the Company or any of its subsidiaries or any material adverse change, or any development that would reasonably be expected to involve a prospective material adverse change, in or affecting the general affairs, management, financial position, stockholders' equity, assets or results of operations of the Company and its subsidiaries taken as a whole, otherwise than as set forth or contemplated in the Prospectus;
(v) The Company and its subsidiaries have good and marketable title in fee simple to all real property and good and marketable title to all personal property owned by them, in each case free and clear of all liens, encumbrances and defects except such as (A) are described in the Prospectus, (B) do not, individually or in the aggregate, result in a material adverse effect on the current or future consolidated financial position, stockholders' equity, assets or results of operations of the Company and its subsidiaries (a "Material Adverse Effect"), or (C) would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect; and any real property and buildings held under lease by the Company and its subsidiaries are held by them under valid, subsisting and enforceable leases with such exceptions as are described in the Prospectus or as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect;
(vi) The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Delaware, with power and authority (corporate and other) to own its properties and conduct its business as described in the Prospectus, and has been duly qualified as a foreign corporation for the transaction of business and is in good standing under the laws of each other jurisdiction in which it owns or leases properties or conducts any business so as to require such qualification, except to the extent that the failure to be so qualified would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect; and each subsidiary of the Company that is listed on Schedule III to this Agreement has been duly organized, is validly existing and is in good standing under the laws of its jurisdiction of incorporation or formation, as applicable;
(vii) The Company has an authorized capitalization as set forth in the Prospectus, and all of the issued shares of capital stock of the Company have been duly and validly authorized and issued, are fully paid and non-assessable and conform to the description of the Stock contained in the Prospectus; and all of the issued shares of capital stock of each subsidiary of the Company have been duly and validly authorized and issued, are fully paid and non-assessable and (except for directors' qualifying shares) are owned directly or indirectly by the Company, free and clear of all liens, encumbrances, equities or claims;
(viii) The unissued Shares to be issued and sold by the Company to the Underwriters hereunder have been duly and validly authorized and, when issued and delivered against payment therefor as provided herein, will be duly and validly issued and fully paid and non-assessable and will conform to the description of the Stock contained in the Prospectus;
(ix) The issue and sale of the Shares to be sold by the Company and the compliance by the Company with all of the provisions of this Agreement and the consummation of the transactions herein contemplated will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, (x) any indenture, mortgage, deed of trust, loan agreement, lease, sublease or other agreement or instrument to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries is bound or to which any of the property or assets of the Company or any of its subsidiaries is subject, (y) the Amended and Restated Certificate of Incorporation or Amended and Restated By-laws of the Company or (z) any statute or any order, rule or regulation of any court or governmental agency or body having jurisdiction over the Company or any of its subsidiaries or any of their properties, except in the case of clauses (x) and (z) for such conflicts, breaches, defaults or violations that would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect; and no consent, approval, authorization, order, registration or qualification of or with any such court or governmental agency or body or any other third party is required for the issue and sale of the Shares or the consummation by the Company of the transactions contemplated by this Agreement, except the registration under the Act of the Shares and such consents,
approvals, authorizations, registrations or qualifications as may be required under state securities or Blue Sky laws in connection with the purchase and distribution of the Shares by the Underwriters;
(x) Neither the Company nor any of its subsidiaries is (x) in
violation of its certificate of incorporation, by-laws, limited liability
company operating agreement or partnership agreement, as applicable, or
(y) in default in the performance or observance of any obligation,
agreement, covenant or condition contained in any indenture, mortgage,
deed of trust, loan agreement, lease or other agreement or instrument to
which it is a party or by which it or any of its properties may be bound,
except in the case of clause (x), but only with respect to subsidiaries of
the Company, and clause (y) for such violations or defaults that would
not, individually or in the aggregate, reasonably be expected to result in
a Material Adverse Effect;
(xi) The statements set forth in the Prospectus under the caption "Description of Capital Stock", insofar as they purport to constitute a summary of the terms of the Stock, under the captions "Material U.S. Federal Income and Estate Tax Considerations to Non-U.S. Holders", "Business -- Government Regulation", "Business -- Environmental Matters", "Business -- Leases", "Description of Indebtedness" and "Underwriting", insofar as they purport to describe the provisions of the laws and documents referred to therein, are accurate, complete and fair;
(xii) Other than as set forth in the Prospectus, there are no legal or governmental proceedings pending to which the Company or any of its subsidiaries is a party or of which any property of the Company or any of its subsidiaries is the subject which, if determined adversely to the Company or any of its subsidiaries, would individually or in the aggregate have a Material Adverse Effect; and, to the best of the Company's knowledge, no such proceedings or any investigations are threatened or contemplated by governmental authorities or threatened by others;
(xiii) The Company is not and, after giving effect to the offering and sale of the Shares, will not be an "investment company", as such term is defined in the Investment Company Act of 1940, as amended (the "Investment Company Act");
(xiv) The financial statements included in the Registration Statement and the Prospectus (taken together with the related notes and schedules thereto) present fairly the financial position of the Company and its subsidiaries as of the dates shown and their results of operations and cash flows for the periods shown, and such financial statements have been prepared in conformity with the generally accepted accounting principles in the United States applied on a consistent basis and the schedules included in each Registration Statement present fairly the information required to be stated therein; and the assumptions used in preparing the pro forma financial statements included in the Registration Statement and the Prospectus provide a reasonable basis for presenting the significant effects
directly attributable to the transactions or events described therein, the related pro forma adjustments, in all material respects, give appropriate effect to those assumptions, and the pro forma columns therein reflect, in all material respects, the proper application of those adjustments to the corresponding historical financial statement amounts;
(xv) Ernst & Young LLP, who have certified certain financial statements of the Company and its subsidiaries, and KPMG LLP, who have certified certain financial statements of Alterra Healthcare Corporation, are each independent public accountants as required by the Act and the rules and regulations of the Commission thereunder;
(xvi) The Company (individually and on a consolidated basis) and each of its subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that (A) transactions are executed in accordance with management's general or specific authorizations; (B) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain asset accountability; (C) access to assets is permitted only in accordance with management's general or specific authorization; and (D) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences;
(xvii) Each of the Company and its subsidiaries (x) has all certificates, consents, exemptions, orders, permits, licenses, authorizations, or other approvals (each, an "Authorization") of and from, and has made all declarations and filings with, all federal, state, local and other governmental authorities, all self-regulatory organizations and all courts and other tribunals, necessary or required to engage in the business currently conducted by it in the manner described in the Prospectus; (y) all such Authorizations are valid and in full force and effect; and (z) each of the Company and its subsidiaries is in compliance in with the terms and conditions of all such Authorizations and with the rules and regulations of the regulatory authorities and governing bodies having jurisdiction with respect thereto, except, with respect to (x), (y) and (z), as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect; and there are no proceedings pending or, to the best of the Company's knowledge, threatened, to revoke, cancel or terminate such Authorizations and applications and the Company is not aware of any basis on which such Authorizations could not be renewed or, in the case of applications, will not be issued without contest;
(xviii) Each of the Company and its subsidiaries owns or possesses or has the right to use the licenses, material copyrights, know-how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems or procedures), domain names, trademarks, service marks and trade names (collectively, the "Intellectual Property") presently employed by it in connection with its operations, except where the failure to own or possess or have the right to use such Intellectual Property would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect; and neither the Company nor any of its subsidiaries has received any notice of infringement of or conflict with asserted rights of others with respect to the foregoing. To the knowledge of the Company and its subsidiaries, the use of such Intellectual Property in connection with the business and operations of the Company and its subsidiaries as described in the Prospectus does not infringe on the rights of any person;
(xix) All tax returns required to be filed by the Company and its subsidiaries in all jurisdictions have been timely and duly filed, other than those filings being contested in good faith and except where the failure to file would not, individually or in the aggregate, have a Material Adverse Effect. There are no tax returns of the Company or its subsidiaries that are currently being audited by state, local or federal taxing authorities or agencies (and with respect to which the Company or its subsidiaries has received notice), where the findings of such audit could reasonably be expected to result in a Material Adverse Effect. All taxes, including withholding taxes, penalties and interest, assessments, fees and other charges due or claimed to be due from such entities, have been paid, other than those being contested in good faith and for which adequate reserves have been provided or those currently payable without penalty or interest or those that could not reasonably be expected to result in a Material Adverse Effect;
(xx) Except as disclosed in the Prospectus, each of the Company and its subsidiaries maintains insurance covering its properties, operations, personnel and businesses which insures against such losses and risks as are adequate in accordance with its reasonable business judgment to protect the Company and its subsidiaries and their businesses;
(xxi) Except as disclosed in the Prospectus, there are no material business relationships or related party transactions which would be required to be disclosed therein by Item 404 of Regulation S-K of the Commission and such business relationship or related party transaction described therein is a fair and accurate description in all material respects of the relationships and transactions so described;
(xxii) Each of the Company and its subsidiaries is in compliance in all material respects with all presently applicable provisions of the Employee Retirement Income Security Act of 1974, as amended, including the regulations and published interpretations thereunder ("ERISA"); no "reportable event" (as defined in ERISA) has occurred with respect to any "pension plan" (as defined in ERISA) for which the Company or any of its subsidiaries would have any material liability; each of the Company and its subsidiaries has not incurred and does not reasonably expect to incur liability under (i) Title IV of ERISA with respect to termination of, or withdrawal from, any "pension plan" or (ii) Section 412 or 4971 of the Internal Revenue Code of 1986, as amended, including the regulations and published interpretations thereunder (the "Code"); and each "pension plan" for which the Company or any of its subsidiaries would have any
material liability, that is intended to be qualified under Section 401(a) of the Code is so qualified in all material respects and nothing has occurred, whether by action or by failure to act, which would cause the loss of such qualification; and
(xxiii) Each of the Company and its subsidiaries is and has been in compliance with all applicable Environmental Laws (as defined below), except where failure to comply would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. To the best of the Company's knowledge, there has been no material seepage, leak, escape, leach, discharge, injection, release, emission, spill, pumping, pouring, emptying, dumping, disposing, or migrating or any threat thereof of any Hazardous Material (as defined below) on, in, under, or from any real property referred to in the Prospectus which requires any disclosure, investigation, cleanup, remediation, monitoring, maintenance, abatement or deed or use restriction, or which will give rise to any other costs or liabilities to the Company or its subsidiaries under any Environmental Laws. There are no past, present or, to the Company's knowledge, reasonably anticipated future events, conditions, circumstances, activities, practices, actions, omissions or plans that could reasonably be expected to interfere with or prevent compliance by the Company or its subsidiaries with Environmental Laws, or that could reasonably be expected to give rise to any material costs or liabilities, which could reasonably be expected to, either individually or in the aggregate, have a Material Adverse Effect. There are no judicial or administrative proceedings of an environmental nature pending, or to the best of the Company's knowledge, threatened against the Company or its subsidiaries which could reasonably be expected to be material to the business or financial condition of the Company and its subsidiaries to involve potential damages, monetary sanctions, capital expenditures, deferred charges or charges to income exceeding ten percent of the current assets of the Company and its subsidiaries or to involve potential monetary sanctions of $100,000.00 or more. None of the Company or its subsidiaries has received notice from any governmental agency or body or other person of any actual or alleged violation of or actual or alleged liability under any Environmental Law, and does not otherwise have knowledge of, any occurrence, condition or circumstance which, with notice, passage of time, or failure to act, would give rise to any claim or liability under or pursuant to any Environmental Law. The Company or its subsidiaries has not arranged for the disposal of any Hazardous Material at, or transported any Hazardous Material to, any site which could result in material liability for the Company or its subsidiaries. The Company or its subsidiaries has not entered into any agreement relating to any alleged violation of any Environmental Law or any actual or alleged release or threatened release or cleanup at any location of any Hazardous Materials. As used herein, "Environmental Law" means any federal, state, local or foreign law, statute, ordinance, rule, regulation, order, decree, judgment, injunction, permit, license, authorization or other binding requirement, or common law, relating to health, safety or the protection, cleanup or restoration of the environment or natural resources, including, but not limited to, those relating to the distribution, processing, generation, treatment, storage, disposal, transportation, other handling
or release or threatened release of Hazardous Materials, and "Hazardous Materials" means any material (including, without limitation, pollutants, contaminants, hazardous or toxic substances or wastes, asbestos, silica, mixed dust, petroleum or constituents thereof, bacteria, radon, mold or fungi) that is regulated by or may give rise to liability under any Environmental Law. The Company has provided you copies of all materials and potentially material environmental studies, investigations, reports or assessments concerning the Company, or any currently or previously owned or leased properties within its possession or control. In the ordinary course of its business, the Company conducts a periodic review of the effect of the Environmental Laws on its business, operations and properties, in the course of which it identifies and evaluates associated costs and liabilities (including, without limitation, any capital or operating expenditures required for cleanup, closure of properties or compliance with the Environmental Laws or any permit, license or approval, any related constraints on operating activities and any potential liabilities to third parties).
(xxiv) The Registration Statement, the Prospectus and any Preliminary Prospectus comply, and any further amendments or supplements thereto will comply, with any applicable laws or regulations of foreign jurisdictions in which the Prospectus or any Preliminary Prospectus, as amended or supplemented, if applicable, are distributed in connection with the Directed Share Program. No consent, approval, authorization or order of, or filing or registration with, any court or governmental agency or body, other than such as have been obtained, is required under the securities laws and regulations of any foreign jurisdiction in which the Directed Shares are offered or sold outside the United States.
(b) Each of the Selling Stockholders severally represents and warrants to, and agrees with, each of the Underwriters and the Company that:
(i) All consents, approvals, authorizations and orders necessary for the execution and delivery by such Selling Stockholder of this Agreement and the Power of Attorney and the Custody Agreement hereinafter referred to, and for the sale and delivery of the Shares to be sold by such Selling Stockholder hereunder, have been obtained; and such Selling Stockholder has full right, power and authority to enter into this Agreement, the Power of Attorney and the Custody Agreement and to sell, assign, transfer and deliver the Shares to be sold by such Selling Stockholder hereunder;
(ii) The sale of the Shares to be sold by such Selling Stockholder hereunder and the compliance by such Selling Stockholder with all of the provisions of this Agreement, the Power of Attorney and the Custody Agreement and the consummation of the transactions herein and therein contemplated will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, (x) any statute, indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which such Selling Stockholder is a party or by which such Selling Stockholder is bound or to which
any of the property or assets of such Selling Stockholder is subject, (y) the Certificate of Incorporation or By-laws of such Selling Stockholder or the Certificate of Formation or Limited Liability Company Operating Agreement of such Selling Stockholder, as applicable, or (z) any statute or any order, rule or regulation of any court or governmental agency or body having jurisdiction over such Selling Stockholder or the property of such Selling Stockholder, except in the case of clauses (x) and (z) for such conflicts, breaches, defaults or violations that would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the validity of the Shares to be sold by such Selling Stockholder or on the ability of such Selling Stockholder to deliver good and valid title to such Shares;
(iii) Such Selling Stockholder has, and immediately prior to the Time of Delivery (as defined in Section 4 hereof) such Selling Stockholder will have, good and valid title to the Shares to be sold by such Selling Stockholder hereunder, free and clear of all liens, encumbrances, equities or claims; and, upon delivery of such Shares and payment therefor pursuant hereto, good and valid title to such Shares, free and clear of all liens, encumbrances, equities or claims, will pass to the several Underwriters;
(iv) Such Selling Stockholder has not taken and will not take, directly or indirectly, any action which is designed to or which has constituted or which might reasonably be expected to cause or result in stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Shares;
(v) To the extent that any statements or omissions made in the Registration Statement, any Preliminary Prospectus, the Prospectus or any amendment or supplement thereto are made in reliance upon and in conformity with written information furnished to the Company by such Selling Stockholder expressly for use therein, such Preliminary Prospectus and the Registration Statement did, and the Prospectus and any further amendments or supplements to the Registration Statement and the Prospectus, when they become effective or are filed with the Commission, as the case may be, will conform in all material respects to the requirements of the Act and the rules and regulations of the Commission thereunder and will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading;
(vi) In order to document the Underwriters' compliance with the reporting and withholding provisions of the Tax Equity and Fiscal Responsibility Act of 1982 with respect to the transactions herein contemplated, such Selling Stockholder will deliver to you prior to or at the First Time of Delivery (as hereinafter defined) a properly completed and executed United States Treasury Department Form W-9 (or other applicable form or statement specified by Treasury Department regulations in lieu thereof);
(vii) Certificates in negotiable form representing all of the Shares
to be sold by such Selling Stockholder hereunder have been placed in
custody under a Custody Agreement, in the form heretofore furnished to you
(the "Custody Agreement"), duly executed and delivered by such Selling
Stockholder to [Name of Custodian], as custodian (the "Custodian"), and
such Selling Stockholder has duly executed and delivered a Power of
Attorney, in the form heretofore furnished to you (the "Power of
Attorney"), appointing the persons indicated in Schedule II hereto, and
each of them, as such Selling Stockholder's attorneys-in-fact (the
"Attorneys-in-Fact") with authority to execute and deliver this Agreement
on behalf of such Selling Stockholder, to determine the purchase price to
be paid by the Underwriters to the Selling Stockholders as provided in
Section 2 hereof, to authorize the delivery of the Shares to be sold by
such Selling Stockholder hereunder and otherwise to act on behalf of such
Selling Stockholder in connection with the transactions contemplated by
this Agreement and the Custody Agreement; and
(viii) The Shares represented by the certificates held in custody for such Selling Stockholder under the Custody Agreement are subject to the interests of the Underwriters hereunder; the arrangements made by such Selling Stockholder for such custody, and the appointment by such Selling Stockholder of the Attorneys-in-Fact by the Power of Attorney, are to that extent irrevocable; the obligations of the Selling Stockholders hereunder shall not be terminated by operation of law, whether by the death or incapacity of any individual Selling Stockholder or, in the case of an estate or trust, by the death or incapacity of any executor or trustee or the termination of such estate or trust, or in the case of a partnership or corporation, by the dissolution of such partnership or corporation, or by the occurrence of any other event; if any individual Selling Stockholder or any such executor or trustee should die or become incapacitated, or if any such estate or trust should be terminated, or if any such partnership or corporation should be dissolved, or if any other such event should occur, before the delivery of the Shares hereunder, certificates representing the Shares shall be delivered by or on behalf of the Selling Stockholders in accordance with the terms and conditions of this Agreement and of the Custody Agreements; and actions taken by the Attorneys-in-Fact pursuant to the Powers of Attorney shall be as valid as if such death, incapacity, termination, dissolution or other event had not occurred, regardless of whether or not the Custodian, the Attorneys-in-Fact, or any of them, shall have received notice of such death, incapacity, termination, dissolution or other event.
2. Subject to the terms and conditions herein set forth, (a) the Company and each of the Selling Stockholders agree, severally and not jointly, to sell to each of the Underwriters, and each of the Underwriters agrees, severally and not jointly, to purchase from the Company and each of the Selling Stockholders, at a purchase price per share of $ , the number of Firm Shares (to be adjusted by you so as to eliminate fractional shares, provided that the total number of Firm Shares shall not be reduced by such adjustment) determined by multiplying the aggregate number of Firm Shares to be sold by the Company and each of the Selling Stockholders as set forth opposite their respective names in Schedule II hereto by a fraction, the
numerator of which is the aggregate number of Firm Shares to be purchased by such Underwriter as set forth opposite the name of such Underwriter in Schedule I hereto and the denominator of which is the aggregate number of Firm Shares to be purchased by all of the Underwriters from the Company and all of the Selling Stockholders hereunder and (b) in the event and to the extent that the Underwriters shall exercise the election to purchase Optional Shares as provided below, the Company agrees to sell to each of the Underwriters, and each of the Underwriters agrees, severally and not jointly, to purchase from the Company, at the purchase price per share set forth in clause (a) of this Section 2, that portion of the number of Optional Shares as to which such election shall have been exercised (to be adjusted by you so as to eliminate fractional shares, provided that the total number of shares subject to such election shall not be reduced by such adjustment) determined by multiplying such number of Optional Shares by a fraction, the numerator of which is the maximum number of Optional Shares which such Underwriter is entitled to purchase as set forth opposite the name of such Underwriter in Schedule I hereto and the denominator of which is the maximum number of Optional Shares that all of the Underwriters are entitled to purchase hereunder.
The Company hereby grants to the Underwriters the right to purchase at their election up to Optional Shares, at the purchase price per share set forth in the paragraph above, for the sole purpose of covering sales of shares in excess of the number of Firm Shares, provided that the purchase price per Optional Share shall be reduced by an amount per share equal to any dividends or distributions declared by the Company and payable on the Firm Shares but not payable on the Optional Shares. Any such election to purchase Optional Shares may be exercised only by written notice from you to the Company, given within a period of 30 calendar days after the date of this Agreement and setting forth the aggregate number of Optional Shares to be purchased and the date on which such Optional Shares are to be delivered, as determined by you but in no event earlier than the First Time of Delivery (as defined in Section 4 hereof) or, unless you and the Company otherwise agree in writing, earlier than two or later than ten business days after the date of such notice.
3. Upon the authorization by you of the release of the Firm Shares, the several Underwriters propose to offer the Firm Shares for sale upon the terms and conditions set forth in the Prospectus.
4. (a) The Shares to be purchased by each Underwriter hereunder, in definitive form, and in such authorized denominations and registered in such names as Goldman, Sachs & Co. may request upon at least forty-eight hours' prior notice to the Company and the Selling Stockholders shall be delivered by or on behalf of the Company and the Selling Stockholders to Goldman, Sachs & Co., through the facilities of the Depositary Trust Company for the account of such Underwriter, against payment by or on behalf of such Underwriter of the purchase price therefor by wire transfer of Federal (same-day) funds to the account specified by the Company and each of the Selling Stockholders to Goldman, Sachs & Co. at least forty-eight hours in advance. The Company will cause the certificates representing the Shares to be made available for checking and packaging at least twenty-four hours prior to the Time of Delivery (as defined below) with respect thereto at the office of Goldman, Sachs & Co., 85 Broad Street, New York, New York 10004 (the "Designated Office"). The time and date of such delivery and payment shall be, with respect to the Firm Shares, 9:30 a.m., New York time, on , 2005 or such other time and date as Goldman, Sachs & Co. and the Company may agree upon in writing, and,
with respect to the Optional Shares, 9:30 a.m., New York time, on the date specified by Goldman, Sachs & Co. in the written notice given by Goldman, Sachs & Co. of the Underwriters' election to purchase such Optional Shares, or such other time and date as Goldman, Sachs & Co. and the Company may agree upon in writing. Such time and date for delivery of the Firm Shares is herein called the "First Time of Delivery", such time and date for delivery of the Optional Shares, if not the First Time of Delivery, is herein called the "Second Time of Delivery", and each such time and date for delivery is herein called a "Time of Delivery".
(b) The documents to be delivered at each Time of Delivery by or on
behalf of the parties hereto pursuant to Section 7 hereof, including the cross
receipt for the Shares and any additional documents requested by the
Underwriters pursuant to Section 7(l) hereof, will be delivered at the offices
of Willkie Farr & Gallagher LLP, 787 Seventh Avenue, New York, New York 10019
(the "Closing Location"), and the Shares will be delivered at the Designated
Office, all at such Time of Delivery. A meeting will be held at the Closing
Location at p.m., New York City time, on the New York Business Day
(as defined herein) next preceding such Time of Delivery, at which meeting the
final drafts of the documents to be delivered pursuant to the preceding sentence
will be available for review by the parties hereto. For the purposes of this
Section 4, "New York Business Day" shall mean each Monday, Tuesday, Wednesday,
Thursday and Friday which is not a day on which banking institutions in New York
are generally authorized or obligated by law or executive order to close.
5. The Company agrees with each of the Underwriters:
(a) To prepare the Prospectus in a form approved by you and to file such Prospectus pursuant to Rule 424(b) under the Act not later than the Commission's close of business on the second business day following the execution and delivery of this Agreement, or, if applicable, such earlier time as may be required by Rule 430A(a)(3) under the Act; to make no further amendment or any supplement to the Registration Statement or Prospectus which shall be disapproved by you promptly after reasonable notice thereof; to advise you, promptly after it receives notice thereof, of the time when any amendment to the Registration Statement has been filed or becomes effective or any supplement to the Prospectus or any amended Prospectus has been filed and to furnish you with copies thereof; to advise you, promptly after it receives notice thereof, of the issuance by the Commission of any stop order or of any order preventing or suspending the use of any Preliminary Prospectus or prospectus, of the suspension of the qualification of the Shares for offering or sale in any jurisdiction, of the initiation or threatening of any proceeding for any such purpose, or of any request by the Commission for the amending or supplementing of the Registration Statement or Prospectus or for additional information; and, in the event of the issuance of any stop order or of any order preventing or suspending the use of any Preliminary Prospectus or prospectus or suspending any such qualification, promptly to use its best efforts to obtain the withdrawal of such order;
(b) Promptly from time to time to take such action as you may reasonably request to qualify the Shares for offering and sale under the securities laws of such jurisdictions as you may request and to comply with such laws so as to permit the continuance of sales and dealings therein in such jurisdictions for as long as may be necessary to complete the distribution
of the Shares, provided that in connection therewith the Company shall not be required to qualify as a foreign corporation or to file a general consent to service of process in any jurisdiction;
(c) Prior to 10:00 A.M., New York City time, on the New York Business Day next succeeding the date of this Agreement and from time to time, to furnish the Underwriters with written and electronic copies of the Prospectus in New York City in such quantities as you may reasonably request, and, if the delivery of a prospectus is required at any time prior to the expiration of nine months after the time of issue of the Prospectus in connection with the offering or sale of the Shares and if at such time any events shall have occurred as a result of which the Prospectus as then amended or supplemented would include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made when such Prospectus is delivered, not misleading, or, if for any other reason it shall be necessary during such period to amend or supplement the Prospectus in order to comply with the Act, to notify you and upon your request to prepare and furnish without charge to each Underwriter and to any dealer in securities as many written and electronic copies as you may from time to time reasonably request of an amended Prospectus or a supplement to the Prospectus which will correct such statement or omission or effect such compliance, and in case any Underwriter is required to deliver a prospectus in connection with sales of any of the Shares at any time nine months or more after the time of issue of the Prospectus, upon your request but at the expense of such Underwriter, to prepare and deliver to such Underwriter as many written and electronic copies as you may request of an amended or supplemented Prospectus complying with Section 10(a)(3) of the Act;
(d) To make generally available to the Company's securityholders as soon as practicable, but in any event not later than eighteen months after the effective date of the Registration Statement (as defined in Rule 158(c) under the Act), an earnings statement of the Company and its subsidiaries (which need not be audited) complying with Section 11(a) of the Act and the rules and regulations of the Commission thereunder (including, at the option of the Company, Rule 158);
(e) During the period beginning from the date hereof and continuing to and including the date 120 days after the date of the Prospectus (the initial "Lock-Up Period"), not to offer, sell, contract to sell or otherwise dispose of, except as provided hereunder, any securities of the Company that are substantially similar to the Shares, including but not limited to any securities that are convertible into or exchangeable for, or that represent the right to receive, Stock or any such substantially similar securities (other than (i) pursuant to employee stock option plans existing on, or upon the conversion or exchange of convertible or exchangeable securities outstanding as of, the date of this Agreement or (ii) the issuance of shares of Stock in exchange for the assets of, or a majority or controlling portion of the equity of, another entity in connection with the acquisition by the Company or any of its subsidiaries of such entity, provided, however, that (x) the aggregate market value of all such shares may not exceed $100 million and (y) prior to the issuance of such shares, each recipient of such shares shall agree in writing with you, in an agreement in the form to be agreed to by the Underwriters, not to sell, offer, dispose or otherwise transfer any such shares or options during such 120 day period, without your prior written consent), without your prior written consent; provided, however, that if (1) during the last 17 days of the initial Lock-Up Period, the Company releases earnings results or announces material news or a material event or (2) prior to the expiration of the initial Lock-
Up period, the Company announces that it will release earnings results during the 15-day period following the last day of the initial Lock-Up Period, then in each case the Lock-Up Period will be automatically extended until the expiration of the 18-day period beginning on the date of release of the earnings results or the announcement of the material news or material event, as applicable, unless Goldman, Sachs & Co. and Lehman Brothers Inc. each waive, in writing, such extension; the Company will provide the representatives and any co-managers with prior notice of any such announcement that gives rise to an extension of the Lock-up Period;
(f) Unless otherwise publicly available in electronic format on the website of the Company or the Commission, to furnish to the Company's stockholders as soon as practicable after the end of each fiscal year an annual report (including a balance sheet and statements of income, stockholders' equity and cash flows of the Company and its consolidated subsidiaries certified by independent public accountants) and, as soon as practicable after the end of each of the first three quarters of each fiscal year (beginning with the fiscal quarter ending after the effective date of the Registration Statement), to make available to the Company's stockholders consolidated summary financial information of the Company and its subsidiaries for such quarter in reasonable detail;
(g) During a period of three years from the effective date of the Registration Statement, to furnish to you copies of all reports or other communications (financial or other) furnished to the Company's stockholders, and to deliver to you (i) as soon as they are available, copies of any reports and financial statements furnished to or filed with the Commission or any national securities exchange on which any class of securities of the Company is listed, other than such reports and financial statements that are publicly available on the Commission's EDGAR system; and (ii) such additional information concerning the business and financial condition of the Company as you may from time to time reasonably request (such financial statements to be on a consolidated basis to the extent the accounts of the Company and its subsidiaries are consolidated in reports furnished to its stockholders generally or to the Commission);
(h) To use the net proceeds received by the Company from the sale of the Shares pursuant to this Agreement in the manner specified in the Prospectus under the caption "Use of Proceeds";
(i) To use its best efforts to list, subject to notice of issuance, the Shares on the New York Stock Exchange (the "Exchange");
(j) To file with the Commission such information on Form 10-Q of Form 10-K as may be required by Rule 463 under the Act;
(k) If the Company elects to rely upon Rule 462(b), the Company shall file a Rule 462(b) Registration Statement with the Commission in compliance with Rule 462(b) by 10:00 P.M., Washington, D.C. time, on the date of this Agreement, and the Company shall at the time of filing either pay to the Commission the filing fee for the Rule 462(b) Registration Statement or give irrevocable instructions for the payment of such fee pursuant to Rule 111(b) under the Act;
(l) Upon request of any Underwriter, to furnish, or cause to be furnished, to such Underwriter an electronic version of the Company's trademarks, servicemarks and corporate logo for use on the website, if any, operated by such Underwriter for the purpose of facilitating the on-line offering of the Shares (the "License"); provided, however, that the License shall be used solely for the purpose described above, is granted without any fee and may not be assigned or transferred; and
(m) In connection with the Directed Share Program, to ensure that the Directed Shares will be restricted to the extent required by the NASD or the rules of such association from sale, transfer, assignment, pledge or hypothecation for a period of three months following the date of the effectiveness of the Registration Statement, and Lehman Brothers Inc. will notify the Company as to which Directed Share Participants will need to be so restricted. At the request of Lehman Brothers Inc., the Company will direct the transfer agent to place stop transfer restrictions upon such securities for such period of time.
(j) To comply with all applicable securities and other applicable laws, rules and regulations in each foreign jurisdiction in which the Directed Shares are offered in connection with the Directed Share Program.
6. The Company and each of the Selling Stockholders covenant and agree with one another and with the several Underwriters that (a) the Company will pay or cause to be paid the following: (i) the fees, disbursements and expenses of the Company's counsel and accountants in connection with the registration of the Shares under the Act and all other expenses in connection with the preparation, printing and filing of the Registration Statement, any Preliminary Prospectus and the Prospectus and amendments and supplements thereto and the mailing and delivering of copies thereof to the Underwriters and dealers; (ii) the cost of printing or producing any Agreement among Underwriters, this Agreement, the Blue Sky Memorandum, closing documents (including any compilations thereof) and any other documents in connection with the offering, purchase, sale and delivery of the Shares; (iii) all expenses in connection with the qualification of the Shares for offering and sale under state securities laws as provided in Section 5(b) hereof, including the fees and disbursements of counsel for the Underwriters in connection with such qualification and in connection with the Blue Sky survey (iv) all fees and expenses in connection with listing the Shares on the Exchange; (v) the filing fees incident to, and the fees and disbursements of counsel for the Underwriters in connection with, securing any required review by the National Association of Securities Dealers, Inc. of the terms of the sale of the Shares; and (vi) all costs, expenses, fees and taxes incident to and in connection with the offer and sale of Firm Shares by the Underwriters in connection with the Directed Share Program, including the fees and disbursements of counsel to the Underwriters related thereto, the costs and expenses of preparation, printing and distribution of the Directed Share Program material and all stamp duties or other taxes incurred by the Underwriters in connection with the Directed Share Program; and (b) the Company will pay or cause to be paid: (i) the cost of preparing stock certificates; (ii) the cost and charges of any transfer agent or registrar and (iii) all other costs and expenses incident to the performance of its obligations hereunder which are not otherwise specifically provided for in this Section 6; and (c) such Selling Stockholder will pay or cause to be paid all costs and expenses incident to the performance of such Selling Stockholder's obligations hereunder which are not otherwise specifically provided for in this Section 6, including (i) any fees and expenses of counsel for such Selling Stockholder, (ii) such Selling
Stockholder's pro rata share of the fees and expenses of the Attorneys-in-Fact and the Custodian, and (iii) all expenses and taxes incident to the sale and delivery of the Shares to be sold by such Selling Stockholder to the Underwriters hereunder. In connection with clause (c) of the preceding sentence, Goldman, Sachs & Co. agrees to pay New York State stock transfer tax, and such Selling Stockholder agrees to reimburse Goldman, Sachs & Co. for associated carrying costs if such tax payment is not rebated on the day of payment and for any portion of such tax payment not rebated. It is understood, however, that the Company shall bear, and the Selling Stockholders shall not be required to pay or to reimburse the Company for, the cost of any other matters not directly relating to the sale and purchase of the Shares pursuant to this Agreement, and that, except as provided in this Section 6, and Sections 8 and 11 hereof, the Underwriters will pay all of their own costs and expenses, including the fees of their counsel, stock transfer taxes on resale of any of the Shares by them, and any advertising expenses connected with any offers they may make.
7. The obligations of the Underwriters hereunder, as to the Shares to be delivered at each Time of Delivery (i) by the Company, shall be subject, in their discretion, to the condition that all representations and warranties and other statements of the Company herein are, at and as of such Time of Delivery, true and correct, the condition that the Company shall have performed all of its obligations hereunder theretofore to be performed, and (ii) by each Selling Stockholder, shall be subject, in their discretion, to the condition that all representations and warranties and other statements of such Selling Stockholder herein are, at and as of such Time of Delivery, true and correct, the condition that such Selling Stockholder shall have performed all of its obligations hereunder theretofore to be performed and the following additional conditions:
(a) The Prospectus shall have been filed with the Commission
pursuant to Rule 424(b) within the applicable time period prescribed for such
filing by the rules and regulations under the Act and in accordance with Section
5(a) hereof; if the Company has elected to rely upon Rule 462(b), the Rule
462(b) Registration Statement shall have become effective by 10:00 P.M.,
Washington, D.C. time, on the date of this Agreement; no stop order suspending
the effectiveness of the Registration Statement or any part thereof shall have
been issued and no proceeding for that purpose shall have been initiated or
threatened by the Commission; and all requests for additional information on the
part of the Commission shall have been complied with to your reasonable
satisfaction;
(b) Willkie Farr & Gallagher LLP, counsel for the Underwriters, shall have furnished to you such written opinion or opinions (a draft of each such opinion is attached as Annex III(a) hereto), dated such Time of Delivery, with respect to such matters as you may reasonably request, and such counsel shall have received such papers and information as they may reasonably request to enable them to pass upon such matters;
(c) Skadden, Arps, Slate, Meagher & Flom LLP, counsel for the Company, shall have furnished to you their written opinion (a draft of such opinion is attached as Annex III(b) hereto), dated such Time of Delivery, in form and substance satisfactory to you;
(d) The respective counsel for each of the Selling Stockholders, as indicated in Schedule II hereto, each shall have furnished to you their written opinion with respect to each of the Selling Stockholders for whom they are acting as counsel (a draft of each such opinion is
attached as Annex III(c) hereto), dated the First Time of Delivery, in form and substance satisfactory to you;
(e) On the date of the Prospectus at a time prior to the execution of this Agreement, at 9:30 a.m., New York City time, on the effective date of any post-effective amendment to the Registration Statement filed subsequent to the date of this Agreement and also at each Time of Delivery, Ernst & Young LLP shall have furnished to you a letter or letters, dated the respective dates of delivery thereof, in form and substance satisfactory to you, to the effect set forth in Annex I hereto (the executed copy of the letter delivered prior to the execution of this Agreement is attached as Annex I(a) hereto and a draft of the form of letter to be delivered on the effective date of any post-effective amendment to the Registration Statement and as of each Time of Delivery is attached as Annex I(b) hereto);
(f) On the date of the Prospectus at a time prior to the execution of this Agreement, at 9:30 a.m., New York City time, on the effective date of any post-effective amendment to the Registration Statement filed subsequent to the date of this Agreement and also at each Time of Delivery, KPMG LLP shall have furnished to you a letter or letters, dated the respective dates of delivery thereof, in form and substance satisfactory to you, to the effect set forth in Annex II hereto (the executed copy of the letter delivered prior to the execution of this Agreement is attached as Annex II(a) hereto and a draft of the form of letter to be delivered on the effective date of any post-effective amendment to the Registration Statement and as of each Time of Delivery is attached as Annex II(b) hereto);
(g) (i) Neither the Company nor any of its subsidiaries shall have
sustained since the date of the latest audited financial statements included in
the Prospectus any loss or interference with its business from fire, explosion,
flood or other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise than as set
forth or contemplated in the Prospectus, and (ii) since the respective dates as
of which information is given in the Prospectus there shall not have been any
change in the capital stock or long-term debt of the Company or any of its
subsidiaries or any change, or any development involving a prospective change,
in or affecting the general affairs, management, financial position,
stockholders' equity, assets or results of operations of the Company and its
subsidiaries taken as a whole, otherwise than as set forth or contemplated in
the Prospectus, the effect of which, in any such case described in clause (i) or
(ii), is in the judgment of the Representatives so material and adverse as to
make it impracticable or inadvisable to proceed with the public offering or the
delivery of the Shares being delivered at such Time of Delivery on the terms and
in the manner contemplated in the Prospectus;
(h) On or after the date hereof (i) no downgrading shall have occurred in the rating accorded the Company's debt securities by any "nationally recognized statistical rating organization", as that term is defined by the Commission for purposes of Rule 436(g)(2) under the Act, and (ii) no such organization shall have publicly announced that it has under surveillance or review, with possible negative implications, its rating of any of the Company's debt securities;
(i) On or after the date hereof there shall not have occurred any of the following: (i) a suspension or material limitation in trading in securities generally on the
Exchange; (ii) a suspension or material limitation in trading in the Company's
securities on the Exchange; (iii) a general moratorium on commercial banking
activities declared by either Federal or New York State authorities or a
material disruption in commercial banking or securities settlement or clearance
services in the United States; (iv) the outbreak or escalation of hostilities
involving the United States or the declaration by the United States of a
national emergency or war or (v) the occurrence of any other calamity or crisis
or any change in financial, political or economic conditions in the United
States or elsewhere, if the effect of any such event specified in clause (iv) or
(v) in the judgment of the Representatives makes it impracticable or inadvisable
to proceed with the public offering or the delivery of the Shares being
delivered at such Time of Delivery on the terms and in the manner contemplated
in the Prospectus;
(j) The Company has obtained and delivered to the Underwriters executed copies of an agreement from each stockholder of the Company other than the Selling Stockholders, providing that, during the Lock-Up Period such stockholders shall not offer, sell contract to sell or otherwise dispose of, except as provided hereunder, any securities of the Company that are substantially similar to the Shares, including but not limited to any securities that are convertible into or exchangeable for, or that represent the right to receive, Stock or any such substantially similar securities (other than pursuant to employee stock option plans existing on, or upon the conversion or exchange of convertible or exchangeable securities outstanding as of, the date of this Agreement), without your prior written consent; provided, however, that if (1) during the last 17 days of the initial Lock-Up Period, the Company releases earnings results or announces material news or a material event or (2) prior to the expiration of the initial Lock-Up period, the Company announces that it will release earnings results during the 15-day period following the last day of the initial Lock-Up Period, then in each case the Lock-Up Period will be automatically extended until the expiration of the 18-day period beginning on the date of release of the earnings results or the announcement of the material news or material event, as applicable, unless Goldman, Sachs & Co. and Lehman Brothers Inc. waive, in writing, such extension;
(k) The Shares at such Time of Delivery shall have been duly listed, subject to notice of issuance, on the Exchange;
(l) The Company shall have complied with the provisions of Section 5(c) hereof with respect to the furnishing of prospectuses on the New York Business Day next succeeding the date of this Agreement;
(m) The Company and the Selling Stockholders shall have furnished or
caused to be furnished to you at such Time of Delivery certificates of officers
of the Company and of the Selling Stockholders, respectively, satisfactory to
you as to the accuracy of the representations and warranties of the Company and
the Selling Stockholders, respectively, herein at and as of such Time of
Delivery, as to the performance by the Company and the Selling Stockholders of
all of their respective obligations hereunder to be performed at or prior to
such Time of Delivery, and as to such other matters as you may reasonably
request, and the Company shall have furnished or caused to be furnished
certificates as to the matters set forth in subsections (a) and (f) of this
Section 7; and
(n) Deborah C. Paskin, Executive Vice President, Secretary and General Counsel of the Company, shall have furnished to you her written opinion (a draft of such opinion is attached as Annex III(d) hereto), dated such Time of Delivery, in form and substance satisfactory to you;
8. (a) The Company will indemnify and hold harmless each Underwriter against any losses, claims, damages or liabilities, joint or several, to which such Underwriter may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in any Preliminary Prospectus, the Registration Statement or the Prospectus, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state in any Preliminary Prospectus, the Registration Statement or the Prospectus, or in any amendment or supplement thereto, any material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse each Underwriter for any legal or other expenses reasonably incurred by such Underwriter in connection with investigating or defending any such action or claim as such expenses are incurred; provided, however, that the Company shall not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in any Preliminary Prospectus, the Registration Statement or the Prospectus or any such amendment or supplement in reliance upon and in conformity with written information furnished to the Company by any Underwriter through Goldman, Sachs & Co. or Lehman Brothers Inc. expressly for use therein.
(b) Each of the Selling Stockholders will indemnify and hold harmless each Underwriter against any losses, claims, damages or liabilities, joint or several, to which such Underwriter may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in any Preliminary Prospectus, the Registration Statement or the Prospectus, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state in any Preliminary Prospectus, the Registration Statement or the Prospectus, or in any amendment or supplement thereto, any material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in any Preliminary Prospectus, the Registration Statement or the Prospectus or any such amendment or supplement thereto in reliance upon and in conformity with written information furnished to the Company by such Selling Stockholder expressly for use therein; and will reimburse each Underwriter for any legal or other expenses reasonably incurred by such Underwriter in connection with investigating or defending any such action or claim as such expenses are incurred; provided, however, that such Selling Stockholder shall not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in any Preliminary Prospectus, the Registration Statement or the Prospectus or any such amendment or supplement in reliance upon and in conformity with written information furnished to the Company by any Underwriter through Goldman, Sachs & Co. or Lehman Brothers Inc. expressly for use therein.
(c) Each Underwriter will indemnify and hold harmless the Company and each Selling Stockholder against any losses, claims, damages or liabilities to which the Company or such Selling Stockholder may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in any Preliminary Prospectus, the Registration Statement or the Prospectus, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in any Preliminary Prospectus, the Registration Statement or the Prospectus or any such amendment or supplement in reliance upon and in conformity with written information furnished to the Company by such Underwriter through Goldman, Sachs & Co. or Lehman Brothers Inc. expressly for use therein; and will reimburse the Company and each Selling Stockholder for any legal or other expenses reasonably incurred by the Company or such Selling Stockholder in connection with investigating or defending any such action or claim as such expenses are incurred.
(d) Promptly after receipt by an indemnified party under subsection
(a), (b) or (c) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the failure to so notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under such subsection. In case any such
action shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party (who
shall not, except with the consent of the indemnified party, be counsel to the
indemnifying party), and, after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party under such
subsection for any legal expenses of other counsel or any other expenses, in
each case subsequently incurred by such indemnified party, in connection with
the defense thereof other than reasonable costs of investigation.
Notwithstanding anything contained herein to the contrary, if indemnity may be
sought pursuant to Section 10(g) hereof in respect of a claim or action referred
to in Section 10(g), then in addition to such separate firm for the indemnified
parties, the indemnifying party shall be liable for the fees and expenses of not
more than one separate firm (in addition to any local counsel) for the Lehman
Brothers Entities (as defined in Section 10(g)) for the defense of any loss,
claim, damage, liability or action arising out of the Directed Share Program. No
indemnifying party shall, without the written consent of the indemnified party,
effect the settlement or compromise of, or consent to the entry of any judgment
with respect to, any pending or threatened action or claim in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified party is an actual or potential party to such action or claim)
unless such settlement, compromise or judgment (i) includes an unconditional
release of the indemnified party from all liability arising out of such action
or claim and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act, by or on behalf of any indemnified party.
(e) If the indemnification provided for in this Section 8 is unavailable to or insufficient to hold harmless an indemnified party under subsection (a), (b) or (c) above in respect of any losses, claims, damages or liabilities (or actions in respect thereof) referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect the relative benefits received by the Company and the Selling Stockholders on the one hand and the Underwriters on the other from the offering of the Shares. If, however, the allocation provided by the immediately preceding sentence is not permitted by applicable law or if the indemnified party failed to give the notice required under subsection (d) above, then each indemnifying party shall contribute to such amount paid or payable by such indemnified party in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of the Company and the Selling Stockholders on the one hand and the Underwriters on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities (or actions in respect thereof), as well as any other relevant equitable considerations. The relative benefits received by the Company and the Selling Stockholders on the one hand and the Underwriters on the other shall be deemed to be in the same proportion as the total net proceeds from the offering (before deducting expenses) received by the Company and the Selling Stockholders bear to the total underwriting discounts and commissions received by the Underwriters, in each case as set forth in the table on the cover page of the Prospectus. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or the Selling Stockholders on the one hand or the Underwriters on the other and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company, each of the Selling Stockholders and the Underwriters agree that it would not be just and equitable if contributions pursuant to this subsection (e) were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to above in this subsection (e). The amount paid or payable by an indemnified party as a result of the losses, claims, damages or liabilities (or actions in respect thereof) referred to above in this subsection (e) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this subsection (e), no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Shares underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages which such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Underwriters' obligations in this subsection (e) to contribute are several in proportion to their respective underwriting obligations and not joint.
(f) The obligations of the Company and the Selling Stockholders under this Section 8 shall be in addition to any liability which the Company and the respective Selling Stockholders may otherwise have and shall extend, upon the same terms and conditions, to each person, if any, who controls any Underwriter within the meaning of the Act; and the obligations of the Underwriters under this Section 8 shall be in addition to any liability which the respective
Underwriters may otherwise have and shall extend, upon the same terms and conditions, to each officer and director of the Company (including any person who, with his or her consent, is named in the Registration Statement as about to become a director of the Company) and to each person, if any, who controls the Company or any Selling Stockholder within the meaning of the Act.
(g) The Company shall indemnify and hold harmless Lehman Brothers Inc. (including its directors, officers and employees) and each person, if any, who controls Lehman Brothers Inc. within the meaning of Section 15 of the Securities Act ("Lehman Brothers Entities"), from and against any loss, claim, damage or liability or any action in respect thereof to which any of the Lehman Brothers Entities may become subject, under the Securities Act or otherwise, insofar as such loss, claim, damage, liability or action (i) arises out of, or is based upon, any untrue statement or alleged untrue statement of a material fact contained in any material prepared by or with the approval of the Company for distribution to Directed Share Participants in connection with the Directed Share Program or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, (ii) arises out of, or is based upon, the failure of the Directed Share Participant to pay for and accept delivery of Directed Shares that the Directed Share Participant agreed to purchase or (iii) is otherwise related to the Directed Share Program; provided that, the Company shall not be liable under this clause (iii) for any loss, claim, damage, liability or action that is determined in a final judgment by a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of the Lehman Brothers Entities. The Company shall reimburse the Lehman Brothers Entities promptly upon demand for any legal or other expenses reasonably incurred by them in connection with investigating or defending or preparing to defend against any such loss, claim, damage, liability or action as such expenses are incurred.
9. (a) If any Underwriter shall default in its obligation to purchase the Shares which it has agreed to purchase hereunder at a Time of Delivery, you may in your discretion arrange for you or another party or other parties to purchase such Shares on the terms contained herein. If within thirty-six hours after such default by any Underwriter you do not arrange for the purchase of such Shares, then the Company and the Selling Stockholders shall be entitled to a further period of thirty-six hours within which to procure another party or other parties satisfactory to you to purchase such Shares on such terms. In the event that, within the respective prescribed periods, you notify the Company and the Selling Stockholders that you have so arranged for the purchase of such Shares, or the Company and the Selling Stockholders notify you that they have so arranged for the purchase of such Shares, you or the Company and the Selling Stockholders shall have the right to postpone a Time of Delivery for a period of not more than seven days, in order to effect whatever changes may thereby be made necessary in the Registration Statement or the Prospectus, or in any other documents or arrangements, and the Company agrees to file promptly any amendments to the Registration Statement or the Prospectus which in your opinion may thereby be made necessary. The term "Underwriter" as used in this Agreement shall include any person substituted under this Section 9 with like effect as if such person had originally been a party to this Agreement with respect to such Shares.
(b) If, after giving effect to any arrangements for the purchase of the Shares of a defaulting Underwriter or Underwriters by you and the Company and the Selling Stockholders as provided in subsection (a) above, the aggregate number of such Shares which remains
unpurchased does not exceed one-eleventh of the aggregate number of all the Shares to be purchased at such Time of Delivery, then the Company and the Selling Stockholders shall have the right to require each non-defaulting Underwriter to purchase the number of Shares which such Underwriter agreed to purchase hereunder at such Time of Delivery and, in addition, to require each non-defaulting Underwriter to purchase its pro rata share (based on the number of Shares which such Underwriter agreed to purchase hereunder) of the Shares of such defaulting Underwriter or Underwriters for which such arrangements have not been made; but nothing herein shall relieve a defaulting Underwriter from liability for its default.
(c) If, after giving effect to any arrangements for the purchase of
the Shares of a defaulting Underwriter or Underwriters by you and the Company
and the Selling Stockholders as provided in subsection (a) above, the aggregate
number of such Shares which remains unpurchased exceeds one-eleventh of the
aggregate number of all of the Shares to be purchased at such Time of Delivery,
or if the Company and the Selling Stockholders shall not exercise the right
described in subsection (b) above to require non-defaulting Underwriters to
purchase Shares of a defaulting Underwriter or Underwriters, then this Agreement
(or, with respect to the Second Time of Delivery, the obligations of the
Underwriters to purchase and of the Company to sell the Optional Shares) shall
thereupon terminate, without liability on the part of any non-defaulting
Underwriter or the Company or the Selling Stockholders, except for the expenses
to be borne by the Company and the Selling Stockholders and the Underwriters as
provided in Section 6 hereof and the indemnity and contribution agreements in
Section 8 hereof; but nothing herein shall relieve a defaulting Underwriter from
liability for its default.
10. The respective indemnities, agreements, representations, warranties and other statements of the Company, the Selling Stockholders and the several Underwriters, as set forth in this Agreement or made by or on behalf of them, respectively, pursuant to this Agreement, shall remain in full force and effect, regardless of any investigation (or any statement as to the results thereof) made by or on behalf of any Underwriter or any controlling person of any Underwriter, or the Company, or any of the Selling Stockholders, or any officer or director or controlling person of the Company, or any controlling person of any Selling Stockholder, and shall survive delivery of and payment for the Shares.
11. If this Agreement shall be terminated pursuant to Section 9 hereof, neither the Company nor the Selling Stockholders shall then be under any liability to any Underwriter except as provided in Sections 6 and 8 hereof; but, if for any other reason any Shares are not delivered by or on behalf of the Company and the Selling Stockholders as provided herein, the Company and each of the Selling Stockholders pro rata (based on the number of Shares to be sold by the Company and such Selling Stockholder hereunder) will reimburse the Underwriters through you for all out-of-pocket expenses approved in writing by you, including fees and disbursements of counsel, reasonably incurred by the Underwriters in making preparations for the purchase, sale and delivery of the Shares not so delivered, but the Company and the Selling Stockholders shall then be under no further liability to any Underwriter in respect of the Shares not so delivered except as provided in Sections 6 and 8 hereof.
12. In all dealings hereunder, you shall act on behalf of each of the Underwriters, and the parties hereto shall be entitled to act and rely upon any statement, request, notice or agreement on behalf of any Underwriter made or given by you jointly or by Goldman, Sachs &
Co. or Lehman Brothers Inc. on behalf of you as the representatives; and in all dealings with any Selling Stockholder hereunder, you and the Company shall be entitled to act and rely upon any statement, request, notice or agreement on behalf of such Selling Stockholder made or given by any or all of the Attorneys-in-Fact for such Selling Stockholder.
All statements, requests, notices and agreements hereunder shall be in writing,
and if to the Underwriters shall be delivered or sent by mail, telex or
facsimile transmission to you as the representatives in care of Goldman, Sachs &
Co., 85 Broad Street, New York, New York 10004, Attention: Registration
Department and Lehman Brothers Inc., 399 Park Avenue, 8th Floor, New York, New
York 10022, Attention: Syndicate Department; if to any Selling Stockholder shall
be delivered or sent by mail, telex or facsimile transmission to counsel for
such Selling Stockholder at its address set forth in Schedule II hereto; and if
to the Company shall be delivered or sent by mail, telex or facsimile
transmission to the address of the Company set forth in the Registration
Statement, Attention: Secretary; provided, however, that any notice to an
Underwriter pursuant to Section 8(c) hereof shall be delivered or sent by mail,
telex or facsimile transmission to such Underwriter at its address set forth in
its Underwriters' Questionnaire or telex constituting such Questionnaire, which
address will be supplied to the Company or the Selling Stockholders by you on
request; provided, however, that notices under subsection 5(e) shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex or
facsimile transmission to you as the representatives at Goldman, Sachs & Co., 85
Broad Street, New York, New York 10004, Attention: Control Room and Lehman
Brothers Inc., 399 Park Avenue, 8th Floor, New York, New York 10022, Attention:
Syndicate Department. Any such statements, requests, notices or agreements shall
take effect upon receipt thereof.
13. This Agreement shall be binding upon, and inure solely to the benefit of, the Underwriters, the Company and the Selling Stockholders and, to the extent provided in Sections 8 and 10 hereof, the officers and directors of the Company and each person who controls the Company, any Selling Stockholder or any Underwriter, and their respective heirs, executors, administrators, successors and assigns, and no other person shall acquire or have any right under or by virtue of this Agreement. No purchaser of any of the Shares from any Underwriter shall be deemed a successor or assign by reason merely of such purchase.
14. The Company and each of the Selling Stockholders acknowledges and agrees that (i) the purchase and sale of the Shares pursuant to this Agreement is an arm's-length commercial transaction between the Company or such Selling Stockholder, as applicable, on the one hand, and the several Underwriters, on the other, (ii) in connection therewith and with the process leading to such transaction each Underwriter is acting solely as a principal and not the agent or fiduciary of the Company or such Selling Stockholder, (iii) no Underwriter has assumed an advisory or fiduciary responsibility in favor of the Company or such Selling Stockholder with respect to the offering contemplated hereby or the process leading thereto (irrespective of whether such Underwriter has advised or is currently advising the Company or such Selling Stockholder on other matters) or any other obligation to the Company or such Selling Stockholder except the obligations expressly set forth in this Agreement and (iv) the Company or such Selling Stockholder has consulted its own legal and financial advisors to the extent it deemed appropriate. The Company and each Selling Stockholder agrees that it will not claim that the Underwriters, or any of them, has rendered advisory services of any nature or respect, or
owes a fiduciary or similar duty to the Company or such Selling Stockholder, in connection with such transaction or the process leading thereto.
15. Time shall be of the essence of this Agreement. As used herein, the term "business day" shall mean any day when the Commission's office in Washington, D.C. is open for business.
16. This Agreement shall be governed by and construed in accordance with the laws of the State of New York.
17. This Agreement may be executed by any one or more of the parties hereto in any number of counterparts, each of which shall be deemed to be an original, but all such counterparts shall together constitute one and the same instrument.
18. Notwithstanding anything herein to the contrary, the Company and the Selling Stockholders are authorized to disclose to any persons the U.S. federal and state income tax treatment and tax structure of the potential transaction and all materials of any kind (including tax opinions and other tax analyses) provided to the Company and the Selling Stockholders relating to that treatment and structure, without the Underwriters imposing any limitation of any kind. However, any information relating to the tax treatment and tax structure shall remain confidential (and the foregoing sentence shall not apply) to the extent necessary to enable any person to comply with securities laws. For this purpose, "tax structure" is limited to any facts that may be relevant to that treatment.
If the foregoing is in accordance with your understanding, please sign and return to us one for the Company and each of the Representatives plus one for each counsel and the Custodian, if any counterparts hereof, and upon the acceptance hereof by you, on behalf of each of the Underwriters, this letter and such acceptance hereof shall constitute a binding agreement among each of the Underwriters, the Company and each of the Selling Stockholders. It is understood that your acceptance of this letter on behalf of each of the Underwriters is pursuant to the authority set forth in a form of Agreement among Underwriters, the form of which shall be submitted to the Company and the Selling Stockholders for examination, upon request, but without warranty on your part as to the authority of the signers thereof.
Any person executing and delivering this Agreement as Attorney-in-Fact for a Selling Stockholder represents by so doing that he has been duly appointed as Attorney-in-Fact by such Selling Stockholder pursuant to a validly existing and binding Power of Attorney which authorizes such Attorney-in-Fact to take such action.
Very truly yours,
BROOKDALE SENIOR LIVING INC.
Title:
EMERITUS CORPORATION
NW SELECT LLC
By: ------------------------------------ Name: Title: As Attorney-in-Fact acting on behalf of each of the Selling Stockholders named in Schedule II to this Agreement. Accepted as of the date hereof at , ---- : ----------------------------------- |
GOLDMAN, SACHS & CO.
LEHMAN BROTHERS INC.
On behalf of each of the Underwriters
BKD COMMON STOCK THIS CERTIFICATE IS TRANSFERABLE IN NEW YORK, NY INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE BROOKDALE SENIOR LIVING INC. CUSIP 112463 10 4 SEE REVERSE FOR CERTAIN RESTRICTIONS THIS CERTIFIES THAT BY IS THE RECORD HOLDER OF FULLY PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK, PAR VALUE $0.01, OF BROOKDALE SENIOR LIVING INC. transferable on the books of the Corporation by the holder hereof in person or by duly authorized attorney, upon surrender of this Certificate properly endorsed. This Certificate and the shares represented hereby are issued and shall be held subject to all of the provisions of the COUNTERSIGNED AND REGISTERED: Certificate of Incorporation of the Corporation and all amendments thereto, to all of which the holder, by acceptance hereof, assents. This (NEW YORK, N.Y.) Certificate is not valid until countersigned and registered by the Transfer Agent and Registrar. Witness the facsimile seal of the Corporation and the facsimile signatures of its duly authorized officers. Dated: AMERICAN STOCK TRANSFER & TRUST COMPANY AUTHORIZED SIGNATURE AND REGISTRAR TRANSFER AGENT SECRETARY CHIEF EXECUTIVE OFFICER AMERICAN BANK NOTE COMPANY. |
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NOTICE: The Signature(s) To This Assignment Must Correspond With The Name(s) As Written Upon The Face Of The Certificate In Every Particular, Without Alteration Or Enlargement Or Any Change Whatever. |
SIGNATURE(S) GUARANTEED:
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THE SIGNATURE(S) MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15. |
Exhibit 5.1
November 7, 2005
Brookdale Senior Living Inc.
330 North Wabash, Suite 1400
Chicago, Illinois 60611
Ladies and Gentlemen:
We have acted as special counsel to Brookdale Senior Living Inc., a Delaware corporation (the "Company"), in connection with the initial public offering (the "Initial Public Offering") by the Company of up to 7,935,000 shares (including 1,035,000 shares subject to an over-allotment option) (the "Primary Shares") and the sale by certain selling shareholders (the "Selling Shareholders") of up to 4,172,000 shares (the "Secondary Shares") of the Company's common stock, par value $0.01 per share (the "Common Stock").
This opinion is being furnished in accordance with the requirements of Item 601(b)(5) of Regulation S-K under the Securities Act of 1933, as amended (the "Act").
In connection with the opinions set forth herein, we have examined and relied on originals or copies of the following: (i) the Registration Statement on Form S-1 (File No. 333-127372) as filed with the Securities and Exchange Commission (the "Commission") on August 9, 2005 under the Act; (ii) Amendment No. 1 to the Registration Statement as filed with the Commission on September 21, 2005 under the Act; (iii) Amendment No. 2 to the Registration Statement as filed with the Commission on October 11, 2005 under the Act; (iv) Amendment No. 3 to the Registration Statement filed as of the date hereof (such Registration Statement, as so amended, being hereinafter referred to as the "Registration Statement"); (v) the form of Underwriting Agreement (the "Underwriting Agreement") proposed to be entered into by and among the Company, as issuer, the Selling Stockholders, and
Brookdale Senior Living Inc.
November 7, 2005
Goldman, Sachs & Co. and Lehman Brothers Inc. as representatives of the several underwriters named therein (the "Underwriters"), filed as an exhibit to the Registration Statement; (vi) a specimen certificate evidencing the Primary Shares; (vii) copies of the stock certificates representing the Secondary Shares; (viii) the Amended and Restated Certificate of Incorporation of the Company, as certified by the Secretary of State of the State of Delaware (the "Amended and Restated Certificate of Incorporation"); (ix) the Amended and Restated By-Laws of the Company, as certified by Deborah C. Paskin, Secretary of the Company (the "Amended and Restated By-Laws"); (x) certain resolutions of the Board of Directors of the Company, relating to the issuance and sale of the Primary Shares and related matters; (xi) certain resolutions of the Board of Directors of the Company, relating to the original issuance and sale of the Secondary Shares and related matters; (xii) certain resolutions of the stockholders of the Company relating to the Amended and Restated Certificate of Incorporation and the Amended and Restated By-Laws; and (xiii) the Conveyance Agreement, dated September 30, 2005, by and among Brookdale Senior Living Inc., Brookdale Living Communities, Inc., BSL Brookdale Merger Inc., BSL CCRC Merger Inc., BSL FEBC Merger Inc., Emeritus Corporation, FEBC-ALT Investors LLC, FIT-ALT Investor LLC, Fortress Brookdale Acquisition LLC, Fortress CCRC Acquisition LLC, Fortress Investment Trust II, Fortress Registered Investment Trust, Health Partners and NW Select LLC (the "Conveyance Agreement") and certain resolutions of the Board of Directors of the Company related thereto. We have also examined originals or copies, certified or otherwise identified to our satisfaction, of such records of the Company and such agreements, certificates and receipts of public officials, certificates of officers or other representatives of the Company and others, and such other documents as we have deemed necessary or appropriate as a basis for the opinion set forth below.
In our examination, we have assumed the legal capacity of all natural persons, the genuineness of all signatures, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as facsimile, electronic, certified or photostatic copies, and the authenticity of the originals of such copies. In making our examination of executed documents, we have assumed that the parties thereto, other than the Company, had the power, corporate or
Brookdale Senior Living Inc.
November 7, 2005
other, to enter into and perform all obligations thereunder and have also assumed the due authorization by all requisite action, corporate or other, and the execution and delivery by such parties of such documents and the validity and binding effect thereof on such parties. As to any facts material to the opinion expressed herein that we did not independently establish or verify, we have relied upon statements and representations of officers and other representatives of the Company and others and of public officials.
In rendering the opinion set forth in paragraph 2 below, we have assumed that the Company received the entire amount of the consideration contemplated by the Conveyance Agreement.
Members of our firm are admitted to the bar in the State of New York, and we do not express any opinion as to the laws of any jurisdiction other than the corporate laws of the State of Delaware, and we do not express any opinion as to the effect of any other laws on the opinion stated herein.
Based upon and subject to the foregoing, we are of the opinion that:
1. When (i) the Registration Statement becomes effective under the Act;
(ii) the Underwriting Agreement has been duly executed and delivered; and (iii)
certificates representing the Primary Shares in the form of the specimen
certificate examined by us have been manually signed by an authorized officer of
the transfer agent and registrar for the Common Stock and registered by such
transfer agent and registrar, and have been delivered to and paid for by the
Underwriters at a price per share not less than the per share par value of the
Common Stock as contemplated by the Underwriting Agreement, the issuance and
sale of the Primary Shares will have been duly authorized, and the Primary
Shares will be validly issued, fully paid and nonassessable.
2. The Secondary Shares have been duly authorized and validly issued and are fully paid and nonassessable.
We hereby consent to the filing of this opinion with the Commission as an exhibit to the Registration Statement. We also consent to the reference to our firm under the caption "Legal Matters" in the Registration Statement. In giving this consent, we do not thereby admit that we are included in the category of persons whose consent is required under Section 7 of the Act or the rules and regulations of the Commission.
Very truly yours,
/s/ Skadden, Arps, Slate, Meagher & Flom LLP |
Exhibit 10.87
BROOKDALE SENIOR LIVING INC.
OMNIBUS STOCK INCENTIVE PLAN
SECTION 1. PURPOSE OF PLAN.
The name of this plan is the Brookdale Senior Living Inc. Omnibus Stock Incentive Plan (the "Plan"). The Plan was adopted by the Board (as hereinafter defined) on October 14, 2005 and approved by the stockholders of the Company (as hereinafter defined) on October 14, 2005, prior to the initial public offering of Company common stock. The purpose of the Plan is to provide additional incentive to selected management employees, directors and Consultants (as hereinafter defined)of the Company or its Subsidiaries (as hereinafter defined) whose contributions are essential to the growth and success of the Company's business, in order to strengthen the commitment of such persons to the Company and its Subsidiaries, motivate such persons to faithfully and diligently perform their responsibilities and attract and retain competent and dedicated persons whose efforts shall result in the long-term growth and profitability of the Company. To accomplish such purposes, the Plan provides that the Company may grant (a) Options, (b) Stock Appreciation Rights, (c) awards of Restricted Shares, Deferred Shares, Performance Shares, unrestricted Shares or Other Stock-Based Awards, or (d) any combination of the foregoing.
SECTION 2. DEFINITIONS.
For purposes of the Plan, the following terms shall be defined as set forth below:
(a) "Administrator" means the Board, or if and to the extent the Board does not administer the Plan, the Committee in accordance with Section 3 hereof.
(b) "Affiliate" means an affiliate of the Company (or other referenced entity, as the case may be) as defined in Rule 12b-2 promulgated under Section 12 of the Exchange Act.
(c) "Award" means any Option, Stock Appreciation Right, Restricted Share, Deferred Share, Performance Share, unrestricted Share or Other Stock-Based Award granted under the Plan.
(d) "Award Agreement" means any written agreement, contract or other instrument or document evidencing an Award.
(e) "Beneficial Owner" (or any variant thereof) has the meaning defined in Rule 13d-3 under the Exchange Act.
(f) "Board" means the Board of Directors of the Company.
(g) "Cause" shall have the meaning set forth in the Participant's employment or other agreement with the Company, any Subsidiary or any Affiliate, provided that if the Participant is not a party to any such employment or other agreement or such employment or other agreement does not contain a definition of Cause, then Cause shall mean (i) the continued failure by the Participant to substantially perform his or her duties and obligations to the Company or any Subsidiary or Affiliate, including without limitation, repeated refusal to follow the reasonable directions of his or her employer, intentional violation of law in the course of performance of the duties of Participant's employment with the Company or any Subsidiary or Affiliate, engagement in misconduct which is materially injurious to the Company or any Subsidiary or Affiliate, repeated absences from work without a reasonable excuse, or intoxication with alcohol or illegal drugs while on the Company's or any Subsidiary's or Affiliate's premises during regular business hours (other than any such failure resulting from his or her incapacity due to physical or mental illness); (ii) fraud or material dishonesty against the Company or any Subsidiary or Affiliate; or (iii) a conviction or plea of guilty or nolo contendere for the commission of a felony or a crime involving material dishonesty. Determination of Cause shall be made by the Administrator in its sole discretion.
(h) "Change in Capitalization" means any (i) merger, consolidation,
reclassification, recapitalization, spin-off, spin-out, repurchase or other
reorganization or corporate transaction or event, (ii) dividend (whether in the
form of cash, Common Stock, or other property), stock split or reverse stock
split, (iii) combination or exchange of shares, (iv) other change in corporate
structure or (v) declaration of a special dividend (including a cash dividend)
or other distribution, which, in any such case, the Administrator determines, in
its sole discretion, affects the Shares such that an adjustment pursuant to
Section 5 hereof is appropriate.
(i) "Change in Control" shall be deemed to have occurred if an event set forth in any one of the following paragraphs shall have occurred:
(1) any Person other than any Permitted Transferee is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or any of its affiliate as defined in Rule 12b-2 promulgated under Section 12 of the Securities Exchange Act of 1934, as amended, the "Exchange Act" ) representing 50% or more of the combined voting power of the Company's then outstanding securities; or
(2) there is consummated a merger or consolidation of the Company or any direct or indirect subsidiary of the Company with any other corporation, other than a merger or consolidation immediately following which the individuals who comprise the Board immediately prior thereto constitute at least a majority of the Board of the entity surviving such merger or consolidation or, if the Company or the entity surviving such merger is then a subsidiary, the ultimate parent thereof; or
(3) the stockholders of the Company approve a plan of complete liquidation or dissolution of the Company or there is consummated an agreement for the sale or disposition by the Company of all or substantially all of the Company's assets, other than (i) a sale or disposition by the Company of all or substantially all of the Company's assets to an entity, at least 50% of the combined voting power of the voting securities of which are owned by stockholders of the Company following the completion of such transaction in substantially the same proportions as their ownership of the Company immediately prior to such sale or (ii) a sale or disposition of all or substantially all of the Company's assets immediately following which the individuals who comprise the Board immediately prior thereto constitute at least a majority of the board of directors of the entity to which such assets are sold or disposed or, if such entity is a subsidiary, the ultimate parent thereof.
Notwithstanding the foregoing, a "Change in Control" shall not be deemed to have occurred by virtue of (i) an Initial Public Offering or (ii) the consummation of any transaction or series of integrated transactions immediately following which the holders of the common stock of the Company immediately prior to such transaction or series of transactions continue to have substantially the same proportionate ownership in an entity which owns all or substantially all of the assets of the Company immediately following such transaction or series of transactions.
(j) "Code" means the Internal Revenue Code of 1986, as amended from time to time, or any successor thereto.
(k) "Committee" means any committee or subcommittee the Board may appoint to administer the Plan. Subject to the discretion of the Board, the Committee shall be composed entirely of individuals who meet the qualifications of an "outside director" within the meaning of Section 162(m) of the Code, a "non-employee director" within the meaning of Rule 16b-3 under the Exchange Act and any other qualifications required by the applicable stock exchange on which the Common Stock is traded. If at any time or to any extent the Board shall not administer the Plan, then the functions of the Administrator specified in the Plan shall be exercised by the Committee. Except as otherwise provided in the Company's Certificate of Incorporation or Bylaws, as amended from time to time, any action of the Committee with respect to the administration of the Plan shall be taken by a majority vote at a meeting at which a quorum is duly constituted or unanimous written consent of the Committee's members.
(l) "Common Stock" means the common stock, par value $.01 per share, of the Company.
(m) "Company" means Brookdale Senior Living Inc. (or any successor corporation).
(n) "Consultant" means a consultant or advisor who is a natural person, engaged to render bona fide services to the Company or any Subsidiary.
(o) "Deferred Shares" means the right to receive Shares at the end of a specified deferral period granted pursuant to Section 9 below.
(p) "Disability" means that a Participant (i) as determined by the Administrator in its sole discretion, is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (ii) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than 3 months under an accident and health plan covering employees of the Company or an Affiliate of the Company.
(q) "Eligible Recipient" means a key employee, director or Consultant of the Company or any Subsidiary who has been selected as an eligible participant by the Administrator.
(r) "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended from time to time.
(s) "Exercise Price" means the per share price at which a holder of an award granted hereunder may purchase the Shares issuable upon exercise of such award.
(t) "Fair Market Value" as of a particular date shall mean the fair market value of a share of Common Stock as determined by the Administrator in its sole discretion; provided, however, that (i) if the Common Stock is admitted to trading on a national securities exchange, fair market value of a share of Common Stock on any date shall be the closing sale price reported for such share on such exchange on the last day preceding such date on which a sale was reported, (ii) if the Common Stock is admitted to quotation on the National Association of Securities Dealers Automated Quotation ("Nasdaq") System or other comparable quotation system and has been designated as a National Market System ("NMS") security, fair market value of a share of Common Stock on any date shall be the closing sale price reported for such share on such system on the last date preceding such date on which a sale was reported, or (iii) if the Common Stock is admitted to quotation on the Nasdaq System but has not been designated as an NMS security, fair market value of a share of Common Stock on any date shall be the average of the highest bid and lowest asked prices of such share on such system on the last date preceding such date on which both bid and ask prices were reported.
(u) "Incentive Stock Option" shall mean an Option that is an "incentive stock option" within the meaning of section 422 of the Code, or any successor provision, and that is designated in the applicable Option agreement as an Incentive Stock Option.
(v) "Initial Public Offering" shall mean the date of the initial public offering of the Company.
(w) "Non-Employee Director" means a director of the Company who is not (i) an officer or employee of the Company or of any Subsidiary or (ii) the Beneficial Owner, whether directly or indirectly, of ten percent (10%) or more of the Common Stock.
(x) "Nonqualified Stock Option" means any Option that is not an Incentive Stock Option, including any Option that provides (as of the time such Option is granted) that it shall not be treated as an Incentive Stock Option.
(y) "Option" means an option to purchase shares of Common Stock granted pursuant to Section 7 hereof.
(z) "Other Stock-Based Awards" means a right or other interest granted to a Participant under the Plan that may be denominated or payable in, valued in whole or in part by reference to, or otherwise based on or related to, Common Stock, including but not limited to restricted stock units, dividend equivalents or performance units, each of which may be subject to the attainment of Performance Goals or a period of continued employment or other terms or conditions as permitted under the Plan.
(aa) "Participant" means (i) any Eligible Recipient selected by the Administrator, pursuant to the Administrator's authority in Section 3 below, to receive grants of Options, Stock Appreciation Rights, awards of Restricted Shares, awards of unrestricted Shares, Deferred Shares, Performance Shares, Other Stock-Based Awards or any combination of the foregoing, and upon his or her death, his or her successors, heirs, executors and administrators, as the case may be and (ii) any Non-Employee Director who is eligible to receive Shares pursuant to Section 11 below.
(bb) "Performance Goals" means performance goals based on one or
more of the following criteria: (i) earnings including operating income,
earnings before or after taxes, earnings before or after interest, depreciation,
amortization, or extraordinary or special items or book value per share (which
may exclude nonrecurring items); (ii) pre-tax income or after-tax income; (iii)
earnings per Share (basic or diluted); (iv) operating profit; (v) revenue,
revenue growth or rate of revenue growth; (vi) return on assets (gross or net),
return on investment, return on capital, or return on equity; (vii) returns on
sales or revenues; (viii) operating expenses; (ix) stock price appreciation; (x)
cash flow, free cash flow, cash flow return on investment (discounted or
otherwise), net cash provided by operations, or cash flow in excess of cost of
capital; (xi) implementation or completion of critical projects or processes;
(xii) economic value created; (xiii) cumulative earnings per share growth; (xiv)
operating margin or profit margin; (xv) common stock price or total stockholder
return; (xvi) cost targets, reductions and savings, productivity and
efficiencies; (xvii) strategic business criteria, consisting of one or more
objectives based on meeting specified market penetration, geographic business
expansion, customer satisfaction, employee satisfaction, human resources
management, supervision of litigation, information technology, and goals
relating to acquisitions, divestitures, joint ventures and similar transactions,
and budget
comparisons; (xviii) personal professional objectives, including any of the foregoing performance goals, the implementation of policies and plans, the negotiation of transactions, the development of long term business goals, formation of joint ventures, research or development collaborations, and the completion of other corporate transactions; and (xix) any combination of, or a specified increase in, any of the foregoing. Where applicable, the Performance Goals may be expressed in terms of attaining a specified level of the particular criteria or the attainment of a percentage increase or decrease in the particular criteria, and may be applied to one or more of the Company, a Subsidiary or Affiliate, or a division or strategic business unit of the Company, or may be applied to the performance of the Company relative to a market index, a group of other companies or a combination thereof, all as determined by the Committee. The Performance Goals may include a threshold level of performance below which no payment shall be made (or no vesting shall occur), levels of performance at which specified payments shall be made (or specified vesting shall occur), and a maximum level of performance above which no additional payment shall be made (or at which full vesting shall occur). Each of the foregoing Performance Goals shall be determined in accordance with generally accepted accounting principles and shall be subject to certification by the Committee; provided that the Committee shall have the authority to make equitable adjustments to the Performance Goals in recognition of unusual or non-recurring events affecting the Company or any Subsidiary or Affiliate or the financial statements of the Company or any Subsidiary or Affiliate, in response to changes in applicable laws or regulations, or to account for items of gain, loss or expense determined to be extraordinary or unusual in nature or infrequent in occurrence or related to the disposal of a segment of a business or related to a change in accounting principles.
(cc) "Performance Shares" means Shares that are subject to restrictions based upon the attainment of specified performance objectives granted pursuant to Section 9 below.
(dd) "Permitted Transferee" means, (a) any Affiliate (a "FIG Affiliate") of Fortress Investment Group LLC, a Delaware limited liability company ("FIG"), (b) any managing director, general partner, director, limited partner, officer or employee of any FIG Affiliate, (c) any investment fund or other entity managed directly or indirectly by FIG or any of its Affiliates (a "FIG Fund"), or (d) any general partner, limited partner, managing member or person occupying a similar role of or with respect to any FIG Fund.
(ee) "Person" shall have the meaning given in Section 3(a)(9) of the
Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except
that such term shall not include (i) the Company or any of its subsidiaries,
(ii) a trustee or other fiduciary holding securities under an employee benefit
plan of the Company or any of its Subsidiaries, (iii) an underwriter temporarily
holding securities pursuant to an offering of such securities, or (iv) a
corporation owned, directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of stock of the Company.
(ff) "Restricted Shares" means Shares subject to certain restrictions granted pursuant to Section 9 below.
(gg) "Retirement" means a termination of a Participant's employment, other than for Cause, on or after attainment of age 65.
(hh) "Shares" means shares of Common Stock reserved for issuance under the Plan, as adjusted pursuant to the Plan, and any successor (pursuant to a merger, consolidation or other reorganization) security.
(ii) "Stock" means Common Stock.
(jj) "Stock Appreciation Right" means the right pursuant to an award granted under Section 8 below to receive an amount equal to the excess, if any, of (i) the aggregate Fair Market Value, as of the date such Stock Appreciation Right or portion thereof is surrendered, of the Shares covered by such right or such portion thereof, over (ii) the aggregate Exercise Price of such right or such portion thereof.
(kk) "Subsidiary" means any corporation in an unbroken chain of corporations beginning with the Company if, at the time of granting of an Award, each of the corporations (other than the last corporation in the unbroken chain) owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in the chain.
SECTION 3. ADMINISTRATION.
(a) The Plan shall be administered by the Administrator and shall be administered in accordance with the requirements of Section 162(m) of the Code (but only to the extent necessary and desirable to maintain qualification of awards under the Plan under Section 162(m) of the Code) and, to the extent applicable, Rule 16b-3 under the Exchange Act ("Rule 16b-3").
(b) Pursuant to the terms of the Plan, the Administrator, subject, in the case of any Committee, to any restrictions on the authority delegated to it by the Board, shall have the power and authority, without limitation:
(1) to select those Eligible Recipients who shall be Participants;
(2) to determine whether and to what extent Stock Options, Stock Appreciation Rights, awards of Restricted Shares, Deferred Shares, Performance Shares, Other Stock-Based Awards or a combination of any of the foregoing, are to be granted hereunder to Participants;
(3) to determine whether Options are intended to be Incentive Stock Options or Nonqualified Stock Options, provided, however, that Incentive Stock
Options can only be granted to employees of the Company or any Subsidiary (within the meaning of Sections 424(e) and (f) of the Code);
(4) to determine the number of Shares to be covered by each award granted hereunder;
(5) to determine the terms and conditions, not inconsistent with the terms of the Plan, of each Award granted hereunder (including, but not limited to, (i) the restrictions applicable to awards of Restricted Shares or Deferred Shares and the conditions under which restrictions applicable to such awards of Restricted Shares or Deferred Shares shall lapse, (ii) the performance goals and periods applicable to awards of Performance Shares, (iii) the Exercise Price, (iv) the vesting schedule applicable to Awards, (v) the number of Shares subject to Awards and (vi) any amendments to the terms and conditions of outstanding Awards, including, but not limited to reducing the Exercise Price of such Awards, extending the exercise period of such Awards and accelerating the vesting schedule of such Awards);
(6) to determine the terms and conditions, not inconsistent with the terms of the Plan, which shall govern all written instruments evidencing Stock Options, Stock Appreciation Rights, awards of Restricted Shares, Deferred Shares or Performance Shares or any combination of the foregoing granted hereunder;
(7) to determine the Fair Market Value;
(8) to determine the duration and purpose of leaves of absence which may be granted to a Participant without constituting termination of their employment for purposes Nonqualified Stock Options and Incentive Stock Options granted under the Plan;
(9) to adopt, alter and repeal such administrative rules, guidelines and practices governing the Plan as it shall from time to time deem advisable; and
(10) to construe and interpret the terms and provisions of the Plan and any award issued under the Plan (and any Award Agreement relating thereto), and to otherwise supervise the administration of the Plan and to exercise all powers and authorities either specifically granted under the Plan or necessary and advisable in the administration of the Plan.
(c) Notwithstanding paragraph (b) of this Section 3, (i) the
automatic, nondiscretionary grants of Shares shall be made to Non-Employee
Directors pursuant to and in accordance with the terms of Section 11 below and
(ii) neither the Board, the Committee nor their respective delegates shall have
the authority to reprice (or cancel and regrant) any Option or, if applicable,
other Award at a lower exercise, base or purchase price without first obtaining
the approval of the Company's stockholders.
(d) All decisions made by the Administrator pursuant to the provisions of the Plan shall be final, conclusive and binding on all persons, including the Company and the Participants. No member of the Board or the Committee, nor any officer or employee of the Company or any Subsidiary acting on behalf of the Board or the Committee, shall be personally liable for any action, omission, determination, or interpretation taken or made in good faith with respect to the Plan, and all members of the Board or the Committee and each and any officer or employee of the Company and of any Subsidiary acting on their behalf shall, to the maximum extent permitted by law, be fully indemnified and protected by the Company in respect of any such action, omission, determination or interpretation.
SECTION 4. SHARES RESERVED FOR ISSUANCE UNDER THE PLAN.
Subject to Section 5 hereof, the maximum number of shares of Common Stock that may be delivered pursuant to Awards granted under the Plan is 2,000,000 shares, as increased on the first day of each fiscal year beginning in calendar year 2006 by a number of shares equal to the lesser of (1) 400,000 shares of Common Stock and (2) 2% of the number of outstanding shares of Common Stock on the last day of the immediately preceding fiscal year. All such shares of Common Stock that are available for the grant of Awards under the Plan may be granted as Incentive Stock Options. From and after such time as the Plan is subject to Code Section 162(m), the aggregate Awards granted during any fiscal year to any single individual who is likely to be a "covered employee" as defined under Code Section 162(m) shall not exceed (i) 400,000 shares subject to Options or Stock Appreciation Rights or (ii) 400,000 shares subject to Restricted Stock, Deferred Shares, unrestricted Shares or Other Stock-Based Awards. Determinations made in respect of the limitation set forth in the preceding sentence shall be made in a manner consistent with Section 162(m) of the Code.
(a) Shares issued under the Plan may, in whole or in part, be authorized but unissued Shares or Shares that shall have been or may be reacquired by the Company in the open market, in private transactions or otherwise. If any Shares subject to an Award are forfeited, cancelled, exchanged or surrendered or if an Award otherwise terminates or expires without a distribution of shares to the Participant, the Shares of stock with respect to such Award shall, to the extent of any such forfeiture, cancellation, exchange, surrender, termination or expiration, again be available for Awards under the Plan.
SECTION 5. EQUITABLE ADJUSTMENTS.
In the event of any Change in Capitalization, an equitable substitution or proportionate adjustment shall be made, in each case, as may be determined by the Administrator, in its sole discretion, in (i) the aggregate number of shares of Common Stock reserved for issuance under the Plan and the maximum number of Shares that may be subject to Awards granted to any Participant in any calendar or fiscal year, (ii) the kind, number and Exercise Price subject to outstanding Options and Stock Appreciation Rights granted under the Plan, and (iii) the kind, number and purchase price of Shares
subject to outstanding awards of Restricted Shares, Deferred Shares, Performance Shares or Other Stock-Based Awards granted under the Plan, in each case as may be determined by the Administrator, in its sole discretion, provided, however, that any fractional shares resulting from the adjustment shall be eliminated. Such other equitable substitutions or adjustments shall be made as may be determined by the Administrator, in its sole discretion. Without limiting the generality of the foregoing, in connection with a Change in Capitalization, the Administrator may provide, in its sole discretion, for the cancellation of any outstanding award granted hereunder in exchange for payment in cash or other property of the aggregate Fair Market Value of the Shares covered by such award, reduced by the aggregate Exercise Price or purchase price thereof, if any. Notwithstanding the foregoing, with respect to Incentive Stock Options, any adjustment shall be made in accordance with the provisions of Section 424(h) of the Code and any regulations or guidance promulgated thereunder, and provided further that no such adjustment shall cause any Award hereunder which is or becomes subject to Section 409A of the Code to fail to comply with the requirements of such section. The Administrator's determinations pursuant to this Section 5 shall be final, binding and conclusive.
SECTION 6. ELIGIBILITY.
Except as set forth in Section 11 below, the Participants under the Plan shall be selected from time to time by the Administrator, in its sole discretion, from among Eligible Recipients; provided, however, that Incentive Stock Options may only be granted to employees of the Company or any Subsidiary. Notwithstanding the foregoing, Non-Employee Directors shall be eligible for awards other than those set forth in Section 11, as determined by the Administrator from time to time.
SECTION 7. OPTIONS.
(a) General. Each Participant who is granted an Option shall enter into an Award Agreement with the Company, containing such terms and conditions as the Administrator shall determine, in its discretion, which Award Agreement shall set forth, among other things, the Exercise Price of the Option, the term of the Option and provisions regarding exercisability of the Option granted thereunder. Each Option shall be clearly identified in the applicable Award Agreement as either an Incentive Stock Option or a Nonqualified Stock Option. The provisions of each Option need not be the same with respect to each Participant. More than one Option may be granted to the same Participant and be outstanding concurrently hereunder. Options granted under the Plan shall be subject to the terms and conditions set forth in this Section 7 and shall contain such additional terms and conditions, not inconsistent with the terms of the Plan, as the Administrator shall deem desirable and set forth in the applicable Award Agreement.
(b) Exercise Price. The Exercise Price of Shares purchasable under an Option shall be determined by the Administrator in its sole discretion at the time of grant, provided that the Exercise Price of an Incentive Stock Option or any Option intended to qualify as performance-based compensation under Section 162(m) of the Code shall not
be less than 100% of the Fair Market Value of the Stock on the date of grant. If a Participant owns or is deemed to own (by reason of the attribution rules applicable under Section 424(d) of the Code) more than 10% of the combined voting power of all classes of stock of the Company or of any Subsidiary and an Incentive Stock Option is granted to such Participant, the option price of such Incentive Stock Option (to the extent required at the time of grant by the Code) shall be no less than 110% of the Fair Market Value on the date such Incentive Stock Option is granted.
(c) Option Term. The maximum term of each Option shall be fixed by the Administrator, but no Option shall be exercisable more than ten years after the date such Option is granted, except that Incentive Stock Options granted to a Participant who owns or is deemed to own (by reason of the attribution rules applicable under Section 424(d) of the Code) more than 10% of the combined voting power of all classes of stock of the Company or of any Subsidiary, shall not be exercisable more than five years after the date such Option is granted. Each Option's term is subject to earlier expiration pursuant to the applicable provisions in the Plan and the Award Agreement. Notwithstanding the foregoing, the Administrator shall have the authority to accelerate the exercisability of any outstanding Option at such time and under such circumstances as it, in its sole discretion, deems appropriate.
(d) Exercisability. Each Option shall be exercisable at such time or times and subject to such terms and conditions, including the attainment of preestablished corporate performance goals, as shall be determined by the Administrator in the applicable Award Agreement. The Administrator may also provide that any Option shall be exercisable only in installments, and the Administrator may waive such installment exercise provisions at any time, in whole or in part, based on such factors as the Administrator may determine in its sole discretion. Notwithstanding anything to the contrary contained herein, an Option may not be exercised for a fraction of a share.
(e) Method of Exercise. Options may be exercised in whole or in part by giving written notice of exercise to the Company specifying the number of Shares to be purchased, accompanied by payment in full of the aggregate Exercise Price of the Shares so purchased in cash or its equivalent, as determined by the Administrator. As determined by the Administrator, in its sole discretion, with respect to any Option or category of Options, payment in whole or in part may also be made (i) by means of consideration received under any cashless exercise procedure approved by the Administrator (including the withholding of Shares otherwise issuable upon exercise), (ii) in the form of unrestricted Shares already owned by the Participant which, (x) in the case of unrestricted Shares acquired upon exercise of an Option, have been owned by the Participant for more than six months on the date of surrender, and (y) have a Fair Market Value on the date of surrender equal to the aggregate option price of the Shares as to which such Option shall be exercised, (iii) any other form of consideration approved by the Administrator and permitted by applicable law or (iv) any combination of the foregoing.
(f) Limitations on Incentive Stock Options. To the extent that the aggregate Fair Market Value with respect to which Incentive Stock Options are exercisable for the first time by a Participant during any calendar year under the Plan and any other stock option plan of the Company shall exceed $100,000, the portion of such Incentive Stock Options in excess of $100,000 shall be treated as Nonqualified Stock Options. Such Fair Market Value shall be determined as of the date on which each such Incentive Stock Option is granted. No Incentive Stock Option may be granted to an individual if, at the time of the proposed grant, such individual owns (or is deemed to own under the Code) stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or of any Subsidiary unless (i) the Exercise Price of such Incentive Stock Option is at least 110% of the Fair Market Value of a share of Common Stock at the time such Incentive Stock Option is granted and (ii) such Incentive Stock Option is not exercisable after the expiration of five years from the date such Incentive Stock Option is granted.
(g) Rights as Stockholder. A Participant shall have no rights to
dividends or any other rights of a stockholder with respect to the Shares
subject to an Option until the Participant has given written notice of exercise,
has paid in full for such Shares, has satisfied the requirements of Section 15
hereof and, if requested, has given the representation described in paragraph
(b) of Section 16 hereof.
(h) Transfers of Options. Except as otherwise determined by the Administrator, and in any event in the case of an Incentive Stock Option, no Option granted under the Plan shall be transferable by a Participant other than by the laws of descent and distribution. Unless otherwise determined by the Administrator in accord with the provisions of the immediately preceding sentence, an Option may be exercised, during the lifetime of the Participant, only by the Participant or, during the period the Participant is under a legal disability, by the Participant's guardian or legal representative. The Administrator may, in its sole discretion, subject to applicable law, permit the gratuitous transfer during a Participant's lifetime of a Nonqualified Stock Option, (i) by gift to a member of the Participant's immediate family, (ii) by transfer by instrument to a trust for the benefit of such immediate family members, or (iii) to a partnership or limited liability company in which such family members are the only partners or members; provided, however, that, in addition to such other terms and conditions as the Administrator may determine in connection with any such transfer, no transferee may further assign, sell, hypothecate or otherwise transfer the transferred Option, in whole or in part, other than by shall or by operation of the laws of descent and distribution. Each permitted transferee shall agree to be bound by the provisions of this Plan and the applicable Award Agreement.
(i) Termination of Employment or Service.
(1) Unless the applicable Award Agreement provides otherwise, in the event that the employment or service of a Participant with the Company or any Subsidiary shall terminate for any reason other than Cause, Retirement, Disability, or death, (A) Options granted to such Participant, to the extent that they are exercisable at
the time of such termination, shall remain exercisable until the date that is 90 days after such termination, on which date they shall expire, and (B) Options granted to such Participant, to the extent that they were not exercisable at the time of such termination, shall expire at the close of business on the date of such termination. The 90-day period described in this Section 7(i)(1) shall be extended to one year after the date of such termination in the event of the Participant's death during such 90-day period. Notwithstanding the foregoing, no Option shall be exercisable after the expiration of its term.
(2) Unless the applicable Award Agreement provides otherwise, in the event that the employment or service of a Participant with the Company or any Subsidiary shall terminate on account of the Retirement, Disability, or death of the Participant, (A) Options granted to such Participant, to the extent that they were exercisable at the time of such termination, shall remain exercisable until the date that is one year after such termination, on which date they shall expire and (B) Options granted to such Participant, to the extent that they were not exercisable at the time of such termination, shall expire at the close of business on the date of such termination. Notwithstanding the foregoing, no Option shall be exercisable after the expiration of its term.
(3) In the event of the termination of a Participant's employment or service for Cause, all outstanding Options granted to such Participant shall expire at the commencement of business on the date of such termination.
Other Change in Employment Status. An Option shall be affected, both with regard to vesting schedule and termination, by leaves of absence, changes from full-time to part-time employment, partial disability or other changes in the employment status of an Participant, in the discretion of the Administrator. The Administrator shall follow any applicable provisions and regulations with respect to the treatment of Incentive Stock Options and the written policies of the Company (if any), including such rules, guidelines and practices as may be adopted pursuant to Section 3 hereof, as they may be in effect from time to time, with regard to such matters.
SECTION 8. STOCK APPRECIATION RIGHTS.
(a) General. Stock Appreciation Rights may be granted either alone ("Free Standing Rights") or in conjunction with all or part of any Stock Option granted under the Plan ("Related Rights"), provided that, in each case, the Common Stock underlying the Stock Appreciation Right is traded on an "established securities market" within the meaning of Section 409A of the Code. In the case of a Nonqualified Stock Option, Related Rights may be granted either at or after the time of the grant of such Stock Option. In the case of an Incentive Stock Option, Related Rights may be granted only at the time of the grant of the Incentive Stock Option. The Administrator shall determine the Eligible Recipients to whom, and the time or times at which, grants of Stock Appreciation Rights shall be made; the number of Shares to be awarded, the price per share, and all other conditions of Stock Appreciation Rights. Notwithstanding the
foregoing, no Related Right may be granted for more shares than are subject to the Stock Option to which it relates and any Stock Appreciation Right must be granted with an Exercise Price not less than the Fair Market Value of Common Stock on the date of grant. The provisions of Stock Appreciation Rights need not be the same with respect to each Participant. Stock Appreciation Rights granted under the Plan shall be subject to the following terms and conditions set forth in this Section 8 and shall contain such additional terms and conditions, not inconsistent with the terms of the Plan, as the Administrator shall deem desirable, as set forth in the applicable Award Agreement.
(b) Awards. The prospective recipient of a Stock Appreciation Right shall not have any rights with respect to such Award, unless and until such recipient has executed an Award Agreement and delivered a fully executed copy thereof to the Company, within a period of sixty days (or such other period as the Administrator may specify) after the award date. Participants who are granted Stock Appreciation Rights shall have no rights as stockholders of the Company with respect to the grant or exercise of such rights.
(c) Exercisability.
(1) Stock Appreciation Rights that are Free Standing Rights ("Free Standing Stock Appreciation Rights") shall be exercisable at such time or times and subject to such terms and conditions as shall be determined by the Administrator at or after grant.
(2) Stock Appreciation Rights that are Related Rights
("Related Stock Appreciation Rights") shall be exercisable only at such time or
times and to the extent that the Stock Options to which they relate shall be
exercisable in accordance with the provisions of Section 7 above and this
Section 8 of the Plan; provided, however, that a Related Stock Appreciation
Right granted in connection with an Incentive Stock Option shall be exercisable
only if and when the Fair Market Value of the Common Stock subject to the
Incentive Stock Option exceeds the Exercise Price of such Option.
(d) Payment Upon Exercise.
(1) Upon the exercise of a Free Standing Stock Appreciation Right, the Participant shall be entitled to receive up to, but not more than, that number of Shares equal in value to the excess of the Fair Market Value as of the date of exercise over the price per share specified in the Free Standing Stock Appreciation Right (which price shall be no less than 100% of the Fair Market Value on the date of grant) multiplied by the number of Shares in respect of which the Free Standing Stock Appreciation Right is being exercised, with the Administrator having the right to determine the form of payment.
(2) A Related Right may be exercised by a Participant by surrendering the applicable portion of the related Option. Upon such exercise and surrender, the Participant shall be entitled to receive up to, but not more than, that number
of Shares equal in value to the excess of the Fair Market Value as of the date of exercise over the Exercise Price specified in the related Option (which price shall be no less than 100% of the Fair Market Value on the date of grant) multiplied by the number of Shares in respect of which the Related Stock Appreciation Right is being exercised, with the Administrator having the right to determine the form of payment. Options which have been so surrendered, in whole or in part, shall no longer be exercisable to the extent the Related Rights have been so exercised.
(3) Notwithstanding the foregoing, the Administrator may determine to settle the exercise of a Stock Appreciation Right in cash (or in any combination of Shares and cash) to the extent that such settlement does not violate Section 409A of the Code.
(e) Non-Transferability.
(1) Free Standing Stock Appreciation Rights shall be transferable only when and to the extent that an Option would be transferable under Section 7 of the Plan.
(2) Related Stock Appreciation Rights shall be transferable only when and to the extent that the underlying Option would be transferable under Section 7 of the Plan.
(f) Termination of Employment or Service.
(1) In the event of the termination of employment or service with the Company or any Subsidiary of a Participant who has been granted one or more Free Standing Stock Appreciation Rights, such rights shall be exercisable at such time or times and subject to such terms and conditions as shall be determined by the Administrator at or after grant.
(2) In the event of the termination of employment or service with the Company or any Subsidiary of a Participant who has been granted one or more Related Stock Appreciation Rights, such rights shall be exercisable at such time or times and subject to such terms and conditions as set forth in the related Stock Options.
(g) Term.
(1) The term of each Free Standing Stock Appreciation Right shall be fixed by the Administrator, but no Free Standing Stock Appreciation Right shall be exercisable more than ten years after the date such right is granted.
(2) The term of each Related Stock Appreciation Right shall be the term of the Stock Option to which it relates, but no Related Stock Appreciation Right shall be exercisable more than ten years after the date such right is granted.
SECTION 9. RESTRICTED SHARES, DEFERRED SHARES AND PERFORMANCE SHARES.
(a) General. Awards of Restricted Shares, Deferred Shares or Performance Shares may be issued either alone or in addition to other awards granted under the Plan. The Administrator shall determine the Eligible Recipients to whom, and the time or times at which, awards of Restricted Shares, Deferred Shares or Performance Shares shall be made; the number of Shares to be awarded; the price, if any, to be paid by the Participant for the acquisition of Restricted Shares, Deferred Shares or Performance Shares; the Restricted Period (as defined in paragraph (c) of this Section 9), if any, applicable to awards of Restricted Shares or Deferred Shares; the performance objectives applicable to awards of Restricted Shares, Deferred Shares or Performance Shares; and all other conditions of the awards of Restricted Shares, Deferred Shares and Performance Shares. The Administrator may also condition the grant of the award of Restricted Shares, Deferred Shares or Performance Shares upon the exercise of Options, or upon such other criteria as the Administrator may determine, in its sole discretion. If the restrictions, performance objectives and/or conditions established by the Administrator are not attained, a Participant shall forfeit his or her shares of Restricted Shares, Deferred Shares or Performance Shares. The provisions of the awards of Restricted Shares, Deferred Shares or Performance Shares need not be the same with respect to each Participant.
(b) Awards and Certificates. The prospective recipient of awards of Restricted Shares, Deferred Shares or Performance Shares shall not have any rights with respect to any such award, unless and until such recipient has executed an Award Agreement and delivered a fully executed copy thereof to the Company, within a period of sixty days (or such other period as the Administrator may specify) after the award date. Except as otherwise provided below in this Section 9(c), (i) each Participant who is granted an award of Restricted Shares or Performance Shares shall be issued a stock certificate in respect of such shares of Restricted Shares or Performance Shares; and (ii) such certificate shall be registered in the name of the Participant, and shall bear an appropriate legend referring to the terms, conditions, and restrictions applicable to any such award.
The Company may require that the stock certificates evidencing Restricted Shares or Performance Shares granted hereunder be held in the custody of the Company until the restrictions thereon shall have lapsed, and that, as a condition of any award of Restricted Shares or Performance Shares, the Participant shall have delivered a stock power, endorsed in blank, relating to the Shares covered by such award.
With respect to awards of Deferred Shares, at the expiration of the Restricted Period, stock certificates in respect of such shares of Deferred Shares shall be delivered to the Participant, or his legal representative, in a number equal to the number of Shares covered by the Deferred Shares award.
(c) Restrictions and Conditions. The awards of Restricted Shares, Deferred Shares and Performance Shares granted pursuant to this Section 9 shall be
subject to the following restrictions and conditions and any additional restrictions or conditions as determined by the Administrator at the time of grant or thereafter:
(1) Subject to the provisions of the Plan and the Restricted Shares Award Agreement, Deferred Shares Award Agreement or Performance Shares Award Agreement, as appropriate, governing any such award, during such period as may be set by the Administrator commencing on the date of grant (the "Restricted Period"), the Participant shall not be permitted to sell, transfer, pledge or assign shares of Restricted Shares, Deferred Shares or Performance Shares awarded under the Plan; provided, however, that the Administrator may, in its sole discretion, provide for the lapse of such restrictions in installments and may accelerate or waive such restrictions in whole or in part based on such factors and such circumstances as the Administrator may determine, in its sole discretion, including, but not limited to, the attainment of certain performance related goals, the Participant's termination of employment or service as a director or Consultant to the Company or any Subsidiary, the Participant's death or Disability. Notwithstanding the foregoing, upon a Change in Control, the outstanding Awards shall be subject to Section 12 hereof.
(2) Except as may be provided in a Restricted Share Award Agreement, the Participant shall generally have the rights of a stockholder of the Company with respect to Restricted Shares or Performance Shares during the Restricted Period. The Participant shall generally not have the rights of a stockholder with respect to Shares subject to awards of Deferred Shares during the Restricted Period; provided, however, that dividends declared during the Restricted Period with respect to the number of Shares covered by Deferred Shares shall be paid to the Participant. Certificates for Shares of unrestricted Common Stock shall be delivered to the Participant promptly after, and only after, the Restricted Period shall expire without forfeiture in respect of such awards of Restricted Shares, Deferred Shares or Performance Shares except as the Administrator, in its sole discretion, shall otherwise determine.
(3) The rights of Participants granted awards of Restricted Shares, Deferred Shares or Performance Shares upon termination of employment or service as a director or Consultant to the Company or to any Subsidiary terminates for any reason during the Restricted Period shall be set forth in the Award Agreement.
SECTION 10. OTHER STOCK-BASED AWARDS.
(a) The Administrator is authorized to grant Awards to Participants in the form of Other Stock-Based Awards, as deemed by the Administrator to be consistent with the purposes of the Plan and as evidenced by an Award Agreement. The Administrator shall determine the terms and conditions of such Awards, consistent with the terms of the Plan, at the date of grant or thereafter, including any Performance Goals and performance periods. Common Stock or other securities or property delivered pursuant to an Award in the nature of a purchase right granted under this Section 10 shall be purchased for such consideration, paid for at such times, by such methods, and in such
forms, including, without limitation, Shares, other Awards, notes or other property, as the Administrator shall determine, subject to any required corporate action.
(b) To the extent that the Plan is subject to Section 162(m) of the
Code, no payment shall be made to a "covered employee" (within the meaning of
Section 162(m) of the Code) prior to the certification by the Committee that the
Performance Goals have been attained. The Committee may establish such other
rules applicable to the Other Stock-Based Awards, provided, however, that in the
event that the Plan is subject to Section 162(m) of the Code, such rules shall
be in compliance with Section 162(m) of the Code.
SECTION 11. NON-EMPLOYEE DIRECTOR GRANTS.
(a) Annual Grant. Except as otherwise provided by the Administrator, on the first business day after the annual stockholders' meeting of the Company and each annual stockholders' meeting thereafter during the term of the Plan (beginning with the annual stockholders' meeting in 2006), each Non-Employee Director shall be granted that number of Shares, the aggregate Fair Market Value of which shall equal $15,000 on the date of grant (the "Non-Employee Director Shares"). The Non-Employee Director Shares shall be fully vested as of the date of grant.
(b) Stock Availability. In the event that the number of Shares available for grant under the Plan is not sufficient to accommodate the awards of Non-Employee Director Shares, the remaining Shares available for such automatic awards shall be granted to each Non-Employee Director who is to receive such an award on a pro-rata basis. No further grants shall be made until such time, if any, as additional Shares become available for grant under the Plan.
SECTION 12. ACCELERATED VESTING IN CONNECTION WITH A CHANGE IN CONTROL.
In the event of a Change in Control, any outstanding Option that is not assumed or continued, or an equivalent option or right is not substituted therefor pursuant to the Change in Control transaction's governing document, shall become fully vested and exercisable "immediately prior to" the effective date of such Change in Control and shall expire upon the effective date of such Change in Control. For purposes of this Section 12, "immediately prior to" shall mean sufficiently in advance of the Change in Control transaction such that there will be time for each affected Participant to exercise his or her Option and participate in the Change in Control transaction in the same manner as all other holders of Common Stock. If an Option becomes fully vested and exercisable immediately prior to a Change in Control, the Administrator shall notify the affected Participant in writing or electronically that the Option has become fully vested and exercisable, and that the Option will terminate upon the Change in Control.
Unless otherwise determined by the Administrator and evidenced in an Award Agreement, in the event that (i) a Change in Control occurs and (ii) the Participant's employment is terminated by the Company, its successor or affiliate thereof
without Cause on or after the effective date of the Change in Control but prior to 12 months following such Change in Control, then:
(a) any unvested or unexercisable portion of any Award carrying a right to exercise shall become vested and exercisable with respect to 50% of the Shares covered by such unvested portion of such Award; and
(b) the restrictions, deferral limitations, payment conditions and forfeiture conditions applicable to any other Award granted under the Plan shall lapse with respect to 50% of the Shares covered thereby and 50% of such unvested Awards shall be deemed fully vested and performance conditions imposed with respect to such Awards shall be deemed to be fully achieved with respect to 50% of the Shares covered thereby.
SECTION 13. AMENDMENT AND TERMINATION.
The Board may amend, alter or terminate the Plan, but no amendment, alteration, or termination shall be made that would impair the rights of a Participant under any award theretofore granted without such Participant's consent. Unless the Board determines otherwise, the Board shall obtain approval of the Company's stockholders for any amendment that would require such approval in order to satisfy the requirements of sections 162(m) or 422 of the Code, any rules of the stock exchange on which the Common Stock is traded or other applicable law. If any Award is subject to Section 409A of the Code and fails to comply with the requirements of Section 409A of the Code, the Administrator reserves the right to (but is not obligated to) amend, modify or supplement such Award in order to cause it to either not be subject to Section 409A of the Code or to comply with the applicable provisions of Section 409A of the Code. The Administrator may amend the terms of any Award theretofore granted, prospectively or retroactively, but, subject to Section 5 of the Plan, no such amendment shall impair the rights of any Participant without his or her consent.
SECTION 14. UNFUNDED STATUS OF PLAN.
The Plan is intended to constitute an "unfunded" plan for incentive compensation. With respect to any payments not yet made to a Participant by the Company, nothing contained herein shall give any such Participant any rights that are greater than those of a general creditor of the Company.
SECTION 15. WITHHOLDING TAXES.
Each Participant shall, no later than the date as of which the value of an Award first becomes includible in the gross income of the Participant for federal and/or state income tax purposes, pay to the Company, or make arrangements satisfactory to the Administrator regarding payment of, any federal, state, or local taxes of any kind required by law to be withheld with respect to the Award. The obligations of the Company under the Plan shall be conditional on the making of such payments or arrangements, and the
Company shall, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to the Participant. Whenever cash is to be paid pursuant to an award granted hereunder, the Company shall have the right to deduct therefrom an amount sufficient to satisfy any federal, state and local withholding tax requirements related thereto. Whenever Shares are to be delivered pursuant to an award, the Company shall have the right to require the Participant to remit to the Company in cash an amount sufficient to satisfy any federal, state and local withholding tax requirements related thereto. With the approval of the Administrator, a Participant may satisfy the foregoing requirement by electing to have the Company withhold from delivery of Shares or by delivering already owned unrestricted shares of Common Stock, in each case, having a value equal to the minimum amount of tax required to be withheld. Such shares shall be valued at their Fair Market Value on the date of which the amount of tax to be withheld is determined. Fractional share amounts shall be settled in cash. Such an election may be made with respect to all or any portion of the Shares to be delivered pursuant to an award. The Company may also use any other method of obtaining the necessary payment or proceeds, as permitted by law, to satisfy its withholding obligation with respect to any Option or other Award.
SECTION 16. GENERAL PROVISIONS.
(a) Shares shall not be issued pursuant to the exercise of any Option granted hereunder unless the exercise of such Option and the issuance and delivery of such Shares pursuant thereto shall comply with all relevant provisions of law, including, without limitation, the Securities Act of 1933, as amended, the Exchange Act and the requirements of any stock exchange upon which the Common Stock may then be listed, and shall be further subject to the approval of counsel for the Company with respect to such compliance.
(b) The Administrator may require each person acquiring Shares to represent to and agree with the Company in writing that such person is acquiring the Shares without a view to distribution thereof. The certificates for such Shares may include any legend that the Administrator deems appropriate to reflect any restrictions on transfer which the Administrator determines, in its sole discretion, arise under applicable securities laws or are otherwise applicable.
(c) All certificates for Shares delivered under the Plan shall be subject to such stop-transfer orders and other restrictions as the Administrator may deem advisable under the rules, regulations, and other requirements of the Securities and Exchange Commission, any stock exchange upon which the Common Stock may then be listed, and any applicable federal or state securities law, and the Administrator may cause a legend or legends to be placed on any such certificates to make appropriate reference to such restrictions.
(d) The Administrator may require a Participant receiving Shares pursuant to the Plan, as a condition precedent to receipt of such Shares, to enter into a
stockholder agreement or "lock-up" agreement in such form as the Committee shall determine is necessary or desirable to further the Company's interests.
(e) The adoption of the Plan shall not confer upon any Eligible Recipient any right to continued employment or service with the Company or any Subsidiary, as the case may be, nor shall it interfere in any way with the right of the Company or any Subsidiary to terminate the employment or service of any of its Eligible Recipients at any time.
SECTION 17. EFFECTIVE DATE.
The Plan became effective upon adoption by the Board on October 14, 2005 (the "Effective Date"), and approval by stockholders of the Company on October 14, 2005.
SECTION 18. TERM OF PLAN.
No award shall be granted pursuant to the Plan on or after the tenth anniversary of the Effective Date, but awards theretofore granted may extend beyond that date.
Exhibit 23.2
Consent of Independent Registered Public Accounting Firm
We consent to the reference to our firm under the caption "Experts" in Amendment No. 3 to the Registration Statement (Form S-1 No. 333-127372) and related Prospectus of Brookdale Senior Living Inc. for the registration of its common stock and to the use of our reports: dated August 5, 2005 with respect to the balance sheet of Brookdale Senior Living Inc. as of July 1, 2005; dated August 4, 2005 with respect to the combined financial statements and financial statement schedule of Brookdale/Alterra as of December 31, 2004 and 2003, and for each of the three years in the period ended December 31, 2004; dated July 22, 2005 with respect to the combined financial statements of the Fortress CCRC Portfolio as of December 31, 2004 and 2003, and for each of the three years in the period ended December 31, 2004; and dated June 7, 2005 with respect to the combined financial statements of the Prudential Portfolio as of December 31, 2004 and 2003, and for each of the three years in the period ended December 31, 2004.
/s/ Ernst & Young LLP Chicago, Illinois November 4, 2005 |
EXHIBIT 23.3
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors
Alterra Healthcare Corporation:
We consent to the use of our report dated April 13, 2004, with respect to the consolidated balance sheets of Alterra Healthcare Corporation (the Predecessor Company) as of December 31, 2002, and the related consolidated statements of operations, changes in stockholders' equity (deficit), and cash flows for the period from January 1, 2003 to November 30, 2003 and the year ended December 31, 2002, included herein and to the reference to our firm under the heading "Experts" in the prospectus.
Our report dated April 13, 2004 also contains an explanatory paragraph that the Corporation emerged from Chapter 11 bankruptcy on December 4, 2003. Upon emergence from bankruptcy, the Corporation changed its basis of financial statement presentation to reflect the adoption of fresh start accounting in accordance with AICPA Statement of Position 90-7, Financial Reporting by Entities in Reorganization Under the Bankruptcy Code.
/s/ KPMG LLP Milwaukee, Wisconsin November 4, 2005 |