PLEDGE AGREEMENT
THIS PLEDGE
AGREEMENT (this “ Agreement ”) is entered into
as of February 27, 2009, among BROOKDALE SENIOR LIVING
INC., a Delaware corporation (the “ Borrower ”),
each of the Domestic Subsidiaries of the Borrower
from time to time party hereto (individually a “
Guarantor ” and collectively the “
Guarantors ”; the Guarantors, together with the
Borrower, individually an “ Obligor ” and
collectively the “ Obligors ”) and BANK OF
AMERICA, N.A., in its capacity as administrative agent (in such
capacity, the “ Administrative Agent ”) for the
holders of the Secured Obligations (defined below).
RECITALS
WHEREAS,
pursuant to that certain Second Amended and Restated Credit
Agreement dated as of the date hereof (as amended, modified,
extended, renewed or replaced from time to time, the “
Credit Agreement ”) among the Borrower, the Guarantors
identified therein, the Lenders identified therein and the
Administrative Agent, the Lenders have agreed to make Loans
and issue Letters of Credit upon the
terms and subject to the conditions set forth therein;
and
WHEREAS, this
Agreement is required by the terms of the Credit
Agreement.
NOW, THEREFORE,
in consideration of these premises and other good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
(a) Capitalized
terms used and not otherwise defined herein shall have the meanings
ascribed to such terms in the Credit Agreement, and the following
terms shall have the meanings set forth in the UCC (defined
below): Adverse Claim, Certificated Security, Control,
Money, Proceeds, Securities Account, Security.
(b) In
addition, the following terms shall have the meanings set forth
below:
“
Collateral ” has the meaning provided in Section 2
hereof.
“ Equity Interests ” shall
mean (a) in the case of a corporation, capital stock,
(b) in the case of an association or business entity, any and
all shares, interests, participations, rights or other equivalents
(however designated) of capital stock, (c) in the case of a
partnership, partnership interests (whether general, preferred or
limited), (d) in the case of a limited liability company,
membership interests and (e) any other interest or
participation that confers or could confer on a Person the right to
receive a share of the profits and losses of, or distributions of
assets of, the issuing Person, without limitation, options,
warrants and any other “equity security” as defined in
Rule 3a11-1 of the Securities Exchange Act of 1934, as
amended.
“ Pledged Equity ” means,
with respect to each Obligor, the percent indicated on Schedule
1(a) hereto (as amended from time to time in accordance with
Section 4(f) ) of the issued and outstanding Equity
Interests of each Domestic Subsidiary of the Obligor
set forth on Schedule 1(a) hereto (as amended from time
to time in accordance with Section 4(f) ), in each case
together with the certificates (or other agreements or
instruments), if any, representing such shares, and all options and
other rights, contractual or otherwise, with respect thereto,
including, but not limited to, the following:
(1) all
Equity Interests representing a dividend thereon, or representing a
distribution or return of capital upon or in respect thereof, or
resulting from a stock split, revision, reclassification or other
exchange therefor, and any subscriptions, warrants, rights or
options issued to the holder thereof, or otherwise in respect
thereof; and
(2) in
the event of any consolidation or merger involving the issuer
thereof and in which such issuer is not the surviving Person, all
shares of each class of the Equity Interests of the successor
Person formed by or resulting from such consolidation or merger, to
the extent that such successor Person is a direct Subsidiary of an
Obligor.
“
Scheduled Consents ” shall mean those letter
agreements set forth on Schedule 1(b) hereto.
“
Secured Obligations ” means, without duplication, (a)
all Obligations now existing or hereafter arising pursuant to the
Loan Documents and (b) all costs and expenses incurred in
connection with enforcement and collection of the Obligations,
including the reasonable fees, charges and disbursements of
counsel.
“
UCC ” means the Uniform Commercial Code as in effect
from time to time in the state of New York except as such term may
be used in connection with the perfection of the Collateral and
then the applicable jurisdiction with respect to such affected
Collateral shall apply.
2.
Grant of Security Interest in the Collateral . To
secure the prompt payment and performance in full when due, whether
by lapse of time, acceleration, mandatory prepayment or otherwise,
of the Secured Obligations, each Obligor hereby grants to the
Administrative Agent, for the benefit of the holders of the Secured
Obligations, a continuing security interest in, and a right to set
off against, any and all right, title and interest of such Obligor
in and to all of the following, whether now owned or existing or
owned, acquired, or arising hereafter (collectively, the “
Collateral ”):
(a) all
of each Obligor’s right, title and interest in all shares of
stock, membership interests and partnership interests described on
Schedule 1(a) hereto and all certificates described on
Schedule 1(a) hereto evidencing such shares, membership
interests or partnership interests;
(c) all
books, records, ledger cards, files, correspondence, computer
programs, tapes, disks, and related data processing software (owned
by such Obligor) that at any time evidence or contain information
relating to any Collateral or are otherwise necessary or helpful in
the collection thereof or realization thereupon; and
(d) all
Proceeds of any and all of the foregoing.
The Obligors
and the Administrative Agent, on behalf of the Lenders, hereby
acknowledge and agree that the security interests created hereby in
the Collateral constitute continuing collateral security for all of
the Secured Obligations, whether now existing or hereafter
arising.
3.
Representations and Warranties . Each Obligor
hereby represents and warrants to the Administrative Agent, for the
benefit of the holders of the Secured Obligations, that:
(a)
Ownership . Each Obligor is the legal and
beneficial owner of its Collateral and has the right to pledge,
sell, assign or transfer the same. Subject to any
Permitted Liens, there exists no Adverse Claim with respect to the
Pledged Equity of such Obligor.
(b)
Chief Executive Office; Books & Records; Legal Name; State
of Organization . As of the Closing Date, each
Obligor’s chief executive office and principal place of
business are (and for the prior four months have been) located at
the locations set forth on Schedule 3(b) attached
hereto, and, as of the Closing Date, each Obligor keeps its books
and records at such applicable locations. As of the
Closing Date, each Obligor’s exact legal name is as shown in
this Agreement and its location (within the meaning of Section
9-307 of the UCC) is (and for the prior four months has been) its
state of organization as shown in this Agreement. As of
the Closing Date, no Obligor has in the past four months changed
its name, been party to a merger, consolidation or other change in
structure not disclosed on Schedule 3(b) .
(c)
Security Interest/Priority . This Agreement
creates a valid security interest in favor of the Administrative
Agent, for the benefit of the holders of the Secured Obligations,
in the Collateral of such Obligor and, when properly perfected by
filing, shall constitute a valid and perfected, first priority
security interest in such Collateral (including all uncertificated
Pledged Equity consisting of partnership or limited liability
company interests that do not constitute Securities), to the extent
such security interest can be perfected by filing under the UCC,
free and clear of all Liens except for Permitted
Liens. The taking possession by the Administrative Agent
of the Certificated Securities (if any) evidencing the Pledged
Equity will perfect and establish the first priority of the
Administrative Agent’s security interest in all the Pledged
Equity evidenced by such Certificated Securities.
(d)
Authorization of Pledged Equity . All Pledged
Equity is duly authorized and validly issued, is fully paid and, to
the extent applicable, nonassessable and is not subject to the
preemptive rights of any Person.
(e)
No Other Equity Interests . As of the
Closing Date, no Obligor owns any Certificated Securities in any
Subsidiary that are required to be pledged and delivered to the
Administrative Agent hereunder except as set forth on Schedule
1(a) hereto. All such Certificated Securities have
been delivered to the Administrative Agent.
(f)
Consents; Etc. There are no restrictions in any
organizational document governing any Pledged Equity or any other
document related thereto which would limit or restrict (i) the
grant of a Lien pursuant to this Agreement on such Pledged Equity,
(ii) the perfection of such Lien or (iii) subject to (A) compliance
with the Scheduled Consents and (B) customary restrictions and/or
conditions in the organizational documents governing any Pledged
Equity, including, without limitation, notice of transfer of
ownership of such Pledged Equity, acknowledgment of the terms of
the applicable organizational documents governing such Pledged
Equity, and execution of the applicable organizational documents
governing such Pledged Equity (“ Transfer Restrictions
”), the exercise of remedies in respect of such perfected
Lien in the Pledged Equity as contemplated by this
Agreement. Except for (i) the filing or recording
of UCC financing statements, (ii) obtaining Control to perfect
the Liens created by this Agreement (to the extent required under
Section 4(a) hereof), (iii) such actions as may be required by
applicable Laws, (iv) such actions required pursuant to the
Scheduled Consents, (v) such actions required by applicable
Transfer Restrictions and (vi) consents, authorizations, filings or
other actions which have been obtained or made, no consent or
authorization of, filing with, or other act by or in respect of,
any arbitrator or Governmental Authority and no consent of any
other Person (including, without limitation, any stockholder,
member or creditor of such Obligor), is required for (A) the
grant by such Obligor of the security interest in the Collateral
granted hereby or for the execution, delivery or performance of
this Agreement by such Obligor, (B) the perfection of such
security interest (to the extent such security interest can be
perfected by filing under the UCC or the granting of Control) or
(C) the exercise by the Administrative Agent or the holders of
the Secured Obligations of the rights and remedies provided for in
this Agreement in accordance with applicable Laws.
4.
Covenants . Each Obligor covenants that until such time as
the Secured Obligations (excluding Secured Obligations solely with
respect to Cash Collateralized Letters of Credit) arising under the
Loan Documents have been paid in full and the Commitments and any
Letters of Credit (excluding any Cash Collateralized Letters of
Credit) have expired or been terminated, such Obligor
shall:
(a)
Pledged Equity . Deliver to the Administrative Agent
promptly upon the receipt thereof by or on behalf of an Obligor,
all certificates and instruments constituting Pledged
Equity. Prior to delivery to the Administrative Agent,
all such certificates constituting Pledged Equity shall be held in
trust by such Obligor for the benefit of the Administrative Agent
pursuant hereto. All such certificates representing
Pledged Equity shall be delivered in suitable form for transfer by
delivery or shall be accompanied by duly executed instruments of
transfer or assignment in blank, substantially in the form provided
in Exhibit 4(a) hereto.
(b)
Filing of Financing Statements, Notices, etc
. Authorize, and hereby does authorize, the
Administrative Agent to prepare and file such financing statements
(including continuation statements) or amendments thereof or
supplements thereto or other instruments as the Administrative
Agent may from time to time deem necessary or appropriate in order
to perfect and maintain the security interest granted hereunder in
accordance with the UCC. Such financing statements may
describe the collateral in the same manner as described in this
Agreement or may contain an indication or description of collateral
that describes such property in any other manner as the
Administrative Agent may determine is necessary, advisable or
prudent to ensure the perfection of the security interests in the
collateral granted to the Administrative Agent in connection
herewith. Each Obligor shall also execute and deliver to
the Administrative Agent such agreements, assignments or
instruments (including affidavits, notices, reaffirmations and
amendments and restatements of existing documents, as the
Administrative Agent may reasonably request) and do all such other
things as the Administrative Agent may reasonably deem necessary or
appropriate (i) to assure to the Administrative Agent its
security interests hereunder are perfected and maintained,
including such instruments as the Administrative Agent may from
time to time reasonably request in order to perfect and maintain
the security interests granted hereunder in accordance with the
UCC, (ii) to consummate the transactions contemplated hereby
and (iii) to otherwise protect and assure the Administrative
Agent of its rights and interests
hereunder. Furthermore, each Obligor also hereby
irrevocably makes, constitutes and appoints the Administrative
Agent, its nominee or any other person whom the Administrative
Agent may designate, as such Obligor’s attorney in fact with
full power and for the limited purpose to sign in the name of such
Obligor any financing statements, or amendments and supplements to
financing statements, renewal financing statements, notices or any
similar documents which in the Administrative Agent’s
reasonable discretion would be necessary or appropriate in order to
perfect and maintain perfection of the security interests granted
hereunder, such power, being coupled with an interest, being and
remaining irrevocable until such time as the Secured Obligations
arising under the Loan Documents have been paid in full and the
Commitments have expired or been terminated. In the
event for any reason the Law of any jurisdiction other than New
York becomes or is applicable to the Collateral of any Obligor or
any part thereof, or to any of the Secured Obligations, such
Obligor agrees to execute and deliver all such instruments and to
do all such other things as the Administrative Agent in its sole
discretion reasonably deems necessary or appropriate to preserve,
protect and enforce the security interest of the Administrative
Agent under the Law of such other jurisdiction (and, if an Obligor
shall fail to do so promptly upon the request of the Administrative
Agent, then the Administrative Agent may execute any and all such
requested documents on behalf of such Obligor pursuant to the power
of attorney granted hereinabove).
(c)
Defense of Title . Warrant and defend title to
and ownership of the Collateral (except as otherwise permitted
under the Credit Agreement and the other Loan Documents) of such
Obligor at its own expense against the claims and demands of all
other parties claiming an interest therein, keep the Collateral
free from all Liens, except for Liens permitted by the Credit
Agreement and not sell, exchange, transfer, assign, lease or
otherwise dispose of the Collateral of such Obligor or any interest
therein, except as permitted under the Credit Agreement and the
other Loan Documents.
(e)
Issuance or Acquisition of Equity Interests . Not
without executing and delivering, or causing to be executed and
delivered, to the Administrative Agent such agreements, documents
and instruments as the Administrative Agent may reasonably require,
issue or acquire any Pledged Equity consisting of an interest in a
partnership or a limited liability company that (i) is dealt in or
traded on a securities exchange or in a securities market, (ii) by
its terms expressly provides that it is a Security governed by
Article 8 of the UCC, (iii) is an investment company security, (iv)
is held in a Securities Account or (v) constitutes a Security or a
Financial Asset.
(f)
Updates to Schedule 1(a) . Following formation or
acquisition of any Domestic Subsidiary, comply with the terms of
Section 7.14(a) of the Credit Agreement and, if applicable, deliver
to the Administrative Agent a replacement Schedule 1(a)
hereto identifying such Subsidiary and indicating the maximum
amount of the Equity Interests of such Subsidiary which the Obligor
is allowed to pledge.
5.
Authorization to File Financing Statements . Each
Obligor hereby authorizes the Administrative Agent to prepare and
file such financing statements (including continuation statements)
or amendments thereof or supplements thereto or other instruments
as the Administrative Agent may from time to time deem necessary or
appropriate in order to perfect and maintain the security interests
granted hereunder in accordance with the UCC. Such
financing statements may describe the collateral in the same manner
as described in this Agreement or may contain an indication or
description of collateral that describes such property in any other
manner as the Administrative Agent may determine is necessary,
advisable or prudent to ensure the perfection of the security
interests in the collateral granted to the Administrative Agent in
connection herewith.
6.
Advances . On failure of any Obligor to perform
any of the covenants and agreements contained herein, the
Administrative Agent may, at its sole option and in its sole
discretion, perform the same and in so doing may expend such sums
as the Administrative Agent may reasonably deem advisable in the
performance thereof, including, without limitation, the payment of
any taxes, a payment to obtain a release of a Lien or potential
Lien, expenditures made in defending against any adverse claim and
all other expenditures which the Administrative Agent may make for
the protection of the security hereof or which may be compelled to
make by operation of Law. All such sums and amounts so
expended shall be repayable by the Obligors on a joint and several
basis promptly upon timely notice thereof and demand therefor,
shall constitute additional Secured Obligations and shall bear
interest from the date said amounts are expended at the Default
Rate. No such performance of any covenant or agreement
by the Administrative Agent on behalf of any
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