GUARANTY AGREEMENT
This Guaranty Agreement (the "Guaranty") is made, given and delivered as
of June 17, 1998, by BROOKDALE LIVING COMMUNITIES, INC., a Delaware corporation
(the "Guarantor") to BANC ONE CAPITAL PARTNERS IV, LTD., an Ohio limited
liability company (the "Lender").
Background
The following is a mutual statement by the parties of certain factual
matters that form the basis of this Guaranty.
A. Loan Agreement. AH Michigan Subordinated, LLC, an Ohio limited
liability company (the "Borrower"), and the Lender have entered into a certain
Loan Agreement concurrently with the execution of this Guaranty (the "Loan
Agreement"), pursuant to which the Lender has agreed to lend to the Borrower up
to the sum of $11,000,776, subject to additional advances as described in the
Loan Agreement (the "Loan"). The Borrower has also executed certain Promissory
Notes of even date herewith, in favor of the Lender, further evidencing the Loan
(the "Notes"). All terms not otherwise defined herein shall have the meanings
ascribed to them in the Loan Agreement.
B. Owner. AH Michigan Owner Limited Partnership (the "Owner"), the sole
partners of which are the Borrower and AH Michigan CGP, Inc., an Ohio
corporation (the "General Partner") which acts as the sole general partner of
the Owner. The Borrower is the sole shareholder of the General Partner.
C. Project. The Owner intends to develop a an independent living facility
with a non-licensed assisted living component for the elderly in Southfield,
Michigan, which is to be known as "The Heritage at Southfield" (the "Project").
The Lender has agreed to make the Loan to the Borrower to be used as a an equity
contribution to the Owner, the proceeds of which will fund a portion of the
Project costs.
D. Guarantor. Brookdale Living Communities of Michigan, Inc. (the
"Manager") is the manager and developer of the Project pursuant to a certain
Amended and Restated Development Agreement with the Owner of even date herewith
(the "Development Agreement") and a certain Management Agreement with the Owner
of even date herewith (the "Management Agreement"). The Guarantor is an
Affiliate of the Manager and will derive material benefits from the Loan.
NOW, THEREFORE, for and in consideration of the promises, in order to induce the
Lender to make the Loan and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Guarantor does
hereby guarantee and the parties do hereby agree, as follows:
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Statement of Agreement
Section 1. Payment Guaranty.
A. The Guarantor, absolutely and unconditionally, hereby guarantees to the
Lender the full, prompt and complete repayment of all of the Borrower's
obligations under the Notes, in any of the following circumstances:
(a) The Manager files a voluntary petition in bankruptcy or engages
in any other voluntary act of insolvency;
(b) Any material, intentional misrepresentations of fact to the
Owner, the Borrower or the Lender by the Guarantor or the Manager, or any
of their respective authorized agents or representatives contained in any
Loan Document or in any other written document delivered in connection
with the Loan;
(c) Fraud or misappropriation of funds on the part of the Guarantor
or the Manager with respect to the Project;
(d) The Guarantor, the Manager or any of their respective Affiliates
contests, impairs or otherwise challenges the Lender's right or ability to
foreclose on its security interest, or at Lender's option, to become the
undisputed, absolute owner of all or any portion of the Membership Interests
(subject to Brookdale's Equity Option) or to exercise its rights pursuant to its
Special Management Interest; or
(e) The breach of the Guarantor's obligations under Section 1(C),
below.
B. The Guarantor, absolutely and unconditionally, hereby guarantees
to the Lender the full, prompt and complete reimbursement of all costs, losses,
expenses and damages (including reasonable attorneys' fees), exclusive of
consequential damages, sustained or incurred by the Lender, as a result of: (a)
any material physical waste at the Project or of the Property by the Guarantor,
the Manager or any of their respective authorized agents or representatives; (b)
the failure to apply insurance or condemnation proceeds by the Guarantor, the
Manager or any of their respective authorized agents or representatives in
accordance with the requirements of the Senior Loan Documents; (c) any shortfall
between (i) the sum of the Re-sized Amount and the Preferred Equity available
from the Senior Lender and (ii) the unpaid Principal, (as such terms are defined
in the Senior Loan Documents), but only to the extent the Lender pays or causes
to be paid such shortfall to the Senior Lender and Brookdale would otherwise be
liable to the Senior Lender for the payment of such amount pursuant to its
Guaranty of Payment (as such term is defined in the Senior Loan Documents); or
(d) the failure of the Borrower to pay Scheduled Debt Service on the Priority
Note for the monthly periods, if any, after the Original Expected Conversion
Date (as such term is defined in the Senior Loan Documents) through and
including the Maturity Date.
C. Without the prior written consent of the Lender exercised in its
sole discretion, the Guarantor shall not (i) permit any financing pursuant to
the Master Financing Facility
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Agreement (as such term is defined in the Senior Loan Documents) other than the
Senior Loan and the loan by Senior Lender of even date herewith to AH Texas
Owner Limited Partnership (the "Texas Senior Loan") or (ii) otherwise permit the
Senior Loan to be cross-defaulted and/or cross-collateralized with
any loan other than the Texas Senior Loan.
D. The Guarantor, absolutely and unconditionally, hereby guarantees
to the Lender the full, prompt and complete payment and performance of the
obligations of the Borrower pursuant to Section 6.1(m) of the Loan Agreement;
provided, however, that so long as no Event of Default then exists, the guaranty
pursuant to this Section 1(D) (except with respect to Guarantor's liability for
any sums due and payable under this Guaranty as of the date of such termination
and any sums thereafter becoming payable pursuant to Section 5 of this Guaranty)
shall terminate on the Payment Obligations Termination Date (as such term is
defined in the Senior Loan Documents).
Section 2. Unconditional Obligations. The obligations of the
Guarantor under this Guaranty (the "Obligations") are absolute and
unconditional, and shall not be impaired by any action or omission to act, with
or without notice to the Guarantor (except for such notices as expressly
required by the Loan Documents or the Intercreditor Agreement), of the Lender or
any other holder or beneficiary of any of the Obligations, or by reason of any
other circumstance which might otherwise constitute a discharge or defense of
the Guarantor. Except as expressly contained herein in the Intercreditor
Agreement or the other Loan Documents, the Guarantor hereby expressly waives
diligence, presentment, protest, notice of dishonor, demand for payment or
performance, extension of time of payment or performance, notice of acceptance
of this Guaranty, and indulgences and notices of every kind under the Loan
Agreement, the Notes or any of the other Loan Documents and consent to any and
all forbearances and extensions of time thereunder and to any and all changes in
the terms, covenants and conditions thereof, and agree that they shall not be
released hereunder by any matter or things whatsoever whereby it as Guarantor
and surety otherwise would or might be released, other than a written release
delivered by the Lender or by payment or performance of the Obligations or by
payment in full of the Notes and all other obligations of the Borrower under the
Loan Agreement.
Section 3. Costs and Expenses. The Guarantor agrees to pay all the
reasonable costs, expenses and fees, including all reasonable attorneys' fees,
which may be incurred by the Lender in enforcing or attempting to enforce this
Guaranty following any default on the part of the Guarantor hereunder, whether
the same shall be enforced by suit or otherwise. If any such fees and expenses
are not so reimbursed, the amount thereof shall, to the extent permitted by law,
constitute indebtedness due hereunder.
Section 4. Financial Statements and Compliance Certificate. The
Guarantor agrees to provide to the Lender, not later than one hundred twenty
(120) days following the end of each fiscal year, an audited income and cash
flow statement and balance sheet as of the end of such fiscal year. The
Guarantor agrees to provide, or cause to be provided, to the Borrower the
reports contemplated by Sections 6.1 (a) and (b) of the Loan Agreement for
delivery by the Borrower to the Lender as contemplated therein. In connection
with the delivery of the financial statements contemplated by this Section 4,
the Guarantor shall cause to be delivered to the Lender a certificate
substantially in the form of Exhibit A attached hereto.
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Xxxxxx 0. Rescission or Return of Payments. The Guarantor agrees
that, if at any time all or any part of any payment theretofore applied by the
Lender to any of the Obligations is or must be rescinded or returned by the
Lender for any reason whatsoever (including without limitation the insolvency,
bankruptcy or reorganization of the Borrower), such Obligations shall, for the
purposes of this Guaranty, to the extent that such payment is or must be
rescinded or returned, be deemed to have continued in existence, notwithstanding
such application by the Lender, and this Guaranty shall continue to be effective
or reinstated, as the case may be, as to such Obligations, all as though such
application by the Lender had not been made.
Section 6. Assignment or Transfer of Liabilities. The Lender may,
from time to time, without notice to the Guarantor, assign or transfer any or
all of the Obligations or any interest therein; and, notwithstanding any such
assignment or transfer or any subsequent assignment or transfer thereof, such
Obligations shall be and remain Obligations for the purposes of this Guaranty,
and each and every immediate and successive assignee or transferee of any of the
Obligations or of any such interest therein shall, to the extent of the interest
of such assignee or transferee in the Obligations, be entitled to the benefits
of this Guaranty to the same extent as if such assignee or transferee were the
transferor.
Section 7. Enforcement. The Obligations hereunder are joint and
several and are independent of the obligations of the Borrower, and a separate
action or actions may be brought and prosecuted against the Guarantor regardless
of whether any action is brought against the Borrower or whether the Borrower be
joined in any such action(s). The Guarantor hereby acknowledges and agree that
it shall not be a condition precedent to the enforcement of this Guaranty by the
Lender against the Guarantor that the Lender first seek recourse against the
Borrower by reason of a breach or default by the Borrower.
Section 8. Cumulative Remedies, Delays. No delay on the part of the
Lender in the exercise of any right or remedy shall operate as a waiver thereof,
and no single or partial exercise by the Lender of any right or remedy shall
preclude other or further exercise thereof or the exercise of any other right or
remedy. No action of the Lender permitted hereunder shall in any way affect or
impair the rights of the Lender and the Obligations of the Guarantor under this
Guaranty. For the purpose of this Guaranty, Obligations shall include all
obligations of the Guarantor hereunder, notwithstanding any right or power of
the Borrower or anyone else to assert any claim or defense as to the invalidity
or unenforceability of any such Obligations, and no such claim or defense shall
affect or impair the obligations of the Guarantor hereunder.
Section 9. Subordination. The Guarantor hereby subordinates any and
all claims which it now has, or in the future may acquire, as a creditor of the
Borrower or the Owner, to the prior payment and satisfaction in full of this
Guaranty. If, prior to the payment and satisfaction, or termination, of this
Guaranty, the Guarantor would, without reference to the provisions of this
Section 9, be entitled to receive any payment on account of any claim of the
Guarantor against the Borrower or the Owner, all such payments shall be made
instead to the Lender until the Obligations have been paid and satisfied in
full, and the Guarantor hereby so direct. If the Guarantor receives any payment
on account of any claim of the Guarantor against the Borrower or the Owner, the
Guarantor shall immediately pay the same over to the Lender to be applied to the
payment or satisfaction of the
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Obligations, if any. Anything in this ss.9 to the contrary notwithstanding,
Manager and the Guarantor may receive and retain payments (i) subject to the
restrictions set forth in the Consent and Subordination of Manager (as
hereinafter defined) under the Management Agreement and the
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Development Agreement and (ii) under the Amended and Restated Property
Management Agreement, if any, entered into between the Owner and the Manager as
described in the Consent and Subordination of Manager. For purposes hereof, the
"Consent and Subordination of Manager" shall mean that certain Consent and
Subordination of Manager of even date herewith executed by the Manager in favor
of the Lender. Anything herein to the contrary notwithstanding, the provisions
of this ss.9 do not create any obligation on the part of the Owner to the
Lender.
ss. 10. Amendments, Modifications, Etc. No amendment, modification,
termination, or waiver of any provision of this Guaranty nor consent to any
departure by the Guarantor therefrom, shall in any event be effective unless the
same shall be in writing and signed by the Lender, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given. No notice or demand on the Guarantor in any case shall
entitle the Guarantor to any other or further notice or demand in similar or
other circumstances. In addition, the Guarantor agrees not to amend the Equity
Option Agreement or the Brookdale Option Agreement without the prior written
consent of the Lender.
ss. 11. No Reliance. The Guarantor acknowledges that it has independently
investigated the legal, economic, tax, accounting and other consequences of the
Loan and the transactions contemplated by the Loan Documents and have not
received or relied in any way on any advice of the Lender or any of its
Affiliates as to such consequences.
ss. 12. Governing Law. This Guaranty was negotiated in the State of Ohio,
accepted by the Lender in the State of Ohio, and the proceeds of the Loan
guaranteed hereby were or are to be disbursed by Lender from the State of Ohio.
The Guarantor and the Lender agree that the State of Ohio has a substantial
relationship to the transaction evidenced hereby and agree that this Guaranty
and the rights and obligations of the parties hereunder shall be governed by and
construed in accordance with the laws of the State of Ohio (without giving
effect to principles of conflicts of law).
ss. 13. Severability. In the event any one or more of the provisions
contained in this Guaranty shall for any reason be held to be invalid, illegal
or unenforceable in any respect, such provision shall be deemed replaced by the
valid and enforceable provision that is substantially most similar to such
invalid or unenforceable provision, but the remaining provisions shall not be
affected thereby.
ss. 14. Waiver of Jury Trial; Consent to Venue. THE GUARANTOR AND THE
LENDER, AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL,
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT THEY MAY HAVE TO A
TRIAL BY JURY IN ANY LITIGATION BASED UPON OR ARISING OUT OF THIS GUARANTY OR
ANY RELATED INSTRUMENT OR AGREEMENT, OR ANY OF THE TRANSACTIONS CONTEMPLATED BY
THIS GUARANTY, OR ANY COURSE OF CONDUCT, DEALING, STATEMENTS (WHETHER ORAL OR
WRITTEN) OR ACTIONS OF THE GUARANTOR OR THE LENDER. THE GUARANTOR AND THE LENDER
SHALL NOT SEEK TO CONSOLIDATE, BY COUNTERCLAIM OR OTHERWISE, ANY ACTION IN WHICH
A JURY TRIAL HAS BEEN WAIVED WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT
BE OR HAS NOT BEEN WAIVED. IN THE EVENT OF A DISPUTE UNDER THIS GUARANTY, THE
GUARANTOR AND THE LENDER HEREBY
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AGREE THAT EXCLUSIVE JURISDICTION AND VENUE LIES IN A COURT OF COMPETENT
JURISDICTION IN FRANKLIN COUNTY, OHIO. THESE PROVISIONS SHALL NOT BE DEEMED TO
HAVE BEEN MODIFIED IN ANY RESPECT OR RELINQUISHED BY THE GUARANTOR OR THE LENDER
EXCEPT BY A WRITTEN INSTRUMENT EXECUTED BY SAME.
ss. 15. Gender and Number. Terms that imply gender and number shall
be construed to imply the relevant gender and number.
ss. 16. Multiple Counterparts. This Guaranty may be signed in
multiple counterparts with the same effect as if the signatures thereto were
upon the same instrument.
ss. 17. Termination of Guaranty. Subject to the provisions of
Section 5, this Guaranty shall terminate upon the irrevocable payment in full of
the Notes and all other obligations of the Borrower under the Loan Agreement.
ss. 18. Intercreditor Agreement. THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER, AND ALL RIGHTS AND REMEDIES OF LENDER WITH RESPECT TO THE LOAN AND
THE OBLIGATIONS OR ANY COLLATERAL FOR THE LOAN OR ANY OF THE OBLIGATIONS ARE
EACH AND ALL SUBJECT TO THE TERMS AND CONDITIONS OF THE INTERCREDITOR AGREEMENT.
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This Guaranty has been executed by the Guarantor effective as of the date
first written above.
GUARANTOR:
BROOKDALE LIVING COMMUNITIES, INC.,
a Delaware corporation
By: ______________________________________
Name: Xxxxxx X. Xxxxxxxx, Xx.
Title: Executive Vice President
LENDER:
BANC ONE CAPITAL PARTNERSHIP IV,
LTD., an Ohio limited liability company
By: BOCP Holdings Corporation, an Ohio
corporation, its Manager
By:
Name: Xxxxxxx X. Xxxx
Title: Authorized Signer
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Exhibit A
COMPLIANCE CERTIFICATE
[INSERT DATE]
The undersigned Guarantor is a party to a certain Guaranty Agreement dated
June 17, 1998 (the "Guaranty") in favor of Banc One Capital Partners IV, Ltd.
(the "Lender"). The Guarantor is executing and delivering this Certificate to
the Lender pursuant to ss.4 of the Guaranty. Any defined term used in this
Certificate and not otherwise defined in this Certificate shall have the meaning
ascribed to it in the Guaranty. The Guarantor hereby certifies to the Lender as
follows:
1. Attached hereto and made part hereof are the financial statements
required by ss.4 of the Guaranty, which financial statements conform
in all material respects with the requirements of such Section.
2. As of the date hereof, the Guarantor has no knowledge of any
condition, event or act which with notice or lapse of time or both
would constitute an Event of Default pursuant to Sections 8.1(t),
8.1(u) or 8.1(v) of the Loan Agreement.
3. The status of the Guarantor's Net Worth, EBITDAR and Liquid Assets
(as such terms are defined in the Loan Agreement) as of the date of
the attached financial statements does not constitute an Event of
Default under the aforementioned Sections of the Loan Agreement and
is set forth below:
Net Worth:
Actual Required
$110,000,000
EBITDAR:
Actual Required
$ 5,000,000
Liquid Assets:
Actual Required
$ 5,000,000
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IN WITNESS WHEREOF, the Guarantor has caused this Certificate to be
executed and delivered by its duly authorized representative as of the date
first set forth above.
GUARANTOR:
Brookdale Living Communities, Inc.
By: ______________________________________
Its: ______________________________________
Date: ____________________________________
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