NON-RECOURSE GUARANTY AGREEMENT
This Non-Recourse Guaranty Agreement (the "Guaranty") is made, given and
delivered as of June 17, 1998, by BROOKDALE LIVING COMMUNITIES, INC., a Delaware
corporation ("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 (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 is an Ohio 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 an independent living facility
with a non-licensed assisted living component for the elderly in Southfield,
Michigan, which is currently referred to as "The Heritage at Southfield" (the
"Project"). The Lender has agreed to make the Loan to the Borrower to be used as
a capital contribution to the Owner, the proceeds of which will fund a portion
of the Project costs.
D. Guarantor. An affiliate of the Guarantor will be the manager and
developer of the Project and the Guarantor will derive material benefits from
the Loan. The Guarantor has entered into a certain Conditional Investment
Agreement dated June 17, 1998, with Banc One Capital Funding Corporation
("BOCFC") in order to induce Lender to make the Loan (the "Conditional
Investment Agreement").
E. Pledge of Conditional Investment Agreement. In order to collateralize
the Borrower's payment and performance obligations under the Loan Documents, as
well as to collateralize the Guarantor's obligations under this Guaranty, the
Guarantor has also entered into a certain Security Agreement-Pledge and
Assignment of Investment Agreement (the "Security Agreement") of even date
herewith, pursuant to which the Guarantor has pledged and assigned all of its
interests in the Conditional Investment Agreement to the Lender.
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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:
Statement of Agreement
ss. 1. Guaranty. The Guarantor, absolutely and unconditionally, hereby
guarantees to the Lender the full, prompt and complete payment of the Borrower's
obligations under the Loan Documents and the payment to AH Michigan Investor,
Inc. of funds from the exercise of the Equity Option equal to its capital
contribution to the Borrower of $1,050,000 plus an amount necessary to produce a
17.11% IRR on such capital contribution.
ss. 2. Unconditional Obligations. Subject to the provisions of ss.3 below,
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, 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. 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 consents to any and all forbearances and
extensions of time thereunder and to any and all changes in the terms, covenants
and conditions thereof, and agrees that it 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.
ss.3. Limitations on Liability. Any provision in this Guaranty (or in any
other Loan Document) to the contrary notwithstanding, the Guarantor shall not
have any personal liability and no deficiency judgment shall be brought or
entered into and no judgments shall be enforceable against the Guarantor or any
officer, director or shareholder of the Guarantor or any of its successors,
assigns, administrators or personal representatives, or affiliates of Guarantor
(including, without limitation, the Manager) to pay any of the obligations
evidenced by this Guaranty or the Security Agreement. The Lender agrees that in
the event of an actual or alleged failure, breach or default hereunder by the
Guarantor, the Lender's sole and exclusive remedy against the Guarantor shall be
against the Conditional Investment Agreement pursuant to the Security Agreement,
and no judgment pursuant to this Guaranty shall be subject to execution upon, or
a lien against any property of, the Guarantor other than the Investment
Agreement. Nothing in this ss.3 or otherwise contained in this Guaranty shall be
deemed to limit, modify or impair the obligations of the Guarantor to the Lender
pursuant to the Recourse Guaranties (as such term is defined in the Loan
Agreement).
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ss. 4. 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 5. 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 agrees 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, 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.
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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, to the prior payment and satisfaction in full of this Guaranty. If,
prior to the payment and satisfaction of this Guaranty, the Guarantor would,
without reference to the provisions of this ss.9, be entitled to receive any
payment on account of any claim of the Guarantor against the Borrower, 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, the Guarantor shall immediately pay the same over to the Lender to be
applied to the payment or satisfaction of the Obligations, if any.
SECTION 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.
SECTION 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.
SECTION 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).
SECTION 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.
SECTION 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
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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 UNLESS FAILURE TO SO CONSOLIDATE
WOULD RESULT IN A MANDATORY LOSS OF SUCH CLAIM. IN THE EVENT OF A DISPUTE UNDER
THIS GUARANTY, THE GUARANTOR AND THE LENDER HEREBY 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.
SECTION 15. Gender and Number. Terms that imply gender and number shall
be construed to imply the relevant gender and number.
SECTION 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.
SECTION 17. Intercreditor Agreement.
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND ALL RIGHTS AND
REMEDIES OF LENDER WITH RESPECT TO THE LOAN, THE OBLIGATIONS OR ANY COLLATERAL
THEREFOR 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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