EXHIBIT 10.5
COLLATERAL ASSIGNMENT OF PARTNERSHIP INTERESTS
FOR VALUE RECEIVED, the undersigned, AH MICHIGAN SUBORDINATED, LLC, an Ohio
limited liability company (the "Limited Partner"), and AH MICHIGAN CGP, INC., an
Ohio corporation (the "General Partner" and together with the Limited Partner,
individually, an "Assignor" and together, the "Assignors"), hereby assign and
transfer to Brookdale Living Communities of Michigan, Inc., a Delaware
corporation (the "Assignee), and do hereby grant to the Assignee a security
interest in, all the right, title and interest of the Assignors in, to, under
and with respect to the following (the "Assigned Interests"):
(i) the entire ninety-nine percent (99%) interest of the Limited Partner as
a limited partner in AH Michigan Owner Limited Partnership, an Ohio limited
partnership (the "Partnership"), created and existing under the Agreement of
Limited Partnership, dated March 27, 1998 (the "Partnership Agreement"), between
the General Partner and the Limited Partner for which the Certificate of Limited
Partnership, dated March 27, 1998, was filed with the Secretary of State of Ohio
on March 27, 1998;
(ii) the entire one percent (1%) interest of the General Partner as a
general partner in the Partnership; and
(iii) all proceeds of any of the foregoing
including, without limitation, the right to receive any and all payments or
distributions of any and every kind whatsoever, whether in cash, property or
otherwise, at any time made, owing or payable to either of the Assignors,
whether on account of its interests in the Partnership or in the nature of a
management fee or as a reimbursement for expenses incurred in connection with
the management of the Partnership or of any other kind or nature whatsoever,
together with, subject to the provisions of Section 4 below, all applicable
rights, powers and privileges of the Assignors as partners under and pursuant to
the Partnership Agreement (including but not limited to the power to vote, grant
or withhold consents, and direct any of the Partnership's actions), as now or
hereafter amended.
This Assignment of the Assigned Interests (this "Assignment") is made and
given to secure the full and timely payment and performance of any and all
indebtedness and obligations of any and
every kind whatsoever of the Assignors to the Assignee, howsoever created,
arising or evidenced, whether direct or indirect, absolute or contingent, or now
or hereafter existing, or due or to become due, under or with respect to (i) the
Guaranty, dated as of the date hereof (as amended or modified from time to time,
the "Guaranty"), by the Assignors in favor of the Assignee, and (ii) any and all
costs, expenses and charges, of any kind whatsoever (including, without
limitation, court costs and reasonable attorneys' fees and expenses), paid or
incurred by or on behalf of the Assignee in the taking, perfection, maintenance
or preservation of the security interest intended to be granted by this
Assignment or the priority thereof, or in the preservation, taking or sale of,
or in dealing with, the Assigned Interests (all such indebtedness and
obligations are referred to collectively herein as the "Secured Indebtedness").
This Assignment is made on the following additional terms, agreements and
conditions:
1. Each Assignor does hereby irrevocably constitute and appoint the
Assignee its true and lawful attorney-in-fact, with full power of substitution,
for such Assignor and in its name, place and stead, to ask, demand, collect,
receive, receipt for, sue for, compound and give acquittance for any and all
sums or properties which may be or become due, payable or distributable to or in
respect to the Assigned Interests, with full power to settle, adjust or
compromise any claim thereunder as fully as such Assignor could do, and to
endorse or sign the name of such Assignor on all items, instruments and
commercial paper given in payment or in part payment thereof, and all documents
of satisfaction, discharge or receipt required or requested in connection
therewith, and, in its discretion, to file any claim or take any other action or
proceeding, either in its own name or in the name of such Assignor, or
otherwise, which the Assignee may deem necessary or appropriate to collect or
otherwise realize upon any and all of the Assigned Interests, or effect a
transfer thereof pursuant to the Partnership Agreement, or which may be
necessary or appropriate to protect and preserve the right, title and interest
of the Assignee in and to such Assigned Interests and the security intended to
be afforded hereby.
2. Without limiting the foregoing, each Assignor hereby further covenants
that it will, upon request of the Assignee, execute and deliver such further
documents and instruments and do
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and perform such other acts and things (including, without limitation, obtaining
such consents hereto, and giving such notices hereof, as the Assignee may
reasonably request from time to time) as the Assignee may deem necessary or
appropriate to more effectively vest in and secure to the Assignee the Assigned
Interests or other rights or interests due or hereafter to become due.
3. Without the prior written approval of the Assignee, the General Partner
shall not, acting on behalf of the Partnership, authorize (a) the payment of any
management fee or other compensation to itself or any affiliate, (b) the
reimbursement to itself of any expenses incurred in connection with managing the
Partnership and conducting the business of the Partnership, or (c) any
Partnership distributions. In the event that the Assignee approves any
Partnership distributions, the General Partner shall notify the Partnership to
make all such distributions directly to the Assignee. All such distributions by
the Partnership at any time received by the Assignee may be retained by the
Assignee as additional collateral security hereunder or may be applied by the
Assignee to the Secured Indebtedness at such time or times and in such order as
the Assignee may deem proper, all in the sole discretion of the Assignee.
4. (a) Unless and until an Event of Default (as defined in Section 8
below) has occurred and is continuing, and either Assignor shall have received
notice in writing from the Assignee, such Assignor shall have the right to
exercise its rights, powers and privileges as a partner under and pursuant to
the Partnership Agreement (including, but not limited to, the power to vote,
grant or withhold consents, and direct any of the Partnership's actions), as now
or hereafter amended; provided, however, that nether Assignor shall, without the
Assignee's prior written consent, cast any vote or give or grant any consent,
waiver or ratification or take any other action which would directly or
indirectly (i) authorize or permit the dissolution, liquidation, or sale of the
Partnership, the sale or other disposition of any assets of the Partnership or
the creation of additional interests in, or the admission of additional Partners
in, the Partnership, (ii) have the result of diluting Assignee's rights or the
value of the Assigned Interests, (iii) violate or be inconsistent with the terms
of this Assignment, the Purchase and Sale Agreement, dated as of the date hereof
(the "Purchase Agreement"), between the Partnership and the Assignee or the
Development Agreement, dated as of the date hereof
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(the "Development Agreement"), between the Partnership and the Assignee, (iv)
have the effect of materially impairing the position or interests of the
Assignee in any manner whatsoever, or (v) authorize the declaration or filing of
any voluntary proceedings in bankruptcy, insolvency or reorganization or any
assignment for the benefit of creditors with respect to such Assignor or the
Partnership. Upon the occurrence and continuance of an Event of Default and
notice in writing from the Assignee, all rights, powers and privileges of each
Assignor as a partner pursuant to or under the Partnership Agreement shall
forthwith cease and thereupon become vested in the Assignee, who shall
thereafter have during the continuance of such Event of Default the sole and
exclusive authority to exercise such rights, powers and privileges.
(b) In no event shall the Assignee be entitled to exercise or deemed
to have exercised the rights, powers or privileges of the General Partner as a
general partner under the Partnership Agreement except as expressly provided
herein.
5. Upon the occurrence and continuance of an Event of Default, the
Assignee, in addition to the rights, powers and authorities to collect the sums
assigned hereunder and any other remedies or rights it may have, shall have all
the rights and remedies of a secured party under the Uniform Commercial Code of
Illinois (regardless of whether such law or a similar law is in effect in the
jurisdiction where such rights and remedies are asserted) with respect to the
Assigned Interests. Subject to the provisions of Section 11 of this Assignment,
all costs and expenses of any kind whatsoever, of collection and enforcement of
the Secured Indebtedness or any rights or remedies hereunder (including without
limitation, all costs of disposing of the Assigned Interests, together with
court costs and reasonable attorneys' fees), or incurred in realizing upon the
Assigned Interests or in enforcing this Assignment, shall be paid by the
Assignors, shall be deemed to be additional Secured Indebtedness secured hereby,
and may be deducted and retained by the Assignee from the proceeds of
disposition of the Assigned Interests and applied to the payment and
satisfaction of such costs and expenses.
6. Each Assignor further represents, warrants and covenants to the
Assignee as follows:
(a) That the Partnership is a valid partnership duly organized and
existing under the laws of the State of Ohio and that
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the Partnership Agreement as heretofore furnished to the Assignee is currently
in full force and effect;
(b) That each Assignor is a corporation or limited liability company,
as applicable, duly organized, validly exiting and in good standing under the
laws of the State of Ohio, and has full right, power and authority to make this
Assignment; that the execution, delivery and performance of this Assignment have
been authorized by all necessary and appropriate corporate or membership
actions, as applicable, and do not conflict with any provision of law or of the
Partnership Agreement or any agreement binding upon or affecting any of the
property of such Assignor or the Partnership; this Assignment is the legal,
valid and binding obligation of such Assignor enforceable in accordance with its
terms, and that neither the Assigned Interests or any monies or other property
distributable in respect thereof are subject to any lien, encumbrance or
security interest other than the security interest granted to the Assignee
hereunder;
(c) That the copy of the Partnership Agreement heretofore delivered to
the Assignee is a true, correct and complete copy of the Partnership Agreement,
and has not been otherwise amended or modified in any respect, and that such
Assignor will not, without the prior written consent of the Assignee, approve,
consent to or suffer or permit to be made any amendment or modification to the
Partnership Agreement;
(d) That such Assignor shall not transfer, assign, pledge or permit
any lien, security interest or other encumbrance to exist on, the Assigned
Interests or any monies or other property distributable in respect thereof; and
(e) That, without the prior written approval of the Assignee, such
Assignor shall not permit any amendment to its organizational documents or the
Partnership Agreement, or enter into any agreement binding upon such Assignor
(other than this Assignment and the Guaranty).
7. In addition to, and not in derogation or limitation of, any other
provision of this Assignment, each Assignor hereby: (i) subordinates to the
rights and interests of the Assignee hereunder (the "Assignee's Interests") any
and all security interests, pledges, collateral interests, and rights of any
kind whatsoever to any of all of the interests in the Partnership which such
Assignor
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may have now or hereafter (the "Subordinated Interests"), howsoever created or
arising (including, without limitation, such security interests as such Assignor
may have pursuant to the provisions of the Partnership Agreement); and (ii)
agrees not to take any action to enforce any right or remedy relating to any of
the Subordinated Interests (except any action for the benefit of such Assignee
which the Assignee approves in writing) until this Assignment to the Assignee
has terminated and all of the Secured Indebtedness has been satisfied in full.
8. The occurrence of any of the following events or conditions shall be an
"Event of Default" hereunder:
(a) Nonpayment of any of the Secured Indebtedness when due, whether by
acceleration or otherwise;
(b) Nonpayment or nonperformance by either Assignor of any of its
obligations under the Guaranty;
(c) Any representation or warranty made by either Assignor herein is
untrue, or any schedule, statement, report or writing furnished by or on
behalf of either Assignor to the Assignee is untrue in any material
respect;
(d) Default in or nonperformance of either Assignor's agreements
herein set forth;
(e) The occurrence of an "Event of Default" as defined in the Note,
dated the date hereof, of the Partnership payable to the order of the
Assignee in the amount of $3,044,082.12;
(f) The occurrence of an "Event of Default" as defined in the
Development Agreement, dated as of the date hereof, between the Partnership
and the Assignee; or
(g) The default by the Partnership in any of its obligations under the
Purchase and Sale Agreement, dated as of the date hereof, between the
Partnership and the Assignee.
9. Any notices required or permitted to be sent hereunder shall be
delivered personally or by telecopier (with answer back acknowledged) or mailed,
certified mail, return receipt requested, or delivered by overnight courier
service to the following addresses, or such other addresses as shall be given by
notice
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delivered hereunder, and shall be deemed to have been given upon delivery, if
delivered personally, upon receipt with answer back acknowledged, if delivered
by telecopier, three (3) business days after mailing, if mailed, or one business
day after delivery to the courier, if delivery by overnight courier service:
If to the
Limited Partner: AH Michigan Subordinated,
LLC
00 Xxxxx Xxxx Xxxxxx
Xxxxx 0000
Xxxxxxxx, Xxxx 00000
Attn: Xxxxx X. Xxxxxxx
Fax: (000) 000-0000
If to the
General Partner: AH Michigan CGP, Inc.
00 Xxxxx Xxxx Xxxxxx
Xxxxx 0000
Xxxxxxxx, Xxxx 00000
Attn: Xxxxx X. Xxxxxxx
Fax: (000) 000-0000
If to the Assignee: Brookdale Living
Communities of Michigan,
Inc.
c/o Brookdale Living
Communities, Inc.
00 Xxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxxx, Xx.
Fax: (000) 000-0000
with a copy to: Brookdale Living
Communities, Inc.
00 Xxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxx
Fax: (000) 000-0000
and to: Winston & Xxxxxx
00 Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
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Attn: Xxxxx X. Xxxxxx
Fax: (000) 000-0000
10. The satisfaction or discharge of any part of the Secured Indebtedness
shall not in any way satisfy or discharge this Assignment, but this Assignment
shall remain in full force and effect as long as any amount remains unpaid or
any obligation remains unperformed on or with respect to any such Secured
Indebtedness. This Assignment shall be binding upon the rights of the Assignors
with respect to the Partnership and not an assignment of any duties, obligations
or liabilities of the Assignors with respect thereto or for any obligation of
the Partnership; and by its acceptance hereof, the Assignee does not undertake
to perform or discharge, and shall not be responsible or liable for the
discharge of any such duties, responsibilities, obligations or liabilities.
11. The Assignee's recourse for the collection of the Secured Indebtedness
shall be limited solely and exclusively to the collateral covered hereby, and no
deficiency judgment shall be brought or entered into against either Assignor or
its officers, directors, members, partners, managers, shareholders,
incorporators or agents, and no judgment shall be subject to execution upon, or
a lien against any property of, either Assignor or its officers, directors,
members, partners, managers, shareholders, incorporators or agents, other than
the collateral covered hereby.
12. The Assignee may assign or transfer its rights under this Assignment.
13. No delay on the part of the Assignee in the exercise of any right or
remedy will operate as a waiver thereof, and no single or partial exercise by
the Assignee of any right or remedy will preclude other or further exercise
thereof or the exercise of any other right or remedy; nor will any modification
or waiver of any of the provisions of this Assignment be binding upon the
Assignee except as expressly set forth in a writing duly signed and delivered on
behalf of the Assignee.
14. Wherever possible, each provision of this Assignment will be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Assignment is prohibited by or invalid under such
law, such provision will be ineffective to the extent of such prohibition or
invalidity,
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without invalidating the remainder of such provision or the remaining provisions
of this Assignment.
15. Section captions used in this Assignment are for convenience only, and
do not affect the construction of this Assignment.
16. TO INDUCE THE ASSIGNEE TO ACCEPT THIS ASSIGNMENT, THE ASSIGNORS
IRREVOCABLY AGREE THAT, SUBJECT TO THE ASSIGNEE'S SOLE AND ABSOLUTE ELECTION,
ALL ACTIONS OR PROCEEDINGS IN ANY WAY ARISING OUT OF, FROM OR RELATED TO THIS
ASSIGNMENT WILL BE LITIGATED IN COURTS HAVING SITUS WITHIN CHICAGO, ILLINOIS.
THE ASSIGNORS HEREBY CONSENT AND SUBMIT TO THE JURISDICTION OF ANY COURT LOCATED
WITHIN CHICAGO, ILLINOIS, WAIVE PERSONAL SERVICE OF PROCESS UPON THE ASSIGNORS,
AND AGREE THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY REGISTERED MAIL
DIRECTED TO THE ASSIGNORS AT THE ADDRESSES STATED ON THE SIGNATURE PAGE HEREOF
AND SERVICE SO MADE WILL BE DEEMED TO BE COMPLETED UPON ACTUAL RECEIPT.
17. THE ASSIGNORS HEREBY EXPRESSLY WAIVE ANY RIGHT TO A TRIAL BY JURY IN
ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS ASSIGNMENT
OR UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY
IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH, AND AGREE THAT ANY SUCH
ACTION OR PROCEEDING WILL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. THE
ASSIGNORS AGREE THAT THEY WILL NOT ASSERT ANY CLAIM AGAINST THE ASSIGNEE ON ANY
THEORY OF LIABILITY, FOR SPECIAL, INDIRECT, CONSEQUENTIAL, INCIDENTAL OR
PUNITIVE DAMAGES.
This Assignment has been delivered at Chicago, Illinois, and shall be
governed by and construed in accordance with the laws of the State of Illinois
(without giving effect to principles of conflicts of law).
IN WITNESS WHEREOF, the Assignors have caused this Assignment to be
executed as of the 30th day of March, 1998.
AH MICHIGAN SUBORDINATED, LLC
By: AH MICHIGAN Investor, Inc.,
its manager
By: __________________________
Name: ________________________
Title: _______________________
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AH MICHIGAN CGP, INC.
By: _______________________________
Name: _____________________________
Title: ____________________________
Accepted:
BROOKDALE LIVING COMMUNITIES
OF MICHIGAN, INC.
By:___________________________
Name: ________________________
Title: _______________________
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