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 Texas 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 $7,382,658, 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 Texas Owner Limited Partnership (the "Owner"), the sole
partners of which are the Borrower and AH Texas 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 congregate housing facility with
an assisted living component for the elderly in Austin, Texas, which is to be
known as "The Heritage at Xxxxxx Ranch" (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. BLC of Texas-II, L.P. (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 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 Michigan Owner Limited Partnership (the
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"Michigan Senior Loan") or (ii) otherwise permit the Senior Loan to be
cross-defaulted and/or cross- collateralized with any loan other than the
Michigan 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 Section1(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 Section5 of this Guaranty) shall
terminate on the Payment Obligations Termination Date (as such term is defined
in the Senior Loan Documents).
Section2. 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 Section4, the Guarantor shall cause to
be delivered to the Lender a certificate substantially in the form of Exhibit A
attached hereto.
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
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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
Section9, 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 Obligations, if any. Anything in this Section9 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 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
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the Manager in favor of the Lender. Anything herein to the contrary
notwithstanding, the provisions of this Section9 do not create any obligation on
the part of the Owner to the Lender.
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. 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.
Section 00.Xx 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 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 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.
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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.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.
Section 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.
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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