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 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 (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 is an Ohio
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 currently referred to as "The Heritage
at Xxxxxx Ranch" (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
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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.
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
SECTION 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 Texas Investor, Inc. of funds from
the exercise of the Equity Option equal to its capital contribution
to the Borrower of $900,000 plus an amount necessary to produce a
17.11% IRR on such capital contribution.
SECTION 2. Unconditional Obligations. Subject to the
provisions of SECTION3 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
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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.
SECTION3. 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 SECTION3 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).
SECTION 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
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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 SECTION9, 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).
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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 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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