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GUARANTY AND SURETYSHIP AGREEMENT
THIS GUARANTY AND SURETYSHIP AGREEMENT (as modified and supplemented and
in effect from time to time, this "Guaranty") is executed and delivered as of
this 22nd day of May, 1998 by ALTERNATIVE LIVING SERVICES, INC., a Delaware
corporation, with offices at 000 Xxxxx Xxxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxxx,
Xxxxxxxxx, 00000, Attention: Xxxxxx X. Xxxxxx, Telefax Number (000) 000-0000
("Guarantor"), in favor of NOMURA ASSET CAPITAL CORPORATION, a Delaware
corporation, with offices at 2 World Xxxxxxxxx Xxxxxx, Xxxxxxxx X, Xxx Xxxx,
Xxx Xxxx 00000-0000, Attention: Xxxxxxxxxxx Xxxxxxx, Telefax Number (212)
667-1666 (together with its successors and assigns, "Lender"), to secure
certain obligations of ALS-VENTURE II, INC., a Delaware corporation, with
offices at c/o Alternative Living Services, Inc. 000 Xxxxx Xxxxxxxxxx Xxxx,
Xxxxx 000, Xxxxxxxxxx, Xxxxxxxxx, 00000, Attention: Xxxxxx X. Xxxxxx, Telefax
Number (000) 000-0000 (the "Borrower").
BACKGROUND
A. Lender is lending to Borrower a Closing Date Advance in the amount of
Thirty Two Million Five Hundred Sixteen Thousand Dollars ($32,516,000.00) and
Lender may make Additional Facility Advances and the Earn-Out Advance provided
the terms of the Loan Agreement are satisfied (the "Loan"). The Loan is
evidenced by a Loan Agreement between Lender and Borrower, dated as of the date
hereof (as modified and supplemented and in effect from time to time, the "Loan
Agreement"), a Promissory Note of even date herewith, and certain other
collateral documents, all dated of even date herewith. Capitalized terms when
used herein without definition shall have the same meaning as defined in the
Loan Agreement.
B. In order to induce Lender to make the Loan, Guarantor has agreed to
execute and deliver this Guaranty to Lender.
AGREEMENTS
In consideration of the premises recited above, and intending to be
legally bound hereby, the Guarantor, hereby agrees:
1. Obligations. The following guarantees and obligations (together, the
"Obligations") are undertaken by Guarantor:
(a) Guarantor hereby unconditionally, absolutely and irrevocably
guarantees and becomes surety to Lender for the prompt payment of the entire
amount of the Indebtedness in strict accordance with the terms of the Loan
Agreement. The obligations of Guarantor constitute a guarantee of payment and
not merely of collection, are absolute and unconditional under all
circumstances and shall not in any event be discharged, impaired, or otherwise
affected except by payment to Lender. Guarantor agrees that it will upon
notice from
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Lender that any Event of Default has occurred under the Note or under any Loan
Document, pay directly to Lender all of the then outstanding Indebtedness.
Guarantor further agrees that any payment required hereunder will be made to
Lender regardless of whether such sums have become due by reason of the
maturity of the Note, acceleration of the Indebtedness or otherwise. The
proceeds of any amounts paid pursuant to this Guaranty will be applied in such
order and in such manner as Lender may elect in its sole discretion.
(b) Lender shall have the right to require Guarantor to pay, comply with
and satisfy its obligations and liabilities under this Guaranty and shall have
the right to proceed immediately against Guarantor with respect thereto,
without being required to bring any proceeding or take any action of any kind
against Borrower or any other guarantor or any other person, entity or property
prior thereto, the liability of Guarantor hereunder being independent of and
separate from the liability of Borrower, any other guarantors and persons and
the availability of other collateral security for the Note and the Loan
Documents.
2. Cancellation. This Guaranty and all obligations and liabilities of
Guarantor hereunder will be cancelled on the date on which the Difference plus
any applicable hedging or interest rate management brokerage costs incurred by
Lender on the Stabilization Date Payment Date are paid to Lender; provided,
however, that this Guaranty shall be reinstated and remain in full force and
effect for so long as such payment may be voided or rescinded in bankruptcy
proceedings as a preference or for any other reason.
3. Costs and Fees. Guarantor hereby agrees that if it does not satisfy
its obligations under this Guaranty in accordance with the terms hereof, the
same shall be considered an Event of Default hereunder and Lender shall have
the right, in addition to the other rights described in this Guaranty, to
collect from Guarantor all costs, fees and expenses (including reasonable
attorneys' fees) incurred by Lender in connection with the enforcement of this
Guaranty against Guarantor, as well as interest on the unpaid liability
hereunder at the Default Rate set forth in the Note, from and after the date
any Event of Default occurs and is continuing through the date of payment.
4. Bankruptcy of Borrower or Guarantor. The obligations of Guarantor
under this Guaranty shall not be discharged, impaired or otherwise affected by
the insolvency, bankruptcy, liquidation, readjustment, composition, dissolution
or other similar proceeding involving or affecting Borrower or Guarantor,
proceedings affecting the ownership of any of the above through merger,
consolidation or otherwise, inconsistent orders in or claims by parties to any
such proceedings or other release of obligations by operation of law.
5. Agreements and Waivers. Guarantor hereby:
(a) agrees that its obligations hereunder shall not be released or
otherwise affected by (and hereby waives notice of) any agreement, amendment,
release, suspension, compromise, forbearance, indulgence, waiver, extension,
renewal, supplement or modification of any of the Loan Documents, or any other
obligations of Borrower to Lender;
(b) consents that Lender may, without affecting the liability of Guarantor
under this Guaranty, (i) exchange, release or surrender any property pledged by
or on
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behalf of Borrower or any other guarantor of any liabilities of Borrower to
Lender, (ii) renew or change, with and subject to the consent of Borrower, the
terms of any of Borrower's liabilities to Lender, or (iii) waive any of
Lender's rights or remedies against Borrower or any other guarantor of any
obligations of Borrower;
(c) Intentionally omitted;
(d) agrees that its liability under this Guaranty shall be in addition to
that stated in any other guaranty that may be hereafter given by the
undersigned and shall not be reduced or affected by any payment made under any
such guaranty;
(e) agrees that any failure or delay by Lender to exercise any right under
this Guaranty or under any other guaranty or with respect to any of the Loan
Documents or otherwise with respect to the Indebtedness shall not be construed
as a waiver of the right to exercise the same or any other right hereunder at
any time and from time to time thereafter;
(f) consents that its obligations under this Guaranty shall not be
affected by any of Borrower's liabilities to Lender in excess of the amounts
guaranteed hereunder;
(g) agrees that Lender shall not, under any circumstances, be required to
exhaust remedies or proceed against Borrower, other sureties, parties, or any
other security for the Indebtedness before proceeding under this Guaranty
against Guarantor;
(h) agrees that under no circumstances (other than payment in full of the
Loan) shall it become subrogated to the claims or liens of Lender against
Borrower or any other guarantor and that all amounts due to Lender shall have
priority over any amounts, whether or not related to the Loan Documents,
payable now or hereafter from Borrower to Guarantor;
(i) agrees that the obligations undertaken in this Guaranty shall not be
affected by the lack of validity or enforceability of any Loan Document, any
change in the time, manner or place of payment or in any other term in respect
of any of the Indebtedness or any other amendment or waiver or a consent to or
any departure from the Loan Documents;
(j) agrees it will neither take or cause to be taken any action, or permit
any inaction, which will violate or cause a default under any of the Loan
Documents;
(k) waives the right to marshalling of Borrower's assets or any stay of
execution and the benefit of all exemption laws, to the extent permitted by
law, other protection granted by law to guarantors, now or hereafter in effect
with respect to any action or proceeding brought by Lender against it;
(l) agrees that no single exercise of the power to bring any action or
institute any proceeding shall be deemed to exhaust such power, but such power
shall continue undiminished and may be exercised from time to time as often as
Lender may elect until all of Guarantor's liabilities and obligations hereunder
have been satisfied;
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(m) agrees that its liability under this Guaranty shall in no way be
released or otherwise affected by the commencement, existence or completion of
any proceeding against Borrower, any other guarantors or any other person or
entity or otherwise with respect to the collection of the Indebtedness; and
Lender shall be under no obligation to take any action and shall not be liable
for any action taken or any failure to take action or any delay in taking
action against Guarantor, Borrower or any other person or entity or otherwise
with respect to the Indebtedness;
(n) waives any notice of (i) Lender's intention to act in reliance of this
Guaranty, (ii) any presentment, demand, protest or notice of dishonor,
nonpayment or other default with respect to the Indebtedness, and (iii) the
commencement or prosecution of any enforcement proceeding against Borrower or
guarantor or any other person or entity with respect to the Indebtedness or
otherwise;
(o) represents and acknowledges that the indebtedness evidenced by the
Note is and will be of direct benefit, interest and advantage to it; and
(p) irrevocably waives all claims of waiver, release, surrender,
alteration or compromise and all defenses, set-offs, counterclaims,
recoupments, reductions, limitations or impairments and any other available
defense at law or in equity.
6. Financial Reporting.
(a) Guarantor shall keep and maintain or shall cause to be kept and
maintained on a Fiscal Year basis, in accordance with GAAP, books,
records and accounts reflecting in reasonable detail all of the financial
affairs of the Guarantor and all items of income and expense in
connection with the operation of the Facility and in connection with any
services, equipment or furnishings provided in connection with the
operation of the Facility. Lender, at Lender's cost and expense, whether
such income or expense may be realized by Guarantor or by any other
Person whatsoever, shall have the right from time to time at all times
during normal business hours upon reasonable prior written notice to the
Guarantor to examine such books, records and accounts at the office of
the Guarantor or other Person maintaining such books, records and
accounts and to make such copies or extracts thereof as Lender shall
desire. After the occurrence of an Event of Default, the Guarantor shall
pay any reasonable costs and expenses incurred by Lender to examine the
Guarantor's books, records and accounts as Lender shall determine in
Lender's sole discretion to be necessary or appropriate in the protection
of Lender's interest.
(b) Guarantor shall furnish to Lender annually within ninety (90)
days following the end of each Fiscal Year, a true, complete and correct
copy of Guarantor's financial statements audited by KPMG Peat Marwick or
other Big Six accounting firm or other firm acceptable to Lender in
Lender's reasonable discretion which shall (a) be in form and substance
acceptable to Lender in Lender's reasonable discretion, (b) be prepared
in accordance with GAAP, (c) include, without limitation, a statement of
operations (profit and loss), a statement of cash flows, a consolidated
balance sheet, (d) be accompanied by an Officer's Certificate from a
senior executive of Guarantor
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certifying as of the date thereof (x) that such statement and the
material described in clause (z) below are true, correct, complete and
accurate and fairly reflects the results of operations and financial
condition of the Guarantor for the relevant period, (y) notice of whether
there exists an Event of Default or Default, and if such Event of Default
or Default exists, the nature thereof, the period of time it has existed
and the action then being taken to remedy same and (z) attaches such
other information or reports as shall be reasonably required by lender or
any applicable Rating Agency, to the extent not included with the
Guarantor's financial statement and (e) be accompanied by an opinion from
an Independent certified public accountant acceptable to Lender in
Lender's sole discretion.
(c) Guarantor shall furnish or caused to be furnished to Lender
annually within forty-five (45) days following the end of each Fiscal
Year, a true, complete and correct copy of Guarantor's unaudited
financial statement which shall (a) be in form and substance acceptable
to Lender in Lender's reasonable discretion, (b) on a basis of accounting
consistent with Guarantor's audited financial statements (which audited
financial statements shall be prepared in accordance with GAAP), (c)
include, without limitation, a statement of operations (profit and loss),
a consolidated balance sheet and such other information or reports as
shall be reasonably requested by Lender and (d) be accompanied by an
Officer's Certificate from a senior executive of Guarantor certifying as
of the date thereof (x) that such statement is true, correct, complete
and accurate and fairly reflects the results of operations and financial
condition of Guarantor for the relevant period, and (y) notice of whether
there exists an Event of Default or Default, and if such Event of Default
or Default exists, the nature thereof, the period of time it has existed
and the action then being taken to remedy same.
(d) Guarantor shall furnish to Lender within forty-five (45) days
following the end of each calendar quarter, a true, correct and complete
quarterly unaudited financial statement for Guarantor which shall (a) be
in form and substance acceptable to Lender in Lender's reasonable
discretion, (b) on a basis of accounting consistent with Guarantor's
audited financial statements (which audited financial statements shall be
prepared in accordance with GAAP), (c) include, without limitation, a
statement of operations (profit and loss), a consolidated balance sheet
and such other information or reports as shall be reasonably requested by
Lender and (d) be accompanied by an Officer's Certificate from a senior
executive of Guarantor certifying as of the date thereof (x) that such
statement is true, correct, complete and accurate and fairly reflects the
results of operations and financial condition of Guarantor for the
relevant period, and (y) notice of whether there exists an Event of
Default or Default, and if such Event of Default or Default exists, the
nature thereof, the period of time it has existed and the action then
being taken to remedy same.
(e) Intentionally deleted.
(f) Guarantor shall furnish to Lender, within ten (10) Business Days
after request, such further information with respect to the operation of
the Facilities and the financial affairs of Guarantor as may be requested
by Lender, including without limitation all business plans pertaining to
the Facilities prepared for Xxxxxxxxx.
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(x) Xxxxxxxxx shall furnish to Lender, within ten (10) Business Days
after request, such further information regarding any Plan or Multiemployer
Plan and any reports or other information required to be filed under ERISA
as may be requested by Lender.
(h) Guarantor shall, concurrently with Guarantor's delivery to Lender,
provide a copy of the items required to be delivered to Lender under this
Section to any servicer and/or special servicer that may be retained in
conjunction with the Loan.
(i) Guarantor shall furnish to Lender such other financial information
with respect to Guarantor or the Facility as Lender may reasonably request.
(j) Guarantor shall furnish or shall cause to be furnished to Lender,
within fifteen (15) days of the receipt by Guarantor any and all notices
(regardless of form) from any licensing and/or certifying agency that any
License of any Facility is being downgraded to a substandard category,
revoked, or suspended, or that action is pending or being considered to
downgrade to a substandard category, revoke, or suspend any License or
certification.
(k) Intentionally deleted.
(l) Guarantor shall furnish to Lender, within fifteen (15) Business
Days of Guarantor's receipt, a copy licensing agency survey or report
reflecting material adverse findings and any statement of material
deficiencies, and within the time period required by the particular agency
for furnishing a plan of correction also shall furnish or cause to be
furnished to Lender a copy of the plan of correction generated from such
survey or report for any Facility, and correct or cause to be corrected any
deficiency, the curing of which is a condition of continued licensure by
the date required for cure by such agency (plus extensions granted by such
agency).
7. Governing Law. (a) This Guaranty was negotiated in New York, and made
by the Guarantor and accepted by Lender in the State of New York, which State
the parties agree has a substantial relationship to the parties and to the
underlying transaction embodied hereby, and in all respects, including, without
limitation, matters of construction, validity and performance, this Guaranty
and the obligations arising hereunder shall be governed by, and construed in
accordance with, the laws of the State of New York applicable to contracts made
and performed in such State and any applicable law of the United States of
America. To the fullest extent permitted by law, Guarantor hereby
unconditionally and irrevocably waives any claim to assert that the law of any
other jurisdiction governs this Guaranty, and this Guaranty shall be governed
by and construed in accordance with the laws of the State of New York pursuant
to Sec. 5-1401 of the New York General Obligations Law.
(b) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST GUARANTOR ARISING OUT OF
OR RELATING TO THIS GUARANTY SHALL BE INSTITUTED IN ANY FEDERAL OR STATE COURT
IN NEW YORK, NEW YORK, PURSUANT TO SEC. 5-1402 OF THE NEW YORK GENERAL
OBLIGATIONS LAW AND THE
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GUARANTOR WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING
OF VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND THE GUARANTOR HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION
OR PROCEEDING. THE GUARANTORS DOES HEREBY DESIGNATE AND APPOINT C/O CT
CORPORATION SYSTEM, CURRENTLY LOCATED AT 0000 XXXXXXXX, XXX XXXX, XXX XXXX
00000, AS ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE
OF ANY AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR
PROCEEDING IN ANY FEDERAL OR STATE COURT AND AGREES THAT SERVICE OF PROCESS
UPON SAID AGENT AT SAID ADDRESS (OR AT SUCH OTHER OFFICE AS MAY BE DESIGNATED
BY GUARANTOR FROM TIME TO TIME IN ACCORDANCE WITH THE TERMS HEREOF) WITH A COPY
TO GUARANTOR AT ITS PRINCIPAL EXECUTIVE OFFICES, ATTENTION: GENERAL COUNSEL
AND WRITTEN NOTICE OF SAID SERVICE OF THE GUARANTOR MAILED OR DELIVERED TO THE
GUARANTOR IN THE MANNER PROVIDED HEREIN SHALL BE DEEMED IN EVERY RESPECT
EFFECTIVE SERVICE OF PROCESS UPON THE GUARANTOR, IN ANY SUCH SUIT, ACTION OR
PROCEEDING. THE GUARANTOR (I) SHALL GIVE PROMPT NOTICE TO LENDER OF ANY
CHANGED ADDRESS OF ITS AUTHORIZED AGENT HEREUNDER, (II) MAY AT ANY TIME AND
FROM TIME TO TIME DESIGNATE A SUBSTITUTE AUTHORIZED AGENT (WHICH OFFICE SHALL
BE DESIGNATED AS THE ADDRESS FOR SERVICE OF PROCESS), AND (III) SHALL PROMPTLY
DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED AGENT CEASES TO HAVE AN OFFICE OR
IS DISSOLVED WITHOUT LEAVING A SUCCESSOR.
8. Modification, Waiver in Writing. No modification, amendment,
extension, discharge, termination or waiver of any provision of this Guaranty,
or consent to any departure by the Guarantor therefrom, shall in any event be
effective unless the same shall be in a writing signed by the Guarantor and
Lender, and then such waiver or consent shall be effective only in the specific
instance, and for the purpose, for which given. Except as otherwise expressly
provided herein, no notice to or demand on the Guarantor shall entitle the
Guarantor to any other or future notice or demand in the same, similar or other
circumstances.
9. Delay Not a Waiver. Neither any failure nor any delay on the part of
Lender in insisting upon strict performance of any term, condition, covenant or
agreement, or exercising any right, power, remedy or privilege hereunder, or
any other instrument given as security therefor, shall operate as or constitute
a waiver thereof, nor shall a single or partial exercise thereof preclude any
other future exercise, or the exercise of any other right, power, remedy or
privilege.
10. Notices. All notices, requests, demands, directions and other
communications which may or are required to be given, served or sent by
Guarantor or the Lender to the other shall be given, served or sent as provided
in the Loan Agreement and shall be effective in accordance with the terms of
the Loan Agreement provided that notices to the Guarantor shall be sent to the
address set forth for the Guarantor in the first paragraph of this Guaranty.
11. TRIAL BY JURY. GUARANTOR AND LENDER, TO THE FULLEST
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EXTENT THAT THEY MAY LAWFULLY DO SO, HEREBY WAIVE TRIAL BY JURY IN ANY ACTION
OR PROCEEDING, INCLUDING, WITHOUT LIMITATION, ANY TORT ACTION, BROUGHT BY ANY
PARTY HERETO WITH RESPECT TO THIS GUARANTY.
12. Headings. The Section headings in this Guaranty are included herein
for convenience of reference only and shall not constitute a part of this
Guaranty for any other purpose.
13. Assignment. Lender shall have the right to assign in whole or in part
this Guaranty and the obligations hereunder to any Person.
14. Severability. Wherever possible, each provision of this Guaranty
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Guaranty shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Guaranty.
15. Waiver of Counterclaim. The Guarantor hereby waives the right to
assert a counterclaim, other than compulsory counterclaim, in any action or
proceeding brought against it by Lender or its agents.
[Signature on the following page]
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IN WITNESS WHEREOF, Guarantor has executed and delivered this Guaranty the
date first written above.
GUARANTOR
ALTERNATIVE LIVING SERVICES, INC., a
Delaware corporation
By: _________________________
Xxxxx Xxxxxxx
Vice President
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