July 1, 1998
Xxxxxx Financial, Inc.
000 Xxxx Xxxxxx Xxxxxx
00xx Xxxxx
Xxxxxxx, XX 00000
Re: $12,000,000 Loan ("Loan") from Xxxxxx Financial, Inc. ("Lender")
to The Xxxxxxxxx Business Trust, S.T., a Delaware business trust
("Borrower")
Ladies and Gentlemen:
Reference is hereby made to the above-referenced Loan
evidenced by that certain Fixed Rate Program Promissory Note Secured by Mortgage
of even date herewith made by Borrower to the order of Lender ("Note") and
secured by, among other things, that certain Open-End Mortgage Deed, Assignment
of Rents and Security Agreement and Fixture Filing of even date herewith
("Mortgage"). All capitalized terms used herein and not otherwise defined shall
have the same meanings ascribed to them in the Note and/or the Mortgage.
Brookdale Living Communities of Connecticut-WH, Inc.
("Operator") is concurrently herewith entering into a lease of the Property from
Borrower, pursuant to which Operator will operate, manage and maintain the
Property. Operator is a wholly-owned subsidiary of the undersigned and has
guaranteed repayment of the Loan pursuant to a certain Guaranty of even date
herewith (the "Guaranty"). Xxxx Xxxxxxxx is secured by a mortgage against the
interest of Operator in the Property under the aforesaid lease (the "Leasehold
Mortgage"). It is in the direct financial interest and to the benefit of Parent
to execute and deliver this letter agreement ("Agreement") to Lender so as to
induce Lender to make the Loan. Accordingly, the undersigned, Brookdale Living
Communities, Inc. ("Parent"), xxxxxx agrees that Parent shall, together with
Xxxxxxxx and Operator, be jointly and severally personally liable to pay the
following (collectively the "Retained Liabilities"):
all losses, damages, costs and expenses including reasonable
attorneys' fees and expenses incurred by Xxxxxx as a result of:
(i) the collection and receipt of proceeds and
income from the Property and the other
assets and obligations securing the Loan by
or for the benefit of Borrower, Operator or
Parent following an Event of Default which
are not paid to Lender or applied to the
Property in the ordinary course of business;
(ii) fraud;
(iii) material misrepresentation;
(iv) misapplication or misappropriation of funds
which come into the possession of Borrower,
Operator or Parent;
(v) intentional and material waste to the Property;
(vi) the breach of the obligations set forth in
the Hazardous Substance Indemnification
Agreement from Operator and Parent to Lender
of even date herewith, as hereafter amended,
if at all;
(vii) the breach of the provisions contained in
Paragraph 15 (transfers of the property or
beneficial interest in Borrower; assumption)
of the Mortgage or Paragraph 15 of the
Leasehold Mortgage;
(viii) the breach of the provisions contained in
Paragraph 16 (no additional liens) of the
Mortgage or the provisions of Paragraph 16
of the Leasehold Mortgage; or
(ix) the breach of the provisions contained in
Paragraph 17 (single asset entity) of the
Mortgage or the provisions of Paragraph 17
of the Leasehold Mortgage; and
(b) any claim for any commissions on brokerage fees relating to the Loan.
The foregoing shall in no way limit or impair the enforcement
against the Property or any other security granted by the Loan Documents or the
Guaranty Documents as defined in the Leasehold Mortgage of any of the Lender's
rights and remedies pursuant to the Loan Documents or the Guaranty Documents as
defined in the Leasehold Mortgage.
Parent agrees that the liability of Parent shall be direct and
immediate as a primary and not a secondary obligation or liability, and is not
conditional or contingent upon the pursuit of any remedies against Borrower,
Operator or any other person, or against any collateral or liens held by Xxxxxx.
Parent waives any rights which it may have to require that (a) Lender first
proceed against Borrower, Operator or any other person or entity with respect to
the Retained Liabilities or (b) Lender first proceed against any collateral held
by Lender or (c) any party to be joined in any proceeding to enforce the
Retained Liabilities.
Parent hereby subordinates to Lender and agrees not to take
any action, until the Guaranty is cancelled by Xxxxxx, with respect to any
rights to enforce any remedy which Lender may have against Borrower or Operator,
any rights to participate in any security for the Loan and any rights of
indemnity, reimbursement, contribution or subrogation which Parent may have
against Borrower or Operator with respect to the Retained Liabilities.
Parent consents and agrees that Lender may at any time, and
from time to time, without notice to or further consent from any other person or
entity and either with or without consideration do any one or more of the
following, all without affecting the agreements contained herein or the
liability of any person or entity for the Retained Liabilities: (a) surrender
without substitution any property or other collateral of any kind or nature
whatsoever held by Xxxxxx, or by any person, firm or corporation on Xxxxxx's
behalf or for Lender's account, securing the Loan or the Guaranteed Obligations
or the Retained Liabilities; (b) modify the terms of any document evidencing,
securing or setting forth the terms of the Loan; (c) grant releases, compromises
and indulgences with respect to the Loan or the Retained Liabilities to
Borrower, Operator or Parent; or (d) take or fail to take any action of any type
whatsoever with respect to the Loan or the Retained Liabilities.
Parent hereby waives and agrees not to assert or take
advantage of any defense based upon:
The incapacity, lack of authority or disability of Borrower, Operator
or any other person or entity;
(b) The failure of Lender to commence an action against Borrower or
Operator to proceed against or exhaust any security held by Xxxxxx at
any time or to pursue any other remedy whatsoever at any time;
(c) Any duty on the part of Lender to disclose to Parent any facts Lender
may now or hereafter know regarding Borrower or Operator regardless of
whether Xxxxxx has reason to believe that any such facts materially
increase the risk beyond that which Parent intends to assume or has
reason to believe that such facts are unknown to Parent, Parent
acknowledging that it is fully responsible for being and keeping
informed of the financial condition and affairs of Borrower and
Operator;
(d) Except as specifically required by the Mortgage, the Guaranty or the
Leasehold Mortgage, lack of notice of default, demand of performance or
notice of acceleration to Borrower, Operator or any other party with
respect to the Loan or the Retained Liabilities;
(e) The consideration for this Agreement;
(f) Any acts or omissions of Lender which vary, increase or decrease the risk on
Parent;
(g) Any statute of limitations affecting the liability of Parent hereunder,
the liability of Borrower, Operator or any guarantor, if any, under the
Loan Documents, or the enforcement hereof, to the extent permitted by
law;
(h) The application by Borrower or Operator of the proceeds of the Loan for
purposes other than the purposes represented by Borrower or Operator to
Lender or intended or understood by Xxxxxx or Parent;
(i) An election of remedies by Xxxxxx, including any election to proceed
against any collateral by judicial or nonjudicial foreclosure, whether
real property or personal property, or by deed in lieu thereof, and
whether or not every aspect of any foreclosure sale is commercially
reasonable, and whether or not any such election of remedies destroys
or otherwise impairs the subrogation rights of Parent or the rights of
Parent to proceed against Borrower, Operator or any guarantor for
reimbursement, or both;
(j) Any statute or rule of law which provides that the obligation of a
surety must be neither larger in amount nor in any other aspects more
burdensome than that of a principal;
(k) Xxxxxx's election, in any proceeding instituted under the Federal
Bankruptcy Code, of the application of Section 1111(b) (2) of the
Federal Bankruptcy Code or any successor statute; and
(l) Any borrowing or any grant of a security interest under Section 364 of
the Federal Bankruptcy Code.
Parent covenants and agrees to provide to Lender a copy of its
financial statements prepared in accordance with generally accepted accounting
principles, certified by Parent to be a true and complete copy of such financial
statements and in form reasonably satisfactory to Lender, within sixty (60) days
of the end of each calendar year.
EACH OF PARENT AND LENDER BY ITS ACCEPTANCE OF THIS AGREEMENT,
HEREBY WAIVES ITS RESPECTIVE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING BASED UPON, OR RELATED TO, THE SUBJECT MATTER OF THIS AGREEMENT AND
THE BUSINESS RELATIONSHIP THAT IS BEING ESTABLISHED. THIS WAIVER IS KNOWINGLY,
INTENTIONALLY AND VOLUNTARILY MADE BY PARENT AND BY XXXXXX, AND PARENT
ACKNOWLEDGES THAT NEITHER XXXXXX NOR ANY PERSON ACTING ON BEHALF OF XXXXXX HAS
MADE ANY REPRESENTATIONS OF FACT TO INDUCE THIS WAIVER OF TRIAL BY JURY OR HAS
TAKEN ANY ACTIONS WHICH IN ANY WAY MODIFY OR NULLIFY ITS EFFECT. EACH OF PARENT
AND LENDER ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A
BUSINESS RELATIONSHIP, THAT EACH OF PARENT AND LENDER HAVE ALREADY RELIED ON
THIS WAIVER IN ENTERING INTO THIS AGREEMENT AND THAT EACH OF THEM WILL CONTINUE
TO RELY ON THIS WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH OF PARENT AND
LENDER FURTHER ACKNOWLEDGE THAT THEY HAVE BEEN REPRESENTED (OR HAVE HAD THE
OPPORTUNITY TO BE REPRESENTED) IN THE SIGNING OF THIS AGREEMENT AND IN THE
MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL.
Parent further agrees that the provisions of this Agreement
shall bind each of Parent's successors and assigns, as the case may be.
Notwithstanding the provisions hereof to the contrary, by its
acceptance hereof, Xxxxxx, acknowledges and agrees that no shareholder, officer,
director, employee, agent or representative of Parent shall be personally liable
to Lender for any amount due under this Agreement except for (i) distributions
of rent or other proceeds of the Property, including insurance or condemnation
proceeds actually received (and only to the extent received) by such person,
after an Event of Default (as defined in the Leasehold Mortgage) occurs or
otherwise in violation of the Loan Documents or the Guaranty Documents (as
defined in the Mortgage) and (ii) Lender's costs of collection of such amount,
including reasonable attorneys' fees and costs.
[Signature on following page]
Parent acknowledges that such Xxxxxx's execution and delivery
of this Agreement to Lender is a material inducement to Xxxxxx's making of the
Loan to Borrower.
BROOKDALE LIVING COMMUNITIES, INC.,
a Delaware corporation
By____________________________________
Name:_________________________________
Title_________________________________
Accepted this 1st day of
July, 1998
Xxxxxx Financial, Inc.
By:_________________________
Name:_______________________
Title:________________________
