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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 31, 1998
BROOKDALE LIVING COMMUNITIES, INC.
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(Exact name of registrant as specified in its charter)
Delaware 0-22253 36-4103821
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(State or other jurisdiction of Commission File Number (I.R.S. Employer
incorporation or organization) Identification Number)
77 West Wacker Drive, Suite 4800, Chicago, Illinois 60601
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (312) 977-3700.
NOT APPLICABLE
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS
On March 31, 1998, Brookdale Living Communities of Michigan, Inc. ("BLC-
Michigan"), a wholly-owned subsidiary of Brookdale Living Communities, Inc.,
sold to AH Michigan Owner Limited Partnership, an unaffiliated third party
("Michigan Purchaser"), certain land located in Southfield, Michigan (the
"Michigan Land") on which BLC-Michigan is constructing a senior independent and
assisted living facility (the "Michigan Facility"). The purchase price was
$4,044,082, of which $1,000,000 was paid in cash and $3,044,082 was paid by the
delivery of a promissory note (the "Michigan Note") issued by Michigan Purchaser
payable to the order of BLC-Michigan. Interest accrues on the Michigan Note at
the rate of 9.0% per annum, and all amounts due under the Michigan Note are
payable on June 30, 1998, subject to acceleration under certain circumstances.
In connection with the sale of the Michigan Land, BLC-Michigan and Michigan
Purchaser entered into a Development Agreement pursuant to which BLC-Michigan
agrees to continue the development of the Michigan Facility, and Michigan
Purchaser agrees to pay all costs incurred in connection with such development,
including BLC-Michigan's overhead and administrative costs. Michigan Purchaser
also agrees to pay BLC-Michigan a development fee in an amount equal to the
aggregate amount of overhead and administrative costs and capitalized interest
expense incurred by BLC-Michigan in connection with the development of the
Michigan Facility. BLC-Michigan has agreed to fund all costs incurred in
connection with the development of the Michigan Facility, and Michigan Purchaser
has agreed to reimburse BLC-Michigan for such costs, including BLC-Michigan's
overhead and administrative costs, upon the termination of the Development
Agreement, which expires by its terms on June 30, 1998. It is expected that,
prior to the expiration of the Development Agreement, Michigan Purchaser will
close on financing for the construction of the Michigan Facility, at which time
the Development Agreement will be restated. BLC-Michigan has the right (the
"Michigan Repurchase Right") to repurchase the Michigan Land and the Michigan
Facility from Michigan Purchaser under certain circumstances, including the
failure of Michigan Purchaser to close on financing for the construction of the
Michigan Facility by June 30, 1998. The repayment of the Michigan Note and the
performance of Michigan Purchaser's obligations under the Development Agreement
and Michigan Purchaser's obligations in connection with the Michigan Repurchase
Right are guaranteed by the owners of Michigan Purchaser, which guaranty is
secured by a collateral assignment of the owners' interests in Michigan
Purchaser in favor of BLC-Michigan.
On March 31, 1998, BLC of Texas-II, L.P. ("BLC- Texas"), a wholly-owned
subsidiary of Brookdale Living Communities, Inc., sold to AH Texas Owner Limited
Partnership, an unaffiliated third party ("Texas Purchaser"), certain land
located in Austin, Texas (the "Texas Land") on which BLC-Texas is constructing a
senior independent and assisted living facility (the "Texas Facility"). The
purchase price was $5,316,341, of which $1,300,000 was paid in cash and
$4,016,341 was paid by the delivery of a promissory note (the "Texas Note")
issued by Texas Purchaser payable to the order of BLC-Texas. Interest accrues on
the Texas Note at the rate of 9.0% per annum, and all amounts due under the
Texas Note are payable on June 30, 1998, subject to acceleration under certain
circumstances. In connection with the sale of the Texas Land, BLC-Texas and
Texas Purchaser entered into a Development Agreement pursuant to which BLC-Texas
agrees to continue the development of the Texas Facility, and Texas Purchaser
agrees to pay all costs incurred in connection with such development, including
BLC-Texas's overhead and administrative costs. Texas Purchaser also agrees to
pay BLC-Texas a development fee in an amount equal to the aggregate amount of
overhead and administrative costs and capitalized interest expense incurred by
BLC-Texas in connection with the development of the Texas Facility. BLC-Texas
has agreed to fund all costs
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incurred in connection with the development of the Texas Facility, and Texas
Purchaser has agreed to reimburse BLC-Texas for such costs, including BLC-
Texas's overhead and administrative costs, upon the termination of the
Development Agreement, which expires by its terms on June 30, 1998. It is
expected that, prior to the expiration of the Development Agreement, Texas
Purchaser will close on financing for the construction of the Texas Facility, at
which time the Development Agreement will be restated. BLC-Texas has the right
(the "Texas Repurchase Right") to repurchase the Texas Land and the Texas
Facility from Texas Purchaser under certain circumstances, including the failure
of Texas Purchaser to close on financing for the construction of the Texas
Facility by June 30, 1998. The repayment of the Texas Note and the performance
of Texas Purchaser's obligations under the Development Agreement and Texas
Purchaser's obligations in connection with the Texas Repurchase Right are
guaranteed by the owners of Texas Purchaser, which guaranty is secured by a
collateral assignment of the owners' interests in Texas Purchaser in favor of
BLC-Texas.
This current report on Form 8-K contains "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995. When
used in this report, the words "believes," "expects," "anticipates," "estimates"
and similar words and expressions are generally intended to identify forward-
looking statements. Statements that describe the Company's future strategic
plans, goals, objectives or expectations are also forward-looking statements.
Readers of this report are cautioned that any forward-looking statements,
including those regarding the intent, belief, or current expectations of the
Company or management, are not guarantees of future performance, results or
events and involve risks and uncertainties, and that actual results and events
may differ materially from those in the forward-looking statements as a result
of various factors, including, but not limited to (i) general economic
conditions in the markets in which the Company operates, (ii) competitive
pressures within the industry and/or the markets in which the Company operates,
(iii) the effect of future legislation or regulatory changes on the Company's
operations and (iv) other factors described from time to time in the Company's
filings with the Securities and Exchange Commission. The forward-looking
statements included in this report are made only as of the date hereof. The
Company undertakes no obligation to update such forward-looking statements to
reflect subsequent events or circumstances.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION
AND EXHIBITS
(c) Exhibits
Exhibit
Number Description
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10.1 Purchase and Sale Agreement, dated as of March 31, 1998, by and
between Brookdale Living Communities of Michigan, Inc. and AH
Michigan Owner Limited Partnership
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Exhibit
Number Description
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10.2 Note, dated March 31, 1998, issued by AH Michigan Owner Limited
Partnership payable to the order of Brookdale Living Communities
of Michigan, Inc. in the principal amount of $3,044,082.12
10.3 Development Agreement, dated as of March 31, 1998, by and between
AH Michigan Owner Limited Partnership and Brookdale Living
Communities of Michigan, Inc.
10.4 Guaranty Agreement, dated as of March 31, 1998, issued by AH
Michigan CPG, Inc. and AH Michigan Subordinated, LLC in favor of
Brookdale Living Communities, Inc.
10.5 Collateral Assignment of Partnership Interests, dated as of March
31, 1998, issued by AH Michigan CPG, Inc. and AH Subordinated,
LLC for the benefit of Brookdale Living Communities of Michigan,
Inc.
10.6 Purchase and Sale Agreement, dated as of March 31, 1998, by and
between BLC of Texas-II, L.P. and AH Texas Owner Limited
Partnership
10.7 Note, dated March 31, 1998, issued by AH Texas Owner Limited
Partnership payable to the order of BLC of Texas-II, L.P. in the
principal amount of $4,016,340.53.
10.8 Development Agreement, dated as of March 31, 1998, by and between
AH Texas Owner Limited Partnership and BLC of Texas-II, L.P.
10.9 Guaranty Agreement, dated as of March 31, 1998, issued by AH
Texas CPG, Inc. and AH Texas Subordinated, LLC in favor of BLC of
Texas-II, L.P.
10.10 Collateral Assignment of Partnership Interests, dated as of March
31, 1998, issued by AH Texas CPG, Inc. and AH Texas Subordinated,
LLC for the benefit of BLC of Texas-II, L.P.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BROOKDALE LIVING COMMUNITIES, INC.
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Registrant
Dated: April 15, 1998 By: /s/ Craig G. Walczyk
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Craig G. Walczyk
Vice President - Chief Financial Officer
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EXHIBIT 10.1
PURCHASE AND SALE AGREEMENT
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THIS PURCHASE AND SALE AGREEMENT (this "Agreement") is entered into
effective as of March 31, 1998, by and between BROOKDALE LIVING COMMUNITIES OF
MICHIGAN, INC., a Delaware corporation ("Seller"), and AH MICHIGAN OWNER LIMITED
PARTNERSHIP, an Ohio limited partnership ("Purchaser"). Any and all capitalized
terms used herein and not otherwise defined shall have the meanings assigned to
such terms in the Development Agreement (as such term is defined below).
W I T N E S S E T H:
WHEREAS, Seller owns that certain land located north of Eleven Mile Road,
Southfield, Michigan consisting of approximately 6.18 acres and legally
described on Exhibit A attached hereto, together with all improvements thereon
(such land and improvements shall hereinafter together be referred to as the
"Land");
WHEREAS, Seller desires to sell all of its interests in and to the Property
(as hereinafter defined) to Purchaser;
WHEREAS, Purchaser desires to purchase the Property from Seller in
accordance with the terms and provisions described in this Agreement;
WHEREAS, there is currently being constructed on the Land a senior
independent and assisted living facility (the "Facility") to consist of
approximately 220 units, which Facility is being constructed pursuant to that
certain Construction Contract Cost Plus With Guaranteed Maximum Cost (the
"Construction Contract"), dated as of December 22, 1997, between Seller and
Walsh Construction Company (the "Contractor") and pursuant to the plans and
specifications for the Facility prepared by Lucien Lagrange and Associates, Ltd.
and incorporated by reference in the Construction Contract;
WHEREAS, concurrent with the execution and delivery hereof, Seller and
Purchaser are executing and delivering that certain Development Agreement (the
"Development Agreement") pursuant to which Seller agrees to continue the
construction and development of the Facility (which have heretofore been
conducted by Brookdale Living Communities, Inc. ("BLCI"))upon the terms set
forth in the Development Agreement; and
WHEREAS, the parties now desire to enter into this Agreement to provide for
the sale by Seller of its interests in the Property to Purchaser, all on the
terms and subject to the conditions set forth herein.
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NOW, THEREFORE, in consideration of the mutual agreements contained herein
and for good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Purchaser and Seller do hereby agree as follows:
1. The Property. For purposes of this Agreement, the term "Property"
shall mean any and all interests of Seller in the following items subject to the
Permitted Exceptions (as hereinafter defined): (i) the Land, (ii) all personal
property and other tangible property now or hereafter located on the Land or
used in connection with the construction, development, operation or maintenance
of the Land, including, but not limited to, fixtures and equipment, other than
personal property and other tangible property necessary or appropriate for
Seller to retain in order to perform its obligations under the Development
Agreement, and (iii) all intangible property now or hereafter used in connection
with the operation or maintenance of the Land, including, but not limited to,
contracts, agreements, guaranties, plans and specifications, licenses, books and
records and all other items and instruments pertaining to the Land except as
described in the Development Agreement and other than intangible property
necessary or appropriate for Seller to retain in order to perform its
obligations under the Development Agreement. "Permitted Exceptions" shall mean
(i) those exceptions listed on Exhibit B attached hereto, (ii) Seller's rights
to reacquire the Property pursuant to Section 8 of this Agreement and (iii) any
rights or interests of any contractors or subcontractors for work done on the
Land that has not been fully paid for as of the Closing. Purchaser acknowledges
that Seller has commenced construction of certain improvements on the Land which
have not been fully paid for as of the date of this Agreement.
2. Purchase and Sale of Property. On the terms and subject to the
conditions set forth in this Agreement, Seller hereby agrees to convey, transfer
and assign to Purchaser, on the Closing Date (as defined in Section 3 below),
Seller's entire right, title and interests in and to the Property for an
aggregate amount equal to Four Million Forty-Four Thousand Eighty-Two and 12/100
Dollars ($4,044,082.12)(the "Purchase Price"). The Purchase Price shall be paid
to Seller as follows: (a) on the Closing Date Purchaser shall pay Seller the
sum (the "Cash Portion") of One Million and no/100 Dollars ($1,000,000.00),
which Cash Portion shall be paid by wire transfer of immediately available funds
to an account designated by Seller, and (b) on the Closing Date, Purchaser shall
deliver to Seller a promissory note (the "Note") substantially in the form of
Exhibit C attached hereto, payable to the order of Seller in the original
principal amount of Three Million Forty-Four Thousand Eighty-Two and 12/100
Dollars ($3,044,082.12) The repayment of the Note and the obligations of
Purchaser under this Agreement and the Development Agreement shall be guarantied
(a) by AH Michigan Subordinated, LLC ("AH Subordinated"), an Ohio limited
liability company and the owner of a ninety-nine percent (99%)
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limited partnership interest in Purchaser and the owner of all of the issued and
outstanding stock of AH Michigan CGP, Inc. ("AH CGP"), an Ohio corporation and
the owner of a one percent (1%) general partnership interest in Purchaser, and
(b) by AH CGP, in each case pursuant to a non-recourse Guaranty (the
"Guaranty"), with all of the obligations of AH Subordinated and AH CGP under the
Guaranty being secured by a pledge of all of the interests in Purchaser held by
AH Subordinated and AH CGP. Except as expressly contained herein, Seller shall
be solely responsible for all closing costs in connection with the transaction
contemplated by this Agreement (the "Closing Costs"). In addition to the
Purchase Price, Purchaser shall assume and agrees to pay, in accordance with the
terms of the Development Agreement, all costs, expenses and obligations incurred
by Seller through and including the Closing Date in connection with the
development and construction of the Facility which have not been paid as of the
Closing Date, which costs, expenses and obligations include, but are not
necessarily limited to, retainage held back from the Contractor pursuant to the
Construction Contract ($99,609.40 as of February 28, 1998) and accrued
developer's fees payable by Seller to BLCI ($483,145.24 as of February 28,
1998), and agrees to reimburse Seller for the Closing Costs in accordance with
the terms of the Development Agreement.
3. Closing. The closing ("Closing") of the purchase and sale of the
Property shall occur on a date designated by Seller, but in no event later than
March 31, 1998, unless otherwise agreed by the parties hereto. The Closing
shall take place at the offices of Miller, Canfield, Paddock and Stone. The
time and date of such Closing are herein called the "Closing Date".
4. Representations and Warranties of Seller. Seller represents, warrants
and covenants to Purchaser that, as of the date hereof and the Closing Date:
(a) Seller is the owner of the Property subject to the Permitted Exceptions and
has full power and authority to sell, convey, assign and transfer to Purchaser
the Property, free and clear of all liens and encumbrances except the Permitted
Exceptions; (b) Seller has full capacity, right, power and authority to execute,
deliver and perform this Agreement and all documents pursuant hereto, and all
required actions and approvals therefor have been duly taken and obtained; (c)
this Agreement and all documents to be executed pursuant hereto by Seller are
and shall be binding upon and enforceable against Seller in accordance with
their respective terms; and (d) there are no litigation or other proceedings
pending against Seller which could have a material adverse effect on Seller's
ability to consummate the transaction contemplated hereby. The representations
and warranties of Seller set forth above shall be deemed remade on the Closing
Date, and shall survive the Closing and the recording of the deed.
5. Representations and Warranties of Purchaser. Purchaser represents,
warrants and covenants to Seller that, as of the date
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hereof and the Closing Date: (a) Purchaser has full partnership power and
authority to execute, deliver and perform this Agreement and all documents
pursuant hereto, and all required partnership actions and approvals therefor
have been duly taken and obtained; (b) this Agreement and all documents to be
executed pursuant hereto by Purchaser are and shall be binding upon and
enforceable against Purchaser in accordance with their respective terms; and (c)
there are no litigation or other proceedings pending against Purchaser which
could have a material adverse effect on Purchaser's ability to consummate the
transaction contemplated hereby. The representations and warranties of Purchaser
set forth above shall be deemed remade on the Closing Date, and shall survive
the Closing and the recording of the deed.
6. Seller's Deliveries at Closing. In addition to this Agreement and the
Development Agreement, Seller shall deliver to Purchaser at the Closing the
following items:
(a) Bill of Sale. A bill of sale conveying, transferring and otherwise
assigning to the Purchaser any and all of the Property, other than the real
estate.
(b) Covenant Deed. Covenant Deed for the Land subject to the Permitted
Exceptions.
(c) Other Documents. Such other documents which are necessary to
complete and perfect the conveyance of Property to the Purchaser as
contemplated by this Agreement, including, without limitation, any transfer
declarations, owner's affidavits and undertakings required by the title
company and similar items required by local law or the title company.
7. Purchaser's Deliveries at Closing. In addition to this Agreement, the
Development Agreement and the Note, Purchaser shall cause AH Subordinate and AH
CGP to deliver to Seller the Guaranty and the pledge agreement or pledge
agreements contemplated by Section 2 hereof, and shall deliver, or cause to be
delivered to Seller at the Closing such other documents which are necessary to
complete and perfect the conveyance of Property to Purchaser as contemplated by
this Agreement, including, without limitation, any transfer declarations,
owner's affidavits and undertakings required by the title company and similar
items required by local law or the title company.
8. Repurchase Right. If (a) by June 30, 1998 Purchaser fails to obtain
and cause to be funded financing from Nomura Asset Capital Corporation and Banc
One Capital Corporation, or one of their respective affiliates, generally
consistent with the provisions of the term sheets or commitments previously
issued with respect to the Property and otherwise acceptable to Seller (the
"Financing"), or (b) prior to the closing of the Financing, Purchaser elects to
transfer (directly or indirectly) its
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<PAGE>
ownership interest in the Property, or Purchaser, AH CGP or AH Subordinate
violates any provision of its organizational documents, then, in either (or
both) of such events, Seller shall have the right to repurchase the Property
from Purchaser for an amount (as increased pursuant to the immediately following
sentence, the "Repurchase Price") equal to the Purchase Price less the Cash
Portion. The Repurchase Price shall increase by nine percent (9%) per annum from
the Closing Date until the closing of the reconveyance of the Property pursuant
to this Section 8. The Repurchase Price may be payable, in part, by the
cancellation of the Note. If Seller elects to repurchase the Property, Purchaser
shall deliver title and conveyance documents to Seller which are equivalent to
those delivered to Purchaser at the Closing (except for any title matters,
including mechanics' liens, created by or relating to Seller, and except that
Purchaser shall clear any title matters created by or relating to Purchaser). In
addition, at the closing of the reconveyance of the Property pursuant to this
Section 8, Seller shall assume all of Purchaser's obligations under the
Development Agreement. Purchaser's obligations and Seller's rights under this
Paragraph Section 8 shall be set forth in the documents recorded at the Closing.
If Seller elects to exercise the repurchase right provided for herein, Seller
must give notice of such election not later than July 31, 1998. The closing of
the reconveyance of the Property to Seller, and the payment to Purchaser of the
Repurchase Price therefor, shall occur not later than the later of (i) thirty
(30) days after Seller gives Purchaser notice of Seller's election to repurchase
the Property, or (ii) five (5) days after Purchaser has completed clearance of
any title matters required to be cleared by Purchaser (except for clearance of
matters to be paid and released at the repurchase closing, using any cash paid
in payment of the Repurchase Price). The provisions of this Section 8 shall
survive the Closing.
9. Miscellaneous.
(a) No Brokerage. Each party hereto represents and warrants to the other
parties hereto that it has not incurred any obligation or liability, contingent
or otherwise, for brokerage or finder's fees or agent's commissions or other
like payment solely in connection with this Agreement or the sale of the
Property contemplated hereby and each party agrees to indemnify and hold the
other parties hereto harmless against and in respect of any such obligation or
liability based in any way on agreements, arrangements or understandings claimed
to have been made by such party with any third party.
(b) Survival of Representations, Warranties and Agreements. The
representations, warranties and agreements of the parties contained in this
Agreement shall survive the Closing Date.
(c) Notices. All notices, requests, demands and other communications
which are required or may be given under this
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<PAGE>
Agreement shall be in writing and shall be deemed to have been duly given if
delivered personally or sent by telex, or sent by United States mail, certified
or registered, postage prepaid, with return receipt requested, or otherwise
actually delivered, addressed to the parties hereto at the addresses set forth
in the Development Agreement.
(d) Entire Agreement. This Agreement (including the exhibits and
schedules hereto) constitutes the entire agreement among the parties hereto and
supersedes all prior agreements and understandings, oral and written, among the
parties hereto with respect to the subject matter hereof.
(e) Binding Effect; Benefit. This Agreement shall inure to the benefit of
and be binding upon the parties hereto and each other person who is indemnified
under any provision of this Agreement and their respective successors and
assigns. Nothing in this Agreement, expressed or implied, is intended to confer
on any person other than the parties hereto and/or each other person who is
indemnified under any provision of this Agreement or their respective successors
and assigns, any rights, remedies, obligations or liabilities under or by reason
of this Agreement.
(f) Amendment; Waiver. No provision of this Agreement may be amended,
waived or otherwise modified without the prior written consent of the parties
hereto.
(g) Section Headings. The section headings contained in this Agreement
are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
(h) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
(i) Applicable Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the state where the Land is located.
10. Limitation of Personal Liability. Notwithstanding any other provision
of this Agreement to the contrary, in no event shall any officer, director,
member, partner, manager, shareholder, incorporator or agent of Purchaser or of
Purchaser's affiliates be personally liable to Seller for any of Purchaser's
obligations under this Agreement, except as expressly provided in the Guaranty
and the Collateral Assignment (as defined in the Guaranty).
[Signature page follows]
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<PAGE>
IN WITNESS WHEREOF, the undersigned have executed and delivered this
Agreement as of the date first above written.
SELLER:
BROOKDALE LIVING COMMUNITIES OF MICHIGAN,
INC.
By:_________________________________________
Name:_______________________________________
Its:________________________________________
PURCHASER
AH MICHIGAN OWNER LIMITED PARTNERSHIP
By: AH Michigan CGP, Inc.
Managing General Partner
By:_________________________________________
Name:_______________________________________
Its:________________________________________
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<PAGE>
EXHIBIT A
---------
LEGAL DESCRIPTION
-----------------
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<PAGE>
EXHIBIT B
---------
PERMITTED EXCEPTIONS
--------------------
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<PAGE>
EXHIBIT C
---------
FORM OF PROMISSORY NOTE
-----------------------
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<PAGE>
EXHIBIT 10.2
NOTE
----
$3,044,082.12 March 31, 1998
FOR VALUE RECEIVED, AH Michigan Owner Limited Partnership, an Ohio
limited partnership (the "Purchaser"), hereby promises to pay, on June 30, 1998,
to the order of Brookdale Living Communities of Michigan, Inc., a Delaware
corporation (the "Seller"), the principal amount of THREE MILLION FORTY-FOUR
THOUSAND EIGHTY-TWO DOLLARS AND TWELVE CENTS ($3,044,082.12), together with
interest as provided in Section 2 below on the unpaid principal amount hereof.
1. Purchase and Sale Agreement. This Note is being delivered by the
Purchaser to the Seller pursuant to Section 2 of the Purchase and Sale Agreement
dated as of the date hereof (the "Purchase Agreement") between the Purchaser and
the Seller and evidences a portion of the Purchase Price for the Property (as
each such term is defined in the Purchase Agreement).
2. Interest. The unpaid principal amount outstanding under this Note
shall bear interest at the rate of 9% per annum. Interest shall be calculated
on the basis of a year of 365 days and actual days elapsed. Accrued interest
shall be paid at the maturity date of this Note or upon earlier prepayment
hereof.
3. Prepayments. The Purchaser shall prepay the unpaid principal
amount of this Note in whole, without premium, together with all accrued and
unpaid interest hereon, immediately upon the making of the loan by Banc One
Capital Partners IV, Ltd. (the "Subordinated Lender") pursuant to the Loan
Agreement to be entered into between AH Michigan Subordinated, LLC, an Ohio
limited liability company (the "Subordinated Borrower"), and the Subordinated
Lender and the contribution of the proceeds thereof by the Subordinated Borrower
to the Purchaser as a capital contribution.
4. Place of Payment. All payments under the Note shall be made and
delivered, without setoff or counterclaim, in
<PAGE>
immediately available funds to the Seller on the date due by wire transfer to an
account designated in writing by the Seller to the Purchaser.
5. Security for Payment. Payment of this Note shall be guaranteed by
(a) the Subordinated Borrower, which owns a ninety-nine percent (99%) limited
partnership interest in the Purchaser and all of the issued and outstanding
stock of AH Michigan CGP, Inc. ("AH CGP" and, together with the Subordinated
Borrower, the "Obligors"), an Ohio corporation and the owner of a one percent
(1%) general partnership interest in the Purchaser, and (b) AH CGP, in each case
by a non-recourse Guaranty (the "Guaranty"), with all of the obligations of the
Obligors under the Guaranty being secured by a collateral assignment of all of
the partnership interests in the Purchaser held by the Obligors pursuant to a
collateral assignment of partnership interests (the "Collateral Assignment")
being entered into contemporaneously herewith by the Obligors with the Seller.
Notwithstanding any provision in this Note to the contrary, (i) recourse to the
Obligors for the obligations of the Purchaser under this Note shall be limited
to the obligations of the Obligors under the Guaranty and the security therefor
and (ii)in no event shall any officer, director, incorporator, manager or agent
of the Purchaser or the Obligors be personally liable to the Seller for the
payment of the obligations of the Purchaser under this Note.
6. Events of Default. (a) Each of the following constitutes an
event of default under this Note (an "Event of Default"):
i. (A) Either the Guaranty or the Collateral Assignment shall cease
to be a legal, valid and binding obligation of either of the Obligors, (B)
either Obligor shall default in or fail to perform any of such Obligor's
agreements set forth in the Collateral Assignment, (C) either of the
Obligors shall challenge the validity of the Guaranty or the Collateral
Assignment, or (D) the Collateral Assignment shall cease to create in favor
of the Seller a perfected security interest in the collateral covered
thereby.
ii. An "Event of Default", as defined in the Development Agreement
dated as of the date hereof between the Seller and the Purchaser, by the
Purchaser shall occur.
MICHIGAN -2-
<PAGE>
iii. The Purchaser or either of the Obligors shall: (i) file a
voluntary petition in bankruptcy, insolvency, debtor relief or for
arrangement, reorganization or other relief under the Federal Bankruptcy
Code or any similar state or federal law; (ii) apply for, consent to, or
suffer the appointment of or taking possession by a receiver, liquidator,
or trustee (or similar official) for the Purchaser or either of the
Obligors or for any part of the Property or any substantial part of its
other property; (iii) make any assignment for the benefit of creditors;
(iv) become insolvent or fail generally to pay debts as they become due.
Any bankruptcy, reorganization, debt arrangement or other proceeding under
bankruptcy or insolvency law, or any dissolution or liquidation proceeding
is instituted against the Purchaser or either of the Obligors.
(b) At any time after the occurrence of an Event of Default, the
Seller may, at its option, declare the entire principal balance under this Note,
together with interest accrued thereon to be immediately due and payable without
necessity of notice to the Purchaser, and the Seller may exercise all remedies
available to it.
(c) Upon an Event of Default, the Seller, at its option, may proceed
to exercise its rights and remedies under the Guaranty and the Collateral
Assignment and to exercise any other rights and remedies against the Purchaser
or with respect to this Note which the Seller may have at law, at equity or
otherwise. The Seller's remedies under this Note, the Guaranty and the
Collateral Assignment shall be cumulative and concurrent and may be pursued
singly, successively, or together against any or all of the Purchaser and the
Obligors. The Seller may resort to every other right or remedy available at law
or in equity without first exhausting the rights and remedies contained herein,
all in the Seller's sole discretion. Failure of the Seller, for any period of
time or on more than one occasion, to exercise its option to accelerate the
maturity date of this Note shall not constitute a waiver of that right at any
time during an Event of Default or in the event of any subsequent Event of
Default. The Seller shall not by any other omission or act be deemed to waive
any of its rights or remedies unless such waiver is written and signed by an
officer of the managing general partner of the Seller, and then only to the
extent specifically set forth. A waiver in connection with one
MICHIGAN -3-
<PAGE>
event shall not be construed as continuing or as a bar to or waiver of any right
or remedy in connection with a subsequent event. No single or partial exercise
of any power under this Note or under the Guaranty or the Collateral Assignment
shall preclude other or further exercise thereof. The Seller shall at all times
have the right to proceed against any portion of any security held for this Note
in such order and in such manner as the Seller may deem fit, without waiving any
rights with respect to any other security. No delay or omission on the part of
the Seller in exercising any right under this Note shall operate as a waiver of
such right or of any other right under this Note.
7. Notices. 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 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 Purchaser: AH Michigan Owner
Limited Partnership
41 South High Street
Suite 1300
Columbus, Ohio 43215
Attn: David B. Fenkell
Fax: (614) 365-2499
If to the Seller: Brookdale Living
Communities of
Michigan, Inc.
C/O Brookdale Living
Communities, Inc.
77 W. Wacker Drive
Suite 4800
Chicago, Illinois 60601
Attn: Darryl W. Copeland, Jr.
Fax: (312) 977-3699
MICHIGAN -4-
<PAGE>
with a copy to: Brookdale Living
Communities, Inc.
77 West Wacker Drive
Suite 4800
Chicago, Illinois 60601
Attn: Robert J. Rudnik
Fax: (312) 977-3701
and to: Winston & Strawn
35 West Wacker Drive
Chicago, IL 60601
Attn: Wayne D. Boberg
Fax: (312) 558-5700
8. Governing Law. This Note 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).
9. Waivers, Consents, Etc. The Purchaser (a) waives presentment and
demand for payment, notices of nonpayment and of dishonor, protest of dishonor,
and notice of protest; (b) except as specifically required herein, waives all
notices in connection with the performance, default, or enforcement or
collection of this Note; (c) waives any and all lack of diligence and delays in
the enforcement or collection of this Note; (d) agrees that its liability shall
be unconditional and without regard to the liability of any other person or
entity, and shall not in any manner be affected by any indulgence or forbearance
granted or consented to by the Seller; (e) consents to the release of any
security at any time given, with or without substitution, and to the release of
any person or entity liable for the payment thereof; and (f) consents to the
addition of any and all other makers, endorsers, guarantors, and other obligors,
and to the acceptance of any and all other security, and agrees that the
addition of any such obligors or security shall not affect the liability of the
Purchaser.
10. Interest Laws. The Purchaser and the Seller intend to comply
with the laws of the State of Illinois with regard to the rate of interest
charged. Notwithstanding any provision to the contrary in this Note, no such
provision shall require the payment or permit the collection of any amount
("Excess Interest") in
MICHIGAN -5-
<PAGE>
excess of the maximum amount of interest or loan charges permitted by law to be
charged. If any Excess Interest is provided for, or is adjudicated to be
provided for, in this Note, then (a) the provisions of this paragraph shall
govern and control; (b) the Purchaser shall not be obligated to pay any Excess
Interest; (c) any Excess Interest that the Seller may have received shall, at
the option of Seller, be (i) applied as a credit against the then outstanding
principal balance of this Note or against the accrued and unpaid interest
thereon not to exceed the maximum amount permitted by law; (ii) refunded to the
payor, or (iii) so applied or refunded in any combination of the foregoing; (d)
the applicable interest rate or loan charges shall be reduced to the maximum
lawful rate, and this Note shall be reformed and modified to reflect such
reduction in the applicable interest rate or loan charges; and (e) the Purchaser
shall not have any action against the Seller for any damages whatsoever arising
from the collection of Excess Interest. If a refund reduces principal, the
reduction shall be treated as a partial prepayment, though not subject to any
minimum limit on permitted prepayments.
In Witness Whereof, the Purchaser has caused this Note to be executed
as of the date first stated above.
AH MICHIGAN OWNER LIMITED PARTNERSHIP,
an Ohio limited partnership
By: AH Michigan CGP, Inc.,
its general partner
By: _______________________________
Name:______________________________
Its:_______________________________
MICHIGAN -6-
<PAGE>
EXHIBIT 10.3
DEVELOPMENT AGREEMENT
---------------------
This DEVELOPMENT AGREEMENT (this "Agreement"), dated as of March 31, 1998,
is made and entered into by and between AH MICHIGAN OWNER LIMITED PARTNERSHIP,
an Ohio limited partnership ("Owner"), and BROOKDALE LIVING COMMUNITIES OF
MICHIGAN, INC., a Delaware corporation ("Developer").
RECITALS
--------
WHEREAS, Owner is acquiring certain real property from Developer pursuant
to that certain Purchase and Sale Agreement of even date herewith between
Developer, as seller, and Owner, as purchaser (the "Purchase and Sale
Agreement"), and desires to develop it for use as a senior and assisted living
facility in Austin, Texas, which is currently referred to as The Heritage at
Gaines Ranch (the "Project");
WHEREAS, Developer is experienced and qualified in the business of
developing senior and assisted living facilities such as the Project, and Owner
desires to engage Developer to perform development services in connection with
the construction of the Project;
WHEREAS, Developer has commenced construction of the Project and has
entered into a construction contract, an architectural contract and other
contracts related thereto, and hereafter shall enter into additional contracts
and amendments, change orders, modifications or supplements of or to any of the
foregoing (collectively, the "Construction Contracts"); and
WHEREAS, Owner desires to retain Developer to, and Developer is willing to,
perform development services in connection with the construction of the Project
on the terms and subject to the conditions set forth in this Agreement.
AGREEMENTS
----------
NOW, THEREFORE, in consideration of the recitals and the mutual promises
and covenants herein contained and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
1. Responsibilities of Developer.
<PAGE>
(a) Owner hereby engages Developer to perform the services in
connection with the development and construction of the Project normally and
customarily performed by a developer of a commercial real estate project and as
further described herein, and Developer hereby accepts such engagement and,
subject to the conditions set forth in this Agreement, agrees to provide such
services, at Owner's expense. During the term of this Agreement, Developer
shall have full authority to construct the Project or cause the Project to be
constructed as a senior and assisted living facility, and shall have full and
complete control and reign over, and use of, the entire Project, including its
common areas. Without limiting the generality of the foregoing, Developer
shall, at Owner's expense, have full authority as follows:
(i) Regulatory Compliance. Developer shall use reasonable
efforts to obtain and maintain all licenses, permits, qualifications and
approvals from any applicable governmental or regulatory authority required for
the construction of the Project. In addition, Developer shall supervise and
coordinate the preparation and filing of (and, where required to do so under
applicable law or regulations, file) all reports or other information required
by all state or other governmental agencies having jurisdiction over the Project
and shall deliver copies of all such reports and information to Owner
simultaneously with such filings. Developer shall cooperate with governmental
inspection and enforcement activities.
(ii) Equipment and Improvements. Developer shall, on behalf of
Owner, acquire or effect the acquisition of equipment and improvements which are
needed to operate the Project or its services.
(iii) Existing Contracts. Developer shall have the right and
authority, at the Owner's expense, to enter into, perform, and modify its
obligations and duties under the Construction Contracts and to deal with, and
enforce the obligations of, all parties thereto.
(iv) Legal Proceedings. Developer shall have the right and
authority, on its own behalf or through legal counsel designated by Developer,
direct all legal matters and proceedings that are within the scope of
Developer's authority pursuant to this Agreement. Without limiting the
generality of the foregoing, Developer is authorized (without the prior written
consent of Owner) to (a) settle, in the name and on behalf of Owner and on
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<PAGE>
such terms and conditions as Developer may deem to be in the best interests of
the Project, any and all claims or demands arising out of, or in connection
with, the operation of the Project, whether or not legal action has been
instituted and (b) enter into such agreements with any governmental agencies
having jurisdiction over the Project deemed necessary or desirable by Developer
in its sole and absolute judgment. All such amounts paid in respect of any such
settlements and agreements shall be expenses of the Project and be paid by
Owner. Developer will give notice promptly to Owner of all demands and claims
and all settlements and legal actions, but the failure to give such notice shall
not affect the preceding provisions of this paragraph.
(v) Other Matters. Developer shall, on its own behalf or, if
necessary, on Owner's behalf, be permitted to enter into such other agreements,
contracts, easements and to perform such other acts as are necessary or
desirable, in Developer's sole and absolute discretion, for the completion and
operation of the Project.
2. Responsibilities of Owner. Owner shall not interfere with Developer in
connection with the development of the Project in accordance with the terms of
this Agreement. Owner acknowledges and agrees that the development of the
Project is within the exclusive control of Developer, and Owner hereby grants
Developer sole and exclusive possession and control over the Project. Owner
hereby assumes and agrees to pay in accordance with the next sentence hereof (i)
all costs, expenses and obligations incurred by Developer through and including
the date of this Agreement in connection with the development and construction
of the Project which have not been paid as of the date of this Agreement, which
costs, expenses and obligations include, but are not necessarily limited to
retainage held back from the general contractor of the Project ($99,609.40 as of
February 28, 1998) and accrued developer's fees payable by Developer to
Brookdale Living Communities, Inc. ($483,145.24 as of February 28, 1998), (ii)
all closing costs incurred by Developer, as seller, under the Purchase and Sale
Agreement and (iii) all costs, expenses and obligations incurred by Developer
from and after the date of this Agreement in connection with the development and
construction of the Project. Developer shall be responsible for the payment of
all such costs, expenses and obligations which become due and payable during the
term of this Agreement, and Owner shall reimburse Developer for all amounts paid
by Developer immediately upon termination of this Agreement.
-3-
<PAGE>
3. Exclusive Representative/Attorney-in-Fact. It is understood and agreed
that Developer shall be the exclusive representative of Owner for purposes
described in this Agreement, including, without limitation, all acts, functions
and activities which would normally and customarily be performed by a developer
of real estate in connection with the construction of a major commercial
project. Any communications, any regulatory authorities, governmental agencies,
contractors, materialmen suppliers, employees of the Project shall be directed
through Developer.
4. Insurance. Developer shall, at Owner's expense, arrange for and
maintain all necessary and proper hazard insurance covering the Project,
including the furniture, fixtures and equipment situated thereon, all necessary
and proper public liability insurance for the protection of Developer and Owner.
Developer shall, at Owner's expense, also arrange for and maintain all employee
health and worker's compensation insurance for the Project's personnel. Any
insurance provided pursuant to this paragraph shall be an expense of the Project
payable by Owner.
5. Proprietary Interest. The systems, methods, procedures and controls
employed by Developer and any written materials or brochures developed by
Developer to document the same are to remain the property of Developer and are
not, at any time during or after the term of this Agreement, to be utilized,
distributed, copied or otherwise employed or acquired by Owner, except as
authorized by Developer.
6. Term of Agreement. Unless this Agreement is sooner terminated as
hereinafter expressly provided in Section 7 or as otherwise agreed in writing by
both parties, the term of this Agreement shall commence on the date hereof and
shall end on the earlier to occur of (i) the date on which the amounts due under
that certain Note dated March 30, 1998 made by Owner to Developer in the amount
of $3,044,082.12 are payable (whether at maturity of such Note or by reason of
the acceleration of such Note or prepayment thereunder) and (ii) June 30, 1998.
7. Events of Default and Remedies.
(a) Event of Default. At the option of the non-
-4-
<PAGE>
defaulting party, each of the following shall constitute an "Event of Default"
hereunder:
(i) if Owner shall fail to pay or allow payment of any installment of
the Fees due to Developer in accordance with Section 10 hereof for a period of
five (5) days after written notice of such failure from Developer;
(ii) if Owner fails to perform in any material respect any term,
provision, or covenant of this Agreement (other than as set forth in Section
7(a)(i)) and (A) such failure continues for ten (10) days after written notice
from Developer specifying such failure to perform (unless such failure cannot be
cured by the payment of money and cannot reasonably be cured within such 10-day
period, in which event, Owner shall have an additional period, not to exceed an
additional thirty (30) days, in which to cure the default) or (B) Owner fails to
endeavor diligently and continuously to cure such default as promptly as is
practicable;
(iii) if Developer fails to perform in any material respect any term,
provision, or covenant of this Agreement and (A) subject to Section 8 below,
such failure continues for thirty (30) days after written notice from Owner
specifying such failure to perform (unless such failure cannot reasonably be
cured within such 30-day period, in which event, the defaulting party shall have
an additional period as is necessary to cure the default) or (B) Developer fails
to endeavor diligently and continuously to cure such default as promptly as is
practicable;
(iv) if either Owner, on the one hand, or Developer, on the other, is
dissolved or liquidated, applies for or consents to the appointment of a
receiver, trustee or liquidator of all or a substantial part of its assets,
files a voluntary petition in bankruptcy or is the subject of an involuntary
bankruptcy filing, makes a general assignment for the benefit of creditors, or
files a petition or an answer seeking reorganization or arrangement with
creditors or to take advantage of any insolvency law, or if an order, judgment
or decree shall be entered by any court of competent jurisdiction, on the
application of a creditor, adjudicating Owner or Developer bankrupt or insolvent
or approving a petition seeking reorganization of Owner or Developer or
appointing a receiver, trustee or liquidator for such party of all or a
substantial part of its assets, and such order, judgment or decree shall
continue unstayed and in effect for any period of sixty (60) consecutive days.
-5-
<PAGE>
(b) Remedies. At any time after the occurrence and during the
continuance of any Event of Default caused by Owner, Developer may, at its
option, do one or more of the following: (i) exercise its rights under that
certain Guaranty ("Guaranty") dated as of the date hereof made by AH Michigan
CGP, Inc., an Ohio corporation and AH Michigan Subordinated, LLC, an Ohio
limited liability company (collectively, the "Guarantors"), and that certain
Collateral Assignment of Partnership Interests dated as of the date hereof made
by the Guarantors ("Assignment"), (ii) terminate this Agreement by giving
written notice to Owner and/or (iii) exercise all rights and remedies available
under law or equity. At any time after the occurrence and during the continuance
of an Event of Default caused by Developer under Section 7(a)(iv) above, Owner
may, at its option, terminate this Agreement by giving written notice to
Developer. At any time after the occurrence and during the continuance of an
Event of Default caused by Developer (other than under Section 7(a)(iv) above),
Owner may, as its option, terminate this Agreement in accordance with the terms
hereof and Developer shall have no other liability to Owner hereunder.
8. Force Majeure. The parties will not be deemed to be in violation or
breach of this Agreement if they are prevented from performing any of their
respective obligations hereunder for any reason beyond their control, including,
without limitation, strikes, shortages, war, acts of God, or any applicable
statute, regulation or rule of federal, state or local government or agency
thereof having jurisdiction over the Project or the operations thereof.
9. [Intentionally Omitted]
10. Fees. During the term of this Agreement, Developer shall be entitled
to receive development fees (the "Fees") in an amount and payable by Owner as
follows:
(a) all corporate overhead and administrative costs and capitalized
interest costs incurred by Developer after the date hereof in performing
the services under this Agreement; and
(b) an additional amount equal to the amount specified in Section
10(a) above.
-6-
<PAGE>
The Fees described in this Section 10 above shall accrue and shall be due and
payable by Owner to Developer in cash on the date on which this Agreement is
terminated.
11. Assignment. This Agreement shall not be assigned (including by
operation of law, whether by merger or consolidation (excluding a merger
effected solely for the purpose of changing Owner's jurisdiction of
incorporation that does not affect the ownership interests of Owner in any
material respect) or otherwise) by Owner, on the one hand, or by Developer, on
the other, without the prior written consent of the other party; provided,
however, that to the extent permitted by applicable law and regulations, and
subject to the receipt of all required licenses, permits, approvals and
authorizations of applicable governmental agencies, this Agreement may be
assigned by Developer to one or more corporations or other legal entities all
the shares (and, in the case of legal entities other than corporations, all the
equity ownership and voting control) of which are owned, directly or indirectly,
by Developer or by Brookdale Living Communities, Inc.
12. Notices. Any notices required or permitted to be sent hereunder shall
be delivered personally or by facsimile (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 delivered hereunder, and shall be deemed to have been given upon
delivery, if delivered personally, upon receipt with answer back acknowledged,
if delivered by facsimile, 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 Owner, to:
AH Michigan Owner Limited Partnership
41 South High Street, Suite 1300
Columbus, Ohio 43215
Attn: David B. Fenkell
Facsimile: (614) 365-2499
If to Developer, to:
c/o Brookdale Living Communities, Inc.
-7-
<PAGE>
77 West Wacker Drive
Suite 4400
Chicago, Illinois 60601
Attn: Darryl W. Copeland, Jr.
Facsimile: (312) 977-3699
With a copy to:
c/o Brookdale Living Communities, Inc.
77 West Wacker Drive
Suite 4400
Chicago, Illinois 60601
Attn: Robert J. Rudnik
Facsimile: (312) 977-3701
and to:
Winston & Strawn
35 West Wacker Drive
Chicago, Illinois 60601
Attn: Wayne D. Boberg, Esq.
Facsimile: (312) 558-5700
13. Relationship of the Parties. The relationship of Developer to Owner in
connection with this Agreement shall be that of an independent contractor, and
all acts performed by Developer during the term hereof shall be deemed to be
performed in Developer's capacity as an independent contractor. Nothing
contained in this Agreement is intended to or shall be construed to give rise to
or create a partnership or joint venture or lease between Owner, its successors
and assigns, on the one hand, and Developer, its successors and assigns, on the
other hand.
14. Entire Agreement. This Agreement and any documents executed in
connection herewith contain the entire agreement among the parties with respect
to the subject matter hereof and, subject to the restrictions contained in
Section 11 above, shall be binding upon their respective successors and assigns,
and shall be construed in accordance with the laws of the state where the
Project is located. This Agreement may not be modified or amended except by
written instrument signed by the parties hereto.
15. Contract Modifications for Certain Legal Events. In the event any
state or federal laws or regulations, whether now
-8-
<PAGE>
existing or enacted or promulgated after the effective date of this Agreement,
are interpreted by judicial decision, a regulatory agency or legal counsel of
both parties in such a manner as to indicate that the structure of this
Agreement may be in violation of such laws or regulations, Owner and Developer
agree to cooperate in restructuring their relationship and this Agreement to
eliminate such violation or to reduce the risk thereof to the extent such
restructuring can be accomplished upon commercially reasonable terms; provided,
that any such restructuring shall, to the maximum extent possible, preserve the
underlying economic and financial arrangements between Owner and Developer. The
parties agree that such amendment may require either or both parties to obtain
appropriate regulatory licenses and approvals.
16. Captions. The captions used herein are for convenience of reference
only and shall not be construed in any manner to limit or modify any of the
terms hereof.
17. Severability. In the event one or more of the provisions contained in
this Agreement is deemed to be invalid, illegal or unenforceable in any respect
under applicable law, the validity, legality and enforceability of the remaining
provisions hereof shall not in any way be impaired thereby.
18. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, and each such counterpart
shall together constitute but one and the same Agreement.
19. Limitation of Personal Liability. Notwithstanding any other provision
of this Agreement to the contrary, in no event shall any officer, director,
member, partner, manager, shareholder, incorporator or agent of Owner or of
Owner's affiliates be personally liable to Developer for any of Owner's
obligations under this Agreement, except as expressly provided in the Guaranty
and the Assignment.
[signature page follows]
-9-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Development
Agreement to be executed and delivered in their names and on their behalf as of
the date first set forth above.
OWNER:
AH MICHIGAN OWNER LIMITED PARTNERSHIP,
an Ohio limited partnership
By: AH Michigan CGP, Inc.,
its general partner
By:________________________________
Title:_____________________________
DEVELOPER:
BROOKDALE LIVING COMMUNITIES OF MICHIGAN,
INC., a Delaware corporation
By:_____________________________________
Title:__________________________________
-10-
<PAGE>
EXHIBIT 10.4
GUARANTY
To: Brookdale Living Communities of Michigan, Inc.
c/o Brookdale Living Communities, Inc.
77 West Wacker Drive
Suite 4800
Chicago, Illinois 60601
1. Guaranty of Payment. For value received and in consideration of the
acceptance by Brookdale Living Communities of Michigan, Inc., a Delaware
corporation (the "Seller"), of the Note (defined below) of AH Michigan Owner
Limited Partnership, an Ohio limited partnership (the "Purchaser"), in partial
payment of the purchase price payable by the Purchaser to the Seller pursuant to
the Purchase and Sale Agreement, dated as of the date hereof (the "Purchase
Agreement"), between the Seller and the Purchaser, 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, a "Guarantor" and together, the "Guarantors"),
which together own all of the partnership interests in the Purchaser, hereby
unconditionally guarantee, jointly and severally, the full and prompt payment
when due, whether by acceleration or otherwise, and at all times thereafter, of
all obligations (all such obligations being hereinafter collectively called the
"Liabilities") of the Purchaser to the Seller, howsoever created, arising or
evidenced, whether direct or indirect, absolute or contingent, or now or
hereafter existing, or due or to become due, and the performance by the
Purchaser of its obligations, under or in connection with (i) the Note, dated
the date hereof (as amended, restated, extended or replaced from time to time,
the "Note"), of the Purchaser payable to the order of the Seller in the amount
of $3,044,082.12, (ii) the Purchase Agreement, and (iii) the Development
Agreement, dated as of the date hereof (as amended or restated from time to
time, the "Development Agreement"), between the Purchaser and the Seller, and
the Guarantors further agree to pay all expenses and attorneys' fees paid or
incurred by the Seller in endeavoring to collect the Liabilities, or any part
thereof, and in enforcing this Guaranty.
<PAGE>
2. Non-Recourse Guaranty. The obligations of the Guarantors hereunder are
secured by the Collateral Assignment of Partnership Interests, dated as of the
date hereof (the "Collateral Assignment"), by the Guarantors in favor of the
Seller, and notwithstanding any provision of this Guaranty to the contrary, the
Seller's recourse for the collection of the Liabilities shall be limited solely
and exclusively to the collateral covered thereby, and no deficiency judgment
shall be brought or entered into against either Guarantor 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 Guarantor or its officers, directors, members, partners,
managers, shareholders, incorporators or agents, other than the collateral
covered by the Collateral Assignment.
3. Acceleration of the Time of Payment of Amount Payable Under the Guaranty.
The Guarantors agree that, in the event of the dissolution or insolvency of the
Purchaser or either Guarantor, or the inability of the Purchaser or either
Guarantor to pay debts as they mature, or an assignment by the Purchaser or
either Guarantor for the benefit of creditors, or the institution of any
proceeding by or against the Purchaser or either Guarantor alleging that the
Purchaser or such Guarantor is insolvent or unable to pay debts as they mature,
and if such event occurs at a time when any of the Liabilities may not then be
due and payable, the Guarantors will pay to the Seller forthwith the full amount
which would be payable hereunder by the Guarantors as if all Liabilities of the
Purchaser were then due and payable.
4. Continuing Guaranty. This Guaranty is in all respects a continuing,
absolute and unconditional Guaranty (subject to the limitations set forth in
Section 2 of this Guaranty), and will remain in full force and effect
(notwithstanding, without limitation, the dissolution of either Guarantor) until
the Note has been paid in full and all obligations of the Purchaser under the
Development Agreement have been paid or performed in full, all obligations of
the Purchaser under the Purchase Agreement have been paid or performed in full
and the Development Agreement has been terminated.
5. Rescission or Return of Payment on Liabilities. The Guarantors further
agree that, if at any time all or any part of any payment theretofore applied by
the Seller to any of the Liabilities is or must be rescinded or returned by the
Seller for
2
<PAGE>
any reason whatsoever (including, without limitation, the insolvency, bankruptcy
or reorganization of the Purchaser), such Liabilities are, for the purposes of
this Guaranty, to the extent that such payment is or must be rescinded or
returned, deemed to have continued in existence, notwithstanding such
application by the Seller, and this Guaranty will continue to be effective or be
reinstated, as the case may be, as to such Liabilities, all as though such
application by the Seller had not been made.
6. Seller Permitted to Take Certain Actions. The Seller may, from time to time
(but is not obligated to), whether before or after any discontinuance of this
Guaranty, at its sole discretion and without notice to the Guarantors, take any
or all of the following actions without in any way affecting the obligations of
the Guarantors hereunder: (a) receive a security interest in any property to
secure any of the Liabilities or any obligation hereunder; (b) retain or obtain
the primary or secondary obligation of any obligor or obligors, in addition to
the Guarantors, with respect to any of the Liabilities; (c) extend or renew for
one or more periods (whether or not longer than the original period), alter or
exchange any of the Liabilities, or release or compromise any obligation of
either of the Guarantors hereunder or any obligation of any nature of any other
obligor with respect to any of the Liabilities; (d) release its security
interest in, or surrender, release or permit any substitution or exchange for,
all or any part of any property securing any of the Liabilities or any
obligation hereunder, or extend or renew for one or more periods (whether or not
longer than the original period) or release, compromise, alter or exchange any
obligations of any nature of any obligor with respect to any such property; and
(e) resort to the Guarantors for payment of any of the Liabilities, whether or
not the Seller (i) has resorted to any property of any other obligor securing
any of the Liabilities or (ii) has proceeded against any other obligor primarily
or secondarily obligated with respect to any of the Liabilities (all of the
actions referred to in preceding clauses (i) and (ii) being hereby expressly
waived by the Guarantors).
7. Application of Payments. Any amounts received by the Seller from whatsoever
source on account of the Liabilities may be applied by it toward the payment of
such of the Liabilities, and in such order of application, as the Seller may
from time to time elect.
3
<PAGE>
8. Subrogation. Until such time as this Guaranty has been discontinued and the
Seller has received payment of the full amount of all Liabilities and of all
obligations of the Guarantors hereunder, no payment made by or for the account
of the Guarantors pursuant to this Guaranty entitles the Guarantors by
subrogation or otherwise to any payment by the Purchaser or from or out of any
property of Purchaser, and the Guarantors will not exercise any right or remedy
against the Purchaser or any property of the Purchaser by reason of any
performance by the Guarantors of this Guaranty.
9. Waiver of Notice and Other Matters. The Guarantors hereby expressly waive:
(a) notice of the acceptance by the Seller of this Guaranty; (b) notice of the
existence or creation or non-payment of all or any of the Liabilities; (c)
presentment, demand, notice of dishonor, protest, and all other notices
whatsoever; and (d) all diligence in collection or protection of or realization
upon the Liabilities or any thereof, any obligation hereunder, or any guaranty
of or any security for any of the foregoing.
10. Additional Liabilities of the Purchasers Permitted. The creation or
existence from time to time of Liabilities in excess of the amount to which the
right of recovery under this Guaranty is limited is hereby authorized, without
notice to the Guarantors, and will in no way affect or impair the rights of the
Seller and the obligations of the Guarantors under this Guaranty.
11. Assignment of Liabilities. The Seller may, from time to time, whether
before or after any discontinuance of this Guaranty, without notice to the
Guarantors, assign or transfer any or all of the Liabilities or any interest
therein; and, notwithstanding any such assignment or transfer or any subsequent
assignment or transfer thereof, such Liabilities will remain Liabilities for the
purposes of this Guaranty, and each and every immediate and successive assignee
or transferee of any of the Liabilities or of any interest therein will, to the
extent of the interest of such assignee or transferee in the Liabilities, be
entitled to the benefits of this Guaranty to the same extent as if such assignee
or transferee were the Seller; provided, however, that, unless the Seller
otherwise consents in writing, the Seller has an unimpaired right, prior and
superior to that of any such assignee or transferee, to enforce this Guaranty,
for the benefit of the Seller, as to those of the Liabilities which the Seller
has not assigned or transferred.
4
<PAGE>
12. Waiver and Modifications. No delay on the part of the Seller in the
exercise of any right or remedy will operate as a waiver thereof, and no single
or partial exercise by the Seller 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 Guaranty be binding
upon the Seller except as expressly set forth in a writing duly signed and
delivered on behalf of the Seller.
13. Obligations Under Guaranty. No action of the Seller permitted hereunder
will in any way affect or impair the rights of the Seller and the obligations of
the Guarantors under this Guaranty. For the purposes of this Guaranty,
Liabilities include all obligations of the Purchaser to the Seller described in
Section 1 of this Guaranty, notwithstanding any right or power of the Purchaser
or anyone else to assert any claim or defense as to the invalidity or
unenforceability of any such obligation, and no such claim or defense will
affect or impair the obligations of the Guarantors hereunder. Subject to the
provisions of Section 2 of this Guaranty, the obligations of the Guarantors
under this Guaranty are absolute and unconditional irrespective of any
circumstance whatsoever which might constitute a legal or equitable discharge or
defense of the Guarantors. The Guarantors hereby acknowledge that there are no
conditions to the effectiveness of this Guaranty.
14. Successors. This Guaranty is binding upon the Guarantors, and upon the
heirs, legal representative, successors and assigns of the Guarantors; and to
the extent that the Purchaser or the Guarantors are either partnerships,
corporations or limited liability companies, all references herein to the
Purchaser and to the Guarantors, respectively, are deemed to include any
successor or successors, whether immediate or remote, to such partnerships,
corporations or limited liability companies.
15. Law. This Guaranty has been delivered in Chicago, Illinois, and will be
construed in accordance with and governed by the laws of the State of Illinois
(without giving effect to principles of conflicts of law).
16. Severability. Wherever possible, each provision of this Guaranty will be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Guaranty is prohibited by or invalid under such
law, such provision will be
5
<PAGE>
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Guaranty.
17. Captions. Section captions used in this Guaranty are for convenience only,
and do not affect the construction of this Guaranty.
18. Consent to Jurisdiction. To induce the Seller to accept this Guaranty, the
Guarantors irrevocably agree that, subject to the Seller's sole and absolute
election, ALL ACTIONS OR PROCEEDINGS IN ANY WAY ARISING OUT OF, FROM OR RELATED
TO THIS GUARANTY WILL BE LITIGATED IN COURTS HAVING SITUS WITHIN CHICAGO,
ILLINOIS. THE GUARANTORS HEREBY CONSENT AND SUBMIT TO THE JURISDICTION OF ANY
COURT LOCATED WITHIN CHICAGO, ILLINOIS, WAIVE PERSONAL SERVICE OF PROCESS UPON
THE GUARANTORS, AND AGREE THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY
REGISTERED MAIL DIRECTED TO THE GUARANTORS AT THE ADDRESSES STATED ON THE
SIGNATURE PAGE HEREOF AND SERVICE SO MADE WILL BE DEEMED TO BE COMPLETED UPON
ACTUAL RECEIPT.
19. Waiver of Jury Trial. THE GUARANTORS HEREBY EXPRESSLY WAIVE ANY RIGHT TO A
TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER
THIS GUARANTY 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 GUARANTORS AGREE THAT THEY WILL NOT ASSERT ANY CLAIM AGAINST
THE SELLER ON ANY THEORY OF LIABILITY, FOR SPECIAL, INDIRECT, CONSEQUENTIAL,
INCIDENTAL OR PUNITIVE DAMAGES.
20. Notices. 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 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:
6
<PAGE>
If to the
Limited Partner: AH Michigan Subordinated, LLC
41 South High Street
Suite 1300
Columbus, OH 43215
Attn: David B. Fenkell
Fax: (614) 365-2499
If to the
General Partner: AH Michigan CGP, Inc.
41 South High Street
Suite 1300
Columbus, OH 43215
Attn: David B. Fenkell
Fax: (614) 365-2499
If to the Seller: Brookdale Living Communities
of Michigan, Inc.
c/o Brookdale Living
Communities, Inc.
77 West Wacker Drive
Suite 4800
Chicago, IL 60601
Attn: Darryl W. Copeland, Jr.
Fax: (312) 977-3699
with a copy to: Brookdale Living Communities,
Inc.
77 West Wacker Drive
Suite 4800
Chicago, IL 60601
Attn: Robert J. Rudnik
Fax: (312) 977-3701
and to: Winston & Strawn
35 West Wacker Drive
Chicago, IL 60601
Attn: Wayne D. Boberg
Fax: (312) 558-5700
7
<PAGE>
SIGNED AND DELIVERED THIS 30th day of March, 1998.
AH MICHIGAN SUBORDINATED, LLC
By: AH Michigan Investor, Inc.,
its manager
By: _______________________
Name: _____________________
Title: ____________________
AH MICHIGAN CGP, INC.
By: _______________________
Name: _____________________
Title: ____________________
Accepted:
BROOKDALE LIVING COMMUNITIES OF
MICHIGAN, INC.
By:__________________________
Name: _______________________
Title: ______________________
8
<PAGE>
October 22, 1997
LaSalle National Bank
135 South LaSalle Street
Chicago, Illinois 60603
Re: $10,000,000 Unsecured Loan from LaSalle National Bank
to Brookdale Living Communities, Inc.
-----------------------------------------------------
Ladies and Gentlemen:
In the undersigned's capacity as General Counsel of Brookdale Living
Communities, Inc., a Delaware corporation ("Borrower"), the undersigned has
acted as counsel for Borrower in connection with, and have been requested to
deliver an opinion with respect to, the execution and delivery by Borrower of
the documents listed in Schedule 1 hereto (the "Documents") in connection with
the loan made by LaSalle National Bank a national banking association (the
"Bank"), to Borrower in the principal amount of $10,000,000.
In connection with this opinion, the undersigned has examined and is
familiar with the Documents. In addition, the undersigned has examined and
relied upon (except as otherwise set forth herein) such corporate certificates,
documents and instruments, certificates of public officials and other documents
and matters as the undersigned has deemed necessary.
Based on the foregoing, and subject to the qualifications, assumptions,
limitations, comments and exceptions stated herein, the undersigned is of the
opinion that:
1. Each of the Documents have been duly executed and delivered by Borrower.
2. To the best knowledge of the undersigned after due inquiry, there is no
action, proceeding or governmental investigation pending or threatened that
(i) questions the
<PAGE>
validity of or challenges the Documents or any of the transactions
contemplated thereby, (ii) would have an adverse effect on the benefits
intended to be realized by Bank under the Documents, or (iii) could
reasonably be expected to have, either in any case or in the aggregate, a
materially adverse effect on the business, properties, assets, operations
or financial condition of Borrower.
3. To the best knowledge of the undersigned after due inquiry, Borrower is
not in violation of any term of its Restated Certificate of Incorporation
or By-laws or of any agreement, document or instrument to which it is a
party or by which it is bound or of any applicable law, ordinance, rule or
regulation of any governmental authority or of any applicable order,
judgment or decree of any court, arbitrator or governmental authority, the
consequences of which violation could reasonably be expected to have,
either in any case or in the aggregate, a materially adverse effect on the
business, operations, financial condition, properties or assets of
Borrower. Neither the execution and delivery nor the performance of the
Documents by Borrower will (i) contravene the Restated Certificate of
Incorporation or By-laws of Borrower in effect as of the date hereof, (ii)
to the best knowledge of the undersigned after due inquiry, violate any
provision of any order, writ, judgment, injunction, decree, determination
or award presently in effect applicable to Borrower, (iii) to the best
knowledge of the undersigned after due inquiry, result in a breach of or
constitute a default under or require the consent of any person pursuant to
any indenture or loan or credit agreement or any other material agreement,
document or instrument to which Borrower is a party as of the date hereof
or by which Borrower or Borrower's properties are bound or affected as of
the date hereof, or (iv) to the best knowledge of the undersigned after due
inquiry, result in, or require, the creation or imposition of any lien or
encumbrance (other than those in favor of Bank) upon or with respect to any
properties or assets of Borrower, pursuant to the terms of any material
agreement, document or instrument to which Borrower is a party as of the
date hereof or as of the date hereof by which Borrower or Borrower's
properties are bound or affected as of the date hereof.
<PAGE>
October 22, 1997
Page 3
In rendering the opinions set forth herein, the undersigned has assumed,
without any independent verification or investigation, that (i) the Documents,
and all other agreements, certificates, instruments and other documents
contemplated by the Documents, constitute the valid, binding and enforceable
obligations in accordance with their respective terms of all parties thereto and
that all parties thereto (other than Borrower) have the requisite right, power
and authority to enter into and perform their respective obligations under the
Documents, and such other agreements, certificates, instruments and other
documents; (ii) all consents and waivers delivered by third parties in
connection with the Documents and the transactions contemplated thereby have
been duly authorized, executed and delivered by such third parties and have not
been rescinded in any respect; (iii) (other than with respect to the signatures
of the officers of Borrower) all signatures on agreements, certificates,
instruments and other documents which the undersigned has examined and reviewed
are genuine; and (iv) all agreements, certificates, instruments and other
documents submitted to the undersigned as copies are true and complete copies of
the originals thereof.
Certain of the opinions expressed in this letter are subject to the
following qualifications:
A. Whenever it is stated that the undersigned has assumed any matter, it is
intended to indicate that the undersigned has assumed such matter without
making any factual, legal or other inquiry or investigation, and without
expressing any opinion or conclusion of any kind, concerning such matter.
B. The opinions expressed herein are limited to the matters expressly set
forth herein, and no opinion is implied or may be inferred beyond the
matters expressly stated herein. To
<PAGE>
October 22, 1997
Page 4
the extent the foregoing opinions express or depend on matters of fact or
the undersigned's knowledge, such opinions are based on the undersigned's
actual knowledge of such facts, without inquiry except as otherwise
specifically stated herein.
C. The undersigned expresses no opinion as to the enforceability of any of
the Documents.
The opinion addresses the law and facts as of the date hereof, and the
undersigned undertakes no obligation to inform you of any changes in the law or
any facts occurring after the date hereof.
The undersigned is a member of the bar of the State of Illinois. The
opinions set forth herein are limited to the laws of the United States of
America and the State of Illinois, and the undersigned expresses no opinion with
respect to the laws of any other state or jurisdiction or with respect to any
local, city, county or municipal laws.
The opinions set forth herein are solely for the benefit of the Bank and
its permitted assigns, and this opinion may not be quoted or reproduced in whole
or in part or otherwise referred to in any document or instrument or be
furnished to or relied upon by any other person or entity or in connection with
any transaction other than those contemplated by the Documents without the
undersigned's prior express written consent.
Very truly yours,
----------------------------------------
<PAGE>
October 22, 1997
Page 5
Robert J. Rudnik
General Counsel
<PAGE>
Schedule 1
----------
DOCUMENTS
---------
Each of the following documents are dated as of October 22, 1997:
1. Loan Agreement between Brookdale Living Communities, Inc., a Delaware
corporation ("Borrower"), and LaSalle National Bank, a national banking
association (the "Bank").
2. Note, issued by Borrower, payable to the order of the Bank in the
principal amount of $10,000,000.00.
3. Solvency and Business Purpose Affidavit from Borrower in favor of the
Bank.
<PAGE>
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
<PAGE>
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
2
<PAGE>
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
3
<PAGE>
(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
4
<PAGE>
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
5
<PAGE>
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
6
<PAGE>
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
41 South High Street
Suite 1300
Columbus, Ohio 43215
Attn: David B. Fenkell
Fax: (614) 365-2499
If to the
General Partner: AH Michigan CGP, Inc.
41 South High Street
Suite 1300
Columbus, Ohio 43215
Attn: David B. Fenkell
Fax: (614) 365-2499
If to the Assignee: Brookdale Living
Communities of Michigan,
Inc.
c/o Brookdale Living
Communities, Inc.
77 West Wacker Drive
Suite 4800
Chicago, Illinois 60601
Attn: Darryl W. Copeland, Jr.
Fax: (312) 977-3699
with a copy to: Brookdale Living
Communities, Inc.
77 West Wacker Drive
Suite 4800
Chicago, Illinois 60601
Attn: Robert J. Rudnik
Fax: (312) 977-3701
and to: Winston & Strawn
35 West Wacker Drive
Chicago, Illinois 60601
7
<PAGE>
Attn: Wayne D. Boberg
Fax: (312) 558-5700
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,
8
<PAGE>
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: _______________________
9
<PAGE>
AH MICHIGAN CGP, INC.
By: _______________________________
Name: _____________________________
Title: ____________________________
Accepted:
BROOKDALE LIVING COMMUNITIES
OF MICHIGAN, INC.
By:___________________________
Name: ________________________
Title: _______________________
10
<PAGE>
Exhibit 10.6
PURCHASE AND SALE AGREEMENT
---------------------------
THIS PURCHASE AND SALE AGREEMENT (this "Agreement") is entered into
effective as of March 31, 1998, by and between BLC OF TEXAS-II, L.P., a Delaware
limited partnership ("Seller"), and AH TEXAS OWNER LIMITED PARTNERSHIP, an Ohio
limited partnership("Purchaser"). Any and all capitalized terms used herein and
not otherwise defined shall have the meanings assigned to such terms in the
Development Agreement (as such term is defined below).
W I T N E S S E T H:
WHEREAS, Seller owns that certain land located west and south of Gaines
Ranch Loop and north of MoPac Expressway (Loop 1) in Travis County, Texas
consisting of approximately 4 acres and legally described on Exhibit A attached
hereto, together with all improvements thereon (such land and improvements shall
hereinafter together be referred to as the "Land");
WHEREAS, Seller desires to sell all of its interests in and to the Property
(as hereinafter defined) to Purchaser;
WHEREAS, Purchaser desires to purchase the Property from Seller in
accordance with the terms and provisions described in this Agreement;
WHEREAS, there is currently being constructed on the Land a senior
independent and assisted living facility (the "Facility") to consist of
approximately 220 units, which Facility is being constructed pursuant to that
certain Construction Contract Cost Plus With Guaranteed Maximum Cost (the
"Construction Contract"), dated as of December 15, 1997, between Seller and
Constructors & Associates, Incorporated (the "Contractor") and pursuant to the
plans and specifications for the Facility prepared by Lucien Lagrange and
Associates, Ltd. and incorporated by reference in the Construction Contract;
WHEREAS, concurrent with the execution and delivery hereof, Seller and
Purchaser are executing and delivering that certain Development Agreement (the
"Development Agreement") pursuant to which Seller agrees to continue the
construction and development of the Facility (which have heretofore been
conducted by Brookdale Living Communities, Inc. ("BLCI"))upon the terms set
forth in the Development Agreement; and
WHEREAS, the parties now desire to enter into this Agreement to provide for
the sale by Seller of its interests in the Property to Purchaser, all on the
terms and subject to the conditions set forth herein.
<PAGE>
NOW, THEREFORE, in consideration of the mutual agreements contained herein
and for good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Purchaser and Seller do hereby agree as follows:
1. The Property. For purposes of this Agreement, the term "Property"
shall mean any and all interests of Seller in the following items subject to the
Permitted Exceptions (as hereinafter defined): (i) the Land, (ii) all personal
property and other tangible property now or hereafter located on the Land or
used in connection with the construction, development, operation or maintenance
of the Land, including, but not limited to, fixtures and equipment, other than
personal property and other tangible property necessary or appropriate for
Seller to retain in order to perform its obligations under the Development
Agreement, and (iii) all intangible property now or hereafter used in connection
with the operation or maintenance of the Land, including, but not limited to,
contracts, agreements, guaranties, plans and specifications, licenses, books and
records and all other items and instruments pertaining to the Land except as
described in the Development Agreement and other than intangible property
necessary or appropriate for Seller to retain in order to perform its
obligations under the Development Agreement. "Permitted Exceptions" shall mean
(i) those exceptions listed on Exhibit B attached hereto, (ii) Seller's rights
to reacquire the Property pursuant to Section 8 of this Agreement and (iii) any
rights or interests of any contractors or subcontractors for work done on the
Land that has not been fully paid for as of the Closing. Purchaser acknowledges
that Seller has commenced construction of certain improvements on the Land which
have not been fully paid for as of the date of this Agreement.
2. Purchase and Sale of Property. On the terms and subject to the
conditions set forth in this Agreement, Seller hereby agrees to convey, transfer
and assign to Purchaser, on the Closing Date (as defined in Section 3 below),
Seller's entire right, title and interests in and to the Property for an
aggregate amount equal to Five Million Three Hundred Sixteen Thousand Three
Hundred Forty and 53/100 Dollars ($5,316,340.53) (the "Purchase Price"). The
Purchase Price shall be paid to Seller as follows: (a) on the Closing Date
Purchaser shall pay Seller the sum (the "Cash Portion") of One Million Three
Hundred Thousand and no/100 Dollars ($1,300,000.00), which Cash Portion shall be
paid by wire transfer of immediately available funds to an account designated by
Seller, and (b) on the Closing Date, Purchaser shall deliver to Seller a
promissory note (the "Note") substantially in the form of Exhibit C attached
hereto, payable to the order of Seller in the original principal amount of Four
Million Sixteen Thousand Three Hundred Forty and 53/100 Dollars ($4,016,340.53).
The repayment of the Note and the obligations of Purchaser under this Agreement
and the Development Agreement shall be guarantied (a) by AH Texas Subordinated,
LLC ("AH Subordinated"),an Ohio limited liability
-2-
<PAGE>
company and the owner of a ninety-nine percent (99%) limited partnership
interest in Purchaser and the owner of all of the issued and outstanding stock
of AH Texas CGP, Inc. ("AH CGP"), an Ohio corporation and the owner of a one
percent (1%) general partnership interest in Purchaser, and (b) by AH CGP, in
each case pursuant to a non-recourse Guaranty (the "Guaranty"), with all of the
obligations of AH Subordinated and AH CGP under the Guaranty being secured by a
pledge of all of the interests in Purchaser held by AH Subordinated and AH CGP.
Except as expressly contained herein, Seller shall be solely responsible for all
closing costs in connection with the transaction contemplated by this Agreement
(the "Closing Costs. In addition to the Purchase Price, Purchaser shall assume
and agrees to pay, in accordance with the terms of the Development Agreement,
all costs, expenses and obligations incurred by Seller through and including the
Closing in connection with the development and construction of the Facility
which have not been paid as of the Closing Date, which costs, expenses and
obligations include, but are not necessarily limited to, retainage held back
from the Contractor pursuant to the Construction Contract ($63,626.89 as of
February 28, 1998) and accrued developer's fees payable by Seller to BLCI
($662,221.27 as of February 28, 1998), and agrees to reimburse Seller for the
Closing Costs in accordance with the terms of the Development Agreement.
3. Closing. The closing ("Closing") of the purchase and sale of the
Property shall occur on a date designated by Seller, but in no event later than
March 31, 1998, unless otherwise agreed by the parties hereto. The Closing
shall take place at the offices of Miller, Canfield, Paddock and Stone. The
time and date of such Closing are herein called the "Closing Date".
4. Representations and Warranties of Seller. Seller represents, warrants
and covenants to Purchaser that, as of the date hereof and the Closing Date:
(a) Seller is the owner of the Property subject to the Permitted Exceptions and
has full power and authority to sell, convey, assign and transfer to Purchaser
the Property, free and clear of all liens and encumbrances except the Permitted
Exceptions; (b) Seller has full capacity, right, power and authority to execute,
deliver and perform this Agreement and all documents pursuant hereto, and all
required actions and approvals therefor have been duly taken and obtained; (c)
this Agreement and all documents to be executed pursuant hereto by Seller are
and shall be binding upon and enforceable against Seller in accordance with
their respective terms; and (d) there are no litigation or other proceedings
pending against Seller which could have a material adverse effect on Seller's
ability to consummate the transaction contemplated hereby. The representations
and warranties of Seller set forth above shall be deemed remade on the Closing
Date, and shall survive the Closing and the recording of the deed.
5. Representations and Warranties of Purchaser. Purchaser represents,
warrants and covenants to Seller that, as of the date
-3-
<PAGE>
hereof and the Closing Date: (a) Purchaser has full partnership power and
authority to execute, deliver and perform this Agreement and all documents
pursuant hereto, and all required partnership actions and approvals therefor
have been duly taken and obtained; (b) this Agreement and all documents to be
executed pursuant hereto by Purchaser are and shall be binding upon and
enforceable against Purchaser in accordance with their respective terms; and (c)
there are no litigation or other proceedings pending against Purchaser which
could have a material adverse effect on Purchaser's ability to consummate the
transaction contemplated hereby. The representations and warranties of Purchaser
set forth above shall be deemed remade on the Closing Date, and shall survive
the Closing and the recording of the deed.
6. Seller's Deliveries at Closing. In addition to this Agreement and the
Development Agreement, Seller shall deliver to Purchaser at the Closing the
following items:
(a) Bill of Sale. A bill of sale conveying, transferring and otherwise
assigning to the Purchaser any and all of the Property, other than the real
estate.
(b) Special Warranty Deed. Special Warranty Deed for the Land subject
to the Permitted Exceptions.
(c) Other Documents. Such other documents which are necessary to
complete and perfect the conveyance of Property to the Purchaser as
contemplated by this Agreement, including, without limitation, any transfer
declarations, owner's affidavits and undertakings required by the title
company and similar items required by local law or the title company.
7. Purchaser's Deliveries at Closing. In addition to this Agreement, the
Development Agreement and the Note, Purchaser shall cause AH Subordinate and AH
CGP to deliver to Seller the Guaranty and the pledge agreement or pledge
agreements contemplated by Section 2 hereof, and shall deliver, or cause to be
delivered to Seller at the Closing such other documents which are necessary to
complete and perfect the conveyance of Property to Purchaser as contemplated by
this Agreement, including, without limitation, any transfer declarations,
owner's affidavits and undertakings required by the title company and similar
items required by local law or the title company.
8. Repurchase Right. If (a) by June 30, 1998 Purchaser fails to obtain
and cause to be funded financing from Nomura Asset Capital Corporation and Banc
One Capital Corporation, or one of their respective affiliates, generally
consistent with the provisions of the term sheets or commitments previously
issued with respect to the Property and otherwise acceptable to Seller (the
"Financing"), or (b) prior to the closing of the Financing, Purchaser elects to
transfer (directly or indirectly) its
-4-
<PAGE>
ownership interest in the Property, or Purchaser, AH CGP or AH Subordinate
violates any provision of its organizational documents, then, in either (or
both) of such events, Seller shall have the right to repurchase the Property
from Purchaser for an amount (as increased pursuant to the immediately following
sentence, the "Repurchase Price") equal to the Purchase Price less the Cash
Portion. The Repurchase Price shall increase by nine percent (9%) per annum from
the Closing Date until the closing of the reconveyance of the Property pursuant
to this Section 8. The Repurchase Price may be payable, in part, by the
cancellation of the Note. If Seller elects to repurchase the Property, Purchaser
shall deliver title and conveyance documents to Seller which are equivalent to
those delivered to Purchaser at the Closing (except for any title matters,
including mechanics' liens, created by or relating to Seller, and except that
Purchaser shall clear any title matters created by or relating to Purchaser). In
addition, at the closing of the reconveyance of the Property pursuant to this
Section 8, Seller shall assume all of Purchaser's obligations under the
Development Agreement. Purchaser's obligations and Seller's rights under this
Paragraph Section 8 shall be set forth in the documents recorded at the Closing.
If Seller elects to exercise the repurchase right provided for herein, Seller
must give notice of such election not later than July 31, 1998. The closing of
the reconveyance of the Property to Seller, and the payment to Purchaser of the
Repurchase Price therefor, shall occur not later than the later of (i) thirty
(30) days after Seller gives Purchaser notice of Seller's election to repurchase
the Property, or (ii) five (5) days after Purchaser has completed clearance of
any title matters required to be cleared by Purchaser (except for clearance of
matters to be paid and released at the repurchase closing, using any cash paid
in payment of the Repurchase Price). The provisions of this Section 8 shall
survive the Closing.
9. Miscellaneous.
(a) No Brokerage. Each party hereto represents and warrants to the other
parties hereto that it has not incurred any obligation or liability, contingent
or otherwise, for brokerage or finder's fees or agent's commissions or other
like payment solely in connection with this Agreement or the sale of the
Property contemplated hereby and each party agrees to indemnify and hold the
other parties hereto harmless against and in respect of any such obligation or
liability based in any way on agreements, arrangements or understandings claimed
to have been made by such party with any third party.
(b) Survival of Representations, Warranties and Agreements. The
representations, warranties and agreements of the parties contained in this
Agreement shall survive the Closing Date.
(c) Notices. All notices, requests, demands and other communications
which are required or may be given under this
-5-
<PAGE>
Agreement shall be in writing and shall be deemed to have been duly given if
delivered personally or sent by telex, or sent by United States mail, certified
or registered, postage prepaid, with return receipt requested, or otherwise
actually delivered, addressed to the parties hereto at the addresses set forth
in the Development Agreement.
(d) Entire Agreement. This Agreement (including the exhibits and
schedules hereto) constitutes the entire agreement among the parties hereto and
supersedes all prior agreements and understandings, oral and written, among the
parties hereto with respect to the subject matter hereof.
(e) Binding Effect; Benefit. This Agreement shall inure to the benefit of
and be binding upon the parties hereto and each other person who is indemnified
under any provision of this Agreement and their respective successors and
assigns. Nothing in this Agreement, expressed or implied, is intended to confer
on any person other than the parties hereto and/or each other person who is
indemnified under any provision of this Agreement or their respective successors
and assigns, any rights, remedies, obligations or liabilities under or by reason
of this Agreement.
(f) Amendment; Waiver. No provision of this Agreement may be amended,
waived or otherwise modified without the prior written consent of the parties
hereto.
(g) Section Headings. The section headings contained in this Agreement
are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
(h) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
(i) Applicable Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the state where the Land is located.
10. Limitation of Personal Liability. Notwithstanding any other provision
of this Agreement to the contrary, in no event shall any officer, director,
member, partner, manager, shareholder, incorporator or agent of Purchaser or of
Purchaser's affiliates be personally liable to Seller for any of Purchaser's
obligations under this Agreement, except as expressly provided in the Guaranty
and the Collateral Assignment (as defined in the Guaranty).
[Signature page follows]
-6-
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed and delivered this
Agreement as of the date first above written.
SELLER:
BLC OF TEXAS-II, L.P.
By: Brookdale Living Communities of
Texas-II, Inc.
Its Managing General Partner
By:__________________________
Name:________________________
Its:_________________________
PURCHASER
AH TEXAS OWNER LIMITED PARTNERSHIP
By: AH Texas CGP, Inc.
Managing General Partner
By:__________________________
Name:________________________
Its:_________________________
-7-
<PAGE>
EXHIBIT A
---------
LEGAL DESCRIPTION
-----------------
Lot Two (2), Block "A", RESUBDIVISION OF LOT 1, BLOCK A, GAINES RANCH PUD,
SECTION ONE, a subdivision in Travis County, Texas, according to the map or plat
thereof, recorded in Volume 99, Page(s) 175-176 of the Plat Records of Travis
County, Texas.
-8-
<PAGE>
EXHIBIT B
---------
PERMITTED EXCEPTIONS
--------------------
The Repurchase Right set forth in Section 8 of the foregoing Purchase and Sale
Agreement and all restrictions, easements and other matters of record applicable
to the Property, other than liens.
-9-
<PAGE>
EXHIBIT C
---------
FORM OF PROMISSORY NOTE
-----------------------
-10-
<PAGE>
EXHIBIT 10.7
NOTE
----
$4,016,340.53 March 31, 1998
FOR VALUE RECEIVED, AH Texas Owner Limited Partnership, an Ohio
limited partnership (the "Purchaser"), hereby promises to pay, on June 30, 1998,
to the order of BLC of Texas - II, L.P., a Delaware limited partnership (the
"Seller"), the principal amount of FOUR MILLION SIXTEEN THOUSAND THREE HUNDRED
FORTY DOLLARS AND FIFTY THREE CENTS ($4,016,340.53), together with interest as
provided in Section 2 below on the unpaid principal amount hereof.
1. Purchase and Sale Agreement. This Note is being delivered
by the Purchaser to the Seller pursuant to Section 2 of the Purchase and Sale
Agreement dated as of the date hereof (the "Purchase Agreement") between the
Purchaser and the Seller and evidences a portion of the Purchase Price for the
Property (as each such term is defined in the Purchase Agreement).
2. Interest. The unpaid principal amount outstanding under
this Note shall bear interest at the rate of 9% per annum. Interest shall be
calculated on the basis of a year of 365 days and actual days elapsed. Accrued
interest shall be paid at the maturity date of this Note or upon earlier
prepayment hereof.
3. Prepayments. The Purchaser shall prepay the unpaid
principal amount of this Note in whole, without premium, together with all
accrued and unpaid interest hereon, immediately upon the making of the loan by
Banc One Capital Partners IV, Ltd. (the "Subordinated Lender") pursuant to the
Loan Agreement to be entered into between AH Texas Subordinated, LLC, an Ohio
limited liability company (the "Subordinated Borrower"), and the Subordinated
Lender and the contribution of the proceeds thereof by the Subordinated Borrower
to the Purchaser as a capital contribution.
4. Place of Payment. All payments under the Note shall be
made and delivered, without setoff or counterclaim, in immediately available
funds to the Seller on the date due by wire
<PAGE>
transfer to an account designated in writing by the Seller to the Purchaser.
5. Security for Payment. Payment of this Note shall be
guaranteed by (a) the Subordinated Borrower, which owns a ninety-nine percent
(99%) limited partnership interest in the Purchaser and all of the issued and
outstanding stock of AH Texas CGP, Inc. ("AH CGP" and, together with the
Subordinated Borrower, the "Obligors"), an Ohio corporation and the owner of a
one percent (1%) general partnership interest in the Purchaser, and (b) AH CGP,
in each case by a non-recourse Guaranty (the "Guaranty"), with all of the
obligations of the Obligors under the Guaranty being secured by a collateral
assignment of all of the partnership interests in the Purchaser held by the
Obligors pursuant to a collateral assignment of partnership interests (the
"Collateral Assignment") being entered into contemporaneously herewith by the
Obligors with the Seller. Notwithstanding any provision in this Note to the
contrary, (i) recourse to the Obligors for the obligations of the Purchaser
under this Note shall be limited to the obligations of the Obligors under the
Guaranty and the security therefor and (ii)in no event shall any officer,
director, incorporator, manager or agent of the Purchaser or the Obligors be
personally liable to the Seller for the payment of the obligations of the
Purchaser under this Note.
6. Events of Default. (a) Each of the following constitutes
an event of default under this Note (an "Event of Default"):
i. (A) Either the Guaranty or the Collateral Assignment shall cease
to be a legal, valid and binding obligation of either of the Obligors, (B)
either Obligor shall default in or fail to perform any of such Obligor's
agreements set forth in the Collateral Assignment, (C) either of the
Obligors shall challenge the validity of the Guaranty or the Collateral
Assignment, or (D) the Collateral Assignment shall cease to create in favor
of the Seller a perfected security interest in the collateral covered
thereby.
ii. An "Event of Default", as defined in the Development Agreement
dated as of the date hereof between the Seller and the Purchaser, by the
Purchaser shall occur.
iii. The Purchaser or either of the Obligors shall: (i) file a
voluntary petition in bankruptcy, insolvency, debtor
TEXAS -2-
<PAGE>
relief or for arrangement, reorganization or other relief under the Federal
Bankruptcy Code or any similar state or federal law; (ii) apply for,
consent to, or suffer the appointment of or taking possession by a
receiver, liquidator, or trustee (or similar official) for the Purchaser or
either of the Obligors or for any part of the Property or any substantial
part of its other property; (iii) make any assignment for the benefit of
creditors; (iv) become insolvent or fail generally to pay debts as they
become due. Any bankruptcy, reorganization, debt arrangement or other
proceeding under bankruptcy or insolvency law, or any dissolution or
liquidation proceeding is instituted against the Purchaser or either of the
Obligors.
(b) At any time after the occurrence of an Event of Default, the
Seller may, at its option, declare the entire principal balance under this Note,
together with interest accrued thereon to be immediately due and payable without
necessity of notice to the Purchaser, and the Seller may exercise all remedies
available to it.
(c) Upon an Event of Default, the Seller, at its option, may proceed
to exercise its rights and remedies under the Guaranty and the Collateral
Assignment and to exercise any other rights and remedies against the Purchaser
or with respect to this Note which the Seller may have at law, at equity or
otherwise. The Seller's remedies under this Note, the Guaranty and the
Collateral Assignment shall be cumulative and concurrent and may be pursued
singly, successively, or together against any or all of the Purchaser and the
Obligors. The Seller may resort to every other right or remedy available at law
or in equity without first exhausting the rights and remedies contained herein,
all in the Seller's sole discretion. Failure of the Seller, for any period of
time or on more than one occasion, to exercise its option to accelerate the
maturity date of this Note shall not constitute a waiver of that right at any
time during an Event of Default or in the event of any subsequent Event of
Default. The Seller shall not by any other omission or act be deemed to waive
any of its rights or remedies unless such waiver is written and signed by an
officer of the managing general partner of the Seller, and then only to the
extent specifically set forth. A waiver in connection with one event shall not
be construed as continuing or as a bar to or waiver
TEXAS -3-
<PAGE>
of any right or remedy in connection with a subsequent event. No single or
partial exercise of any power under this Note or under the Guaranty or the
Collateral Assignment shall preclude other or further exercise thereof. The
Seller shall at all times have the right to proceed against any portion of any
security held for this Note in such order and in such manner as the Seller may
deem fit, without waiving any rights with respect to any other security. No
delay or omission on the part of the Seller in exercising any right under this
Note shall operate as a waiver of such right or of any other right under this
Note.
7. Notices. 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 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 Purchaser: AH Texas Owner
Limited Partnership
41 South High Street
Suite 1300
Columbus, Ohio 43215
Attn: David B. Fenkell
Fax: (614) 365-2499
If to the Seller: BLC Of Texas - II, L.P.
C/O Brookdale Living
Communities, Inc.
77 W. Wacker Drive
Suite 4800
Chicago, Illinois 60601
Attn: Darryl W. Copeland, Jr.
Fax: (312) 977-3699
with a copy to: Brookdale Living
Communities, Inc.
77 West Wacker Drive
TEXAS -4-
<PAGE>
Suite 4800
Chicago, Illinois 60601
Attn: Robert J. Rudnik
Fax: (312) 977-3701
and to: Winston & Strawn
35 West Wacker Drive
Chicago, IL 60601
Attn: Wayne D. Boberg
Fax: (312) 558-5700
8. Governing Law. This Note 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).
9. Waivers, Consents, Etc. The Purchaser (a) waives presentment and
demand for payment, notices of nonpayment and of dishonor, protest of dishonor,
and notice of protest; (b) except as specifically required herein, waives all
notices in connection with the performance, default, or enforcement or
collection of this Note; (c) waives any and all lack of diligence and delays in
the enforcement or collection of this Note; (d) agrees that its liability shall
be unconditional and without regard to the liability of any other person or
entity, and shall not in any manner be affected by any indulgence or forbearance
granted or consented to by the Seller; (e) consents to the release of any
security at any time given, with or without substitution, and to the release of
any person or entity liable for the payment thereof; and (f) consents to the
addition of any and all other makers, endorsers, guarantors, and other obligors,
and to the acceptance of any and all other security, and agrees that the
addition of any such obligors or security shall not affect the liability of the
Purchaser.
10. Interest Laws. The Purchaser and the Seller intend to comply
with the laws of the State of Illinois with regard to the rate of interest
charged. Notwithstanding any provision to the contrary in this Note, no such
provision shall require the payment or permit the collection of any amount
("Excess Interest") in excess of the maximum amount of interest or loan charges
permitted by law to be charged. If any Excess Interest is provided for, or
TEXAS -5-
<PAGE>
is adjudicated to be provided for, in this Note, then (a) the provisions of this
paragraph shall govern and control; (b) the Purchaser shall not be obligated to
pay any Excess Interest; (c) any Excess Interest that the Seller may have
received shall, at the option of Seller, be (i) applied as a credit against the
then outstanding principal balance of this Note or against the accrued and
unpaid interest thereon not to exceed the maximum amount permitted by law; (ii)
refunded to the payor, or (iii) so applied or refunded in any combination of the
foregoing; (d) the applicable interest rate or loan charges shall be reduced to
the maximum lawful rate, and this Note shall be reformed and modified to reflect
such reduction in the applicable interest rate or loan charges; and (e) the
Purchaser shall not have any action against the Seller for any damages
whatsoever arising from the collection of Excess Interest. If a refund reduces
principal, the reduction shall be treated as a partial prepayment, though not
subject to any minimum limit on permitted prepayments.
In Witness Whereof, the Purchaser has caused this Note to be executed
as of the date first stated above.
AH TEXAS OWNER LIMITED PARTNERSHIP,
an Ohio limited partnership
By: AH Texas CGP, Inc.,
its general partner
By: _______________________________
Name:______________________________
Its:_______________________________
TEXAS -6-
<PAGE>
EXHIBIT 10.8
DEVELOPMENT AGREEMENT
---------------------
This DEVELOPMENT AGREEMENT (this "Agreement"), dated as of March 31, 1998,
is made and entered into by and between AH TEXAS OWNER LIMITED PARTNERSHIP, an
Ohio limited partnership ("Owner"), and BLC OF TEXAS-II, L.P., a Delaware
limited partnership ("Developer").
RECITALS
--------
WHEREAS, Owner is acquiring certain real property from Developer pursuant
to that certain Purchase and Sale Agreement of even date herewith between
Developer, as seller, and Owner, as purchaser (the "Purchase and Sale
Agreement"), and desires to develop it for use as a senior and assisted living
facility in Austin, Texas, which is currently referred to as The Heritage at
Gaines Ranch (the "Project");
WHEREAS, Developer is experienced and qualified in the business of
developing senior and assisted living facilities such as the Project, and Owner
desires to engage Developer to perform development services in connection with
the construction of the Project;
WHEREAS, Developer has commenced construction of the Project and has
entered into a construction contract, an architectural contract and other
contracts related thereto, and hereafter shall enter into additional contracts
and amendments, change orders, modifications or supplements of or to any of the
foregoing (collectively, the "Construction Contracts"); and
WHEREAS, Owner desires to retain Developer to, and Developer is willing to,
perform development services in connection with the construction of the Project
on the terms and subject to the conditions set forth in this Agreement.
AGREEMENTS
----------
NOW, THEREFORE, in consideration of the recitals and the mutual promises
and covenants herein contained and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
1. Responsibilities of Developer.
<PAGE>
(a) Owner hereby engages Developer to perform the services in
connection with the development and construction of the Project normally and
customarily performed by a developer of a commercial real estate project and as
further described herein, and Developer hereby accepts such engagement and,
subject to the conditions set forth in this Agreement, agrees to provide such
services, at Owner's expense. During the term of this Agreement, Developer
shall have full authority to construct the Project or cause the Project to be
constructed as a senior and assisted living facility, and shall have full and
complete control and reign over, and use of, the entire Project, including its
common areas. Without limiting the generality of the foregoing, Developer
shall, at Owner's expense, have full authority as follows:
(i) Regulatory Compliance. Developer shall use reasonable
efforts to obtain and maintain all licenses, permits, qualifications and
approvals from any applicable governmental or regulatory authority required for
the construction of the Project. In addition, Developer shall supervise and
coordinate the preparation and filing of (and, where required to do so under
applicable law or regulations, file) all reports or other information required
by all state or other governmental agencies having jurisdiction over the Project
and shall deliver copies of all such reports and information to Owner
simultaneously with such filings. Developer shall cooperate with governmental
inspection and enforcement activities.
(ii) Equipment and Improvements. Developer shall, on behalf of
Owner, acquire or effect the acquisition of equipment and improvements which are
needed to operate the Project or its services.
(iii) Existing Contracts. Developer shall have the right and
authority, at the Owner's expense, to enter into, perform, and modify its
obligations and duties under the Construction Contracts and to deal with, and
enforce the obligations of, all parties thereto.
(iv) Legal Proceedings. Developer shall have the right and
authority, on its own behalf or through legal counsel designated by Developer,
direct all legal matters and proceedings that are within the scope of
Developer's authority pursuant to this Agreement. Without limiting the
generality of the foregoing, Developer is authorized (without the prior written
consent of Owner) to (a) settle, in the name and on behalf of Owner and on
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<PAGE>
such terms and conditions as Developer may deem to be in the best interests of
the Project, any and all claims or demands arising out of, or in connection
with, the operation of the Project, whether or not legal action has been
instituted and (b) enter into such agreements with any governmental agencies
having jurisdiction over the Project deemed necessary or desirable by Developer
in its sole and absolute judgment. All such amounts paid in respect of any such
settlements and agreements shall be expenses of the Project and be paid by
Owner. Developer will give notice promptly to Owner of all demands and claims
and all settlements and legal actions, but the failure to give such notice shall
not affect the preceding provisions of this paragraph.
(v) Other Matters. Developer shall, on its own behalf or, if
necessary, on Owner's behalf, be permitted to enter into such other agreements,
contracts, easements and to perform such other acts as are necessary or
desirable, in Developer's sole and absolute discretion, for the completion and
operation of the Project.
2. Responsibilities of Owner. Owner shall not interfere with Developer in
connection with the development of the Project in accordance with the terms of
this Agreement. Owner acknowledges and agrees that the development of the
Project is within the exclusive control of Developer, and Owner hereby grants
Developer sole and exclusive possession and control over the Project. Owner
hereby assumes and agrees to pay in accordance with the next sentence hereof (i)
all costs, expenses and obligations incurred by Developer through and including
the date of this Agreement in connection with the development and construction
of the Project which have not been paid as of the date of this Agreement, which
costs, expenses and obligations include, but are not necessarily limited to
retainage held back from the general contractor of the Project ($63,626.89 as of
February 28, 1998) and accrued developer's fees payable by Developer to
Brookdale Living Communities, Inc. ($662,221.27 as of February 28, 1998), (ii)
all closing costs incurred by Developer, as seller, under the Purchase and Sale
Agreement and (iii) all costs, expenses and obligations incurred by Developer
from and after the date of this Agreement in connection with the development and
construction of the Project. Developer shall be responsible for the payment of
all such costs, expenses and obligations which become due and payable during the
term of this Agreement, and Owner shall reimburse Developer for all amounts paid
by Developer immediately upon termination of this Agreement.
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<PAGE>
3. Exclusive Representative/Attorney-in-Fact. It is understood and agreed
that Developer shall be the exclusive representative of Owner for purposes
described in this Agreement, including, without limitation, all acts, functions
and activities which would normally and customarily be performed by a developer
of real estate in connection with the construction of a major commercial
project. Any communications, any regulatory authorities, governmental agencies,
contractors, materialmen suppliers, employees of the Project shall be directed
through Developer.
4. Insurance. Developer shall, at Owner's expense, arrange for and
maintain all necessary and proper hazard insurance covering the Project,
including the furniture, fixtures and equipment situated thereon, all necessary
and proper public liability insurance for the protection of Developer and Owner.
Developer shall, at Owner's expense, also arrange for and maintain all employee
health and worker's compensation insurance for the Project's personnel. Any
insurance provided pursuant to this paragraph shall be an expense of the Project
payable by Owner.
5. Proprietary Interest. The systems, methods, procedures and controls
employed by Developer and any written materials or brochures developed by
Developer to document the same are to remain the property of Developer and are
not, at any time during or after the term of this Agreement, to be utilized,
distributed, copied or otherwise employed or acquired by Owner, except as
authorized by Developer.
6. Term of Agreement. Unless this Agreement is sooner terminated as
hereinafter expressly provided in Section 7 or as otherwise agreed in writing by
both parties, the term of this Agreement shall commence on the date hereof and
shall end on the earlier to occur of (i) the date on which the amounts due under
that certain Note dated March 30, 1998 made by Owner to Developer in the amount
of $4,016,340.53 are payable (whether at maturity of such Note or by reason of
the acceleration of such Note or prepayment thereunder) and (ii) June 30, 1998.
7. Events of Default and Remedies.
(a) Event of Default. At the option of the non-
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<PAGE>
defaulting party, each of the following shall constitute an "Event of Default"
hereunder:
(i) if Owner shall fail to pay or allow payment of any installment of
the Fees due to Developer in accordance with Section 10 hereof for a period of
five (5) days after written notice of such failure from Developer;
(ii) if Owner fails to perform in any material respect any term,
provision, or covenant of this Agreement (other than as set forth in Section
7(a)(i)) and (A) such failure continues for ten (10) days after written notice
from Developer specifying such failure to perform (unless such failure cannot be
cured by the payment of money and cannot reasonably be cured within such 10-day
period, in which event, Owner shall have an additional period, not to exceed an
additional thirty (30) days, in which to cure the default) or (B) Owner fails to
endeavor diligently and continuously to cure such default as promptly as is
practicable;
(iii) if Developer fails to perform in any material respect any term,
provision, or covenant of this Agreement and (A) subject to Section 8 below,
such failure continues for thirty (30) days after written notice from Owner
specifying such failure to perform (unless such failure cannot reasonably be
cured within such 30-day period, in which event, the defaulting party shall have
an additional period as is necessary to cure the default) or (B) Developer fails
to endeavor diligently and continuously to cure such default as promptly as is
practicable;
(iv) if either Owner, on the one hand, or Developer, on the other, is
dissolved or liquidated, applies for or consents to the appointment of a
receiver, trustee or liquidator of all or a substantial part of its assets,
files a voluntary petition in bankruptcy or is the subject of an involuntary
bankruptcy filing, makes a general assignment for the benefit of creditors, or
files a petition or an answer seeking reorganization or arrangement with
creditors or to take advantage of any insolvency law, or if an order, judgment
or decree shall be entered by any court of competent jurisdiction, on the
application of a creditor, adjudicating Owner or Developer bankrupt or insolvent
or approving a petition seeking reorganization of Owner or Developer or
appointing a receiver, trustee or liquidator for such party of all or a
substantial part of its assets, and such order, judgment or decree shall
continue unstayed and in effect for any period of sixty (60) consecutive days.
-5-
<PAGE>
(b) Remedies. At any time after the occurrence and during the
continuance of any Event of Default caused by Owner, Developer may, at its
option, do one or more of the following: (i) exercise its rights under that
certain Guaranty ("Guaranty") dated as of the date hereof made by AH Texas CGP,
Inc., an Ohio corporation and AH Texas Subordinated, LLC, an Ohio limited
liability company (collectively, the "Guarantors"), and that certain Collateral
Assignment of Partnership Interests dated as of the date hereof made by the
Guarantors ("Assignment"), (ii) terminate this Agreement by giving written
notice to Owner and/or (iii) exercise all rights and remedies available under
law or equity. At any time after the occurrence and during the continuance of an
Event of Default caused by Developer under Section 7(a)(iv) above, Owner may, at
its option, terminate this Agreement by giving written notice to Developer. At
any time after the occurrence and during the continuance of an Event of Default
caused by Developer (other than under Section 7(a)(iv) above), Owner may, as its
option, terminate this Agreement in accordance with the terms hereof and
Developer shall have no other liability to Owner hereunder.
8. Force Majeure. The parties will not be deemed to be in violation or
breach of this Agreement if they are prevented from performing any of their
respective obligations hereunder for any reason beyond their control, including,
without limitation, strikes, shortages, war, acts of God, or any applicable
statute, regulation or rule of federal, state or local government or agency
thereof having jurisdiction over the Project or the operations thereof.
9. [Intentionally Omitted]
10. Fees. During the term of this Agreement, Developer shall be entitled
to receive development fees (the "Fees") in an amount and payable by Owner as
follows:
(a) all corporate overhead and administrative costs and capitalized
interest costs incurred by Developer after the date hereof in performing
the services under this Agreement; and
(b) an additional amount equal to the amount specified in Section
10(a) above.
-6-
<PAGE>
The Fees described in this Section 10 above shall accrue and shall be due and
payable by Owner to Developer in cash on the date on which this Agreement is
terminated.
11. Assignment. This Agreement shall not be assigned (including by
operation of law, whether by merger or consolidation (excluding a merger
effected solely for the purpose of changing Owner's jurisdiction of
incorporation that does not affect the ownership interests of Owner in any
material respect) or otherwise) by Owner, on the one hand, or by Developer, on
the other, without the prior written consent of the other party; provided,
however, that to the extent permitted by applicable law and regulations, and
subject to the receipt of all required licenses, permits, approvals and
authorizations of applicable governmental agencies, this Agreement may be
assigned by Developer to one or more corporations or other legal entities all
the shares (and, in the case of legal entities other than corporations, all the
equity ownership and voting control) of which are owned, directly or indirectly,
by Developer or by Brookdale Living Communities, Inc.
12. Notices. Any notices required or permitted to be sent hereunder shall
be delivered personally or by facsimile (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 delivered hereunder, and shall be deemed to have been given upon
delivery, if delivered personally, upon receipt with answer back acknowledged,
if delivered by facsimile, 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 Owner, to:
AH Texas Owner Limited Partnership
41 South High Street, Suite 1300
Columbus, Ohio 43215
Attn: David B. Fenkell
Facsimile: (614) 365-2499
If to Developer, to:
c/o Brookdale Living Communities, Inc.
-7-
<PAGE>
77 West Wacker Drive
Suite 4400
Chicago, Illinois 60601
Attn: Darryl W. Copeland, Jr.
Facsimile: (312) 977-3699
With a copy to:
c/o Brookdale Living Communities, Inc.
77 West Wacker Drive
Suite 4400
Chicago, Illinois 60601
Attn: Robert J. Rudnik
Facsimile: (312) 977-3701
and to:
Winston & Strawn
35 West Wacker Drive
Chicago, Illinois 60601
Attn: Wayne D. Boberg, Esq.
Facsimile: (312) 558-5700
13. Relationship of the Parties. The relationship of Developer to Owner in
connection with this Agreement shall be that of an independent contractor, and
all acts performed by Developer during the term hereof shall be deemed to be
performed in Developer's capacity as an independent contractor. Nothing
contained in this Agreement is intended to or shall be construed to give rise to
or create a partnership or joint venture or lease between Owner, its successors
and assigns, on the one hand, and Developer, its successors and assigns, on the
other hand.
14. Entire Agreement. This Agreement and any documents executed in
connection herewith contain the entire agreement among the parties with respect
to the subject matter hereof and, subject to the restrictions contained in
Section 11 above, shall be binding upon their respective successors and assigns,
and shall be construed in accordance with the laws of the state where the
Project is located. This Agreement may not be modified or amended except by
written instrument signed by the parties hereto.
15. Contract Modifications for Certain Legal Events. In the event any
state or federal laws or regulations, whether now
-8-
<PAGE>
existing or enacted or promulgated after the effective date of this Agreement,
are interpreted by judicial decision, a regulatory agency or legal counsel of
both parties in such a manner as to indicate that the structure of this
Agreement may be in violation of such laws or regulations, Owner and Developer
agree to cooperate in restructuring their relationship and this Agreement to
eliminate such violation or to reduce the risk thereof to the extent such
restructuring can be accomplished upon commercially reasonable terms; provided,
that any such restructuring shall, to the maximum extent possible, preserve the
underlying economic and financial arrangements between Owner and Developer. The
parties agree that such amendment may require either or both parties to obtain
appropriate regulatory licenses and approvals.
16. Captions. The captions used herein are for convenience of reference
only and shall not be construed in any manner to limit or modify any of the
terms hereof.
17. Severability. In the event one or more of the provisions contained in
this Agreement is deemed to be invalid, illegal or unenforceable in any respect
under applicable law, the validity, legality and enforceability of the remaining
provisions hereof shall not in any way be impaired thereby.
18. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, and each such counterpart
shall together constitute but one and the same Agreement.
19. Limitation of Personal Liability. Notwithstanding any other provision
of this Agreement to the contrary, in no event shall any officer, director,
member, partner, manager, shareholder, incorporator or agent of Owner or of
Owner's affiliates be personally liable to Developer for any of Owner's
obligations under this Agreement, except as expressly provided in the Guaranty
and the Assignment.
[signature page follows]
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Development
Agreement to be executed and delivered in their names and on their behalf as of
the date first set forth above.
OWNER:
AH TEXAS OWNER LIMITED PARTNERSHIP,
an Ohio limited partnership
By: AH Texas CGP, Inc.,
its general partner
By:________________________________
Title:_____________________________
DEVELOPER:
BLC OF TEXAS-II, L.P.,
a Delaware limited partnership
By: Brookdale Living Communities
of Texas-II, Inc., its general
partner
By:________________________________
Title:_____________________________
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<PAGE>
EXHIBIT 10.9
GUARANTY
To: BLC of Texas-II, L.P.
c/o Brookdale Living Communities, Inc.
77 West Wacker Drive
Suite 4800
Chicago, Illinois 60601
1. Guaranty of Payment. For value received and in consideration of the
acceptance by BLC of Texas-II, L.P., a Delaware limited partnership (the
"Seller"), of the Note (defined below) of AH Texas Owner Limited Partnership, an
Ohio limited partnership (the "Purchaser"), in partial payment of the purchase
price payable by the Purchaser to the Seller pursuant to the Purchase and Sale
Agreement, dated as of the date hereof (the "Purchase Agreement"), between the
Seller and the Purchaser, AH TEXAS SUBORDINATED, LLC, an Ohio limited liability
company (the "Limited Partner"), and AH TEXAS CGP, INC., an Ohio corporation
(the "General Partner" and together with the Limited Partner, individually, a
"Guarantor" and together, the "Guarantors"), which together own all of the
partnership interests in the Purchaser, hereby unconditionally guarantee,
jointly and severally, the full and prompt payment when due, whether by
acceleration or otherwise, and at all times thereafter, of all obligations (all
such obligations being hereinafter collectively called the "Liabilities") of the
Purchaser to the Seller, howsoever created, arising or evidenced, whether direct
or indirect, absolute or contingent, or now or hereafter existing, or due or to
become due, and the performance by the Purchaser of its obligations, under or in
connection with (i) the Note, dated the date hereof (as amended, restated,
extended or replaced from time to time, the "Note"), of the Purchaser payable to
the order of the Seller in the amount of $4,016,340.53, (ii) the Purchase
Agreement, and (iii) the Development Agreement, dated as of the date hereof (as
amended or restated from time to time, the "Development Agreement"), between the
Purchaser and the Seller, and the Guarantors further agree to pay all expenses
and attorneys' fees paid or incurred by the Seller in endeavoring to collect the
Liabilities, or any part thereof, and in enforcing this Guaranty.
<PAGE>
2. Non-Recourse Guaranty. The obligations of the Guarantors hereunder are
secured by the Collateral Assignment of Partnership Interests, dated as of the
date hereof (the "Collateral Assignment"), by the Guarantors in favor of the
Seller, and notwithstanding any provision of this Guaranty to the contrary, the
Seller's recourse for the collection of the Liabilities shall be limited solely
and exclusively to the collateral covered thereby, and no deficiency judgment
shall be brought or entered into against either Guarantor 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 Guarantor or its officers, directors, members, partners,
managers, shareholders, incorporators or agents, other than the collateral
covered by the Collateral Assignment.
3. Acceleration of the Time of Payment of Amount Payable Under the Guaranty.
The Guarantors agree that, in the event of the dissolution or insolvency of the
Purchaser or either Guarantor, or the inability of the Purchaser or either
Guarantor to pay debts as they mature, or an assignment by the Purchaser or
either Guarantor for the benefit of creditors, or the institution of any
proceeding by or against the Purchaser or either Guarantor alleging that the
Purchaser or such Guarantor is insolvent or unable to pay debts as they mature,
and if such event occurs at a time when any of the Liabilities may not then be
due and payable, the Guarantors will pay to the Seller forthwith the full amount
which would be payable hereunder by the Guarantors as if all Liabilities of the
Purchaser were then due and payable.
4. Continuing Guaranty. This Guaranty is in all respects a continuing,
absolute and unconditional Guaranty (subject to the limitations set forth in
Section 2 of this Guaranty), and will remain in full force and effect
(notwithstanding, without limitation, the dissolution of either Guarantor) until
the Note has been paid in full and all obligations of the Purchaser under the
Development Agreement have been paid or performed in full, all obligations of
the Purchaser under the Purchase Agreement have been paid or performed in full
and the Development Agreement has been terminated.
5. Rescission or Return of Payment on Liabilities. The Guarantors further
agree that, if at any time all or any part of any payment theretofore applied by
the Seller to any of the Liabilities is or must be rescinded or returned by the
Seller for
2
<PAGE>
any reason whatsoever (including, without limitation, the insolvency, bankruptcy
or reorganization of the Purchaser), such Liabilities are, for the purposes of
this Guaranty, to the extent that such payment is or must be rescinded or
returned, deemed to have continued in existence, notwithstanding such
application by the Seller, and this Guaranty will continue to be effective or be
reinstated, as the case may be, as to such Liabilities, all as though such
application by the Seller had not been made.
6. Seller Permitted to Take Certain Actions. The Seller may, from time to time
(but is not obligated to), whether before or after any discontinuance of this
Guaranty, at its sole discretion and without notice to the Guarantors, take any
or all of the following actions without in any way affecting the obligations of
the Guarantors hereunder: (a) receive a security interest in any property to
secure any of the Liabilities or any obligation hereunder; (b) retain or obtain
the primary or secondary obligation of any obligor or obligors, in addition to
the Guarantors, with respect to any of the Liabilities; (c) extend or renew for
one or more periods (whether or not longer than the original period), alter or
exchange any of the Liabilities, or release or compromise any obligation of
either of the Guarantors hereunder or any obligation of any nature of any other
obligor with respect to any of the Liabilities; (d) release its security
interest in, or surrender, release or permit any substitution or exchange for,
all or any part of any property securing any of the Liabilities or any
obligation hereunder, or extend or renew for one or more periods (whether or not
longer than the original period) or release, compromise, alter or exchange any
obligations of any nature of any obligor with respect to any such property; and
(e) resort to the Guarantors for payment of any of the Liabilities, whether or
not the Seller (i) has resorted to any property of any other obligor securing
any of the Liabilities or (ii) has proceeded against any other obligor primarily
or secondarily obligated with respect to any of the Liabilities (all of the
actions referred to in preceding clauses (i) and (ii) being hereby expressly
waived by the Guarantors).
7. Application of Payments. Any amounts received by the Seller from whatsoever
source on account of the Liabilities may be applied by it toward the payment of
such of the Liabilities, and in such order of application, as the Seller may
from time to time elect.
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<PAGE>
8. Subrogation. Until such time as this Guaranty has been discontinued and the
Seller has received payment of the full amount of all Liabilities and of all
obligations of the Guarantors hereunder, no payment made by or for the account
of the Guarantors pursuant to this Guaranty entitles the Guarantors by
subrogation or otherwise to any payment by the Purchaser or from or out of any
property of Purchaser, and the Guarantors will not exercise any right or remedy
against the Purchaser or any property of the Purchaser by reason of any
performance by the Guarantors of this Guaranty.
9. Waiver of Notice and Other Matters. The Guarantors hereby expressly waive:
(a) notice of the acceptance by the Seller of this Guaranty; (b) notice of the
existence or creation or non-payment of all or any of the Liabilities; (c)
presentment, demand, notice of dishonor, protest, and all other notices
whatsoever; and (d) all diligence in collection or protection of or realization
upon the Liabilities or any thereof, any obligation hereunder, or any guaranty
of or any security for any of the foregoing.
10. Additional Liabilities of the Purchasers Permitted. The creation or
existence from time to time of Liabilities in excess of the amount to which the
right of recovery under this Guaranty is limited is hereby authorized, without
notice to the Guarantors, and will in no way affect or impair the rights of the
Seller and the obligations of the Guarantors under this Guaranty.
11. Assignment of Liabilities. The Seller may, from time to time, whether
before or after any discontinuance of this Guaranty, without notice to the
Guarantors, assign or transfer any or all of the Liabilities or any interest
therein; and, notwithstanding any such assignment or transfer or any subsequent
assignment or transfer thereof, such Liabilities will remain Liabilities for the
purposes of this Guaranty, and each and every immediate and successive assignee
or transferee of any of the Liabilities or of any interest therein will, to the
extent of the interest of such assignee or transferee in the Liabilities, be
entitled to the benefits of this Guaranty to the same extent as if such assignee
or transferee were the Seller; provided, however, that, unless the Seller
otherwise consents in writing, the Seller has an unimpaired right, prior and
superior to that of any such assignee or transferee, to enforce this Guaranty,
for the benefit of the Seller, as to those of the Liabilities which the Seller
has not assigned or transferred.
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<PAGE>
12. Waiver and Modifications. No delay on the part of the Seller in the
exercise of any right or remedy will operate as a waiver thereof, and no single
or partial exercise by the Seller 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 Guaranty be binding
upon the Seller except as expressly set forth in a writing duly signed and
delivered on behalf of the Seller.
13. Obligations Under Guaranty. No action of the Seller permitted hereunder
will in any way affect or impair the rights of the Seller and the obligations of
the Guarantors under this Guaranty. For the purposes of this Guaranty,
Liabilities include all obligations of the Purchaser to the Seller described in
Section 1 of this Guaranty, notwithstanding any right or power of the Purchaser
or anyone else to assert any claim or defense as to the invalidity or
unenforceability of any such obligation, and no such claim or defense will
affect or impair the obligations of the Guarantors hereunder. Subject to the
provisions of Section 2 of this Guaranty, the obligations of the Guarantors
under this Guaranty are absolute and unconditional irrespective of any
circumstance whatsoever which might constitute a legal or equitable discharge or
defense of the Guarantors. The Guarantors hereby acknowledge that there are no
conditions to the effectiveness of this Guaranty.
14. Successors. This Guaranty is binding upon the Guarantors, and upon the
heirs, legal representative, successors and assigns of the Guarantors; and to
the extent that the Purchaser or the Guarantors are either partnerships,
corporations or limited liability companies, all references herein to the
Purchaser and to the Guarantors, respectively, are deemed to include any
successor or successors, whether immediate or remote, to such partnerships,
corporations or limited liability companies.
15. Law. This Guaranty has been delivered in Chicago, Illinois, and will be
construed in accordance with and governed by the laws of the State of Illinois
(without giving effect to principles of conflicts of law).
16. Severability. Wherever possible, each provision of this Guaranty will be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Guaranty is prohibited by or invalid under such
law, such provision will be
5
<PAGE>
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Guaranty.
17. Captions. Section captions used in this Guaranty are for convenience only,
and do not affect the construction of this Guaranty.
18. Consent to Jurisdiction. To induce the Seller to accept this Guaranty, the
Guarantors irrevocably agree that, subject to the Seller's sole and absolute
election, ALL ACTIONS OR PROCEEDINGS IN ANY WAY ARISING OUT OF, FROM OR RELATED
TO THIS GUARANTY WILL BE LITIGATED IN COURTS HAVING SITUS WITHIN CHICAGO,
ILLINOIS. THE GUARANTORS HEREBY CONSENT AND SUBMIT TO THE JURISDICTION OF ANY
COURT LOCATED WITHIN CHICAGO, ILLINOIS, WAIVE PERSONAL SERVICE OF PROCESS UPON
THE GUARANTORS, AND AGREE THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY
REGISTERED MAIL DIRECTED TO THE GUARANTORS AT THE ADDRESSES STATED ON THE
SIGNATURE PAGE HEREOF AND SERVICE SO MADE WILL BE DEEMED TO BE COMPLETED UPON
ACTUAL RECEIPT.
19. Waiver of Jury Trial. THE GUARANTORS HEREBY EXPRESSLY WAIVE ANY RIGHT TO A
TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER
THIS GUARANTY 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 GUARANTORS AGREE THAT THEY WILL NOT ASSERT ANY CLAIM AGAINST
THE SELLER ON ANY THEORY OF LIABILITY, FOR SPECIAL, INDIRECT, CONSEQUENTIAL,
INCIDENTAL OR PUNITIVE DAMAGES.
20. Notices. 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 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:
6
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If to the
Limited Partner: AH Texas Subordinated, LLC
41 South High Street
Suite 1300
Columbus, OH 43215
Attn: David B. Fenkell
Fax: (614) 365-2499
If to the
General Partner: AH Texas CGP, Inc.
41 South High Street
Suite 1300
Columbus, OH 43215
Attn: David B. Fenkell
Fax: (614) 365-2499
If to the Seller: BLC Of Texas - II, L.P.
c/o Brookdale Living
Communities, Inc.
77 West Wacker Drive
Suite 4800
Chicago, IL 60601
Attn: Darryl W. Copeland, Jr.
Fax: (312) 977-3699
with a copy to: Brookdale Living Communities,
Inc.
77 West Wacker Drive
Suite 4800
Chicago, IL 60601
Attn: Robert J. Rudnik
Fax: (312) 977-3701
and to: Winston & Strawn
35 West Wacker Drive
Chicago, IL 60601
Attn: Wayne D. Boberg
Fax: (312) 558-5700
7
<PAGE>
SIGNED AND DELIVERED THIS 30th day of March, 1998.
AH TEXAS SUBORDINATED, LLC
By: AH Texas Investor, Inc.,
its manager
By: _______________________
Name: _____________________
Title: ____________________
AH TEXAS CGP, INC.
By: ____________________________
Name: __________________________
Title: _________________________
Accepted:
BLC OF TEXAS-II, L.P.
By: Brookdale Living Communities
of Texas-II, Inc.,
Managing General Partner
By:___________________________
Name: ________________________
Title: _______________________
8
<PAGE>
EXHIBIT 10.10
COLLATERAL ASSIGNMENT OF PARTNERSHIP INTERESTS
FOR VALUE RECEIVED, the undersigned, AH TEXAS SUBORDINATED, LLC, an Ohio
limited liability company (the "Limited Partner"), and AH TEXAS 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 BLC of Texas - II, L.P., a Delaware limited partnership (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 Texas 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
<PAGE>
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 and perform such other acts and things
(including, without
2
<PAGE>
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 (the "Development
Agreement"), between the Partnership and the
3
<PAGE>
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
4
<PAGE>
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
5
<PAGE>
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 $4,016,340.53;
(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
6
<PAGE>
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 Texas Subordinated, LLC
41 South High Street
Suite 1300
Columbus, Ohio 43215
Attn: David B. Fenkell
Fax: (614) 365-2499
If to the
General Partner: AH Texas CGP, Inc.
41 South High Street
Suite 1300
Columbus, Ohio 43215
Attn: David B. Fenkell
Fax: (614) 365-2499
If to the Assignee: BLC Of Texas - II, L.P.
c/o Brookdale Living
Communities, Inc.
77 West Wacker Drive
Suite 4800
Chicago, Illinois 60601
Attn: Darryl W. Copeland, Jr.
Fax: (312) 977-3699
with a copy to: Brookdale Living
Communities, Inc.
77 West Wacker Drive
Suite 4800
Chicago, Illinois 60601
Attn: Robert J. Rudnik
Fax: (312) 977-3701
and to: Winston & Strawn
35 West Wacker Drive
Chicago, Illinois 60601
Attn: Wayne D. Boberg
Fax: (312) 558-5700
7
<PAGE>
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, without invalidating the remainder of such provision or the
remaining provisions of this Assignment.
8
<PAGE>
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 TEXAS SUBORDINATED, LLC
By: AH Texas Investor, Inc.,
its manager
By: ___________________________
Name: _________________________
Title: ________________________
9
<PAGE>
AH TEXAS CGP, INC.
By: ___________________________
Name: _________________________
Title: ________________________
Accepted:
BLC OF TEXAS-II, L.P.
By: Brookdale Living Communities
of Texas - II, Inc.,
Managing General Partner
By:___________________________
Name: ________________________
Title: _______________________
10
