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): June 30, 1998
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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 4400, 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)
<PAGE>
ITEM 5. OTHER EVENTS
On June 30, 1998, pursuant to the terms and provisions of that certain
Purchase and Sale Agreement (the "Purchase Agreement"), dated as of June 30,
1998, Brookdale Living Communities of North Carolina, Inc. ("BLC-North
Carolina"), a wholly-owned subsidiary of Brookdale Living Communities, Inc.
("BLCI"), sold to AH North Carolina Owner Limited Partnership, an unaffiliated
third party ("Purchaser"), certain land located in Raleigh, North Carolina (the
"Land") on which BLC-North Carolina is constructing a senior independent and
assisted living facility (the "Facility"). The purchase price for the Land was
$2,902,776.97, of which $1,000,000 was paid in cash and $1,902,776.97 was paid
by the delivery of a promissory note (the "Note") issued by Purchaser payable to
the order of BLC-North Carolina. Interest accrues on the Note at the rate of
9.0% per annum, and all amounts due under the Note are payable on September 30,
1998, subject to acceleration under certain circumstances. In connection with
the sale of the Land, BLC-North Carolina and Purchaser entered into a
Development Agreement (the "Development Agreement") pursuant to which BLC-North
Carolina agreed to continue the development of the Facility, and Purchaser
agreed to pay all costs incurred in connection with such development, including
BLC-North Carolina's overhead and administrative costs and capitalized interest.
Purchaser also agreed to pay BLC-North Carolina a development fee in an amount
equal to the aggregate amount of overhead and administrative costs and
capitalized interest expense incurred by BLC-North Carolina in connection with
the development of the Facility. BLC-North Carolina has agreed to fund all costs
incurred in connection with the development of the Facility, and Purchaser has
agreed to reimburse BLC-North Carolina for such costs, including BLC-North
Carolina's overhead and administrative costs, upon the termination of the
Development Agreement, which expires by its terms on September 30, 1998. It is
expected that, prior to the expiration of the Development Agreement, Purchaser
will close on financing for the construction of the Facility, at which time the
Development Agreement will be amended and restated. BLC-North Carolina has the
right (the "Repurchase Right") to repurchase the Land and the Facility from
Purchaser under certain circumstances, including the failure of Purchaser to
close on financing for the construction of the Facility by September 30, 1998,
for a price based on Purchaser's cost thereof. The repayment of the Note and the
performance of Purchaser's obligations under the Development Agreement and
Purchaser's obligations in connection with the Repurchase Right are guaranteed
by the owners of Purchaser, which guaranty is secured by a collateral assignment
of the owners' interests in Purchaser in favor of BLC-North Carolina. The
obligations of BLC-North Carolina under the Purchase Agreement and the
Development Agreement are guaranteed by BLCI.
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, including
the ability to complete development projects on time and on budget, 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.
<PAGE>
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 June 30, 1998, by and between
AH North Carolina Owner Limited Partnership and Brookdale Living
Communities of North Carolina, Inc., and guaranteed by Brookdale Living
Communities, Inc.
10.2 Note, dated June 30, 1998, issued by AH North Carolina Owner Limited
Partnership in favor of Brookdale Living Communities of North Carolina,
Inc. in the principal amount of $1,902,776.97
10.3 Development Agreement, dated as of June 30, 1998, by and between AH
North Carolina Owner Limited Partnership and Brookdale Living
Communities of North Carolina, Inc., and guaranteed by Brookdale Living
Communities, Inc.
10.4 Guaranty Agreement, dated as of June 30, 1998, issued by AH North
Carolina CPG, Inc. and AH North Carolina Subordinated, LLC in favor of
Brookdale Living Communities of North Carolina, Inc.
10.5 Collateral Assignment of Partnership Interests, dated as of June 30,
1998, issued by AH North Carolina CPG, Inc. and AH North Carolina
Subordinated, LLC for the benefit of Brookdale Living Communities of
North Carolina, Inc.
<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 hereunto duly authorized.
BROOKDALE LIVING COMMUNITIES, INC.
Registrant
Dated: July 17, 1998 By: /s/ Robert J. Rudnik
--------------------
Robert J. Rudnik
Executive Vice President/
General Counsel
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (this "Agreement") is entered into
effective as of June 30, 1998, by and BROOKDALE LIVING COMMUNITIES OF NORTH
CAROLINA, INC., a Delaware corporation ("Seller"), and AH NORTH CAROLINA 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 in Raleigh, North
Carolina consisting of approximately 8.25 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 219 units, which Facility is being constructed pursuant to that
certain letter of intent to enter into a Construction Contract dated April 27,
1998 (together with the Construction Contract entered into pursuant to such
letter of intent, the "Construction Contract"), between Seller, as owner, and
McDevitt Street Bovis, Inc.(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.
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 Two Million Nine Hundred Two Thousand Seven Hundred
Seventy-six and .97/100 Dollars ($2,902,776.97) (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), 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 One Million Nine Hundred Two
Thousand Seven Hundred Seventy-six and .97/100 Dollars ($1,902,776.97). The
repayment of the Note and the obligations of Purchaser under this Agreement and
the Development Agreement shall be guarantied (a) by AH North Carolina
Subordinated, LLC ("AH Subordinated"), an Ohio limited liability 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 North Carolina
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 ($0 as ofthe date
hereof) and accrued developer's fees payable by Seller to BLCI ($231,195.30 as
of the date hereof), 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
June 30, 1998, unless otherwise agreed by the parties hereto. The Closing shall
take place at the offices of Hunton & Williams. 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, its partners, officers, managers,
employees, agents, (including without limitation David B. Fenkell) 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; (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 and (e) the Property is in full compliance with all
applicable laws, including, without limitation, any laws governing hazardous
substances. 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 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 September 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 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 October 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 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.
(j) Indemnity. Seller agrees to indemnify and hold harmless Purchaser, its
partners, officers, managers, employees, agents (including without limitation
David B. Fenkell) for any and all costs and/or expenses (including without
limitation reasonable attorneys' fees) in connection with any tax audit or
related proceedings directly arising out of the transactions contemplated by
this Agreement. This indemnity shall survive the closing.
(k) Telecopy. This Agreement may be transmitted via telecopy and shall be
deemed an original for all purposes.
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]
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed and delivered this
Agreement as of the date first above written.
SELLER:
Brookdale Living Communities of North
Carolina, Inc.
By: __________________________
Name: Darryl W. Copeland, Jr.
Its: Vice President
PURCHASER:
AH North Carolina OWNER LIMITED
PARTNERSHIP
By: AH North Carolina CGP, Inc., its
Managing General Partner
By:
Name: David B. Fenkell
Its: President
<PAGE>
EXHIBIT A
LEGAL DESCRIPTION
[SEE ATTACHED]
<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.
<PAGE>
EXHIBIT C
FORM OF PROMISSORY NOTE
blc\nomura\P&S North Carolina
<PAGE>
JOINDER BY BROOKDALE LIVING COMMUNITIES, INC.
This Joinder (this "Joinder") by Brookdale Living Communities, Inc., a
Delaware corporation ("Guarantor"), effective as of June 30, 1998, is attached
to and a part of that certain Purchase and Sale Agreement (the "Agreement")
dated as of June 30, 1998, by and between AH North Carolina Owner Limited
Partnership ("Purchaser") and Brookdale Living Communities of North Carolina,
Inc. ("Seller"). Guarantor is the sole stockholder of all of the outstanding
stock of Seller and, as such, will benefit from the Agreement. All terms not
otherwise defined in this Joinder shall have the same meaning ascribed to them
in the Agreement. Guarantor hereby irrevocably, absolutely and unconditionally
guarantees to Purchaser, its partners, officers, managers, employees, agents
(including without limitation David B. Fenkell) the prompt and complete
observance, fulfillment and performance of all of the obligations of Seller
under or pursuant to the Agreement.
GUARANTOR:
BROOKDALE LIVING COMMUNITIES, INC.,
a Delaware corporation
By:
Name: Darryl W. Copeland, Jr.
Title: Executive Vice President
NOTE
$1,902,776.97 June 30, 1998
FOR VALUE RECEIVED, AH North Carolina Owner Limited
Partnership, an Ohio limited partnership (the "Purchaser"), hereby promises to
pay, on September 30, 1998, to the order of Brookdale Living Communities of
North Carolina, Inc., a Delaware Corporation (the "Seller"), the principal
amount of ONE MILLION NINE HUNDRED TWO THOUSAND SEVEN HUNDRED SEVENTY-SIX
DOLLARS AND NINTY-SEVEN CENTS ($1,902,776.97), 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 North Carolina 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 transfer to an account designated in writing
by the Seller to the Purchaser.
<PAGE>
-6-
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 North Carolina 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 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.
<PAGE>
(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 f 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 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:
<PAGE>
If to the Purchaser: AH North Carolina Owner
Limited Partnership
320 King of Prussia Road, Suite 160
Radnor, PA 19087
Attn: David B. Fenkell
Fax: (610) 902-0777
With a copy to: Squire, Sanders & Demsey
1300 Huntington Center
41 South High Street
Columbus, Ohio 43215
Attn: Scott West, Esq.
Facsimile: (614) 365-2499
If to the Seller: Brookdale Living Communities of North Carolina, Inc.
Brookdale Living Communities, Inc.
77 W. Wacker Drive, Suite 4400
Chicago, Illinois 60601
Attn: Darryl W. Copeland, Jr.
Fax: (312) 977-3692
<PAGE>
with a copy to: Brookdale Living Communities, Inc.
77 West Wacker Drive, Suite 4400
Chicago, Illinois 60601
Attn: Robert J. Rudnik
Fax: (312) 977-3769
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).
<PAGE>
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 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.
This Note may be transmitted via telecopy and shall be deemed an
original for all purposes.
In Witness Whereof, the Purchaser has caused this Note to be executed
as of the date first stated above.
AH NORTH CAROLINA OWNER LIMITED PARTNERSHIP,
an Ohio limited partnership
By: AH North Carolina CGP, Inc.,
its general partner
By: ___________________________
Name: David B. Fenkell
Its: President
DEVELOPMENT AGREEMENT
This DEVELOPMENT AGREEMENT (this "Agreement"), dated as of June 30,
1998, is made and entered into by and between AH NORTH CAROLINA OWNER LIMITED
PARTNERSHIP, an Ohio limited partnership ("Owner"), and BROOKDALE LIVING
COMMUNITIES OF NORTH CAROLINA, 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 Raleigh, North Carolina, which is legally described on Exhibit A
attached hereto and currently referred to as Regency Place(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 (i) a letter of intent to enter into a construction contract with
McDevitt Street Bovis, Inc., as general contractor, (ii) an architectural
contract and (iii) 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:
<PAGE>
1. Responsibilities of Developer.
<PAGE>
-19-
(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.
<PAGE>
(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 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, accrued developer's fees payable by
Developer to Brookdale Living Communities, Inc. ($231,195.30) as of the date
hereof), (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. 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, material men suppliers, employees of the Project shall be
directed through Developer. Owner hereby appoints Developer as Owner's
attorney-in fact, coupled with an interest, to execute and deliver any
agreements, documents and instruments on behalf of Owner in accordance with this
Agreement; provided, however, any such agreement, document or instrument
executed by Developer as Owner's attorney-in-fact shall contain the following
language: "Notwithstanding any other provision of this [insert name of document]
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 for any of Owner's obligations under this Agreement."
<PAGE>
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 June 30, 1998 made by Owner to Developer in the amount
of $1,902,776.97 are payable (whether at maturity of such Note or by reason of
the acceleration of such Note or prepayment thereunder) and (ii) September 30,
1998.
7. Events of Default and Remedies.
(a) Event of Default. At the option of the non-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;
<PAGE>
(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.
(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 North
Carolina CGP, Inc., an Ohio corporation and AH North Carolina 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.
<PAGE>
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. Indemnity.
(a) Developer agrees to indemnify, reimburse, defend and hold
harmless Owner, its partners and their directors, officers, employees, partners,
members, managers, shareholders, and agents (individually, an "Indemnified
Party" and collectively, the "Indemnified Parties") for, from and against all
demands, claims, actions or causes of action, assessments, losses, damages,
reasonable attorneys' fees, disbursements and expenses, including costs of
Remedial Work (as defined below)(collectively "Losses"), asserted against,
resulting to, imposed on, or incurred by any of them, directly or indirectly, in
connection with any of the following:
(i) events, circumstances, or conditions which occur, are
alleged to, or do, form the basis for an Environmental Claim
(as defined below);
(ii) the presence, Use (as defined below) or Release (as
defined below) of Hazardous Substances (as defined below) at,
on, in, under, or from the Project, which presence, use or
release requires or could reasonably require Remedial Work;
(iii) any Environmental Claim against any Person (as defined
below) whose liability for such Environmental Claim Developer
has or may have assumed or retained either contractually or by
operation of law;
(iv) events, circumstances, or conditions relating to the
Project or Developer which occur, are alleged to, or do, form
the basis for any claim under any applicable laws except to
the extent caused directly by Owner or any of the Indemnified
Parties;
(v) any failure of Developer to fulfill each and every
obligation undertaken pursuant to this Agreement; or
(vi) anything occurring at or around, or in connection with,
the Project during the term of the Agreement except to the
extent caused directly by Owner or any of the Indemnified
Parties.
(b) Nothing in this Agreement shall be deemed to deprive an Indemnified
Party of any rights or remedies provided to such Indemnified Party
elsewhere in this Agreement or otherwise available to such Indemnified
Party under law. Developer waives and releases each Indemnified Party
from any rights or defenses Developer may have under common law or
Environmental Laws for liability arising from or resulting from the
presence, Use or Release of Hazardous Substances except to the extent
directly caused by the gross negligence, fraud or willful misconduct of
such Indemnified Party.
(c) Definitions. As used herein, the following terms shall have the
following meanings:
"Environmental Claim" means any written request for
information by a governmental authority, or any written notice,
notification, claim, administrative, regulatory or judicial action,
suit, judgment, demand or other written communication by any Person or
governmental authority requiring, alleging or asserting liability with
respect to Developer, Owner or the Project, whether for damages,
contribution, indemnification, cost recovery, compensation, injunctive
relief, investigatory, response, remedial or cleanup costs, damages to
natural resources, personal injuries, fines or penalties arising out
of, based on or resulting from (i) the presence, Use, Release or
threatened Release into the environment of any Hazardous Substance in
violation of any Environmental Law originating at or from, or otherwise
affecting, the Project, (ii) any fact, circumstance, condition or
occurrence forming the basis of any violation, or alleged violation, of
any Environmental Law by Developer or otherwise affecting the Project
or (iii) any alleged injury or threat of injury to health, safety or
the environment by Developer or otherwise affecting the Project arising
from actions which are in violation of Environmental Laws.
"Environmental Laws" means any and all applicable
federal, state, local and foreign laws, rules, regulations or municipal
ordinances each as amended from time to time, and any Permits,
approvals, licenses, registrations, filings and authorizations, in each
case as in effect as of the relevant date, relating to the environment,
health or safety, and pertaining to or imposing liability or standards
of conduct concerning environmental regulation, contamination or
clean-up, including the Comprehensive Environmental Response,
Compensation and Liability Act, the Resource Conservation and Recovery
Act, the Emergency Planning and Community Right-to-Know Act of 1986,
the Hazardous Substances Transportation Act, the Solid Waste Disposal
Act, the Clean Water Act, the Clean Air Act, the Toxic Substance
Control Act, the Safe Drinking Water Act, the Occupational Safety and
Health Act, any state super-lien and environmental clean-up statutes
and all amendments to and regulations in respect of the foregoing laws.
"Hazardous Substance" means, collectively, (i) any
petroleum or petroleum products or waste oils, explosives, radioactive
materials, asbestos, urea formaldehyde foam insulation, polychlorinated
biphenyls ("PCBs"), lead in drinking water, and lead based paint, the
presence, generation, use, transportation, storage or disposal of or
exposure to which (x) is regulated or could lead to liability under any
Environmental Law or (y) is subject to notice or reporting requirements
under any Environmental Law, (ii) any chemicals or other materials or
substances which are now or hereafter become defined as or included in
the definition of "hazardous substances," "hazardous wastes,"
"hazardous materials," "extremely hazardous wastes," "restricted
hazardous wastes," "toxic substances," "toxic pollutants,"
"contaminants," "pollutants" or words of similar import under any
Environmental Law and (iii) any other chemical or any other material or
substance, exposure to which is now or hereafter prohibited, limited or
regulated under any Environmental Law.
"Person" means any individual, corporation, limited
liability company, partnership, joint venture, estate, trust,
unincorporated association, or any other entity, any federal, state,
county or municipal government or any bureau, department or agency
thereof and any fiduciary acting in such capacity on behalf of any of
the foregoing.
"Release" means, with respect to any Hazardous
Substances, any release, threatened release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, leaching
or migration into the indoor or outdoor environment, including, without
limitation, the movement of Hazardous Substances through ambient air,
soil, surface water, ground water, wetlands, land or subsurface strata.
"Remedial Work" means any investigation, site
monitoring, containment, cleanup, removal, restoration or other work of
any kind reasonably necessary or required under an applicable
Environmental Law.
"Use" means, with respect to any Hazardous Substance,
the generation, manufacture, processing, distribution, handling, use,
treatment, recycling or storage of such Hazardous Substance in
violation of Environmental Laws or transportation to or from the
Project of such Person of such Hazardous Substance in violation of
Environmental Laws.
The terms and provisions of this paragraph 9 shall survive the
termination of this Agreement. All payments due to Owner under this Agreement,
including without limitation this paragraph 9 shall be payable by Developer
within ten (10) days after written demand therefor, and shall bear interest at a
rate equal to the prime rate plus five percent (5%) from the date such payment
is due until the date of payment.
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.
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:
[Remainder of Page Intentionally Left Blank]
<PAGE>
If to the Owner: AH North Carolina Subordinated, LLC
320 King of Prussia Road, Suite 160
Radnor, PA 19087
Attn: David B. Fenkell
Fax: (610) 902-0777
With a copy to: Squire, Sanders & Demsey
1300 Huntington Center
41 South High Street
Columbus, Ohio 43215
Attn: Scott West, Esq.
Fax: (614) 365-2499
If to the Seller: Brookdale Living Communities of North
Carolina, Inc.
c/o Brookdale Living Communities, Inc.
77 West Wacker Drive, Suite 4400
Chicago, IL 60601
Attn: Darryl W. Copeland, Jr.
Fax: (312) 977-3692
with a copy to: Brookdale Living Communities, Inc.
77 West Wacker Drive, Suite 4400
Chicago, IL 60601
Attn: Robert J. Rudnik
Fax: (312) 977-3769
and to: Winston & Strawn
35 West Wacker Drive
Chicago, IL 60601
Attn: Wayne D. Boberg
Fax: (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.
<PAGE>
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 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.
20. Telecopy. This Agreement and the signatures thereto may be transmitted
via telecopy.
21. Recording. Developer may record this Agreement without Owner's consent
at any time.
[signature page follows]
<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 North Carolina OWNER LIMITED PARTNERSHIP,
an Ohio limited partnership
By: AH North Carolina CGP, Inc., its general partner
By:________________________________
Name: David B. Fenkell
Title: President
DEVELOPER:
Brookdale Living Communities of North Carolina,
Inc., a Delaware corporation
By:________________________________
Name: Darryl W. Copeland, Jr.
Title: President
<PAGE>
JOINDER BY BROOKDALE LIVING COMMUNITIES, INC.
This Joinder (this "Joinder") by Brookdale Living Communities, Inc., a
Delaware corporation ("Guarantor"), effective as of June 30, 1998, is attached
to and a part of that certain Development Agreement (the "Agreement") dated as
of June 30, 1998, by and between AH North Carolina Owner Limited Partnership
("Owner") and Brookdale Living Communities of North Carolina, Inc.
("Developer"). Guarantor is the sole stockholder of all of the outstanding stock
of Developer and, as such, will benefit from the Agreement. All terms not
otherwise defined in this Joinder shall have the same meaning ascribed to them
in the Agreement. Guarantor hereby irrevocably, absolutely and unconditionally
guarantees to Owner, its partners, officers, managers, employees, agents
(including without limitation David B. Fenkell) the prompt and complete
observance, fulfillment and performance of all of the obligations of Developer
under or pursuant to the Agreement.
GUARANTOR:
BROOKDALE LIVING COMMUNITIES, INC., a Delaware corporation
By:
Name: Darryl W. Copeland, Jr.
Title: Executive Vice President
<PAGE>
EXHIBIT A
Legal Description
[See Attached]
<PAGE>
STATE OF ILLINOIS )
) SS.
COUNTY OF COOK )
The foregoing instrument was acknowledged before me this _____ day of
June 1998, by Darryl W. Copeland, Jr. the Vice President of Brookdale Living
Communities of North Carolina, Inc., a Delaware corporation, on behalf of said
corporation.
NOTARY MUST AFFIX SEAL
- ------------------------------
NOTARY PUBLIC
Cook County, Illinois
STATE OF ILLINOIS )
) SS.
COUNTY OF COOK )
The foregoing instrument was acknowledged before me this _____
day of June 1998, by Darryl W. Copeland, Jr., the Executive Vice President of
Brookdale Living Communities, Inc., a Delaware corporation, on behalf of said
corporation.
NOTARY MUST AFFIX SEAL
- ------------------------------
NOTARY PUBLIC
Cook County, Illinois
<PAGE>
STATE OF ILLINOIS )
) SS.
COUNTY OF COOK )
The foregoing instrument was acknowledged before me this _____
day of June 1998, by David B. Fenkell, the President of AH North Carolina CGP,
Inc., as general partner of AH North Carolina Owner Limited Partnership, an Ohio
limited partnership.
NOTARY MUST AFFIX SEAL
- ------------------------------
NOTARY PUBLIC
GUARANTY
To: Brookdale Living Communities of North Carolina, Inc.
c/o Brookdale Living Communities, Inc.
77 West Wacker Drive
Suite 4400
Chicago, Illinois 60601
1. Guaranty of Payment. For value received and in consideration of the
acceptance by Brookdale Living Communities of North Carolina, Inc., a Delaware
corporation (the "Seller"), of the Note (defined below) of AH North Carolina
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 NORTH CAROLINA
SUBORDINATED, LLC, an Ohio limited liability company (the "Limited Partner"),
and AH NORTH CAROLINA 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 $1,902,776.97, (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>
4
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 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.
<PAGE>
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.
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.
<PAGE>
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.
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.
<PAGE>
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 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:
<PAGE>
If to Limited Partner: AH North Carolina Subordinated, LLC
320 King of Prussia Road, Suite 160
Radnor, PA 19087
Attn: David B. Fenkell
Fax: (610) 902-0777
With a copy to: Squire, Sanders & Demsey
1300 Huntington Center
41 South High Street
Columbus, Ohio 43215
Attn: Scott West, Esq.
Fax: (614) 365-2499
If to General Partner: AH North Carolina CGP, Inc.
320 King of Prussia Road, Suite 160
Radnor, PA 19087
Attn: David B. Fenkell
Fax: (610) 902-0777
With a copy to: Squire, Sanders & Demsey
1300 Huntington Center
41 South High Street
Columbus, Ohio 43215
Attn: Scott West, Esq.
Fax: (614) 365-2499
If to the Seller: Brookdale Living Communities of North
Carolina, Inc.
c/o Brookdale Living Communities, Inc.
77 West Wacker Drive, Suite 4400
Chicago, IL 60601
Attn: Darryl W. Copeland, Jr.
Fax: (312) 977-3692
with a copy to: Brookdale Living Communities, Inc.
77 West Wacker Drive, Suite 4400
Chicago, IL 60601
Attn: Robert J. Rudnik
Fax: (312) 977-3769
and to: Winston & Strawn
35 West Wacker Drive
Chicago, IL 60601
Attn: Wayne D. Boberg
Fax: (312) 558-5700
<PAGE>
21. Telecopy. This Guaranty may be transmitted via telecopy and shall be deemed
an original for all purposes.
SIGNED AND DELIVERED AS OF THIS 30th day of June, 1998.
AH NORTH CAROLINA SUBORDINATED, LLC
By: AH North Carolina Investor, Inc., its manager
By:
Name: David B. Fenkell
Title: President
AH NORTH CAROLINA CGP, INC.
By:
Name: David B. Fenkell
Title: President
Accepted:
Brookdale Living Communities
of North Carolina, Inc.
By:
Name: Darryl W. Copeland, Jr.
Title: Vice President
COLLATERAL ASSIGNMENT OF PARTNERSHIP INTERESTS
FOR VALUE RECEIVED, the undersigned, AH NORTH CAROLINA SUBORDINATED,
LLC, an Ohio limited liability company (the "Limited Partner"), and AH NORTH
CAROLINA 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 NORTH CAROLINA,
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 North Carolina Owner Limited Partnership, an
Ohio limited partnership (the "Partnership"), created and existing under the
Agreement of Limited Partnership, dated as of June 22, 1998 (the "Partnership
Agreement"), between the General Partner and the Limited Partner for which the
Certificate of Limited Partnership, dated June 22, 1998, was filed with the
Secretary of State of Ohio on June 22, 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 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 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.
<PAGE>
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 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.
<PAGE>
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 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).
<PAGE>
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 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 $1,902,776.97;
(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.
<PAGE>
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 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 North Carolina Subordinated, LLC
320 King of Prussia Road, Ste. 160
Radnor, PA 19087
Attn: David B. Fenkell
Fax: (610) 902-0777
With a copy to: Squire, Sanders & Demsey
1300 Huntington Center
41 South High Street
Columbus, Ohio 43215
Attn: Scott West, Esq.
Facsimile: (614) 365-2499
If to the
General Partner: AH North Carolina CGP, Inc.
320 King of Prussia Road, Ste. 160
Radnor, PA 19087
Attn: David B. Fenkell
Fax: (610) 902-0777
With a copy to: Squire, Sanders & Demsey
1300 Huntington Center
41 South High Street
Columbus, Ohio 43215
Attn: Scott West, Esq.
Facsimile: (614) 365-2499
If to the
Assignee: Brookdale Living Communities of
North Carolina, Inc.
c/o Brookdale Living Communities, Inc.
77 West Wacker Drive, Suite 4400
Chicago, Illinois 60601
Attn: Darryl W. Copeland, Jr.
Fax: (312) 977-3692
with a copy to: Brookdale Living Communities, Inc.
77 West Wacker Drive, Suite 4400
Chicago, Illinois 60601
Attn: Robert J. Rudnik
Fax: (312) 977-3769
and to: Winston & Strawn
35 West Wacker Drive
Chicago, Illinois 60601
Attn: Wayne D. Boberg
Fax: (312) 558-5700
<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.
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.
<PAGE>
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.
18. 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).
19. This Assignment may be transmitted via telecopy and shall be deemed
original for all purposed. This Assignment may be executed in counterparts.
IN WITNESS WHEREOF, the Assignors have caused this Assignment to be
executed as of the 30th day of June, 1998.
AH NORTH CAROLINA SUBORDINATED, LLC
By: AH NORTH CAROLINA
INVESTOR, INC., its manager
By:
Name: David B. Fenkell
Title: President
AH NORTH CAROLINA CGP, INC.
By:
Name: David B. Fenkell
Title: President
Accepted:
Brookdale Living Communities
of North Carolina, Inc.
By:
Name: Darryl W. Copeland, Jr.
Title: President
