Equity Option Agreement
This Equity Option Agreement (this "Agreement"), dated as of June
17, 1998, is made and entered into by and among AH Michigan Investor, Inc., an
Ohio corporation (the "Investor"), AH Michigan Subordinated, LLC, an Ohio
limited liability company (the "Company"), AH Michigan CGP, Inc., an Ohio
corporation (the "General Partner"), AH Michigan Owner Limited Partnership, an
Ohio limited partnership (the "Owner" and together with the Investor, the
Company and the General Partner shall be individually referred to as an "Owner
Related Entity" and shall be collectively referred to as the "Owner Related
Entities"), and Brookdale Living Communities, Inc., a Delaware corporation
("Brookdale").
RECITALS
WHEREAS, the Company was formed as of March 27,1998 by the filing
and recording of the Company's Articles of Organization in the Office of the
Secretary of State of the State of Ohio, pursuant to an Operating Agreement
dated as of March 27, 1998 and amended and restated pursuant to an Amended and
Restated Operating Agreement dated as of June 17, 1998 (as so amended and
restated, and as it may be further amended from time to time with the consent of
Brookdale, the "Operating Agreement");
WHEREAS, the Investor is the sole member of, and owns one hundred
percent (100%) of the membership interests (the "Membership Interests") in, the
Company;
WHEREAS, the Company is the sole limited partner of, and owns
ninety-nine percent (99%) of the partnership interests (the "Limited Partnership
Interests") in, the Owner, for which a Certificate of Limited Partnership was
filed with the Secretary of State of the State of Ohio on March 27, 1998 and
which was organized under an Agreement of Limited Partnership, effective as of
March 27, 1998 and amended and restated pursuant to an Amended and Restated
Agreement of Limited Partnership dated as of June 17, 1998 (as so amended and
restated, and as it may be further amended from time to time with the consent of
Brookdale, the "Partnership Agreement");
WHEREAS, the Company is the sole shareholder in, and owns one
hundred percent (100%) of the issued and outstanding shares of capital stock
(the "Capital Stock") of, the General Partner;
WHEREAS, the General Partner is the sole general partner of, and
owns one percent (1%) of the partnership interests (the "General Partnership
Interest") in, the Owner;
WHEREAS, the Owner intends to develop a congregate housing facility
with an assisted living component for the elderly in Southfield, Michigan which
is currently referred to as "The Heritage" (the "Project");
WHEREAS, Nomura Asset Capital Corporation, a Delaware corporation
(the "Senior Lender"), has agreed to make a loan to the Owner up to the sum of
$26,625,000 to fund a portion of the costs of the Project pursuant to a Building
Loan Agreement of even date herewith (as it may
1
be amended from time to time with the consent of Brookdale, the "Building Loan
Agreement") among the Owner, BLC (as hereinafter defined) and the Senior Lender
and a Loan Agreement of even date herewith (as it may be amended from time to
time with the consent of Brookdale, the "Senior Loan Agreement" and, together
with the Building Loan Agreement, the "Senior Loan Agreements") among the Owner,
BLC and the Senior Lender;
WHEREAS, Banc One Capital Partners IV, Ltd., an Ohio limited
liability company (the "Subordinate Lender"), has agreed to loan to the Company
up to the sum of $__________, pursuant to the terms of a certain Loan Agreement
of even date herewith (as it may be amended from time to time with the consent
of Brookdale, the "Subordinate Loan Agreement") between the Subordinate Lender
and the Company and as further evidenced by two certain promissory notes of even
date herewith (as amended or extended from time to time, and together with any
notes taken in substitution therefor, the "Subordinate Notes"), payable by the
Company to the Subordinate Lender, which the Company will contribute as equity
to the Owner to fund a portion of the costs of the Project;
WHEREAS, Brookdale Living Communities of Michigan, Inc., a Delaware
corporation ("BLC") and affiliate of Brookdale will be the developer of the
Project pursuant to an Amended and Restated Development Agreement of even date
herewith (as it may be amended from time to time, the "Development Agreement")
between the Owner and BLC and will be the manager of the Project pursuant to a
Management Agreement of even date herewith (as it may be amended from time to
time, the "Management Agreement") between the Owner and BLC;
WHEREAS, the Investor has made a capital contribution in the amount
of $1,050,000 to the Company, which the Company has in turn contributed as
capital to the Owner to fund a portion of the costs of the Project; and
WHEREAS, the Investor is willing to grant an option to Brookdale to
purchase the Membership Interests upon the terms and conditions set forth
herein.
NOW, THEREFORE, in consideration of the mutual agreements contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Owner Related Entities and
Brookdale hereby agree as follows:
1. The Option. The Investor hereby grants an irrevocable option (the
"Option") to Brookdale to purchase the Membership Interests at the Purchase
Price (as defined in Section 3 hereof) in accordance with the terms of this
Agreement. The Option shall terminate and expire on the date (the "Option
Termination Date") that is the earliest of (a) ten (10) days after the principal
amount of the Subordinate Notes is due and payable, on the stated maturity date
thereof, as it may be extended pursuant to subsection 2.3(a) of the Subordinate
Loan Agreement, (b) thirty (30) days after the date specified by the Subordinate
Lender in a prior or contemporaneous notice to Brookdale as the date on which
the unpaid balance of all principal and interest accrued on the Subordinate
Notes has been declared by the Subordinate Lender to be, or shall have become
automatically, due and payable pursuant to Section 8.2 of the Subordinate Loan
Agreement, and (c) the Exercise Date, as
2
defined in the Intercreditor and Subordination Agreement of even date herewith
(as it may be amended from time to time, the "Intercreditor Agreement") among
the Senior Lender, the Subordinate Lender, the Owner, the Company, the Investor,
the General Partner, BLC and Brookdale. In no event shall the Option Termination
Date be later than July 31, 2002.
2. Triggering Events. The Option is exercisable by Brookdale on or
after the earliest to occur of the following events or dates (each a "Triggering
Event"):
(a) An election by the Company to prepay the Subordinate Notes
in accordance with subsection 2.3(e) of the Subordinate Loan Agreement.
(b) Five days prior to the date on which the principal amount
of the Subordinate Notes is due and payable, whether on the stated
maturity date thereof, as it may be extended pursuant to subsection 2.3(a)
of the Subordinated Loan Agreement, or upon the earlier acceleration
thereof.
(c) An Investor Default (as defined in Section 15 hereof) has
occurred.
3. Purchase Price. The "Purchase Price" for the Membership Interests
shall be an amount equal to $1,050,000, plus the amount required to produce a
17.11% internal rate of return thereon, computed using the methodology described
in Schedule I attached hereto, minus the aggregate amount of any distributions
made by the Company to the Investor (excluding distributions permitted by
paragraph (h) of Section 11).
4. Exercise of the Option. (a) Brookdale may exercise the Option by
giving the Investor and the Escrow Agent (as defined in Section 17 hereof) at
least five (5) days' prior written notice (the "Option Notice"), and if it is
exercising the Option upon the occurrence of a Triggering Event described in
paragraph (a) of Section 2 hereof, by giving the Subordinate Lender on behalf of
the Company notice of an optional prepayment in accordance with subsection
2.3(e) of the Subordinate Loan Agreement. The Option Notice shall specify the
date (the "Closing Date") of the exercise of the Option, which shall be the date
of the repayment in full of the Subordinated Notes, and in any case shall not be
later than the Option Termination Date. If Brookdale exercises the Option prior
to the Option Termination Date but fails to close prior to the Exercise Date,
then the Option shall terminate and Brookdale's rights shall cease and be null
and void. The Company hereby appoints Brookdale as its true and lawful
attorney-in-fact for purposes of giving notice of optional prepayment in
accordance with subsection 2.3(e) of the Subordinate Loan Agreement, which
appointment as attorney-in-fact is irrevocable and is coupled with an interest.
Anything herein to the contrary notwithstanding, the exercise of the Option
shall be conditioned upon the repayment in full of the Subordinate Notes in
accordance with the Subordinate Loan Agreement.
(b) In the event that at the time of the exercise of the
Option by Brookdale, it has not exercised the option (the "Texas Equity
Option") granted to it pursuant to the Equity Option Agreement of even
date herewith among AH Texas Investor, Inc., AH Texas Subordinated, LLC
(the "Texas LLC"), AH Texas CGP, Inc., AH Texas Owner
3
Limited Partnership and Brookdale to purchase one hundred percent (100%)
of the membership interests in the Texas LLC, it shall be obligated to
exercise such option, and to satisfy or cause to be satisfied the
conditions to such exercise (including, without limitation, the repayment
in full of the subordinate notes issued by the Texas LLC to the
Subordinate Lender), prior to the termination thereof.
(c) In the event that Brookdale exercises the Texas Equity
Option prior to its exercise of the Option, it shall be obligated to
exercise the Option, and to satisfy or cause to be satisfied the
conditions to such exercise (including, without limitation, the repayment
in full of the Subordinate Notes), prior to the Option Termination Date.
5. Closing. (a) Upon receipt of the Option Notice, the Investor and
Brookdale shall schedule a closing (the "Closing") to occur on the Closing Date
at the Chicago, Illinois offices of counsel to Brookdale. The Investor and
Brookdale shall each be solely responsible for its own costs incurred in
connection with the Closing; provided, however, that Brookdale shall pay, or
reimburse the Investor for, all reasonable legal fees and expenses of the
Investor incurred in connection with the Closing in an amount not to exceed
$2,500 when aggregated with all other legal fees and expenses paid or reimbursed
by Brookdale pursuant to clause (ii) of paragraph 6(c) and clause (ii) of
paragraph 7(c) of the Property Option Agreement of even date herewith ( as it
may be amended from time to time, the "Property Option Agreement") among the
Company, the Owner and Brookdale.
(b) Contemporaneously with the execution and delivery of this
Agreement, the Investor is delivering to the Escrow Agent an Assignment
and Acceptance Agreement in the form of Exhibit A attached hereto (the
"Assignment" and together with any other documents and instruments
delivered pursuant to clause (v) of paragraph (c) below, the "Assignment
Documents"), undated, but otherwise duly executed by the Investor.
(c) At the Closing, the Escrow Agent shall, in accordance with
the escrow instructions set forth in Section 17 hereof, deliver the
Purchase Price to the Investor, and the Assignment to Brookdale or its
nominee, and the Investor shall deliver to Brookdale or its nominee the
following items:
(i) the stock certificate(s) representing the Capital Stock;
(ii) original executed copies (or if unavailable,
photocopies) of the Company's Articles of Organization, the Operating
Agreement, the Owner's Certificate of Limited Partnership, the
Partnership Agreement and the General Partner's Articles of
Incorporation and Regulations, all certified by an appropriate officer
of the relevant Owner Related Entity as of the Closing Date, as being
true, correct, complete and unamended (or if amended with the consent
of Brookdale, certified to such effect) and in full force and effect
as of such date;
4
(iii) a certificate of an appropriate officer of each Owner
Related Entity, dated the Closing Date, certifying that the
representations and warranties of such Owner Related Entity set forth
in the applicable Section of this Agreement are true and correct as of
the Closing Date as though made by such Owner Related Entity on the
Closing Date;
(iv) the books and records of each Owner Related Entity; and
(v) such other documents and instruments of transfer as are
necessary to complete the transfer of the Membership Interests.
(d) The representations and warranties made by the Owner
Related Entities as of the Closing Date shall survive the Closing.
(e) Prior to the Closing, Brookdale shall conduct Uniform
Commercial Code, tax lien, pending suit and judgment and any other
appropriate searches against each of the Owner Related Entities.
6. Grant of Security Interest. (a) To secure the performance by the
Owner Related Entities of their respective obligations hereunder and the
repayment of any and all indebtedness and other liabilities arising from any
breach by any of the Owner Related Entities of its obligations hereunder, the
Investor hereby grants to Brookdale a continuing security interest in the
Membership Interests and all proceeds thereof, 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 with respect to the Membership Interests, together with all applicable
rights, powers and privileges of the Investor as the sole member and manager of
the Company pursuant to the Operating Agreement (all of the foregoing being
hereinafter collectively referred to as the "Collateral"). The security interest
in the Collateral granted pursuant to the preceding sentence shall be
subordinate to the security interest of the Subordinate Lender in the Membership
Interests and the proceeds thereof (the "Subordinate Lender Security Interest")
granted by the Investor to the Subordinate Lender pursuant to the Security
Agreement - Pledge and Assignment of Membership Interests dated as of the date
hereof (the "Subordinate Lender Security Agreement") between the Investor and
the Subordinate Lender.
(b) Subject to the rights of the Subordinate Lender under the
Subordinate Lender Security Agreement, the Investor does hereby irrevocably
constitute and appoint Brookdale its true and lawful attorney-in-fact, with full
power of substitution, for the Investor and in its name, place and stead, to
ask, demand, collect, receive, receipt for, ▇▇▇ for, compound and give
acquittance for any and all sums or properties which may be or become due,
payable or distributable with respect to the Collateral, with full power to
settle, adjust or compromise any claim thereunder as fully as the Investor could
do, and to endorse or sign the name of the Investor 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 the
Investor,
5
or otherwise, which Brookdale may deem necessary or appropriate to perfect
Brookdale's security interest in or collect or otherwise realize upon any and
all of the Collateral, or effect a transfer thereof pursuant to the Operating
Agreement and this Agreement, or which may be necessary or appropriate to
protect and preserve the right, title and interest of Brookdale in and to the
Collateral and the security intended to be afforded hereby.
(c) Without limiting the foregoing, the Investor agrees that it
will, upon request of Brookdale, execute and deliver such further documents and
instruments (including, without limitation, Uniform Commercial Code Financing
Statements) and do and perform such other acts and things (including, without
limitation, obtaining such consents hereto, and giving such notices hereof, as
Brookdale may reasonably request from time to time) as Brookdale may deem
necessary or appropriate to more effectively vest in and secure to Brookdale the
Collateral or other rights or interests due or hereafter to become due.
(d) Upon the occurrence and continuance of an Investor Default, in
addition to the rights and remedies Brookdale may have hereunder, it shall have
all the rights and remedies of a secured party under applicable law with respect
to the Collateral. All costs and expenses of any kind whatsoever, of collection
and enforcement of the obligations secured hereby or any rights or remedies
hereunder (including without limitation, all costs of disposing of the
Collateral, together with court costs and reasonable attorneys' fees), or
incurred in realizing upon the Collateral or in enforcing this Agreement, shall
be deemed to be additional obligations secured hereby, and may be deducted and
retained by Brookdale from the proceeds of disposition of the Collateral and
applied to the payment and satisfaction of such costs and expenses.
(e) The security interest of Brookdale in the Collateral shall
terminate upon the earlier of the Closing or the Option Termination Date, and
upon such termination, Brookdale shall promptly deliver to the Investor the
appropriate Uniform Commercial Code termination statements.
7. Investor Representations. The Investor represents and warrants to
Brookdale as of the date hereof and as of the Closing Date as follows:
(a) The Investor is a corporation duly organized, validly
existing and in good standing under the laws of the State of Ohio and has
all requisite power and authority to execute, deliver and perform its
obligations under this Agreement and the Assignment Documents and to own
and operate its property and to carry on its business as now conducted.
The Investor is duly qualified to do business in each jurisdiction where
the nature of its operations and applicable laws require such
qualification, except where the failure to be so qualified would not have
a material adverse effect on the Investor.
(b) The execution, delivery and performance of this Agreement
by the Investor have been, and as of the Closing Date, the execution,
delivery and performance of the Assignment Documents by the Investor will
have been, duly authorized by all necessary corporate action, and this
Agreement is, and when executed and delivered, the Assignment Documents
will be, the legal, valid and binding obligation of the Investor,
enforceable in
6
accordance with its terms, except as enforcement may be limited by
bankruptcy, insolvency or the laws or equitable principles affecting the
enforcement of creditors' rights generally.
(c) The execution, delivery and performance by the Investor of
this Agreement do not, and the execution, delivery and performance by the
Investor of the Assignment Documents will not, contravene the terms of the
Investor's Articles of Incorporation or Regulations, true, correct and
complete copies of which have been delivered to Brookdale, conflict with
or result in any breach or contravention of, or the creation of any lien
under, any agreements or instruments to which it is a party or by which it
or any of its property is bound or violate any state or federal law and
all required approvals therefor, if any, have been, or will have been as
of the Closing Date, duly obtained.
(d) The Membership Interests constitute all of the membership
interests in the Company, and the Investor owns the Membership Interests,
free of any liens, claims or encumbrances, other than, as of the date
hereof, the Subordinate Lender Security Interest and the Special
Management Interests (as defined in the Intercreditor Agreement).
(e) There is no litigation or other proceeding pending against
the Investor which could have a material adverse effect on the Investor's
ability to consummate the transactions contemplated by this Agreement and
the Assignment Documents.
(f) The Investor's sole place of business is its address set
forth for notices in paragraph (c) of Section 18 hereof.
8. Company Representations.The Company represents and warrants to
Brookdale as follows as of the date hereof and as of the Closing Date:
(a) The Company is a limited liability company duly organized,
validly existing and in good standing under the laws of the State of Ohio
and has all requisite power and authority to execute, deliver and perform
its obligations under this Agreement and to own and operate its property
and to carry on its business as now conducted. The Company is duly
qualified to do business in each jurisdiction where the nature of its
operations and applicable laws require such qualification, except where
the failure to be so qualified would not have a material adverse effect on
the Company.
(b) The execution, delivery and performance of this Agreement
by the Company have been duly authorized by all necessary organizational
action, and this Agreement is the legal, valid and binding obligation of
the Company, enforceable in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency or the laws or
equitable principles affecting the enforcement of creditors' rights
generally.
(c) The execution, delivery and performance by the Company of
this Agreement do not contravene the terms of the Company's Articles of
Organization or the Operating Agreement, true, correct and complete copies
of which have been delivered to
7
Brookdale, conflict with or result in any breach or contravention of, or
the creation of any lien under, any agreements or instruments to which it
is a party or by which it or any of its property is bound or violate any
state or federal law and all required approvals therefor, if any, have
been duly obtained.
(d) The Company is the sole limited partner of the Owner, and
the Limited Partnership Interests constitute ninety-nine (99%) of the
partnership interests in, the Owner.
(e) Subject to the Senior Lender's rights with respect to and
any rights that it may acquire upon the acquisition of the Preferred
Equity and the Warrants (as such terms are defined in the Senior Loan
Agreement), the Company owns the Limited Partnership Interests free of any
liens, claims or encumbrances.
(f) The Membership Interests are not represented by any
certificates and/or similar instruments, and the Operating Agreement
contains a description of the rights of Brookdale pursuant to this
Agreement.
(g) There is no litigation or other proceeding pending against
the Company which could have a material adverse effect on the Company's
ability to consummate the transactions contemplated by the Property Option
Agreement and as of the Closing Date, if applicable, the Assignment (as
defined therein).
(h) All of the representations and warranties of the Company
set forth in Article V of the Subordinate Loan Agreement are true and
correct as though such representations and warranties were set forth
herein for Brookdale's benefit.
(i) All of the representations and warranties of the Company
set forth in Section 8 of the Property Option Agreement are true and
correct.
(j) The Company has no outstanding liabilities, contingent or
otherwise, other than, as of the date hereof, (i) the indebtedness
evidenced by the Subordinated Notes and (ii) liabilities for which
Brookdale or the Subordinate Lender (or any one or more of their
affiliates) is liable to the Company.
9. General Partner Representations. The General Partner represents
and warrants to Brookdale as follows as of the date hereof and as of the Closing
Date:
(a) The General Partner is a corporation duly organized,
validly existing and in good standing under the laws of the State of Ohio
and has all requisite power and authority to execute, deliver and perform
its obligations under this Agreement and to own and operate its property
and to carry on its business as now conducted. The Company is duly
qualified to do business in each jurisdiction where the nature of its
operations and
8
applicable laws require such qualification, except where the failure to be
so qualified would not have a material adverse effect on the General
Partner.
(b) The execution, delivery and performance of this Agreement
by the Company have been duly authorized by all necessary corporate
action, and this Agreement is the legal, valid and binding obligation of
the Company, enforceable in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, or the laws or
equitable principles affecting the enforcement of creditors' rights
generally.
(c) The execution, delivery and performance by the General
Partner of this Agreement do not contravene the terms of the General
Partners's Articles of Incorporation or Regulations, true, correct and
complete copies of which have been delivered to Brookdale, conflict with
or result in any breach or contravention of, or the creation of any lien
under, any agreements or instruments to which it is a party or by which it
or any of its property is bound or violate any state or federal law and
all required approvals therefor, if any, have been duly obtained.
(d) The General Partner is the sole general partner of the
Owner, and the General Partnership Interest constitutes one percent (1%)
of the partnership interests in, the Owner.
(e) Subject to the Senior Lender's rights with respect to and
any rights that it may acquire upon the acquisition of the Preferred
Equity and the Warrants (as such terms are defined in the Senior Loan
Agreement), the General Partner owns the General Partnership Interest free
of any liens, claims or encumbrances.
(f) All of the representations and warranties made on behalf
of the General Partner set forth in Article V of the Subordinate Loan
Agreement are true and correct as though such representations and
warranties were set forth herein for Brookdale's benefit.
(g) The General Partner has no outstanding liabilities,
contingent or otherwise, other than (i) those of Owner referred to in
paragraph (g) of Section 10 hereof for which it is liable by virtue of
being general partner of Owner and (ii) liabilities for which Brookdale or
the Subordinate Lender (or one or more of their affiliates) is liable to
the General Partner.
10. Owner Representations. The Owner represents and warrants to
Brookdale as follows as of the date hereof and as of the Closing Date:
(a) The Owner is a limited partnership duly organized, validly
existing and in good standing under the laws of the State of Ohio and has
all requisite power and authority to execute and deliver this Agreement,
to perform its obligations under Section 14 hereof and to own and operate
its property and to carry on its business as now conducted.
9
The Owner is duly qualified to do business in each jurisdiction where the
nature of its operations and applicable laws require such qualification,
except where the failure to be so qualified would not have a material
adverse effect on the Owner.
(b) The execution and delivery of this Agreement and the
performance by the Owner of its obligations under Section 14 hereof have
been duly authorized by all necessary partnership action, and this
Agreement is the legal, valid and binding obligation of the Owner,
enforceable in accordance with its terms, except as enforcement may be
limited by bankruptcy, insolvency or the laws or equitable principles
affecting the enforcement of creditors' rights generally.
(c) The execution and delivery of this Agreement and the
performance by the Owner of its obligations under Section 14 hereof do not
contravene the terms of the Partnership Agreement, a true, correct and
complete copy of which has been delivered to Brookdale, conflict with or
result in any breach or contravention of, or the creation of any lien
under, any agreements or instruments to which it is a party or by which it
or any of its property is bound or violate any state or federal law and
all required approvals therefor, if any, have been duly obtained
(d) There is no litigation or other proceeding pending against
the Owner which could have a material adverse effect on the Owner's
ability to consummate the transactions contemplated by the Property Option
Agreement and as of the Closing Date, if applicable, the Property
Conveyance Documents (as defined therein).
(e) All of the representations and warranties made on behalf
of the Owner set forth in Article V of the Subordinate Loan Agreement and
Article IV of the Senior Loan Agreement are true and correct as though
such representations and warranties were set forth herein for Brookdale's
benefit.
(f) All of the representations and warranties of the Owner set
forth in Section 9 of the Property Option Agreement are true and correct.
(g) The Owner has no outstanding liabilities, contingent or
otherwise, other than those incurred under or permitted by the Senior Loan
Agreements, any of the Loan Documents (as defined therein), the Management
Agreement and, as of the date hereof, the Development Agreement.
11. Investor Covenants. Until the earlier of the Closing or the
Option Termination Date, unless Brookdale otherwise consents in writing, the
Investor:
(a) Shall preserve and maintain its legal existence, rights,
franchises and privileges in the State of Ohio, and shall qualify and
remain qualified in each jurisdiction in which such qualification is
necessary or desirable in view of its business and operations or the
ownership of its property.
10
(b) Shall at all times observe and comply with the provisions
of Articles Fifth, Sixth and Tenth of its Articles of Incorporation as in
effect on the date hereof.
(c) Shall not amend the Company's Articles of Organization or
the Operating Agreement and shall at all times observe and comply with the
provisions thereof.
(d) Shall not cause or permit the dissolution of the Company.
(e) Shall not permit the issuance of any member's interests
(or any other interests) in the Company in addition to the Membership
Interests.
(f) Shall continue to own the Membership Interests (which
shall continue to constitute 100% of the membership interests in the
Company), free of any liens, claims or encumbrances, other than the
Subordinate Lender Security Interest and the security interest created by
this Agreement.
(g) Shall not file a voluntary petition in bankruptcy and
shall use its best efforts to contest any involuntary petition filed
against it.
(h) Shall not permit or accept any distributions by the
Company, other than distributions to be applied to the payment of income
taxes and funded by advances to the Company made by the Subordinate Lender
pursuant to subsection 2.6(a) of the Subordinate Loan Agreement.
(i) Shall give Brookdale at least thirty (30) days' prior
written notice of any change in its place of business.
(j) Shall not take any actions that might adversely affect
Brookdale's rights under, or be inconsistent with the terms of, this
Agreement.
12. Company Covenants. Until the earlier of the Closing or the
Option Termination Date, unless Brookdale otherwise consents in writing, the
Company:
(a) Shall not amend the Articles of Incorporation or the
Regulations of the General Partner or amend or consent to the amendment of
the Partnership Agreement, and shall at all times observe and comply with
the provisions thereof.
(b) Shall continue to own the Limited Partnership Interests
(which shall continue to constitute 99% of the partnership interests in
the Owner), free of any liens, claims or encumbrances.
(c) Shall continue to own the Capital Stock (which shall
continue to constitute one hundred percent (100%) of the issued and
outstanding capital stock of the General Partner), free of any liens,
claims or encumbrances.
11
(d) Shall not amend, or request any waiver of any provision
of, the Subordinate Loan Agreement or any of the Loan Documents (as
defined therein) to which it is a party.
(e) Shall comply with all of the covenants applicable to it
set forth in Articles 6 and 7 of the Subordinate Loan Agreement, and shall
promptly deliver to Brookdale copies of all financial statements, reports,
notices, certificates or other writings delivered to the Subordinate
Lender pursuant thereto.
(f) Shall not permit or accept any distributions by the Owner
or any dividends by the General Partner.
(g) Shall not incur any liabilities or obligations, contingent
or otherwise, except expenses incurred in the ordinary course of
administering its business or those that are incurred under or are
necessary to comply with the provisions of the Subordinate Loan Agreement,
and shall not enter into any agreement or contract, whether oral or
written, except this Agreement, the Property Option Agreement, the
Intercreditor Agreement, the Subordinate Loan Agreement and the Loan
Documents (as defined therein) to which it is a party, and agreements
entered into in the ordinary course of administering its business.
(h) Shall give Brookdale at least thirty (30) days' prior
written notice of any change in its place of business.
(i) Shall not take any actions that might adversely affect
Brookdale's rights under, or be inconsistent with the terms of, this
Agreement.
13. General Partner Covenants. Until the earlier of the Closing or
the Option Termination Date, unless Brookdale otherwise consents in writing, the
General Partner:
(a) Shall not amend or consent to the amendment of the
Partnership Agreement, and shall at all times observe and comply with the
provisions thereof.
(b) Shall not cause or permit the dissolution or winding up of
the Owner.
(c) Shall not permit the issuance of any interest in the Owner
in addition to the Limited Partnership Interests and the General
Partnership Interest.
(d) Shall continue to own the General Partnership Interest
(which shall continue to constitute the only general partnership interest
in, and one percent (1%) of the partnership interests) in, the Owner, free
of any liens, claims or encumbrances.
(e) Shall comply with all of the covenants applicable to it
set forth in Articles 6 and 7 of the Subordinate Loan Agreement.
12
(f) Shall not permit or accept any partnership distributions
by the Owner or the payment to itself of any compensation as general
partner of the Owner.
(g) Shall not declare or pay any dividends with respect to, or
purchase or redeem, or issue any options or other rights with respect to,
any shares of the Capital Stock.
(h) Shall not incur any liabilities or obligations, contingent
or otherwise, except expenses incurred in the ordinary course of
administering its business, or enter into any agreement or contract,
whether oral or written, except this Agreement and, on behalf of the Owner
as its general partner, agreements or contracts into which the Owner is
permitted to enter pursuant to paragraph (d) of Section 14 hereof.
(i) Shall not take any actions that might adversely affect
Brookdale's rights under, or be inconsistent with the terms of, this
Agreement.
14. Owner Covenants. Until the earlier of the Closing or the Option
Termination Date, unless Brookdale otherwise consents in writing, the Owner:
(a) Shall comply with all of the covenants applicable to it
set forth in Articles V, VI and VII of the Senior Loan Agreement and shall
promptly deliver to Brookdale copies of all financial statements, reports,
notices, certificates or other writings delivered to the Senior Lender
pursuant thereto.
.
(b) Shall not incur any liabilities or obligations, contingent
or otherwise, except expenses incurred in the ordinary course of
administering its business or those that are incurred under or are
necessary to comply or are permitted by with the provisions of the Senior
Loan Agreements, and shall not enter into any agreement or contract,
whether oral or written, except this Agreement, the Property Option
Agreement, the Intercreditor Agreement, the Senior Loan Agreement, the
Loan Documents (as defined therein) to which it is a party, the
Development Agreement and the Management Agreement, and agreements entered
into in the ordinary course of administering its business.
(c) Shall continue to own the Property (as defined in the
Property Option Agreement), free of any liens, claims or encumbrances,
other than Permitted Exceptions (as so defined).
(d) Shall not take any actions that might adversely affect
Brookdale's rights under, or be inconsistent with the terms of, this
Agreement other than as may be required by the Senior Loan Agreements or
the Loan Documents (as defined therein).
15. Investor Defaults. An "Investor Default" shall mean the
occurrence of one or more of the following described events:
13
(a) A material breach by any Owner Related Entity of any of
the representations and warranties contained (or contained by reference)
in Section 7, 8, 9 or 10 hereof on the date as of which made.
(b) Any Owner Related Entity defaults in the performance or
observation of any covenant of such Owner Related Entity contained in this
Agreement and such default shall continue without cure for fifteen (15)
days after notice thereof by Brookdale to such Owner Related Entity and
the Subordinate Lender.
(c) An "Event of Default", as defined in the Subordinate Loan
Agreement, occurs, which "Event of Default" has not been caused, directly
or indirectly, by the Manager or Brookdale.
(d) An "Event of Default", as defined in either of the Senior
Loan Agreements, occurs, which "Event of Default" has not been caused,
directly or indirectly, by the Manager or Brookdale.
(e) An "Event of Default", as defined in the Development
Agreement, by the Owner occurs.
(f) An "Event of Default", as defined in the Management
Agreement, by the Owner occurs.
(g) The Investor makes an assignment for the benefit of
creditors.
(h) The Investor petitions or applies to any tribunal for the
appointment of a trustee or receiver for itself or any substantial part of
its assets or the Investor commences any proceeding relating to it under
any bankruptcy, reorganization, arrangement, insolvency, readjustment of
debt, dissolution or liquidation law of any jurisdiction whether now or
hereafter in effect.
(i) Any petitions or applications are filed, or any
proceedings are commenced, against the Investor seeking the adjudication
of it as bankrupt and the Investor by any act indicates its admission or
consent thereto, or acquiescence therein, or any order is entered
appointing a trustee or receiver, or adjudicating the Investor bankrupt or
insolvent, or approving the petition in any such proceedings and such
order remains unstayed or undischarged for more than sixty (60) days.
(j) Any order is entered in any proceeding against the
Investor decreeing the dissolution of the Investor and such order remains
unstayed or undischarged for more than sixty (60) days.
(k) Any judgment or order is entered in any proceedings which
affects the Membership Interests, the Limited Partnership Interests, the
Capital Stock or the General
14
Partnership Interest, or any lien, claim or other encumbrance encumbers
any thereof, other than, in the case of the Membership Interests, the
Subordinate Lender Security Interest and the Special Management Interests.
16. Notice of Certain Events. Owner and each other Owner Related
Entity agrees to promptly give notice to Brookdale of:
(a) Any Investor Default known to Owner or such other Owner
Related Entity;
(b) Any notice of any default or "Event of Default" or any
other notice received from the Senior Lender under the Senior Loan
Agreements (unless a copy of such notice is required to be delivered
to BLC and/or Brookdale pursuant thereto);
(c) Any notice of any default or "Event of Default" or any
other notice received from the Subordinate Lender under the
Subordinate Loan Agreement (unless a copy of such notice is required
to be delivered to BLC and/or Brookdale pursuant thereto); and
(d) Any notice given by Owner or any other Owner Related
Entity to the Senior Lender or the Subordinate Lender.
Each notice pursuant to this Section 16 shall be accompanied by a statement of
the chief executive officer of the relevant Owner Related Entity setting forth
the details of the occurrence referred to therein and, if applicable, stating
what action such Owner Related Entity proposes to take with respect thereto.
17. Appointment of Escrow Agent And Establishment of Escrow.
(a) Brookdale and the Investor agree to appoint Squire,
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ as Escrow Agent (in such capacity, together with any
successor thereto, the "Escrow Agent") pursuant to the terms of the Escrow
Agent Appointment Agreement attached hereto as Exhibit B (the "Escrow
Agent Appointment Agreement").
(b) Brookdale and the Investor hereby establish an escrow to
hold the Assignment and to facilitate the Closing.
(c) The Escrow Agent agrees to act in accordance with the
Escrow Agent Appointment Agreement and this Section 17.
(d) On the Closing Date, Brookdale shall deliver to the Escrow
Agent, (i) the Purchase Price by wire transfer of immediately available
funds to an account designated by the Escrow Agent, (ii) a certificate
(the "Purchase Price Certificate") of a Treasurer or an Assistant
Treasurer of Brookdale, dated the Closing Date or a date within the
preceding five (5) days, stating that (A) a Triggering Event has occurred,
(B) the Option Termination Date
15
has not occurred, (C) in the event that Brookdale desires the Assignment
to be delivered to a nominee, the name of such nominee, (D) the Purchase
Price has been accurately calculated in accordance with Section 3 hereof
and Schedule I attached hereto, and showing such calculation, and (iii) a
letter from the Subordinate Lender confirming the receipt of repayment in
full of the Subordinate Notes in accordance with the Subordinate Loan
Agreement.
(e) On the Closing Date, upon receipt of the Purchase Price
and the Purchase Price Certificate, the Escrow Agent shall take the
following actions:
(i) Date the Assignment the Closing Date, insert the
name of the "Assignee" in the preamble thereto and
deliver the Assignment to Brookdale or its
nominee; and
(ii) Deliver the Purchase Price to the Investor by wire
transfer of immediately available funds to an
account designated by the Investor.
(f) In the event that Brookdale assigns its rights under this
Agreement pursuant to paragraph (e) of Section 18 hereof, it shall so
notify the Escrow Agent.
18. Miscellaneous.
(a) Each Owner Related Entity and Brookdale agree that money
damages or other remedy at law would not alone be sufficient or adequate
remedy for any breach or violation of, or a default under, this Agreement
by such Owner Related Entity and that, in addition to all other remedies
available to Brookdale, Brookdale shall be entitled to an injunction
restraining such breach, violation or default or threatened breach,
violation or default and to any other equitable relief, including, without
limitation, specific performance, without bond or other security being
required.
(b) The Owner Related Entities acknowledge and agree that (i)
they are not intended to be beneficiaries of the limitations set forth in
the Intercreditor Agreement on the rights of Brookdale to take Enforcement
Actions (as defined therein) and to enforce any representations,
covenants, warranties or obligations of the Owner under or pursuant to
this Agreement, and (ii) they may not seek to enforce such limitations.
(c) 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
16
mailing, if mailed, or one business day after delivery to the courier, if
delivery by overnight courier service:
If to the
Investor: AH Michigan Investor, Inc.
▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Squire, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to the
Company: AH Michigan Subordinated, LLC
▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Squire, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to the
General Partner: AH Michigan CGP, Inc.
▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Squire, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to the
Owner: AH Michigan Owner Limited Partnership
▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Squire, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to Brookdale: Brookdale Living
Communities, Inc.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: Winston & ▇▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
A copy of any notice sent hereunder shall be sent to (i) the
Senior Lender at Nomura Asset Capital Corporation, Two World ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇▇
▇▇▇▇▇▇, Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇, with copies to: Nomura Asset Capital
Corporation, Two World financial ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇▇▇▇, Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇ and Dechert Price
& ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇, Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Fax: (▇▇▇) ▇▇▇-▇▇▇▇ (or such
other address as shall be given by notice delivered hereunder), and (ii)
the Escrow Agent at Squire, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇. ▇▇▇▇, Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(or such other address as shall be given by notice delivered hereunder).
(d) Entire Agreement. This Agreement (including the schedule
and exhibits hereto) constitutes the entire agreement among the parties
hereto with respect to the subject matter hereof 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 their respective
successors and assigns. Brookdale may assign its rights under this
Agreement without the consent of any Owner Related Entities. In the event
that Brookdale assigns its rights under this Agreement, it shall so notify
the other parties hereto, and references herein, including, without
limitation, in Section 17 hereof, and in the Escrow Agent Appointment
Agreement, to Brookdale shall be deemed to be references to the assignee
to whom such rights have been assigned upon the execution and delivery by
Brookdale and such assignee of an assignment and assumption agreement with
respect to the Escrow Appointment Agreement and this Agreement and
delivery of a copy thereof to each of the other parties hereto and the
Escrow Agent.
(f) No Third Party Beneficiaries. This Agreement is not
intended to and does not benefit or confer rights upon, and is not
intended to be and is not enforceable by, any persons or entities not
party to this Agreement, including, without limitation, the Senior Lender
and the Subordinate Lender.
(g) Amendment; Waiver. No provision of this Agreement may be
amended, waived or otherwise modified without the prior written consent of
the parties hereto and the Subordinate Lender, and, in the case of any
amendment to, or waiver or modification of, the provisions of Section 17
hereof, the acknowledgment and agreement of the Escrow Agent.
(h) 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.
(i) 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.
(j) Applicable Law. This Agreement 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).
(k) Waiver of Jury Trial. Each party hereto, after consulting
or having had the opportunity to consult with counsel, knowingly,
voluntarily and intentionally waives
19
any right any of them may have to a trial by jury in any litigation based
upon or arising out of this Agreement, or any of the transactions
contemplated by this Agreement, or any course of conduct, dealing,
statements (whether oral or written) or actions of any of them. No such
party shall seek to consolidate, by counterclaim or otherwise, any action
in which a jury trial has been waived with any other action in which a
jury trial cannot be or has not been waived unless failure to so
consolidate would result in a loss of such claim.
(l) Limitation of Personal Liability. Notwithstanding any
other provision of this Agreement to the contrary, (i) in no event shall
any officer, director, member, partner, manager, shareholder, incorporator
or agent of any Owner Related Entity be personally liable to Brookdale for
any of such Owner Related Entity's obligations under this Agreement, and
(ii) if the Owner defaults in connection with any representation or
covenant of the Owner set forth in this Agreement, it will not create any
personal liability against the Owner or any lien rights against the
Property.
(m) Intercreditor Agreement. The parties hereto acknowledge
the existence of the Intercreditor Agreement.
20
IN WITNESS WHEREOF, the undersigned have executed and delivered this
Agreement as of the date first above written.
AH MICHIGAN INVESTOR, INC.
By:___________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Its: President
AH MICHIGAN SUBORDINATED, LLC
By: AH Michigan Investor, Inc., its manager
By: ___________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Its: President
AH MICHIGAN CGP, INC.
By:___________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Its: President
AH MICHIGAN OWNER LIMITED PARTNERSHIP
By: AH Michigan CGP, Inc., its general partner
By:___________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Its: President
BROOKDALE LIVING COMMUNITIES, INC.
By:___________________________
Name:_________________________
Its:____________________________
21
JOINDER
The undersigned hereby joins in the execution and delivery of the
foregoing Agreement for the sole purpose of acknowledging and agreeing to the
provisions of Section 17 thereof.
SQUIRE, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
---------------------------------
By:______________________________
Name:____________________________
22
EXHIBIT A
ASSIGNMENT AND ACCEPTANCE AGREEMENT
THIS AGREEMENT made as of ___________________, by and between AH MICHIGAN
INVESTOR, INC., an Ohio corporation ("Assignor"), and
_______________________________ ("Assignee").
WITNESSETH:
1. For good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Assignor does hereby transfer, assign and convey
to Assignee a one hundred percent (100%) interest (the "Interest") as Member in
AH MICHIGAN SUBORDINATED, LLC, an Ohio limited liability company (the "LLC").
2. Assignor does hereby warrant and represent that it is the sole and
lawful owner of the Interest herein transferred, free of any liens, claims or
encumbrances and that it has full power and authority to make such transfer.
3. Assignee does hereby accept the foregoing assignment and agrees to
become a Member of the LLC.
ASSIGNOR:
AH MICHIGAN INVESTOR, INC.
By:___________________________
Title:_________________________
ASSIGNEE:
By:___________________________
Title:_________________________
1
EXHIBIT B
ESCROW AGENT APPOINTMENT AGREEMENT
This Escrow Agent Appointment Agreement (this "Agreement"), dated as
of June __, 1998, is made and entered into by and among AH Michigan Investor,
Inc., an Ohio corporation (the "Investor"), Brookdale Living Communities, Inc.,
a Delaware corporation ("Brookdale"), and Squire, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, as escrow
agent hereunder (in such capacity, together with any successor thereto, the
"Escrow Agent").
RECITALS
WHEREAS, the Investor, AH Michigan Subordinated, LLC, an Ohio
limited liability company (the "Company"), AH Michigan CGP, Inc., an Ohio
corporation (the "General Partner"), AH Michigan Owner Limited Partnership, an
Ohio limited partnership, and Brookdale have entered into an Equity Option
Agreement of even date herewith (as it may be amended from time to time, the
"Equity Option Agreement");
WHEREAS, pursuant to the Equity Option Agreement, the Investor has
granted an option to Brookdale to purchase the membership interests (the
"Membership Interests") that it owns in the Company; and
WHEREAS, the Investor and Brookdale have requested the Escrow Agent
to act in the capacity of escrow agent for the purpose of holding in escrow the
Assignment and Acceptance Agreement pursuant to which the Membership Interests
are to be conveyed, and the Escrow Agent, subject to the terms and conditions
hereof, has agreed to do so.
NOW, THEREFORE, in consideration of the mutual agreements contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Investor, Brookdale and the
Escrow Agent hereby agree as follows:
1. Definitions.Unless otherwise defined herein, capitalized terms
used herein shall have the meanings ascribed to them in the Equity Option
Agreement.
2. Appointment of Escrow Agent. The Investor and Brookdale hereby
designate the Escrow Agent to act as escrow agent for the purposes of performing
the duties set forth in Section 17 of the Equity Option Agreement, and the
Escrow Agent accepts such appointment, all upon the terms and conditions set
forth in this Agreement.
3. Administration. It is agreed that the Escrow Agent shall have no
duties or responsibilities whatsoever under the Equity Option Agreement or this
Agreement except as specifically provided herein; that in the absence of its own
negligence the Escrow Agent shall be fully protected and incur no liability to
anyone in acting upon any notice, written request, consent,
1
certificate, document, or other paper reasonably believed by it to be genuine
and to be signed or sent by the proper persons; that the Escrow Agent shall be
responsible only for the performance of its own obligations under the Equity
Option Agreement and this Agreement; and that the Escrow Agent shall be under no
obligation to commence, continue or defend any suit or proceeding in connection
with the Equity Option Agreement or this Agreement unless requested to do so by
the parties hereto and indemnified to its satisfaction.
4. Expense of Escrow Agent. The Escrow Agent shall not be paid a fee
for acting as Escrow Agent under the Equity Option Agreement and this Agreement.
The Escrow Agent shall not be liable for any claims, suits, actions, costs,
damages, liabilities or expenses (collectively, the "Liabilities") in connection
with the performance of its duties under the Equity Option Agreement or this
Agreement other than Liabilities caused by the negligence or willful misconduct
of the Escrow Agent, and Brookdale hereby agrees to indemnify and hold harmless
the Escrow Agent from and against any and all Liabilities arising from or in
connection with any acts or omissions taken by the Escrow Agent in connection
with the Equity Option Agreement or this Agreement, other than those Liabilities
caused by the negligence or willful misconduct of the Escrow Agent.
5. Termination of Agreement. This Agreement shall terminate upon the
earlier to occur of (a) the performance of the duties of the Escrow Agent under
the Equity Option Agreement, and (b) the Option Termination Date. If the Closing
shall not have occurred on or prior to the Option Termination Date, the Escrow
Agent shall redeliver the Assignment to the Investor.
6. Replacement of Escrow Agent. The Escrow Agent may resign, or the
Investor and Brookdale may agree to discharge the Escrow Agent, from its
obligations under the Equity Option Agreement and this Agreement at any time,
but in no event shall the Escrow Agent be released of its obligations under the
Equity Option Agreement and this Agreement unless and until a substitute escrow
agent has been designated and assumed its obligations.
7. Governing Law. This Agreement 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).
8. 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.
9. 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:
2
If to the
Investor: AH Michigan Investor, Inc.
▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to Brookdale: Brookdale Living
Communities, Inc.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: Winston & ▇▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Escrow Agent: Squire, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
10. Brookdale may assign its rights hereunder in connection with an
assignment of its rights under the Equity Option Agreement in accordance with
the provisions of paragraph (e) of Section 18 thereof.
11. Amendment. This Agreement may be amended only by a written
instrument executed by all parties hereto.
3
IN WITNESS WHEREOF, the undersigned have executed and delivered this
Agreement as of the date first above written.
AH MICHIGAN INVESTOR, INC.
By:___________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Its: President
BROOKDALE LIVING COMMUNITIES, INC.
By:___________________________
Name:_________________________
Its:____________________________
SQUIRE, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
By:______________________________
Name:____________________________
Its:_______________________________
4