ENVIRONMENTAL INDEMNITY AGREEMENT
THIS ENVIRONMENTAL INDEMNITY AGREEMENT (this "Agreement"), made as of
June 17, 1998, from BROOKDALE LIVING COMMUNITIES, INC., a Delaware corporation.
having an office at ▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Telefax Number (▇▇▇) ▇▇▇-▇▇▇▇ (the "Guarantor")
to Banc One Capital Partners IV, Ltd., an Ohio limited liability company, having
an address at ▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇ ▇.
▇▇▇▇▇, Telefax Number (▇▇▇) ▇▇▇-▇▇▇▇ (together with its successors and assigns,
"Lender").
RECITALS
WHEREAS, pursuant to a Loan Agreement dated as of the date hereof
between AH Texas Subordinated, LLC, an Ohio limited liability company
("Borrower"), and Lender (as modified and supplemented and in effect from time
to time, the "Loan Agreement"), at the request of Borrower and Guarantor, Lender
has agreed to make a loan (the "Loan") to Borrower;
WHEREAS, AH Texas Owner Limited Partnership is an Ohio limited
partnership (the "Owner"), the sole partners of which are the Borrower and AH
Texas CGP, Inc., an Ohio corporation (the "General Partner"), which acts as the
sole general partner of the Owner;
WHEREAS, the Borrower is the sole shareholder of the General Partner;
WHEREAS, the Owner intends to develop a congregate housing facility
with an assisted living component for the elderly in Austin, Texas, which is
currently referred to as "The Heritage at ▇▇▇▇▇▇ Ranch" (the "Project");
WHEREAS, the Borrower estimates that the total cost of acquisition,
development and construction of the Project will be $31,097,670 (the "Estimated
Project Cost");
WHEREAS, the Borrower, on behalf of the Owner, has obtained a loan
from Nomura Asset Capital Corporation (the "Senior Lender") for the acquisition,
development and construction of the Project, in the amount of up to $24,250,000
(the "Senior Loan");
WHEREAS, the Lender has agreed to make the Loan to the Borrower to be
used as an equity contribution to the Owner, the proceeds of which will fund a
portion of the Estimated Project Cost which will not be funded by the Senior
Loan, upon the terms and conditions set forth in the Loan Agreement;
WHEREAS, Owner and BLC of Texas - II, L.P., a Delaware limited
partnership (the "Manager"), are entering into a certain management agreement
dated the date herewith and a certain development agreement dated the date
herewith (collectively the "Management Agreement"), pursuant to which Manager
shall manage, operate and develop the Property; and
WHEREAS, Lender is unwilling to make the Loan unless Guarantor
indemnifies Lender against certain liabilities arising under Environmental Laws
(as herein defined), relating to the property being financed in connection with
the Senior Loan, which property consists of the
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fee simple interest in the land more particularly described in the documents
evidencing the Senior Loan and all buildings, structures and other improvements
now or hereafter situated on such land (the "Property").
NOW, THEREFORE, in consideration of the making of the Loan by Lender
and the covenants, agreements, representations and warranties set forth in this
Agreement, the parties hereby covenant, agree, represent and warrant as follows:
1. Defined Terms. Unless the context otherwise requires, capitalized
terms used but not otherwise defined herein but defined in the Loan Agreement
shall have the meanings provided therefore in the Loan Agreement, and the
following terms shall have the following meanings:
"Borrower" has the meaning provided in the Recitals to this Agreement.
"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 Owner, Borrower, Manager or the
Property, 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
Property, (ii) any fact, circumstance, condition or occurrence forming the basis
of any violation, or alleged violation, of any Environmental Law by Owner,
Borrower, Manager or otherwise affecting the Property or (iii) any alleged
injury or threat of injury to health, safety or the environment by Owner,
Borrower, Manager or otherwise affecting the Property 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.
"Environmental Reports" means the environmental audit reports, with
respect to the Property, delivered to Lender prior to the date hereof and in
connection with the Loan, and any amendments or supplements thereto delivered to
Lender prior to the date hereof.
"Guarantor" has the meaning provided in the first paragraph of this
Agreement.
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"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.
"Lender" has the meaning provided in the first paragraph of this Agreement.
"Loan" has the meaning provided in the Recitals to this Agreement.
"Loan Agreement" has the meaning provided in the Recitals to this
Agreement.
"Owner" has the meaning provided in the Recitals to this Agreement.
"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 property of such Person of such Hazardous
Substance in violation of Environmental Laws.
2. Indemnification.
(a) Subject to the limitations set forth in Section 16 hereof,
Guarantor agrees to indemnify, reimburse, defend (with counsel satisfactory to
Lender in Lender's sole discretion), and hold harmless Lender for, from and
against all demands, claims, actions or causes of action, assessments, losses,
damages, liabilities, costs and expenses, including, without limitation,
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interest, penalties, consequential damages, reasonable attorneys' fees,
reasonable disbursements and expenses, and reasonable consultants' fees,
disbursements and expenses, including costs of Remedial Work (collectively
"Losses"), asserted against, resulting to, imposed on, or incurred by Lender,
directly or indirectly in connection with any of the following:
i) events, circumstances, or conditions which are alleged to, or do, form
the basis for an Environmental Claim;
ii) the presence, Use or Release of Hazardous Substances at, on, in,
under or from the Property, which presence, use or release requires or
could reasonably require Remedial Work;
iii) any Environmental Claim against any Person whose liability for
such Environmental Claim Guarantor has or may have assumed or retained
either contractually or by operation of law; or
iv) any failure of Guarantor to fulfill each and every obligation
undertaken pursuant to this Agreement.
(b) The indemnity provided in this Agreement shall not be included in
any exculpation of Guarantor, Manager or Borrower from personal liability
provided in the Loan Agreement or in any of the other Loan Documents. Nothing in
this Agreement shall be deemed to deprive Lender of any rights or remedies
provided to it elsewhere in this Agreement or in the other Loan Documents or
otherwise available to it under law. Guarantor waives and releases Lender from
any rights or defenses Guarantor 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 Lender.
(c) With respect to those matters for which Guarantor has agreed to
indemnify Lender hereunder, and to the maximum extent permitted by applicable
law, Guarantor waives and releases Lender from any rights or defenses Guarantor
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 fraud, gross negligence or willful misconduct
of Lender.
3. Payment. All payments due to Lender under this Agreement shall be
payable to Lender within ten (10) days after written demand therefor, and shall
bear interest at the Default Rate from the date such payment is due until the
date of payment.
4. Governing Law; Waiver of Jury Trial; Consent to Venue.
(a) The parties agree that the State of Ohio has a substantial
relationship to the parties and to the underlying transaction embodied hereby,
and in all respects, including, without limitation, matters of construction,
validity and performance, this Agreement and the obligations arising hereunder
shall be governed by, and construed in accordance with, the laws of the State of
Ohio applicable to contracts made and performed in such State and any applicable
law of the
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United States of America; subject, however, as to performance, to the
Environmental Laws governing the Project. To the fullest extent permitted by
law, Guarantor hereby unconditionally and irrevocably waives any claim to assert
that the law of any other jurisdiction governs this Agreement, and this
Agreement shall be governed by and construed in accordance with the laws of the
State of Ohio; subject, however, as to performance, to the Environmental Laws
governing the Project.
(b) THE GUARANTOR AND THE LENDER, AFTER CONSULTING OR HAVING HAD THE
OPPORTUNITY TO CONSULT WITH COUNSEL, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVE ANY RIGHT THEY MAY HAVE TO A TRIAL BY JURY IN ANY LITIGATION BASED UPON OR
ARISING OUT OF THIS AGREEMENT OR ANY RELATED INSTRUMENT OR AGREEMENT, OR ANY OF
THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, OR ANY COURSE OF CONDUCT,
DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE GUARANTOR OR THE
LENDER. THE GUARANTOR AND THE LENDER SHALL NOT 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
THE FAILURE TO SO CONSOLIDATE WOULD RESULT IN A MANDATORY LOSS OF SUCH CLAIM. IN
THE EVENT OF A DISPUTE UNDER THIS AGREEMENT, THE GUARANTOR AND THE LENDER HEREBY
AGREE THAT EXCLUSIVE JURISDICTION AND VENUE LIES IN A COURT OF COMPETENT
JURISDICTION IN FRANKLIN COUNTY OHIO. THESE PROVISIONS SHALL NOT BE DEEMED TO
HAVE BEEN MODIFIED IN ANY RESPECT OR RELINQUISHED BY THE GUARANTOR OR THE LENDER
EXCEPT BY A WRITTEN INSTRUMENT EXECUTED BY SAME.
5. Modification, Waiver in Writing. No modification, amendment,
extension, discharge, termination or waiver of any provision of this Agreement
or consent to any departure by Guarantor therefrom, shall in any event be
effective unless the same shall be in a writing signed by the party against whom
enforcement is sought, and then such waiver or consent shall be effective only
in the specific instance, and for the purpose, for which given. Except as
otherwise expressly provided herein, no notice to or demand on Guarantor shall
entitle Guarantor to any other or future notice or demand in the same, similar
or other circumstances.
6. Delay Not a Waiver. Neither any failure nor any delay on the part
of Lender in insisting upon strict performance of any term, condition, covenant
or agreement or exercising any right, power, remedy or privilege hereunder,
shall operate as or constitute a waiver thereof, nor shall a single or partial
exercise thereof preclude any other future exercise, or the exercise of any
other right, power, remedy or privilege. In particular, and not by way of
limitation, by accepting payment after the due date of any amount payable under
this Agreement, Lender shall not be deemed to have waived any right either to
require prompt payment when due of all other amounts due under this Agreement,
or to declare a default for failure to effect prompt payment of any such other
amount.
7. Notices. All notices, consents, approvals and requests required or
permitted hereunder shall be given in writing and shall be effective for all
purposes if hand delivered or sent by (a) hand delivery, with proof of attempted
delivery, (b) certified or registered United States
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mail, postage prepaid, (c) expedited prepaid delivery service, either commercial
or United States Postal Service, with proof of attempted delivery, or (d) by
telecopier (with answerback acknowledged) provided that such telecopied notice
must also be delivered by one of the means set forth in (a), (b) or (c) above,
addressed if to Lender at its address set forth on the first page hereof, and if
to Guarantor at its designated address set forth on the first page hereof, or at
such other address and Person as shall be designated from time to time by any
party hereto, as the case may be, in a written notice to the other parties
hereto in the manner provided for in this Section 7. A copy of all notices,
consents, approvals and requests directed to Lender shall be delivered
concurrently to each of the following: Banc One Capital Markets, Inc., ▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, Attention: Legal Department,
Telefax Number (▇▇▇) ▇▇▇-▇▇▇▇. A copy of all notices, consents, approvals and
requests directed to Guarantor shall be delivered concurrently to each of the
following: Brookdale Living Communities, Inc., ▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇., Telefax Number
(▇▇▇) ▇▇▇-▇▇▇▇; Brookdale Living Communities, Inc., ▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esquire, Telefax
Number (▇▇▇) ▇▇▇-▇▇▇▇; Brookdale Living Communities, Inc., ▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esquire,
Telefax Number (▇▇▇) ▇▇▇-▇▇▇▇; and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq., Winston & ▇▇▇▇▇▇, ▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Telefax Number (▇▇▇) ▇▇▇-▇▇▇▇. A
notice shall be deemed to have been given: (a) in the case of hand delivery, at
the time of delivery; (b) in the case of registered or certified mail, when
delivered or the first attempted delivery on a Business Day; (c) in the case of
expedited prepaid delivery upon the first attempted delivery on a Business Day;
or (d) in the case of telecopier, upon receipt of answerback confirmation
received prior to 5:00 p.m. local time on a Business Day or if confirmation
received thereafter on the next succeeding Business Day, provided that such
telecopied notice was also delivered as required in this Section 7. A party
receiving a notice which does not comply with the technical requirements for
notice under this Section 7 may elect to waive any deficiencies and treat the
notice as having been properly given.
8. Assignment. Lender shall have the right to assign this Agreement
and the obligations hereunder to any Person who is from time to time the owner
of the Loan, but not otherwise. All references to "Lender" hereunder shall be
deemed to include the successors and assigns of Lender.
9. Severability. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
10. Heading and Recitals. The information set forth in the heading
and recitals hereof are hereby incorporated herein as a part of this Agreement
with the same effect as if set forth in the body hereof.
11. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall together constitute one and the same instrument.
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12. Estoppel Certificates. Guarantor and Lender each hereby agree at
any time and from time to time upon not less than fifteen (15) days prior
written notice by Guarantor or Lender to execute, acknowledge and deliver to the
party specified in such notice, a statement, in writing, certifying that this
Agreement is unmodified and in full force and effect (or if there have been
modifications, that the same, as modified, is in full force and effect and
stating the modifications hereto), and stating whether or not, to the best
knowledge of such certifying party, there exists any matter giving rise to a
claim under Section 2, and, if so, specifying each such matter; provided,
however, that it shall be a condition precedent to Lender's obligation to
deliver the statement pursuant to this Section 12, that Lender shall have
received, together with Guarantor's request for such statement, an officer's
certificate signed by an authorized officer of Guarantor stating that to the
best of Guarantor's knowledge, no matter which could give rise to a claim under
Section 2 exists as of the date of such certificate (or specifying each such
matter).
13. Survival. Subject to Section 16 hereof, this Agreement shall
survive (in perpetuity) the closing and disbursement of the funds evidenced by
the Note, payment of the Note, and any foreclosure on, or retention of, the
Membership Interests. Notwithstanding the foregoing, Guarantor shall not
indemnify Lender with respect to any Losses incurred in connection with, or as a
direct result of, any or all of the matters described above in Section 2(a)(i)
through 2(a)(iii) to the extent that Guarantor can establish directly and solely
that such Losses result from Hazardous Substances being placed on, above or
under the Property (a) by the affirmative act or gross negligence of Lender or
any employees, agents or bailees of Lender; or (b) subsequent to Lender
foreclosing on, or taking ownership of, the Membership Interests. Guarantor
agrees that this Guaranty shall continue to be effective or shall be reinstated
as the case may be, if at any time any payment is made by Borrower or Guarantor
to Lender and such payment is rescinded or must otherwise be returned by Lender
(as determined by Lender in its sole and absolute discretion) upon insolvency,
bankruptcy, liquidation, reorganization, readjustment, composition, dissolution,
receivership, conservatorship, winding up or other similar proceeding involving
or affecting Borrower or Guarantor, all as though such payment had not been
made.
14. Time of the Essence. Time is of the essence with respect to each
and every covenant, agreement and obligation of Guarantor under this Agreement.
15. Liability. The liability of Guarantor under this Agreement shall
in no way be limited or impaired by (a) any amendment or modification of the
Loan Documents made in accordance therewith, (b) any extensions of time for
performance required by any of the Loan Documents, or (c) the release or
substitution in whole or in part, of any security for the Notes or other
evidence of debt issued pursuant to the Loan Documents; and in any of such
cases, whether with or without notice to Guarantor and with or without
consideration.
16. Termination. Notwithstanding anything to the contrary contained
herein, upon the sale of the Property by Owner to an unrelated third party
purchaser, this Guaranty and the indemnity obligations provided hereunder shall
terminate, except to the extent any such obligations exist and remain unpaid or
otherwise unsatisfied; provided, however, that if subsequent to any such sale,
Losses are incurred as set forth in Section 2(a) and it is proven that such
Losses occurred as a result of actions or omissions of Owner, Borrower, Manager,
or Guarantor, then the indemnification provided herein shall continue to be
effective or shall be reinstated, as the case may be.
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17. INTERCREDITOR AGREEMENT. THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER AND ALL RIGHTS AND REMEDIES OF LENDER WITH RESPECT TO THE LOAN
ARE EACH AND ALL SUBJECT TO THE TERMS AND CONDITIONS OF THE INTERCREDITOR
AGREEMENT.
[Signatures on the following page]
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IN WITNESS WHEREOF, the Guarantor has caused this Environmental
Guaranty Indemnity Agreement to be duly executed by its duly authorized
representative, all as of the day and year first above written.
GUARANTOR:
BROOKDALE LIVING COMMUNITIES, INC.,
a Delaware corporation
By: ________________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Title: Executive Vice President
AGREED AND ACKNOWLEDGED
ONLY FOR SECTION 4(b)
BANC ONE CAPITAL PARTNERS IV, LTD.
By: BOCP Holdings Corporation, its Manager
By: ______________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Authorized Signer
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