LOAN NO. 07-0004017
COLLATERAL ASSIGNMENT OF MANAGEMENT AGREEMENT
AND WAIVER OF PROPERTY MANAGEMENT AND BROKER'S LIENS
THIS COLLATERAL ASSIGNMENT OF MANAGEMENT AGREEMENT AND WAIVER OF PROPERTY
MANAGEMENT AND BROKER'S LIENS ("AGREEMENT") is made as of the 26th day of
August, 2002, by EMERITUS CORPORATION, a Washington corporation ("MANAGER"), and
EMERITUS PROPERTIES XIV, LLC, a Washington limited liability company
("BORROWER"), to and for the benefit of HELLER HEALTHCARE FINANCE, INC., a
Delaware corporation ("LENDER").
RECITALS
A. Borrower is the owner of the real estate legally described in attached
Exhibit A (the "PROPERTY").
--------
B. Borrower and Manager have entered into a certain Management Agreement
pursuant to which Manager has agreed to render certain property management
services and leasing brokerage services (the "MANAGEMENT AGREEMENT").
C. Lender has agreed, subject to certain terms and conditions, to make a
loan to Borrower in an amount not to exceed Eight Million Three Hundred Thousand
and No/100 Dollars ($8,300,000.00) (the "LOAN"). The Loan is evidenced and
governed by a certain Promissory Note A of even date herewith in the face amount
of Five Million Three Hundred Ninety-Five Thousand and No/100 Dollars
($5,395,000.00), that certain Subordinated Promissory Note B of even date
herewith in the face amount of Two Million Nine Hundred Five Thousand and No/100
Dollars ($2,905,000.00) and that certain Loan Agreement by and between Lender
and Borrower of even date herewith, as the same may from time to time be
renewed, amended, modified, increased, consolidated or extended (the "LOAN
AGREEMENT"). All capitalized terms not otherwise defined herein shall have the
meanings assigned to them in the Loan Agreement.
D. To induce Lender to make the Loan, Borrower has agreed to assign, as
security for the Loan, its rights under the Management Agreement and Manager is
willing to waive any and all liens to which it is or will be entitled, now or
hereafter, arising in respect of the Management Agreement or the services
performed, or expenses incurred, thereunder, including without limitation any
mechanic's or materialman's lien claim or broker's lien claim under applicable
law (the "MANAGER'S LIENS").
AGREEMENTS
1. To secure the Loan, Borrower hereby, sells, conveys and assigns to Lender
all its right, title and interest in and to the Management Agreement.
Manager hereby consents to such assignment. Borrower, Lender and Manager hereby
agree that, upon the occurrence of a monetary default under and as defined in
the Loan Agreement, Lender shall have the right, but not the obligation, to
elect, by giving written notice to Borrower and Manager, either to: (i) enforce
the obligations of Manager under the Management Agreement, in which event
Manager will recognize Lender as owner of the Property for purposes of the
Management Agreement; provided that all sums payable under the Management
Agreement accruing from and after the date of delivery of such notice are paid
when due, or (ii) terminate the Management Agreement as of the date of delivery
of such notice without payment of any termination fees or charge notwithstanding
anything to the contrary in the Management Agreement, in which event Borrower
shall make no further payments to Manager and Manager shall not accept any such
payments and Manager shall promptly deliver to Lender all books and records
pertaining to the operation and management of the mortgaged property.
2. Manager acknowledges that pursuant to the terms of the Management
Agreement Manager is required to maintain insurance for the Property. Manager
agrees that it shall maintain such insurance in accordance with the requirements
of the Mortgage, a copy of which Manager acknowledges it has reviewed. In case
of loss or damage to the Property by fire or other casualty, Manager or Borrower
shall give, or cause to be given, written notice thereof to the insurance
carrier(s) and to Lender within three (3) business days after such loss or
damage occurs. Lender is authorized and empowered, and Manager hereby
irrevocably appoints Lender as its attorney-in-fact (such appointment is coupled
with an interest), at its option, to make or file proofs of loss or damage and
to settle and adjust any claim under insurance policies which insure against
such risks, or to direct Manager, in writing, to agree with the insurance
carrier(s) on the amount to be paid in regard to such loss.
3. The assignment made hereby is for collateral purposes only and Lender
shall not be deemed to have assumed, or become liable for, the payment or
performance of any of the obligations or liabilities of Borrower arising from or
in connection with the Management Agreement whether arising before or after the
occurrence of an Event of Default, unless and until Lender delivers to Borrower
and Manager the above described notice of its election to enforce the
obligations of Manager, as provided above, in which event Lender shall have no
liability for any obligations or liabilities accruing prior to the date of the
delivery of such notice.
4. The Manager's Liens are hereby waived.
5. Any notice or other communication required or permitted to be given shall
be in writing addressed to the respective party as set forth below and may be
personally served, telecopied or sent by overnight courier or U.S. Mail and
shall be deemed given: (a) if served in person, when served; (b) if telecopied,
on the date of transmission if before 3:00 p.m. (Chicago time) on a business
day; provided that a hard copy of such notice is also sent pursuant to (c) or
--------
(d) below; (c) if by overnight courier, on the first business day after delivery
to the courier; or (d) if by U.S. Mail, certified or registered mail, return
receipt requested on the fourth (4th) day after deposit in the mail postage
prepaid.
Emeritus Corporation
3131 Elliott Avenue, Suite 500
Seattle, Washington 98121
Attn: Raymond R. Brandstrom, CFO
Notices to Manager: Facsimile: (206) 301-4500
Emeritus Properties XIV, LLC
3131 Elliott Avenue, Suite 500
Seattle, Washington 98121
Attn: Raymond R. Brandstrom, CFO
Notices to Borrower: Facsimile: (202) 301-4500
The Nathanson Group PLLC
1520 Fourth Avenue, Sixth Floor
Seattle, Washington 98101
Attn: Randi S. Nathanson
With a copy to: Facsimile: (206) 623-1738
Heller Healthcare Finance, Inc.
Loan No. 07-0004017
2 Wisconsin Circle, Suite 400
Chevy Chase, Maryland 20815
Attn: Manager, Portfolio Management Group
Notices to Lender: Telecopy: (301) 664-9843
Heller Healthcare Finance, Inc.
Loan No. 07-0004017
100 Congress, Suite 700
Austin, Texas 78701
Attn: Diana Pennington, Vice President and Chief Counsel, Senior Living
Group
With a copy to: Telecopy: (512) 476-7832
Heller Healthcare Finance, Inc.
Loan No. 07-0004017
500 West Monroe Street
Chicago, Illinois 60661
Attn: Kevin McMeen, Senior Vice President
And a copy to: Telecopy: (312) 441-7119
6. Neither Borrower nor Manager shall permit or agree to any modification,
amendment or termination of the Management Agreement (other than the expiration
of the Management Agreement on the expiry date, if any, set forth herein),
without the prior written consent of Lender, which consent Lender shall not
unreasonably withhold or delay.
7. This Agreement shall be governed by and construed in accordance with the
internal laws of the State of Illinois.
8. MANAGER, BORROWER AND LENDER, BY ITS ACCEPTANCE OF THIS AGREEMENT, HEREBY
WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING
BASED UPON, OR RELATED TO, THE SUBJECT MATTER OF THIS AGREEMENT AND THE BUSINESS
RELATIONSHIP THAT IS BEING ESTABLISHED. THIS WAIVER IS KNOWINGLY, INTENTIONALLY
AND VOLUNTARILY MADE BY MANAGER, BORROWER AND LENDER, AND MANAGER AND LENDER
ACKNOWLEDGE THAT NEITHER LENDER NOR ANY PERSON ACTING ON BEHALF OF LENDER HAS
MADE ANY REPRESENTATIONS OF FACT TO INDUCE THIS WAIVER OF TRIAL BY JURY OR HAS
TAKEN ANY ACTIONS WHICH IN ANY WAY MODIFY OR NULLIFY ITS EFFECT. MANAGER,
BORROWER AND LENDER ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO
ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH OF THEM HAS ALREADY RELIED ON THIS
WAIVER IN ENTERING INTO THIS AGREEMENT AND THAT EACH OF THEM WILL CONTINUE TO
RELY ON THIS WAIVER IN THEIR RELATED FUTURE DEALINGS. MANAGER, BORROWER AND
LENDER FURTHER ACKNOWLEDGE THAT THEY HAVE BEEN REPRESENTED (OR HAVE HAD THE
OPPORTUNITY TO BE REPRESENTED) IN THE SIGNING OF THIS AGREEMENT AND IN THE
MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL.
9. MANAGER AND BORROWER HEREBY CONSENT TO THE JURISDICTION OF ANY STATE OR
FEDERAL COURT LOCATED WITHIN THE COUNTY OF COOK, STATE OF ILLINOIS AND
IRREVOCABLY AGREE THAT, SUBJECT TO LENDER'S ELECTION, ALL ACTIONS OR PROCEEDINGS
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS SHALL
BE LITIGATED IN SUCH COURTS. MANAGER AND BORROWER EXPRESSLY SUBMIT AND CONSENT
TO THE JURISDICTION OF THE AFORESAID COURTS AND WAIVE ANY DEFENSE OF FORUM NON
CONVENIENS. MANAGER AND BORROWER HEREBY WAIVE PERSONAL SERVICE OF ANY AND ALL
PROCESS AND AGREE THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE UPON MANAGER OR
BORROWER, AS THE CASE MAY BE, BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT
REQUESTED, ADDRESSED TO MANAGER OR BORROWER, AS THE CASE MAY BE, AT THE ADDRESS
SET FORTH IN THIS AGREEMENT AND SERVICE SO MADE SHALL BE COMPLETE TEN (10) DAYS
AFTER THE SAME HAS BEEN POSTED.
IN WITNESS WHEREOF, the undersigned have executed this instrument on the day and
year first above written.
MANAGER:
EMERITUS CORPORATION,
a Washington corporation
By /s/ Raymond R. Brandstrom
Name Raymond R. Brandstrom
Its CFO
BORROWER:
EMERITUS PROPERTIES XIV, LLC, a Washington limited liability company
By Emeritus Corporation, a Washington corporation, its sole member
By /s/ Raymond R. Brandstrom
Name Raymond R. Brandstrom
Its CFO
LENDER:
HELLER HEALTHCARE FINANCE, INC.,
a Delaware corporation
By /s/ Jeffrey M. Muchmore
Name Jeffrey M. Muchmore
Its Vice President
EXHIBIT A
LEGAL DESCRIPTION
Record Owner: Emeritus Properties XIV, LLC
Legal Description: