NOTE
$4,400,000.00 August 28, 2003
Seattle, Washington
FOR VALUE RECEIVED, EMERITUS CORPORATION, a corporation organized
under the laws of the State of Washington ("Borrower"), shall pay to the order
of HEALTH CARE REIT, INC., a corporation organized under the laws of the State
of Delaware ("Lender"), the principal sum of Four Million Four Hundred Thousand
Dollars ($4,400,000.00), or so much thereof as shall have been advanced to
Borrower, with interest on so much thereof as shall from time to time be
outstanding at the rate of interest set forth below, until fully paid.
1. Definitions.
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"Business Day" means any day which is not a Saturday or Sunday or
a public holiday under the laws of the United States of America or the State of
Ohio.
"Closing Date" means the date of the first disbursement of
proceeds under this Note.
"Commencement Date" means [i] the Closing Date if the Closing
Date occurs on the first day of a month or [ii] the first day of the month after
the Closing Date if the Closing Date occurs on any day other than the first day
of the month.
"Default Rate" means the greater of [i] 2.50% plus the then
applicable interest rate or [ii] 18.50%.
"Event of Default" has the meaning set forth in 8.
"Fixed Rate Increaser Amount" means 50 basis points per year.
"Maturity Date" means the third anniversary of the Commencement
Date.
"State" means the State of Ohio.
2. Interest Rate.
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(a) Initial Rate. Interest shall accrue on the principal amount outstanding
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hereunder from time to time from and after the Closing Date until the first
anniversary of the Commencement Date at the rate of 12% per annum. Thereafter,
on each anniversary of the Commencement Date, the interest rate then in effect
will be increased on an annual basis by the Fixed Rate Increaser Amount.
(b) Default Rate. After the occurrence and during the continuance of an
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Event of Default, Borrower shall pay interest on this Note, and on any judgment
on this Note, at the Default Rate.
(c) Computation Method. All interest rates shall be calculated based on the
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actual number of days elapsed over a 360-day year (365/360 method).
3. Payments.
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(a) On the Closing Date, Borrower shall make a payment of interest on the
outstanding principal balance of the Loan for the period commencing on the
Closing Date and ending on the day before the Commencement Date;
(b) Commencing on the first day of the first month after the Commencement
Date and on the first day of each month thereafter until the first day of the
month before the Maturity Date, Borrower shall make monthly payments of interest
only sufficient to pay all interest accrued pursuant to 2 hereof;
(c) On the Maturity Date, Borrower shall make a balloon payment equal to the
outstanding balance of this Note including the outstanding principal
balance, all accrued and unpaid interest and all charges, expenses and other
amounts payable by Borrower to Lender.
4. Method and Place of Payment. Borrower shall make all payments on this
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Note at One SeaGate, Suite 1500, P.O. Box 1475, Toledo, Ohio 43603-1475, or at
such other place as the holder hereof may designate. Borrower shall make all
payments in lawful money of the United States of America by wire transfer of
immediately available funds.
5. Prepayment. Borrower shall have the privilege of prepaying this Note in
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whole or in part at any time without penalty.
6. Late Charge. Borrower acknowledges that any default in any payment due
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under this Note will result in loss and additional expense to Lender in handling
such delinquent payments and meeting Lender's other financial obligations.
Because such loss and additional expense is extremely difficult and impractical
to ascertain, Borrower agrees that if any payment hereunder (other than the
final payment on maturity) is not paid within 10 days after the due date,
Borrower shall pay, as a reasonable estimate of such loss and expense, a late
charge equal to the lesser of [i] 5% of the amount of the overdue payment, or
[ii] the maximum amount permitted by applicable law.
7. Application of Payments. Unless Lender elects otherwise, in its sole
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discretion, all payments and other amounts received by Lender shall be credited
as follows: [i] first to any charges, costs, expenses and fees payable by
Borrower under this Note or incurred by Lender for the protection of any
collateral securing the payment of this Note, if not paid by Borrower by the due
date; [ii] second to interest on the foregoing amounts at the Default Rate
from the due date or date of payment by Lender, as the case may be; [iii] third
to accrued but unpaid interest on this Note; [iv] fourth, to the principal
amount outstanding; and [v] the balance, if any, to Borrower.
8. Default. Any one or more of the following events shall constitute an
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"Event of Default" hereunder:
(a) Borrower fails to pay any installment on the Note within 10 days after
such payment is due.
(b) Borrower fails to maintain its existence, except in the case of a merger
or consolidation by Borrower, if the surviving entity in such merger has a net
worth immediately after the merger or consolidation at least equal to that of
the Borrower immediately prior thereto.
(c) [i] The filing by Borrower of a petition under 11 U.S.C. or the
commencement of a bankruptcy or similar proceeding by Borrower: [ii] the failure
by Borrower within 60 days to dismiss an involuntary bankruptcy petition or
other commencement of a bankruptcy, reorganization or similar proceeding against
Borrower, or to lift or stay any execution, garnishment or attachment of such
consequences as will impair its ability to carry on its operation at a Facility;
[iii] the entry of an order for relief under 11 U.S.C. in respect of Borrower;
[iv] any assignment by Borrower for the benefit of its creditors; [v] the entry
by Borrower into an agreement of composition with its creditors; [vi] the
approval by a court of competent jurisdiction of a petition applicable to
Borrower in any proceeding for its reorganization instituted under the
provisions of any state or federal bankruptcy, insolvency or similar laws; or
[vii] appointment by final order, judgment or decree of a court of competent
jurisdiction of a receiver of the whole or any substantial part of the
properties of Borrower (provided such receiver shall not have been removed or
discharged within 60 days of the date of his qualification).
(d) An Event of Default pursuant to any one of the following Lease
Agreements ("Lease") of even date: [i] HCRI Fairmont Properties, LLC lease to
Emeritus Properties XII, LLC of property in Manassas, Virginia; [ii] HCRI
Kirkland Properties, LLC lease to Emeritus Properties X, LLC of property in
Kirkland, Washington; [iii] HCRI Drum Hill Properties, LLC lease to Emeritus
Properties IX, LLC of property in Chelmsford, Massachusetts; or [iv] HCRI
Ridgeland Pointe Properties, LLC lease to Ridgeland Assisted Living, LLC of
property in Ridgeland, Mississippi.
(e) Any material representation or warranty made by Borrower in any report,
certificate, application, financial statement or other instrument furnished by
Borrower pursuant hereto or thereto shall prove to be false, misleading or
incorrect in any material respect as of the date made.
(f) Borrower defaults on any indebtedness or obligation to Lender or any
affiliate of Lender or any agreement with Lender or any affiliate of Lender,
which default is not cured within any applicable cure period. This provision
applies to all such indebtedness, obligations and agreements as they may be
amended, modified, extended or renewed from time to time.
(g) Any Event of Default pursuant to any Loan Document, as defined in the
Lease, which is due to the acts or omissions of Borrower or Tenant under the
Lease.
(h) all or a substantial part of the assets of Borrower are attached,
seized, subjected to a writ or distress warrant, or are levied upon, or come
into the possession of any receiver, trustee, custodian or assignee for the
benefit of creditors and are not released within 60 days;
(i) Borrower is enjoined, restrained or in any way prevented by court order
or any proceeding is filed or commenced seeking to enjoin, restrain or in any
way prevent Lender from conducting all or a substantial part of its business or
affairs;
(j) Without waiving any prior or subsequent Event of Default, Lender may
waive any Event of Default or, with or without waiving any Event of Default,
remedy any default.
9. Acceleration and Other Remedies. Upon the occurrence of any Event of
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Default, in addition to all other remedies at law or in equity, at the option of
Lender [i] the outstanding principal balance of this Note and all accrued
and unpaid interest thereon and all other amounts payable by Borrower to Lender
shall be immediately due and payable, and [ii] all such amounts shall bear
interest at the Default Rate from the date of the Event of Default until paid.
Lender may exercise either or both options without notice or demand of any kind.
Additionally, Lender may take whatever action at law or in equity as may appear
necessary or desirable to collect any monies then due and/or thereafter to
become due.
10. Governing Law. This Note shall be governed by and construed in
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accordance with the internal laws of the State, without giving effect to the
conflict of laws rules thereof.
11. Time is of the Essence. Time is of the essence in the payment of this
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Note.
12. Holidays. If any installment of this Note becomes due on a day which is
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not a Business Day, Borrower may pay the installment on the next succeeding
day on which banking institutions are open.
13. Waivers. None of the following shall be a course of dealing, estoppel,
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waiver or the like on which any party to this Note may rely: [i] Lender's
acceptance of one or more late or partial payments; [ii] Lender's forbearance
from exercising any right or remedy under this Note; or [iii] Lender's
forbearance from exercising any right or remedy under this Note on any one or
more occasions. Lender's exercise of any rights or remedies or a part of a
right or remedy on one or more occasions shall not preclude Lender from
exercising the right or remedy at any other time. Lender's rights and remedies
under this Note and the law and equity are cumulative to, but independent of,
each other.
14. Representations. Borrower [i] acknowledges that Lender would not have
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extended the credit evidenced by this Note and will not continue to extend the
credit but for the obligations of Borrower; [ii] warrants that Borrower has
executed this Note to induce Lender to extend and to continue to extend the
credit; [iii] warrants that Borrower has received good and valuable
consideration for executing this Note; and [iv] warrants that Borrower has not
executed this Note in reliance upon the existence of the security for or
guaranty or promise of the payment of this Note.
15. Indulgences. Without notice, Lender may do or refrain from doing
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anything affecting this Note, as many times as Lender desires, including the
following: [i] granting or not granting any indulgences to anyone liable for
payment of this Note; [ii] releasing any security or anyone or any property from
liability on this Note; [iii] amending this Note, including extending the
time for payment of this Note.
16. No Release of Liability. No obligations of Borrower shall be affected
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by [i] any default in this Note when accepted by Lender or arising any time
thereafter; [ii] the unenforceability of or defect in this Note; or [iii] the
insolvency, dissolution, liquidation or winding up of affairs of Borrower or the
start of insolvency proceedings by or against any such party. EACH PARTY
TO THIS NOTE WAIVES ALL SURETYSHIP AND OTHER SIMILAR DEFENSES. Borrower may not
enforce any right of subrogation or contribution unless and until this Note is
paid in full and waives all rights of subrogation against any party that is
subject to insolvency proceedings unless and until this Note is paid in full.
17. Notices. All notices, demands, requests and consents (hereinafter
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"notices") given pursuant to this Note shall be in writing, and shall be served
by [i] personal delivery, [ii] United States Mail, postage prepaid; or [iii]
nationally recognized overnight courier to the following addresses:
To Borrower: Emeritus Corporation
3131 Elliott Avenue, Suite 500
Seattle, Washington 98121
To Lender: Health Care REIT, Inc.
One SeaGate, Suite 1500
P.O. Box 1475
Toledo, Ohio 43603
All notices shall be deemed to be given upon the earlier of actual receipt or
three days after deposit in the United States mail or one business day after
deposit with the overnight courier. Lender and Borrower may change their notice
address at any time by giving the other party written notice of such change.
18. Representation and Warranty Regarding Business Purpose. Borrower
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represents and warrants that the loan evidenced by this Note is for business
purposes only and not for personal, family, household, or agricultural purposes.
19. Security. This Note is unsecured.
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20. Protest. Each party to this Note waives protest, notice of protest,
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demand, dishonor or default, presentment for payment, notice of intent to
declare this Note immediately due and payable, notice of declaration that this
Note is immediately due and payable in full, all other notices, and all demands.
21. Savings Clause. The intention of Lender and Borrower is to comply with
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the laws of the State concerning the rate of interest on this Note.
Notwithstanding any other provision in this Note or in any other document given
in connection with this Note, Borrower shall not be required to pay interest in
excess of the maximum lawful rate. To the extent the amount of interest
provided in this Note ever exceeds the maximum lawful rate (the "Excess
Interest"), [i] the provisions of this paragraph shall govern and control; [ii]
Borrower shall not be obligated to pay any Excess Interest; [iii] any Excess
Interest that Lender may have received shall be credited against the then
outstanding balance due under this Note and, if the Excess Interest exceeds the
outstanding balance, the excess amount shall be refunded to Borrower; [iv] the
rate of interest under this Note or the Default Rate, as applicable, shall be
automatically reduced to the maximum lawful rate and this Note and any other
documents given in connection therewith shall be deemed reformed and modified to
reflect such reduction; and [v] subject to the foregoing provisions of this
paragraph, Borrower shall have no action or remedy against Lender for any
damages whatsoever or any defense to enforcement of the note or any other
documents given in connection therewith arising out of the payment or collection
of any Excess Interest. In determining whether interest paid or payable on this
Note exceeds the maximum lawful rate, Borrower agrees to exclude voluntary
prepayment fees from the calculation of interest and to spread the total amount
of interest throughout the entire contemplated term of this Note.
22. Attorney's Fees and Expenses. Borrower shall pay to Lender all
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reasonable costs and expenses incurred by Lender in administering the Loan and
the security for the Loan, enforcing or preserving Lender's rights under this
Note, and in all matters of collection, whether or not an Event of Default has
actually occurred or has been declared and thereafter cured, including but not
limited to, [i] attorney's and paralegal's fees and disbursements; [ii] the fees
and expenses of any litigation, administrative, bankruptcy, insolvency,
receivership and any other similar proceeding; [iii] court costs; [iv] the
expenses of Lender, its employees, agents, attorneys and witnesses in preparing
for litigation, administrative, bankruptcy, insolvency and other proceedings and
for lodging, travel, and attendance at meetings, hearings, depositions, and
trials; and [v] consulting and witness fees incurred by Lender in connection
with any litigation or other proceeding.
23. Severability. If any clause, provision, section or article of this Note
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is ruled invalid by any court of competent jurisdiction, the invalidity of
such clause, provision, section, or article shall not affect any of the
remaining provisions hereof.
24. Assignment. Borrower shall not assign its rights nor delegate its
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obligations under this Note.
25. Amendment. This Note may not be amended except in writing signed by
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Borrower and Lender. All references to this Note, whether in this Note or in
any other document or instrument, shall be deemed to incorporate all amendments,
modifications, and renewals of this Note and all substitutions made
therefor after the date hereof.
26. CONSENT TO JURISDICTION. BORROWER HEREBY IRREVOCABLY SUBMITS AND
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CONSENTS TO THE NON-EXCLUSIVE JURISDICTION AND VENUE OF ANY STATE OR FEDERAL
COURT HAVING JURISDICTION OVER LUCAS COUNTY, OHIO FOR ANY ACTION OR PROCEEDING
TO ENFORCE OR DEFEND ANY MATTER ARISING FROM OR RELATED TO [I] THE COMMITMENT
LETTER FOR THE LOAN EVIDENCED BY THIS NOTE; [II] THIS NOTE; OR [III] ANY LOAN
DOCUMENT EXECUTED IN CONNECTION WITH THIS NOTE. BORROWER HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT BORROWER MAY EFFECTIVELY DO SO, THE DEFENSE OF AN
INCONVENIENT FORUM TO THE MAINTENANCE OF ANY SUCH ACTION OR PROCEEDING.
BORROWER AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE
CONCLUSIVE AND MAY BE ENFORCED IN ANY OTHER JURISDICTION BY SUIT ON THE JUDGMENT
OR IN ANY OTHER MANNER PROVIDED BY LAW.
BORROWER AGREES NOT TO INSTITUTE ANY LEGAL ACTION OR PROCEEDING
AGAINST LENDER OR ANY DIRECTOR, OFFICER, EMPLOYEE, AGENT OR PROPERTY OF LENDER,
CONCERNING ANY MATTER ARISING OUT OF OR RELATING TO THE COMMITMENT LETTER OR ANY
LOAN DOCUMENT IN ANY COURT OTHER THAN A STATE OR FEDERAL COURT HAVING
JURISDICTION OVER LUCAS COUNTY, OHIO UNLESS SUCH COURTS LACK SUBJECT MATTER OR
IN PERSONAM JURISDICTION IN WHICH CASE SUCH ACTION OR PROCEEDING MAY BE BROUGHT
IN ANY COURT WHICH HAS SUCH JURISDICTION.
BORROWER HEREBY CONSENTS TO SERVICE OF PROCESS BY LENDER IN ANY MANNER
AND IN ANY JURISDICTION PERMITTED BY LAW. NOTHING HEREIN SHALL AFFECT OR IMPAIR
LENDER'S RIGHT TO SERVE LEGAL PROCESS IN ANY MANNER PERMITTED BY LAW, OR
LENDER'S RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST BORROWER OR THE
PROPERTY OF BORROWER IN THE COURTS OF ANY OTHER JURISDICTION.
27. WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY LAW, LENDER,
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BY ITS ACCEPTANCE OF THIS NOTE, AND BORROWER HEREBY KNOWINGLY AND VOLUNTARILY
WAIVE THE RIGHT TO A JURY TRIAL IN ANY ACTION, PROCEEDING OR COUNTERCLAIMS
ARISING OUT OF OR RELATING TO THIS NOTE.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the undersigned has executed this Note effective
as of the date first set forth above.
EMERITUS CORPORATION
By: William M. Shorten
Title: Director of Real Estate