GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT is made effective as of the 30th day of May, 1996,
by the undersigned (hereinafter referred to collectively as "Guarantor", whether
one or more) in favor of RMI CAPITAL MANAGEMENT CO., whose address is 3773
Cherry Creek North Drive, Suite 640, Denver, Colorado 80209 ("Lender").
WITNESSETH :
1. GUARANTEED INDEBTEDNESS. FOR VALUE RECEIVED, Guarantor
unconditionally and absolutely guarantees, jointly and severally with any and
all other Guarantors executing this Guaranty or a counterpart hereof either now
or in the future, to Lender the prompt and full payment, performance and
observance, when due, of all debts, obligations and liabilities of Emeritus
Properties II, Inc. ("Borrower"), to Lender, payable under or with respect to
(i) that certain Promissory Note dated of even date herewith (the "Note"), in
the original principal sum of $4,695,00.00, executed by Borrower and payable
to the order of Lender, together with all renewals, extensions and
modifications thereof; (ii) all other documents now or hereafter securing
performance of the obligations of Borrower under the Note; and (iii) attorneys
fees and costs as described below. All indebtedness, obligations and
liabilities hereinabove described and covered by this Guaranty, or intended
so to be, are hereinafter sometimes collectively referred to as the
"Guaranteed Indebtedness." If Guarantor is or becomes liable for any
indebtedness owing by Borrower to Lender by endorsement or otherwise than
under this Guaranty, such liability shall not be in any manner impaired or
affected hereby, and the rights of Lender hereunder shall be cumulative of any
and all other rights that Lender may ever have against Guarantor. The exercise
by Lender of any right or remedy hereunder or under any other instrument, or
at law or in equity, shall not preclude the concurrent or subsequent exercise
of any other right or remedy. Without in any way diminishing the generality
of the foregoing, it is specifically understood and agreed that this Guaranty
is given by Guarantor as an additional guaranty to any and all other guarantees
heretofore or hereafter executed and delivered to Lender by Guarantor (or any
of them) in favor of Lender relating to indebtedness of Borrower to Lender, and
nothing herein shall ever be deemed to replace or be in lieu of any other of
such previous or subsequent guarantees.
2. CONSIDERATION. Guarantor acknowledges and warrants that it
derived or expects to derive financial and other advantage and benefit, directly
or indirectly, from the Guaranteed Indebtedness and each and every advance
thereof and from each and
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every renewal or extension. Any debt or right to distributions owed to
Guarantor from Borrower is hereby subordinated to the Guaranteed Indebtedness.
The Loan evidenced by the Note may be granted at the request of the Borrower and
without authorization from or notice to the undersigned. Lender need not
inquire into the power of the Borrower or the authority of its agents acting or
purportedly acting on its behalf. The Loan shall be deemed to have been granted
at the instance and request of the undersigned and in consideration of and in
reliance upon this Guarantee.
3. GUARANTOR WAIVERS. The obligations, covenants, agreements and
duties of Guarantor under this Guaranty shall not be released or impaired in any
manner whatsoever, without the written consent of Lender, on account of any or
all of the following: (a) any assignment, endorsement or transfer, in whole or
in part, of the Guaranteed Indebtedness, although made without notice to or the
consent of Guarantor; (b) any waiver by Lender of the performance or observance
by Borrower or Guarantor of any of the agreements, covenants, terms or
conditions contained in any document evidencing, governing or securing the
Guaranteed Indebtedness; (c) any extensions of the time for payment or
performance of all or any portion of the Guaranteed Indebtedness; (d) the
renewal, rearrangement, modification or amendment (whether material or
otherwise) of any duty, agreement or obligation of Borrower set forth in any
document evidencing, governing or securing the Guaranteed Indebtedness; (e) the
voluntary or involuntary liquidation, sale or other disposition of all or
substantially all of the assets of Borrower or Guarantor; (f) any receivership,
insolvency, bankruptcy, reorganization or other similar proceedings affecting
Borrower or Guarantor or any of their assets; (g) any release, withdrawal,
surrender, exchange, substitution, subordination or loss of any security or
other guaranty at any time existing in connection with all or any portion of the
Guaranteed Indebtedness, or the acceptance of additional or substitute property
as security therefor; (h) the release or discharge of Borrower or any other
guarantor from the observance or performance of any agreement, covenant, term or
condition contained in any document evidencing, governing or securing the
Guaranteed Indebtedness; (i) any action which Lender may take or omit to take by
virtue of any document evidencing, governing or securing the Guaranteed
Indebtedness or through any course of dealing with Borrower; (j) the addition of
a new guarantor or guarantors; (k) the operation of law or any other cause,
whether similar or dissimilar to the foregoing; (l) any adjustment, indulgence,
forbearance or compromise that may be granted or given by Lender to any party;
(m) the failure by Lender to file or enforce a claim against the estate (either
in administration, bankruptcy or other proceeding) of Borrower or any other
person or entity; (n) recovery from Borrower or any other person or entity
becomes barred by any statute of limitations or is otherwise prevented; (o) any
defenses, set-offs or counterclaims which may be available to Borrower or any
other person or entity; (p) any impairment, modification, change,
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release or limitation of liability of, or stay of actions of lien enforcement
proceedings against Borrower, its property, or its estate in bankruptcy
resulting from the operation of any present or future provisions of the
Bankruptcy Code or any other similar federal or state statute, or from the
decisions of any court; (q) any neglect, delay, omission, failure or refusal of
Lender to take or prosecute any action for the perfection of collateral or the
collection of any of the Guaranteed Indebtedness or to foreclose or take or
prosecute any action in connection with any lien, right of security, existing or
to exist in connection with, or as security for, any of the Guaranteed
Indebtedness, it being the intention hereof that Guarantor shall remain liable
as principal on the Guaranteed Indebtedness, notwithstanding any act, omission
or thing which might, but for the provisions hereof, otherwise operate as a
legal or equitable discharge of Guarantor; (r) any defense that may arise by
reason of the incapacity, lack of authority, death or disability of, or
revocation hereof, by any guarantor or others; (s) demand, protest and notice of
any other kind, including, without limiting the generality of the foregoing,
notice of any action or non-action on the part of Borrower, Lender, any
endorser, guarantor under this or any other instrument, or creditor of Borrower,
or any other person whomsoever, in connection with the Guaranteed Indebtedness;
(t) any defense based upon an election of remedies by Lender, including, without
limitation, an election to proceed by non-judicial rather than judicial
foreclosure, which destroys or otherwise impairs the subrogation rights of the
undersigned or the right of the undersigned to proceed against Borrower for
reimbursement, or both; and (u) any duty on the part of Lender to disclose to
the undersigned any facts it may now or hereafter know about Borrower,
regardless of whether Lender has reason to believe that any such facts
materially increase the risk beyond which the undersigned is obligated or
whether Lender has a reasonable opportunity to communicate such facts to the
undersigned, it being understood and agreed that the undersigned is fully
responsible for being and keeping informed of the financial condition of
Borrower and of all circumstances bearing on the risk of non-payment of the
Guaranteed Indebtedness. Notice to Guarantor of the acceptance of this Guaranty
and of the making, renewing or assignment of the Guaranteed Indebtedness and
each item thereof, are hereby expressly waived by Guarantor.
4. GUARANTOR'S OBLIGATION TO PAY THE GUARANTEED INDEBTEDNESS. In
the event of default by Borrower in payment or performance of the Guaranteed
Indebtedness, or any part thereof, when such indebtedness becomes due, either by
its terms or as the result of the exercise of any power to accelerate, without
any notice having been given to Guarantor of the acceptance by Lender of this
Guaranty and without any notice having been given to Guarantor of the creating
or incurring of such indebtedness, Guarantor agrees to pay the amount due
thereon to Lender following written demand made by Lender to Guarantor at least
seven (7) days prior to the date of required payment by Guarantor. It shall not
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be necessary for Lender, in order to enforce such payment by Guarantor, first,
to institute suit or exhaust its remedies against Borrower or others liable on
such indebtedness, or to enforce its rights against any security which shall
ever have been given to secure such indebtedness. Guarantor hereby waives any
and all legal requirements that Lender institute any action or proceeding at law
or in equity or exhaust its rights, remedies and recourse against Borrower or
anyone else with respect to the Guaranteed Indebtedness as a condition precedent
to bringing an action against Guarantor upon this Guaranty. Each payment on the
Guaranteed Indebtedness shall be deemed to have been made by Borrower unless
express written notice is given to Lender at the time of such payment that such
payment is made by Guarantor as specified in such notice.
5. WAIVER OF SUBROGATION. Until all indebtedness of Borrower to
Lender shall have been paid in full, even though such indebtedness is in excess
of Guarantor's liability hereunder, Guarantor shall have no right of
subrogation, and hereby expressly waives any right to enforce any remedy which
Lender now has or may hereafter have against Borrower, and waives any benefit
of, and any right to participate in, any security now or hereafter held by
Lender. Guarantor waives all rights of indemnification against Borrower and
agrees to rely solely on its rights of subrogation following payment in full to
Lender in order to collect from Borrower sums paid hereunder.
6. GUARANTOR'S FINANCIAL INFORMATION. Guarantor hereby warrants and
represents to Lender that (a) any and all balance sheets, net worth statements
and other financial data that have heretofore been given to Lender with respect
to Guarantor fairly and accurately present the financial condition of Guarantor
as of the date thereof and, since the date thereof, there has been no material
adverse change in the financial condition of Guarantor, (b) except as otherwise
disclosed to Lender, there are no material legal proceedings, claims or demands
pending against or, to the knowledge of such Guarantor, threatened against,
Guarantor or any of Guarantor's assets, or, if there is any such material
proceeding, claim or demand, it has been disclosed in writing to Lender and does
not and shall not have any material adverse effect upon the ability of Guarantor
to perform any of Guarantor's obligations hereunder, (c) Guarantor is not in
breach or default of any legal requirement, contract or commitment, which would
have a material adverse effect on Guarantor or the Guaranteed Indebtedness, (d)
no event (including specifically Guarantor's execution and delivery of this
Guaranty) has occurred which, with the lapse of time or the giving of notice or
both, could result in Guarantor's breach or default under any legal requirement,
contract or commitment which would have a material adverse effect on Guarantor
or the Guaranteed Indebtedness and (e) Guarantor is solvent. Guarantor hereby
agrees to furnish Lender annually and from time to time, promptly upon request
therefor, current
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financial reports and statements setting forth in reasonable detail the
financial condition of Guarantor at the time of such request, certified by
Guarantor to Lender, and prepared in accordance with generally accepted
accounting principles consistently applied or in other form reasonably
acceptable to Lender. Should such statements be unsatisfactory in Lender's fair
and reasonable judgment, then the Lender shall have the right to request a
review and/or preparation of new unaudited statements by an independent
certified public accountant approved by Lender. Guarantor authorizes Lender to
update Guarantor's credit reports from time to time until all indebtedness of
Borrower to Lender shall have been paid in full.
7. LENDER'S RIGHTS IN COLLATERAL. If all or any part of the
Guaranteed Indebtedness at any time be secured, Guarantor agrees that Lender may
at any time and from time to time, at its discretion and with or without
valuable consideration, allow substitution or withdrawal of collateral or other
security and release collateral or other security without impairing or
diminishing the obligations of Guarantor hereunder. Guarantor further agrees
that if Borrower executes in favor of Lender any collateral agreement, deed of
trust or other security instrument, the exercise by Lender of any right or
remedy thereby conferred on Lender shall be wholly discretionary with Lender,
and that the exercise or failure to exercise any such right or remedy shall in
no way impair or diminish the obligation of Guarantor hereunder. Guarantor
further agrees that Lender shall not be liable for its failure to use diligence
in the collection of the Guaranteed Indebtedness or in preserving the liability
of any person liable on the Guaranteed Indebtedness, and Guarantor hereby waives
presentment for payment, notice of nonpayment, protest and notice thereof,
notice of acceleration, and diligence in bringing suits against any person
liable on the Guaranteed Indebtedness, or any part thereof.
8. JOINT GUARANTORS. If now or hereafter there is more than one
Guarantor, Guarantor agrees that Lender, in its discretion, may (i) bring suit
against all Guarantors jointly and severally or against any one or more of them,
(ii) compound or settle with any one or more of Guarantors for such
consideration as Lender may deem proper, and (iii) release one or more of
Guarantors from liability hereunder, and that no such action shall impair the
rights of Lender to collect the Guaranteed Indebtedness (or the unpaid balance
thereof) from other Guarantors, or any of them, not so sued, settled with or
released. Guarantors agree among themselves, however, that nothing contained in
this paragraph, and no action by Lender permitted under this paragraph, shall in
any way affect or impair the rights or obligations of Guarantors among
themselves.
9. EFFECT OF BORROWER DEFENSE TO PAYMENT. If the Guaranteed
Indebtedness at any time exceeds the amount permitted by law, or Borrower is not
liable because the act of creating the
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Guaranteed Indebtedness is ultra vires, or the persons creating the Guaranteed
Indebtedness acted in excess of their authority, and for these reasons the
Guaranteed Indebtedness which Guarantor agrees to pay cannot be enforced against
Borrower, such fact shall in no manner affect Guarantor's liability hereunder,
but Guarantor shall be liable under this Guaranty notwithstanding that Borrower
is not liable for the Guaranteed Indebtedness, and to the same extent Guarantor
would have been liable if the Guaranteed Indebtedness had been enforceable
against Borrower.
10. ASSIGNMENT OF GUARANTY. This Guaranty is for the benefit of
Lender, its successors and assigns, and in the event of an assignment by Lender,
its successors or assigns, of the Guaranteed Indebtedness, or any part thereof,
the rights and benefits hereunder, to the extent applicable to the indebtedness
so assigned, may be transferred with such indebtedness.
11. BANKRUPTCY LIMITATIONS. Except for the continuing obligations
under this Section 11, this Guaranty shall be otherwise released and terminated
upon the earlier of (1) Completion of Improvements as defined in the
Construction Loan Agreement by and between Lender and Borrower, 90% occupancy of
the property, and annual net operating income of at least $575,000; or (2)
payment in full of the Note. If during any preference period, Borrower files a
petition or is the subject of an involuntary petition seeking relief under
federal bankruptcy laws, and if as a result thereof Lender is required to
disgorge any payment received from Borrower as a preference, then Guarantor
agrees to repay to Lender all such amounts, together with interest from the date
which is seven (7) days after written demand for repayment at the rate of 12%
per annum, together with costs of collection, if any, including attorneys fees.
In the event the undersigned files a petition in or is the subject of
an involuntary petition seeking relief under federal bankruptcy laws, the
aggregate amount payable by the undersigned is limited to the largest amount
which would not render this obligation subject to avoidance.
12. ADDITIONAL LENDER RIGHTS. No modification, consent, amendment or
waiver of any provision of this Guaranty, nor consent to any release by any
Guarantor therefrom, shall be effective unless the same shall be in writing and
signed by an officer of Lender, and then shall be effective only in the specific
instance and for the purpose for which given. No notice to or demand on any
Guarantor in any case shall, of itself, entitle any Guarantor to any other or
further notice or demand in similar or other circumstances. No delay or
omission by Lender in exercising any power or right hereunder shall impair any
such right or power or be construed as a waiver thereof or any acquiescence
therein, nor shall any single or partial exercise of any such power preclude
other or further exercise thereof, or the exercise of any other
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right or power hereunder. All rights and remedies of Lender hereunder are
cumulative of each other and of every other right or remedy which Lender may
otherwise have at law or in equity or under any other contract or document, and
the exercise of one or more rights or remedies shall not prejudice or impair the
concurrent or subsequent exercise of other rights or remedies. In this
Guaranty, whenever the text so requires, the singular number includes the plural
and conversely.
13. CONTROLLING LAW. This Guaranty shall be governed by and
construed in accordance with the laws of Montana. This Guaranty shall
constitute the entire agreement of the undersigned with Lender with respect to
the subject matter hereof and no representation, understanding, promise or
condition concerning the subject matter hereof shall be binding upon Lender
unless expressed herein. This Guaranty is effective upon delivery to Lender
without condition.
14. ATTORNEY'S FEES. If Guarantor should breach or fail to perform
any provision of this Guaranty, Guarantor agrees to pay Lender all costs and
expenses incurred by Lender in the enforcement hereof. These costs and expenses
shall include attorney and paralegal fees, expert witness fees and costs of
depositions.
15. USURY SAVINGS CLAUSE. No provision herein or in the Note, or in
any other instrument or any other loan document executed by Borrower or
Guarantor evidencing, governing or securing the Guaranteed Indebtedness shall
require the payment or permit the collection of interest in excess of the
maximum permitted by law. If any excess of interest in such respect is provided
for herein or in the Note, or in any other such instrument or any other loan
document, the provisions of this paragraph shall govern, and neither Borrower
nor Guarantor shall be obligated to pay the amount of such interest to the
extent that it is in excess of the amount permitted by law, the intention of the
parties being to conform strictly to the applicable usury laws from time to time
in effect. All promissory notes, instruments and other loan documents executed
by Borrower or Guarantor evidencing the Guaranteed Indebtedness shall be held
subject to reduction of the interest charged to the amount allowed under said
usury laws as now or hereafter construed by the courts having jurisdiction.
16. NOTICE. Any notice, request, demand, consent, approval, or other
communication required or permitted hereunder shall be in writing and shall be
deemed to have been given when personally delivered, or one day after delivery
to a national overnight delivery courier service, cost prepaid, or three days
following deposit in the United States mail, certified mail, return receipt
requested, postage prepaid, addressed to the party for whom it is intended at
the following addresses:
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IF TO GUARANTOR:
Emeritus Corporation
Market Place One
2003 Western Avenue, Suite 660
Seattle, Washington 98121
Facsimile Number: (206) 443-5432
Attention: Jean Fukuda
WITH A COPY TO:
The Nathanson Group
1411 Fourth Avenue, Suite 905
Seattle, Washington 98101
Facsimile Number: (206) 623-1738
Attention: Randi Nathanson
IF TO LENDER:
RMI Capital Management Co.
3773 Cherry Creek North Drive, Suite 640
Denver, Colorado 80209
Facsimile Number: (303) 329-0997
Attention: Jeff Crawford
WITH A COPY TO:
Banks & Imatani, P.C.
1200 17th Street, Suite 1310
Denver, Colorado 80202
Facsimile Number: (303) 446-2716
Attention: Barbara S. Banks
provided, however, that a party may change its address for purposes of receipt
of any such communication by giving ten (10) days prior written notice of such
change to the other parties in the manner above prescribed.
EMERITUS CORPORATION
By: /s/ Raymond R. Brandstrom
----------------------------
PRESIDENT
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