Loan No.____________
GUARANTY
"Continuing Guaranty"
For Valuable Consideration, receipt of
which is hereby acknowledged, and to induce U.S.
Bank of Washington, National Association (
"Lender" ) to make a loan (the "Loan" ) to
Emeritus Properties VI, Inc., a Washington
corporation ("Borrower"), which is evidenced by
various documents, including as applicable,
Promissory Note of even date herewith in the
principal amount of $3,500,000.00, Deed of Trust,
and other Documents (all jointly, and as
applicable severally, referred to as the "Loan
Documents"), which loan Lender would not extend
but for this Guaranty, the undersigned, and each
of them, (hereinafter "undersigned" or
"Guarantor") irrevocably and unconditionally
guarantees to Lender the full payment and prompt
performance of each and every obligation of
Borrower under the Loan Documents, and all
liabilities, direct or contingent, joint, several,
or independent arising in conjunction with the
Loan Documents, including all liabilities of any
assignee or successor in interest of Borrower,
whether at maturity or earlier by reason of
acceleration or otherwise, or whether extended,
together with interest, attorney fees, and other
costs and expenses paid or incurred by Lender in
enforcing its rights under the Loan Documents. The
undersigned waives notice and acceptance of this
Guaranty and of any liability to which it applies,
and waives presentment, demand of payment, notice
of dishonor or non-payment, protest, notice of
protest on any such liabilities, suit, or other
action by Lender, and tender of notices of default
on any Loan Documents.
In addition to but not in limitation of the
preceding, the undersigned agrees that Lender may,
at any time and from time to time, without the
consent of, or notice or responsibility to the
undersigned, and without impairing or releasing
the obligations of the undersigned, upon or
without any terms or conditions and in whole or in
part: (1) change the manner, place or terms of
payment, or change or extend the time of payment
of, renew, or alter any liability of Borrower
1
hereby guaranteed, or any other liabilities
whether directly or indirectly relating to the
liabilities hereby guaranteed, and this Guaranty
shall apply to such liabilities of Borrower, as
changed, extended, renewed, or altered in any
manner; (2) exercise or refrain from exercising,
in any manner and in any order, any remedy it may
have with respect to any property securing the
liabilities hereby guaranteed, any liabilities
directly or indirectly relating to the liabilities
hereby guaranteed, or any offset against such
liabilities including but not limited to, judicial
foreclosure, exercise of power of sale or taking a
deed or assignment in lieu of foreclosure as to
any collateral, and Guarantor shall be liable to
Lender for any deficiency resulting from the
exercise by it of any such remedy, even though any
right which Guarantor may have against others
might be diminished or destroyed; (3) exercise or
refrain from exercising any rights against
Borrower or others, including the undersigned, or
otherwise in any way act or refrain from acting;
(4) settle or compromise any liabilities hereby
guaranteed or any liabilities due to Lender,
incurred directly or indirectly, and subordinate
the payment of all or any part thereof to the
payment of any liabilities which may be due to
Lender or others; (5) apply any sums received to
any liability or liabilities of Borrower to
Lender, regardless of what liability or
liabilities of Borrower to Lender remain unpaid.
No invalidity, irregularity, or
unenforceability of the liabilities hereby
guaranteed shall affect, impair, or be a defense
to this Guaranty, and this Guaranty is, and
remains until fully satisfied, a primary
obligation of the undersigned. Lender need not
inquire into the power of Borrower, and any credit
granted in reliance upon the purported exercise of
such power or authority is hereby guaranteed.
No segregation or specific allocation by
Lender of specified collateral against any
liability shall waive or affect any lien against
such collateral or against other property or any
right of Lender, including the rights accruing to
Lender under this Guaranty. No delay on the part
of Lender in exercising any of its rights under
this Guaranty or otherwise, and no partial or
2
single exercise of such, and no action or failure
to act by Lender, with or without notice to the
undersigned or anyone else, shall constitute a
waiver of this right, or shall affect or impair
this Guaranty. Lender and the undersigned expect
and intend that this Guaranty be governed by the
laws of the state of Washington, which state bears
the most significant relation to the transaction.
Lender is not required to disclose any
information with respect to the credit, the
financial condition or character of Borrower, any
collateral, other guarantees, or any action or non-
action on the part of Lender, Borrower, or any
person connected with the credit or collateral
thereto. The undersigned hereby represents that
the undersigned is fully aware of the financial
condition of Borrower and is in such a position by
virtue of its relationship to Borrower to obtain
all necessary financial information concerning
Borrower's business.
Lender shall not be required to first resort
for payment to Borrower, other guarantors, if any,
or other persons or corporations, their properties
or estates, or to any collateral security,
property, liens, mortgages, or other rights or
remedies whatsoever, prior to requiring of the
undersigned full satisfaction of the liabilities
hereby guaranteed. Lender may exercise or refrain
from exercising, in any manner and in any order,
any remedy Lender may have with respect to any
property securing the liabilities hereby
guaranteed, including, but not limited to,
judicial foreclosure as to any collateral, and the
undersigned shall be liable to Lender for any
deficiency resulting from the exercise by Lender
of any such remedy, even though any right which
the undersigned may have against others might be
diminished or destroyed. The undersigned
specifically waives all antideficiency and one-
right-of-action protections, which may otherwise
be available to the undersigned.
Any indebtedness of Borrower now or hereafter
owed to undersigned is hereby subordinated to the
Loan, and such indebtedness of Borrower to the
undersigned, if Lender so requests, shall be
collected, enforced, and received by the
undersigned as trustee for Lender and be paid over
3
to Lender on account of the Loan but without
reducing or affecting in any manner the liability
of the undersigned herein.
The failure of any entity or person to
guarantee Borrower's obligations shall not release
or affect the liability of any entity or person
signing this Guaranty.
The undersigned waives all rights of
subrogation to any collateral and remedies of
Lender against Borrower, and other persons, until
the entire indebtedness owed pursuant to the Loan
Documents is discharged.
Guarantor hereby expressly and irrevocably
releases and waives any and all "claims" (as now
or hereafter defined in the United States
Bankruptcy Code, 11 USC 101 et. seq.) of any
nature whatsoever, whether known or unknown and
whether now existing or hereafter acquired,
against any debtor or the estate in any existing
or future bankruptcy case in which the debtors
include Borrower or any person or entity with
respect to whom Guarantor is an "insider" (as now
or hereafter defined in such Bankruptcy Code), to
the extent such claims in any manner relate to or
arise out of this Guaranty or any indebtedness
guaranteed hereby (including but not limited to
fixed or contingent claims based on subrogation,
indemnity, reimbursement, contribution, or
contract). Guarantor authorizes and empowers
Lender to at any time exercise, in its sole
discretion, any right or remedy or any combination
thereof which may then be available to Lender;
Guarantor agrees that nothing contained herein
shall prevent Lender from suing on any note or
instrument or from exercising any right or remedy
available to Lender thereunder, or under any loan
or collateral documents by and between Lender and
Borrower. Guarantor further agrees that the
exercise of any such rights or remedies shall not
constitute a legal or equitable discharge of
Guarantor. It is Guarantor's intent and purpose
that the obligation hereunder shall be absolute,
independent, and unconditional under any and all
circumstances. Without limiting the generality of
the foregoing, Guarantor expressly waives any and
all rights, benefits, or defenses under:
4
(a) Any applicable "one action" or
"antideficiency" law;
(b) Any defense other than payment in
full to any guaranteed indebtedness on the part of
any person or entity, including but not limited to
Borrower and any other Guarantor;
(c) Any claim based on any alleged
impairment of any collateral or any alleged
unjustified impairment of recourse against
Borrower or any other person or entity liable on
any indebtedness guaranteed hereby (whether such
impairment is alleged to be intentional, reckless,
negligent, or otherwise); and
(d) Any claim or circumstance which
constitutes a legal or equitable discharge of a
guarantor or surety.
Notwithstanding any foreclosure of any lien
on real or personal property securing any
indebtedness guaranteed hereby, whether by the
exercise of a power of sale, by an action for
judicial foreclosure, or by acceptance of a deed
in lieu of foreclosure, Guarantor shall remain
bound under this Guaranty.
If this Guaranty is executed by more than one
signer, all agreements and promises hereby
contained shall be construed`, and are hereby
declared to be, joint and several in each and
every particular, and shall be fully binding upon
and enforceable against either, any, or all of
such signers, and neither the death, release of or
revocation by one or more signers shall affect or
release the liability of any other signer. The
death of any of the undersigned shall not revoke
this Guaranty as to such decedent unless and until
written notice thereof is actually received by
Lender and until all indebtedness then existing is
fully paid and discharged.
The undersigned shall pay to Lender all costs
and expenses, including filing fees and attorney
fees incurred by Lender in arbitration, at trial,
on appeal, or in any bankruptcy proceeding in
connection with the custody, care, preservation,
or collection of any property of the undersigned
or in seeking to enforce any of the liabilities or
5
obligations of the undersigned under this
Guaranty.
The term "undersigned" as used herein shall
mean the entity or person executing this Guaranty,
or any one or more of them. Anyone signing this
Guaranty shall be bound hereby, whether or not
anyone else signs this Guaranty at any time.
This Guaranty and each of its provisions
shall be binding upon the undersigned and upon the
heirs, legal representatives, successors and
assigns of the undersigned, and each of them,
respectively, and shall inure to the benefit of
Lender, its successors and assigns. Any married
person who signs this Guaranty expressly agrees
that recourse may be had against his/her separate
property for all of his/her obligations hereunder.
Should any one or more provisions of this Guaranty
be determined to be illegal or unenforceable, all
other provisions shall remain effective.
The liability of the undersigned pursuant to
this Guaranty shall not be affected in any way by
the institution of any proceedings involving
Borrower under the Federal Bankruptcy Code or by
any action taken in any such proceedings.
This Guaranty shall terminate upon payment in
full of Borrower's indebtedness under the Loan
Documents except that Guarantor's guarantee of the
obligations of Borrower under Certificate and
Indemnity Regarding Hazardous Substances and
Certificate of Compliance and Indemnification
Agreement of even date herewith shall survive
payment of Borrower's indebtedness and transfer of
the property pursuant to foreclosure proceedings
or otherwise. If payment is made by Borrower on a
debt guaranteed hereby and thereafter Lender is
forced to remit the amount of that payment to
Borrower's trustee in bankruptcy or similar person
under any federal or state bankruptcy law or law
for the relief of debtors, Borrower's debt shall
be considered unpaid for the purpose of
enforcement of this Guaranty. Guarantor will, at
Guarantor's own cost and expense, furnish to
Lender within ninety days after the end of each
fiscal year annual financial statements of
Guarantor for such year in reasonable detail and
in form and substance satisfactory to Lender.
6
Either Lender or Guarantor may require that
all disputes, claims, counterclaims and defenses,
including those based on or arising from any
alleged tort ("Claims") relating in any way to
this Guaranty be settled by binding arbitration in
accordance with the Commercial Arbitration Rules
of the American Arbitration Association and Title
9 of the U.S. Code. All claims will be subject to
the statutes of limitation applicable if they were
litigated. This provision is void if the Guaranty,
at the time of the proposed submission to
arbitration, is secured by real property located
outside of Oregon or Washington, or if the effect
of the arbitration procedure (as opposed to any
claims of Guarantor) would be to materially impair
Lender's ability to realize on any collateral
securing the Guaranty. If arbitration occurs and
each party's claim is less than $100,000, one
neutral arbitrator will decide all issues; if any
party's Claim is $100,000 or more, three neutral
arbitrators will decide all issues. All
arbitrators will be active Washington State Bar
members in good standing. All arbitration hearings
will be held in Seattle, Washington. In addition
to all other powers, the arbitrator(s) shall have
the exclusive right to determine all issues of
arbitrability. Judgment on any arbitration award
may be entered in any court with jurisdiction. If
either party institutes any judicial proceeding
relating to the Guaranty, such action shall not be
a waiver of the right to submit any Claim to
arbitration. In addition, each has the right
before, during, and after any arbitration to
exercise any number of the following remedies, in
any order or concurrently: (i) setoff; (ii) self-
help repossession; (iii) judicial or non-judicial
foreclosure against real or personal property
collateral; and (iv) provisional remedies,
including injunction, appointment of receiver,
attachment, claim and delivery and replevin. This
arbitration clause cannot be modified or waived by
either party except in writing, which writing must
refer to this arbitration clause and be signed by
both Lender and Guarantor.
This writing constitutes the complete
understanding of the parties with respect to the
terms of this Guaranty. No parole or extrinsic
evidence of any nature shall be used to supplement
7
or modify any term. There are no conditions to the
effectiveness of this Guaranty.
Receipt of a true copy of this Guaranty is
hereby acknowledged by the undersigned. The
undersigned understands and agrees that this
Guaranty shall not constitute a commitment of any
nature whatsoever by Lender to renew or hereafter
extend credit to Borrower.
ORAL AGREEMENTB OR ORAL COMMITMENTB TO LOAN
MONEY, EXTEND CREDIT, OR TO FORBEAR FROM ENFORCING
REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER
WABHINGTON LAW.
Dated : April 22, 1997
----------------
GUARANTOR:
/s/ Daniel R. Baty
----------------------
Daniel R. Baty
8
STATES OF WASHINGTON )
) ss.
COUNTY OF KING )
I certify that I know or have
satisfactory evidence that Daniel R. Baty is
the person who appeared before me, and said
person acknowledged that he signed this
instrument and acknowledged it to be his free
and voluntary act for the uses and purposes
mentioned in the instrument.
Dated April 22, 1997.
/s/ Catherine L. Pasquan
--------------------------
[SEAL] Notary Public in and for
the State of Washington
residing at Seattle, WA
My commission expires: 3-30-99
9