GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT is made effective as
of the 30th day of January, 1997, by the
undersigned (hereinafter referred to collectively
as
"Guarantor", whether one or more) in favor of RMI
CAPITAL MANAGEMENT CO. , whose address is 0000
Xxxxxx Xxxxx Xxxxx Xxxxx, Xxxxx 000, Xxxxxx,
Xxxxxxxx 00000 ("Lender").
WITNESSETH:
1. GUARNATEED 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
n, 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 $5,080,082.39 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 t4 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 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.
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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; (1) 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,
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
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Indebtedness; (t) any defense based upon an
election of remedies by Lender, including, without
limitation, an election to proceed by nonjudicial
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
being 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 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
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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
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
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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 Guaranteed
Indebtedness is ultra xxxxx, 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. ADDTIONAL 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 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.
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13. CONTROLLING LAW. This Guaranty shall be
governed by and construed in accordance with the
laws of Idaho. 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
0000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxxxx 00000
Facsimile Number: (000) 000-0000
Attention: Xxxxx Xxxxxxx
WITH A COPY TO:
The Xxxxxxxxx Group
0000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxxxx 00000
Facsimile Number: (000) 000-0000
Attention: Xxxxx Xxxxxxxxx
IF TO LENDER:
RMI Capital Management Co.
0000 Xxxxxx Xxxxx Xxxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Facsimile Number: (000) 000-0000
Attention: Xxxx Xxxxxxxx
WITH COPY TO:
Banks & Imatani, P.C.
0000 x0xx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Facsimile Number: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx
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/ Xxxxxxx X. Xxxxxxxxxx
-----------------------------------------
President
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