EX 10.79.6
GUARANTOR PLEDGE AND SECURITY AGREEMENT
(Pledge of Limited Liability Company
Interests)
This Pledge and Security Agreement (this
"Agreement") is made as of January 7, 1998 by Thilo
Best ("Best"), Xxxxx Investors I, L.L.C., a Washington
limited liability company ("Xxxxx"), and Xxxxx
Xxxxxxxxx ("Xxxxxxxxx") (each individually a "Pledgor"
and collectively "Pledgors"), for the benefit of
Emeritus Corporation, a Washington corporation
("Pledgee"), having an office at 0000 Xxxxxxx Xxxxxx,
Xxxxx 000, Xxxxxxx, Xxxxxxxxxx 00000.
RECITALS
A. Contemporaneously with the execution hereof,
Aurora Bay Investments, L.L.C., a Washington limited
liability company ("Aurora Bay"), has entered into a
Credit Agreement dated as of January 7, 1998 between
Aurora Bay and Pledgee (the "Credit Agreement"),
establishing a $5 million credit facility in favor of
Aurora Bay, and in connection therewith executed and
delivered to Pledgee a Convertible Promissory Note (the
"Note").
B. Each of the Pledgors is a member of Aurora Bay
and will financially benefit from Pledgee' extension of
credit to Aurora Bay.
C. Aurora Bay is organized under, and will be
governed by, its Operating Agreement dated as of
January 6,1998 (the "LLC Agreement").
C. Each of the Pledgors has executed and delivered
to Pledgee an nonrecourse guarantee in favor of Pledgee
and is willing to pledge such Pledgor's equity interest
in Aurora Bay to secure repayment of all amounts due
and payable to Pledgee under the Note and the Credit
Agreement.
D. In order to induce Pledgee to extend credit to
Aurora Bay, Xxxxx, Xxxxxxxxx and Best desire to assign,
pledge, and grant a security to Pledgee in the
Collateral described herein.
AGREEMENT
NOW, THEREFORE, in consideration of the recitals,
covenants and agreements set forth herein, and for
other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the
parties hereby agree as follows:
1. COLLATERAL
"Collateral" shall mean:
(a) All of each Pledgor's right, title and interest i
n
A
u
r
o
r
a
B
a
y
,
including without limitation his membership interests
in Aurora Bay, and all of Pledgor's units representing
any right, title, and interest in Aurora Bay ("Units"),
together with any additional Units or interest arising
out of the interest pledged hereunder by way of
dividend, split-up, reorganization, recapitalization or
other similar proceedings, whether now owned or
hereafter acquired;
(b) Pledgor's right to receive distributions,
allocations and payments under the LLC Agreement, as
such LLC Agreement may be modified from time to time;
(c) All indebtedness of Aurora Bay to Pledgor
of any kind or description; and
(d) All substitutions, replacements, products
and proceeds, whether cash proceeds or noncash
proceeds, and products of any and all of the foregoing.
If any redemption, reclassification,
readjustment or other exchange is proposed or made with
respect to the Collateral, Pledgee may, but need not,
accept the property so exchanged in lieu of the
Collateral, described herein, and Pledgor agrees to
deliver and hypothecate for the benefit of Pledgee any
securities, cash, personalty or other property received
in exchange for the Collateral, on such reasonable
terms and conditions which will not impair Pledgee's
security. Such substituted collateral shall be held by
Pledgee under the terms of this Agreement in the same
manner as the original Collateral pledged hereunder.
2. PLEDGE
Pledgor hereby assigns, pledges and grants a
security interest to Pledgee, to and in the Collateral
to secure the payment and performance of all
obligations of Aurora Bay to Pledgee, whether presently
existing or hereafter arising, direct and indirect, and
with interest thereon, under the Note and the Credit
Agreement made by Aurora Bay in favor of Pledgee and
all further costs and expenses provided for in this
Agreement (collectively the "Obligations"). When more
than one person is liable on any of the Obligations,
Pledgor shall be jointly and severally liable with such
person or persons. Pledgor agrees and acknowledges that
Pledgor may cause a notation to be made in the record
books of Aurora Bay to the effect that the Collateral
is subject to this Agreement, and Pledgee may cause a
copy of this Agreement to be attached to the record
books of Aurora Bay at all times while this Agreement
remains in effect.
3. MANNER OF PERFECTING SECURITY
Concurrently with the execution of this Agreement,
Pledgor shall deliver signed UCC-1 Financing Statements
for filing in the States of Washington and Texas to
reflect the Pledge's interest in the Collateral.
Pledgor agrees that it owns the Collateral in
constructive trust for the Pledgee so long as the
Pledgor's obligations hereunder remain outstanding, and
agrees to provide the Pledgee advance notice of any
change of address.
4. RIGHTS OF PARTIES WHEN NO DEFAULT
Unless an Event of Default (as hereinafter
defined) shall have occurred and be continuing, the
Pledgor shall be entitled to vote the Collateral and to
give consents, waivers and ratifications with respect
thereto. In order to permit the Pledgor to exercise
such voting and/or consensual powers, the Pledgee
shall, if necessary, upon the written request of the
Pledgor from time to time, execute and deliver to the
Pledgor appropriate proxies.
Prior to the occurrence of an Event of Default
(as hereinafter defined), Pledgor may use the proceeds
of all payments made, as permitted by the terms of the
Credit Agreement, upon the indebtedness of Aurora Bay
to Pledgor in such manner as Pledgor shall determine in
Pledgor's absolute discretion.
Upon the occurrence of an Event of Default,
Pledgee shall receive (i) all cash or other dividends
or distributions paid or made with respect to the
Collateral, (ii) any and all sums paid with respect to
any of the Collateral, and (iii) all amounts payable
and/or distributable on the liquidation, whether
voluntary or involuntary, of Aurora Bay (collectively,
"Distributions"), and shall hold the same, together
with any other amount to which the Pledgee is entitled
in an interest bearing cash collateral account as
additional collateral subject to the terms of this
Agreement.
2
5. PLEDGEE'S ADDITIONAL RIGHTS DURING DEFAULT
If an Event of Default shall have occurred and
shall be continuing, i.e. not have been remedied or
waived), in addition to any other rights granted
hereunder, the Pledgee shall be entitled to exercise
any, all or any combination of the following rights:
(a) Vote the Collateral and to give consents,
waivers and ratifications with respect thereto and
otherwise act with respect thereto as though the
Pledgee were the outright owner thereof (the Pledgor
hereby irrevocably constituting and appointing the
Pledgee its proxy and attorney-in-fact with full power
and substitution so to do, such appointing being a
power coupled with an interest), although the Pledgee
shall not have any duty to exercise any such rights,
privileges, options or powers or to sell or to
otherwise realize upon any of the Collateral, as
hereinafter authorized, or to preserve the same, and
the Pledgee shall not be responsible for any failure to
do so or delay in so doing;
(b) Receive all Distributions;
(c) Exercise any and all rights of
collection, conversion or exchange, and any and all
other rights, privileges, options or power of the
Pledgor pertaining or relating to the Collateral (the
Pledgor hereby irrevocably constituting and appointing
the Pledgee his proxy and attorney-in-fact with full
power of substitution so to do), although the Pledgee
shall not have any duty to exercise any such rights,
privileges, options or powers or to sell or to
otherwise realize upon any of the Collateral, as
hereinafter authorized, or to preserve the same, and
the Pledgee shall not be responsible for any failure to
do so or delay in so doing;
(d) Apply any or all amounts held in any cash
collateral account to payment of the Obligations;
(e) Sell, assign and deliver the whole or,
from time to time, any part ..
of the Collateral at any broker's board or at any
private sale or at public auction, with demand or
notice or advertisement of the time or place of sale or
adjournment thereof or otherwise, for cash, for credit
or for other property, for immediate or future
delivery, and for such price or prices and on such
terms as determined in an arms length sale with an
unrelated third party or pursuant to a price determined
under the most current agreement between the Members of
Aurora Bay, and the Pledgee may bid for and purchase
the whole or any part of the Collateral so sold. Any
such notice shall state the time, place and method
fixed for such sale and, in case of sale at a broker's
board, shall state the board at which such sale is to
be made and the day on which Collateral, or that
portion thereof so being sold, will first be offered
for sale at such board. The Pledgee may, without notice
or publication, adjourn any public or private sale or
cause the same to be adjourned from time to time by
announcement at the time and place fixed for the sale,
and such sale may be made at any time or place to which
the same may be so adjourned. For the purposes hereof,
(i) a private sale shall, in the case of the
Collateral, include, a sale after solicitation of a
number of persons reasonably approximating the maximum
number which, in the sole opinion of the Pledgee, shall
not require registration of the Collateral so being
offered for sale pursuant to the Securities Act of
1933, as amended, or compliance with any applicable
state securities law commonly known as a "Blue Sky
Law," and (ii) an agreement to sell all or any part of
the Collateral shall be treated as a sale thereof, and
the Pledgee shall be free to carry out such sale
pursuant to such agreement and the Pledgor shall not be
entitled to the return of any Collateral subject
thereto, notwithstanding the fact that after the
Pledgee shall have entered into such an agreement all
Events of Default may have been remedied or the
Obligations may have been paid in full;
3
(f) Either personally or by means of a court
appointed receiver, take possession of all or any part
of the Collateral and exclude therefrom the Pledgor and
all others claiming under the Pledgor, and thereafter
exercise all rights and powers of the Pledgor with
respect to the Collateral or any part thereof. If the
Pledgee demands or attempts to take possession of any
of the Collateral in the exercise of any rights under
this Agreement, the Pledgor promises and agrees to
promptly turn over and deliver complete possession
thereof to the Pledgee; and
(g) Exercise any remedies of a secured party
under the Uniform Commercial Code of the States of
Washington and/or Texas, or any other applicable law,
and exercise any remedies available to the Pledgee
under any other agreement among the parties.
6. CERTAIN SECURITIES LAW RESTRICTIONS
In view of the possible position of the Pledgor
as an "affiliate" or "control person" of Aurora Bay, or
because of other present or future circumstances, a
question may arise under the Securities Act of 1933, as
amended, as now or hereafter in effect, or any similar
statute hereafter enacted analogous in purpose or
effect (such Act and any such similar statute as from
time to time in effect being hereinafter called the
"Federal Securities Laws") with respect to any
disposition of the Collateral permitted hereunder. The
Pledgor understands that compliance with the Federal
Securities Laws may very strictly limit the course of
conduct of the Pledgee if the Pledgee were to attempt
to dispose of all or any part of the Collateral and may
also limit the extent to . which or the manner in which
any subsequent transferee of the Collateral may dispose
of the same. Similarly, because of the position of the
Pledgor with respect to the Aurora Bay or because of
other circumstances, there may be other legal
restrictions or limitations affecting the Pledgee in
any attempts to dispose of all or any part of the
Collateral under applicable Blue Sky or other state
securities laws or similar laws analogous in purpose or
effect. The Pledgor agrees that any such private sale
conducted in a manner which complies with such Federal
Securities Laws and Blue Sky or state securities laws
shall be commercially reasonable (within the meaning of
Section 9-504(3) of the Uniform Commercial Code), and
the Pledgor hereby waives any claims against the
Pledgee arising by reason of the fact that the price at
which the Collateral may have been sold at such a
private sale was less than the price which might have
been obtained at a public sale or was less than the
aggregate amount of the Obligations, even if the
Pledgee accepts the first offer received and does not
offer the Collateral to more than one possible
purchaser. Without limiting the generality of the
foregoing, these provisions would apply if, for
example, the Pledgee placed all or any part of the
Collateral privately with a purchaser or purchasers.
7. REDELIVERY OF COLLATERAL UPON FULL SATISFACTION
.Upon full and complete payment and performance of
the Obligations, the Pledgor shall, except as otherwise
provided herein, be entitled to the return, at its
expense, of such of the Collateral as has not
theretofore been sold pursuant to the provisions of
this Agreement, together with any moneys at the time
held by the Pledgee in any collateral account pursuant
to this Agreement, and all rights of Pledgee hereunder
shall terminate; and Pledgee shall execute and file
terminations of any financing statements covering any
part-of the Collateral.
8. REALIZATION OF COLLATERAL
(a) The Pledgee shall apply the proceeds
of any sale of the whole or any part of the
Collateral, together with any other moneys at the
time held. by the Pledgee under the provisions of
this Agreement after deducting all reasonable costs
and expenses of collection, sale and delivery
(including, without limitation, counsel fees and
expenses) incurred by the Pledgee in connection with
such sale, to the payment of the Obligations, the
application as between the Obligations to be such as
.. the Pledgee may in its sole discretion determine.
4
(b) To the full extent that the Pledgor
may lawfully so agrees, the Pledgor will not at any
time plead, claim or take- the benefit of any
appraisement or valuation, law now or hereafter in
force in order to prevent or delay the enforcement
of this Agreement or the absolute sale of any
portion or all of the Collateral, or the possession
thereof by any purchaser at any sale, and the
Pledgor, for itself and all who may claim under the
Pledgor, as far as the Pledgor now or hereafter
lawfully may, hereby waives the benefit of all such
laws. The Pledgor, for itself and all who may claim
under the Pledgor, as far as the Pledgor now or
hereafter lawfully may, also waives all right to
have all or any portion of the Collateral marshalled
upon any foreclosure hereof and agrees that any
court having jurisdiction over this Agreement may
order the sale of all or any portion of the
Collateral as an entirety. Any sale of, or the grant
of options to purchase, or any other realization
upon, all or any portion of the Collateral shall
operate to divest all right, title, interest, claim
and demand, either at law or in equity, of the
Pledgor in and to the Collateral so sold, optioned
or realized upon, and shall be a perpetual bar both
in law and in equity against the Pledgor and against
any and all persons claiming or attempting to claim
the Collateral so sold, optioned or realized upon,
or any part thereof, from, through and under the
Pledgor. No delay on the part of the Pledgee in
exercising any power of sale, lien, option or other
right hereunder, and no notice or demand which may
be given to or made upon the Pledgor with respect to
any power of sale, lien, option or other right
hereunder shall constitute a waiver thereof, or
limit or impair the right of the Pledgee to take any
action or to exercise any power of sale, lien,
option or any other right under this Agreement, or
otherwise, nor shall any single or partial exercise
thereof, or the exercise of any power, lien, option
or other right under this Agreement or otherwise all
without notice or demand nor shall any of the same
prejudice its rights against the Pledgor in any
respect. Each and every remedy given the Pledgee
shall, to the extent permitted by law, be cumulative
and shall be in addition to any other remedy given
hereunder or now or hereafter existing at law or in
equity or by statute.
(c) The Pledgee may bid for or purchase, free
from any right of redemption on the part of the Pledgor
(all said rights being also hereby waived and
released), any part of or all the Collateral offered
for sale and may make payment on account thereof by
using any claim then due and payable to the to the
Pledgee from the Pledgor as a credit against the
purchase price, and the Pledgee may, upon compliance
with the terms of sale, hold, retain and dispose of
such property without further accountability therefor.
9. EVENTS OF DEFAULT
Time is of the essence in this Agreement. Subject
to the right of cure set forth below in this Section 9,
any of the following events shall constitute a default
of this Security Agreement ("Event of Default").
(a) Any misrepresentation, breath, default
or failure to perform under any of the covenants,
representations or warranties of this Agreement by
Pledgor, or any failure to pay any of the Obligations
or any guaranty of any such Obligations by Pledgor,
Aurora Bay, or any guarantor, or the breach of any
other agreement relating to any of the Obligations or
pursuant to which any of the Obligations arose;
(b) Any failure to pay when due the full
amount of any payment of principal, interest, taxes,
insurance premiums or other charges which are or may be
secured hereby;
(c) The Collateral or any portion thereof
being seized or levied upon under any legal or
governmental process;
5
(d) Pledgor becoming insolvent or the subject
of a petition in bankruptcy, either voluntary or
involuntary, or any other proceeding under the Federal
Bankruptcy Code; or Pledgor making an assignment for
the benefit of creditors; or Pledgor being named in or
the Collateral being subjected to a suit for the
appointment of a receiver;
(e) Entry of any judgment against Pledgor;
(f) The Collateral or proceeds thereof, for
any reason whatsoever, becoming uncollectible in part
or in their entirety;
(g) Aurora Bay admits an additional Member
without. the prior written consent of Pledgee;
(h) The Pledgor terminates or amends the LLC
Agreement without the prior written consent of Pledgee;
(i) Any Unit, or any right, title or
interest, in Aurora Bay, whether or not evidenced by
certificates, is issued, granted, sold, assigned,
transferred, or otherwise conveyed to any party other
than the Pledgee;
(j) Aurora Bay is dissolved; or
(k) An event shall have occurred that upon
notice or lapse of time or both would constitute an
Event of Default.
Notwithstanding the foregoing, in the event of any
nonmonetary default described above, such default shall
not become an Event of Default until Pledgee has given
Pledgor written notice of such default and Pledgor
shall have failed to cure the default within thirty
(30) days after notice.
Upon the happening of any of the foregoing Events
of Default the Obligations shall, at the option of the
Pledgee, become immediately due and payable in their ,
entirety without presentment, demand, protest or other
notice of any kind, all of which are waived by the
Pledgor, and the Pledgee may at -any time thereafter
proceed with the collection thereof and the realization
upon all security which it may hold, including all
rights hereunder or otherwise existing at law.
10. COVENANTS, REPRESENTATIONS, AND WARRANTIES OF
PLEDGOR
(a) Pledgor represents and warrants that:
(i)There are no restrictions upon Pledgor's right to
transfer or
encumber the Collateral in favor of Pledgee,
and Pledgor has the
right to transfer such Collateral to Pledgee
free and clear of any
lien, claim or encumbrances and of any right
of first refusal to
purchase or option to purchase or any similar
such right, and
without obtaining the consent of any other
person, including any
other Member of Aurora Bay, Aurora Bay, or
any other
individual or entity.
(ii) The Collateral of Pledgors collectively
represents not less than
ONE-HUNDRED PERCENT (100"%) of the presently
issued and
outstanding interests in Aurora Bay.
(iii) There are no other interests in Aurora Bay
other than the
Collateral, and Aurora Bay has no other
Members other than the
6
Pledgors.
(b) Pledgor covenants that it shall deliver copies
of any proposed
amendments to the LLC Agreement to Pledgee.
(c) Pledgor covenants that it shall not, without
the prior written consent of
Pledgee, which consent may not be unreasonably withheld
(i) sell, encumber or in any manner dispose of
its interest in the
Collateral or any of the Collateral;
(ii) permit Aurora Bay to issue any additional
interests;
(iii) permit Aurora Bay to dissolve, reorganize,
recapitalize, liquidate
or merge or consolidate with any other
person, firm, limited
liability company or corporation;
(iv) permit Aurora Bay to amend its certificate of
formation or its LLC Agreement;
(v) permit Aurora Bay to declare or pay any
dividends on, or purchase, redeem or retire, or make
any other distribution on account of or with respect
to, any interest in Aurora Bay; except Aurora Bay may
make annual distributions to each Member to defray its
tax liabilities on allocable taxable income for the
prior year as permitted by the Credit Agreement.
11. GENERAL PROVISIONS
(a) All notices hereunder shall be in writing
and shall be effectively given when delivered
personally on the date of delivery, or if mailed, two
days after deposit in the United States mail, first
class, postage prepaid, certified or registered,
addressed as follows:
If to Pledgee: Emeritus Corporation
0000 Xxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, XX 00000
With a copy to: Xxxxxx Xxxx, Esq.
Xxxxxxx Coie
0000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, XX 00000-0000
If to Pledgors: Thilo Best
00000 Xxxxxxxxxxx Xxxxx
Xxxx Xxxxxx, XX 00000
Xxxxx Investors I, L.L.C.
0000 X.X. 00xx
Xxxxxxxxx, Xxxxxxxxxx 00000
7
Xxxxx X. Xxxxxxxxx
0000 XXX Xxxxxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
with a copy to: Xxx X.
Xxxxxxxxxxxx, Esq.
Stollenwerck, Xxxxx &
Xxxxxxxxxx, P.C.
0000 Xxxxxx Xxxx, Xxxxx
0000
Xxxxxx, Xxxxx 00000
or such other addresses as either party may from time
to time specify in writing to the other.
(b) Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall
as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without
invalidating the remaining portions hereof or affecting
the validity or enforceability of such provisions in
any other jurisdiction.
(c) The Pledgor hereby appoints the Pledgee.
as its attorney in fact to execute and file, on its
behalf, any financing statements, continuation
statements or other documentation required to perfect
or continue the security interest created hereby.
(d) This Agreement and the rights and
obligations of the parties hereto shall be construed
and interpreted in accordance with the laws of the
State of Washington.
(e) All agreements, covenants, conditions and
provisions of this Agreement shall inure to the benefit
of and be binding upon the respective successors and
assigns of the parties hereto.
(f) This Agreement may be modified or
rescinded only by a writing expressly relating to this
Agreement and signed by all of the Pledgors and the
Pledgee.
DATED this 7th day of January, 1998.
Xxxxx Investors I, L.L.C., a
Washington
Limited liability company
By: /s/ Xxxxx Xxxxx
----------------------
-----------------
Xxxxx Xxxxx, Manager
/s/ Xxxxx X. Xxxxxxxxx
----------------------------------------
Xxxxx X. Xxxxxxxxx
/s/ Thilo Best
----------
------------------------------
8
