AMENDMENT TO
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GUARANTY OF MANAGEMENT AGREEMENT
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AND SHORTFALL FUNDING AGREEMENT
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(Emeritrust 25)
This Amendment to Guaranty of Management Agreement and Shortfall Funding
Agreement (this "Amendment") is made this 22 day of March, 2001 by and among
Emeritus Corporation, a Washington Corporation ("Emeritus) and AL Investors LLC,
a Delaware limited liability company ("AL Investors"), for itself and as sole
managing member or sole managing member of the general partner of each of the
Facility Entities set forth on Exhibit A to the Guaranty (as amended and as
hereinafter defined).
Recitals
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A. Emeritus and AL entered into that certain Guaranty of Management
Agreement and Shortfall Funding Agreement, dated December 30, 1998 (the
"Guaranty"), pursuant to which, among other things, Emeritus guaranteed the
obligations of Emeritus Management LLC and Emeritus Management I LP under the
Management Agreement as defined therein.
B. The parties to the Management Agreement have agreed that it would be
beneficial to restructure the Senior Loan by, among other things, dividing the
loan into three tranches, collateralizing a portion of the tranche known as
"Tranche B" with certain property owned by AL Investors II LLC (the "XX XX
Additional Collateral Properties"), amending the interest rate, and obtaining
two 9-month conditional options to extend the term of the loan (the "Senior Loan
Restructure").
C. In connection with the Senior Loan Restructure, the parties to the
Management Agreement have entered into a First Amendment to Management Agreement
(the "First Amendment to Management Agreement") pursuant to which, among other
things, the Management Agreement may be extended and Manager's obligation to
fund certain Operating Deficits has been amended. The Management Agreement as
defined in the Guaranty and as amended by the First Amendment to Management
Agreement is referred to herein as the "Management Agreement".
D. Emeritus has agreed to concurrently enter into this Amendment to
confirm that (i) the Guaranty will remain in full force and effect for the
duration of the Management Agreement as amended, and (ii) the Guaranty applies
to Operating Deficits as amended by the First Amendment to Management Agreement.
NOW, THEREFORE, in consideration of Ten and No/100 Dollars, the agreements
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:
Definitions. All terms capitalized herein but not defined shall have the
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meanings given them in the Guaranty or, if not defined therein, in the First
Amendment to Management Agreement executed on or about the date hereof.
Extension of Guaranty.
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2.1 Shortfall Funding Obligations. Section 1.2 is hereby amended
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by deleting all references to the "Initial Term" and replacing them instead with
a reference to the "Initial Term of the Management Agreement, as may be extended
in accordance with the terms of the First Amendment to Management Agreement".
2.2 Survival. Section 11 is hereby deleted in its entirety and
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replaced with the following:
11. SURVIVAL. This Agreement shall survive expiration or
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sooner termination of the Management Agreement. Without limiting the generality
of the foregoing, no termination of the Management Agreement, whether in whole
or in part, or whether by Managers, Owners, or otherwise, shall terminate any
obligation of Emeritus to fund the Emeritus Deficit Contribution accruing or
arising during the Initial Term of the Management Agreement (as may be extended
in accordance with the terms of the First Amendment to Management Agreement),
except only as to Operating Deficits with respect to a Facility terminated from
the Management Agreement by reason of Casualty or Condemnation as set forth in
Section 9.7.2 of the Management Agreement arising after such termination.
Definitions. Exhibit A is hereby amended as follows:
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3.1 Senior Loan. The definition of "Senior Loan" is hereby
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deleted and replaced in its entirety with the following:
SENIOR LOAN: any indebtedness incurred by Owners which is secured by any
mortgage, deed of trust and related security instruments against a Facility.
Initially the Senior Loan is evidenced by that certain Loan Agreement between AL
Investors (and the Facility Entities) and GMAC Commercial Mortgage Corporation
dated on or about December 30, 1998, as amended by the First Amendment to Loan
Agreement dated on or about the date of the First Amendment to the Management
Agreement (the "Senior Loan Amendment"), including, without limitation, all
interest increases and modifications contained therein (the "Initial Senior
Loan"). It is expressly agreed that the Senior Loan includes the entirety of
Tranches A, B & C as set forth in the Senior Loan Amendment.
3.2 Deemed Senior Loan. A new definition shall be added as
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follows:
DEEMED SENIOR LOAN: The amount of the Senior Loan (i) without regard to the
Additional Principal Payments and (ii) without regard to any proceeds from the
sale of the XX XX Additional Collateral Properties which are applied to reduce
the Tranche B debt in accordance with the terms of the Senior Loan Amendment.
3.3 Fixed Operating Expenses. Effective as of January 1, 2002,
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subsection (a) of the definition of Fixed Operating Expenses is hereby deleted
in its entirety. Effective as of the date hereof, subsection (c) of the
definition of Fixed Operating Expenses is amended to read in its entirety "the
debt service on account of the Deemed Senior Loan". The parties hereby agree
that the foregoing amendment is in part intended to and does modify the Guaranty
such that as to "Operating Deficits" and the "Emeritus Deficit Contribution",
Fixed Operating Expenses shall be calculated in accordance with the terms of the
Management Agreement as amended by the First Amendment to Management Agreement
in connection with the Senior Loan Restructure.
Conforming Definitions. Exhibit A is hereby amended as follows:
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4.1 Junior Loan. The definition of Junior Loan is hereby deleted and
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replaced in its entirety with the following: any indebtedness incurred by
Owners which is secured by a mortgage, pledge, and related security instruments
against, among other things, the membership interests of AL Investors in the
Facility Entities. Initially, the Junior Loan is evidenced by that certain Loan
Agreement among AL Investors (and the Facility Entities) and Senior Housing
Partners I, L.P. dated on or about the same date hereof, as subsequently amended
("Initial Junior Loan").
4.2 Operating Period. The definition of Operating Period is hereby
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deleted and replaced in its entirety with the following: the period beginning
with the Commencement Date and ending upon the expiration of the Initial Term
and any extension term.
4.3 Put and Purchase Agreement The definition of Put and Purchase
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Agreement is hereby deleted and replaced in its entirety with the following:
that certain Put and Purchase Agreement dated December 30, 1998, as amended by
First Amendment to Put and Purchase Agreement dated March 26, 1999, and by
Second Amendment to Put and Purchase Agreement dated on or about the date hereof
and as subsequently amended.
Notices. All notices to be given by either party to this Agreement to the
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other party hereto shall be in writing, and shall be sent to the parties at the
addresses and in the manner set forth in the Guaranty.
Ratification. The Guaranty, as amended by this Agreement, is hereby
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ratified and confirmed.
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Understandings and Agreements. This Amendment, together with the
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Management Agreement, constitutes all of the understandings and agreements
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between the parties with respect to the management of the Facilities.
Headings. The headings contained herein are for convenience of reference
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only and are not intended to define, limit or describe the scope or intent of
any provision of this Agreement.
Applicable Law. This Agreement shall be construed and interpreted and be
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governed by the laws of the State of Washington.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date and year first above written.
EMERITUS
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EMERITUS CORPORATION, a Washington
corporation
By: /s/ Xxxxxxx X. Xxxxxxxxxx
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Name Xxxxxxx X. Xxxxxxxxxx
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Title Vice President of Finance
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