GUARANTY
THIS GUARANTY ("Guaranty") is made as of
April 1, 1997, by Emeritus Corporation, a
Washington corporation ("Guarantor" or
"Emeritus"), in favor of TEXAS HCP HOLDING, L.P.,
a Delaware limited partnership ("HCP").
Capitalized terms used herein and not otherwise
defined herein shall have the meanings ascribed to
them in the Assignment Agreement (as defined
below).
RECITALS
A. Pursuant to the terms of that certain
Assignment Agreement of even date herewith by and
between Emeritus Corporation, a Washington
corporation ("Emeritus"), as assignor, and HCP, as
assignee, (the "Assignment Agreement"), Emeritus
has agreed to assign to HCP certain of Emeritus's
right, title and interest under the Purchase and
Sale Agreements in and to the E1 Paso Property,
the San Antonio Property and the San Marcos
Property.
B. Pursuant to the terms of (i) that
certain lease of even date herewith by and between
ESC III, L.P. D/B/A TEXAS-ESC III, L.P., a
Washington limited partnership ("ESC"), as lessee,
and HCP, as lessor, with respect to the E1 Paso
Property (the "EI Paso Lease"), (ii) that certain
lease of even date herewith by and between ESC, as
lessee, and HCP, as lessor, with respect to the
San Antonio Property (the "San Antonio Lease") and
(iii) that certain lease of even date herewith by
and between ESC, as lessee, and HCP, as lessor,
with respect to the San Marcos Property (the "San
Marcos Lease", and collectively with the E1 Paso
Lease and the San Antonio Lease, "the Leases",
HCP has agreed to lease the El Paso Property, the
San Antonio Property and the San Marcos Property
(collectively, the "Properties"), respectively, to
ESC.
THEREFORE, to induce HCP to enter into the
Assignment Agreement and the Leases and to
consummate the transactions contemplated thereby
and in consideration thereof, Guarantor
unconditionally guarantees and agrees as follows:
1. GUARANTY.
(a) Guarantor guarantees and promises to pay
to HCP or order, on demand, in lawful money of the
United States of America, all costs, expenses,
fees, rents and other sums payable by ESC under
each of the Leases and guarantees the faithful and
prompt performance when due of each and every one
of the terms, conditions and covenants to be kept
and performed by ESC under each of the Leases,
including, without limitation, any and all
indemnification and insurance obligations and all
obligations to operate, repurchase, rebuild,
restore or repair the Properties or any facilities
or improvements now or hereafter constituting a
portion of the Properties.
(b) Guarantor guarantees and promises to pay
to HCP or order, on demand, in lawful money of the
United States of America, any fees, costs,
interest and charges of enforcement of each of the
Leases, and preservation and protection of the
Properties, if any, which would be owing by ESC
under clause (a) above, but for the effect of the
federal Bankruptcy Code., The obligations listed
in Sections 1(a) and 1(b) are hereafter
collectively referred to as the 'Guaranteed
Obligations".
2. RIGHTS OF GUARANTEE. Except as otherwise
provided in Section 18 hereof, Guarantor
authorizes HCP, without giving notice to Guarantor
or obtaining Guarantor's consent and without
affecting the liability of Guarantor hereunder,
from time to time to: (a) alter, compromise,
accelerate, extend or change the time or manner
for the payment or the performance of any
Guaranteed Obligation; (b) extend, amend or
terminate any of the Leases; (c) release ESC or
any other party to any of the Leases by consent to
any assignment (or otherwise) as to all or any
portion of the Guaranteed Obligations; (d)
release, substitute or add any one or more
guarantors or lessees; (e) accept additional or
substituted security for any Guaranteed
Obligation; (f) release or subordinate any
security for any Guaranteed Obligation; (g) apply
payments received from ESC or any other person to
any obligations of ESC or such other person under
the Leases, in such order as HCP shall determine
in its sole discretion, whether or not any such
obligations are covered by this Guaranty; (h)
consent, .in the sole discretion of HCP to the
merger, consolidation, restructuring, dissolution
or other change in the structure of ESC or any
other party to any of the Leases; (i) assign this
Guaranty in whole or in part; and (k) consent to
or permit, in HCP's sole discretion, a transfer of
any Property to any other person, including,
without limitation, a transfer of any Property to
an Affiliate (as defined in the Leases). No
exercise or non-exercise by HCP of any right
hereby given to HCP, no neglect or delay in
connection with exercising any such right, no
dealing by HCP with ESC, Guarantor or any other
person, and no change, impairment, release or
suspension of any right or remedy of HCP against
any person, including ESC and any other guarantor
or other person, shall in any way affect any of
the obligations of Guarantor hereunder or any
security furnished by Guarantor or give Guarantor
any recourse or right of offset against HCP.
Except as otherwise provided in Section 18 hereof,
if HCP has exculpated ESC or any other party to
any of the Leases from liability in whole or in
part and/or agreed to look solely to any Property,
any security for the Guaranteed Obligations or any
other asset for the satisfaction of the Guaranteed
Obligations, such exculpation and/or agreement
shall not affect the obligations of Guarantor
hereunder, it being understood that Guarantor's
obligations hereunder are independent of the
obligations of ESC, any other guarantor and any
other party to any of the Leases, and are to be
construed as if no such exculpation or agreement
had been given to ESC, any other guarantor or any
other party to. any of the Leases. It is further
understood and agreed that if any such exculpation
or agreement has been or at any time hereafter is
given to ESC or its affiliates, any other
guarantor or any other party to any of the Leases,
HCP has done or will do so in reliance upon the
agreement of Guarantor expressed herein, subject
to the limitations set forth in Section 18 hereof.
3. GUARANTOR'S GENERAL WAIVERS. Except as
otherwise provided in Section 18 hereof, Guarantor
waives: (a) any defense now existing or hereafter
arising based upon any legal disability or other
defense of ESC, Guarantor or any other guarantor
or other person, or by reason of the cessation or
limitation of the liability of ESC, Guarantor or
any other guarantor or other person from any cause
other than full payment and performance of all
obligations due under the Leases; (b) any defense
based upon any lack of authority of the officers,
directors, partners or agents acting or purporting
to act on behalf of ESC or any other person, or
any defect in the formation of ESC or any other
person; (c) the unenforceability or invalidity of
any security or guaranty or the lack of perfection
or continuing perfection, or failure of priority
of any security for the obligations guarantied
hereunder; (d) any right or defense based upon
HCP's election of any remedy against Guarantor,
ESC or any other person;
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(e) any defense based upon HCP's failure to
disclose to Guarantor any information concerning
ESC s or any other person's financial condition or
any other circumstances bearing on ESC's or any
other person's ability to pay and perform all
obligations due under the Leases; (f) any failure
by HCP to give notice to ESC, Guarantor or any
other person of the sale or other disposition of
security held for the obligations due under any of
the Leases, and any defect in notice given by HCP
in connection with any such sale or disposition of
security held for the obligations due under any of
the Leases; (g) any failure of HCP to comply with
applicable laws in connection with the sale or
disposition of security held for the obligations
due under any of the Leases, including, without
limitation, any failure by HCP to conduct a
commercially reasonable sale or other disposition
of such security; (h) any defense based upon any
statute or rule of law which provides that the
obligation of a surety must be neither larger in
amount nor in any other respects more burdensome
than that of a principal, or that reduces a
surety's or guarantor's obligations in proportion
to the principal's obligation; (i) any use of cash
collateral under Section 363 of the Federal
Bankruptcy Code; (j) any defense based upon HCP's
election, in any proceeding instituted under the
Federal Bankruptcy Code, of the application of
Section 1111(b)(2) of the Federal Bankruptcy Code
or any successor statute; (k) any defense based
upon any borrowing or any grant of a security
interest under Section 364 of the Federal
Bankruptcy Code; (1) any right to enforce any
remedy which HCP may have against ESC or any other
person and any right to participate in, or benefit
from, any security now or hereafter held by HCP
for the obligations due under any of the Leases;
(m) presentment, demand, protest and notice of any
kind, including notice of acceptance of this
Guaranty and of the existence, creation or
incurring of new or additional guaranteed
obligations; (n) the benefit of any statute of
limitations affecting the liability of ESC or any
other person, enforcement of any of the Leases,
the liability of Guarantor hereunder or the
enforcement hereof; (o) relief from any applicable
valuation or appraisement laws; and (p) any
defense based upon any other action by HCP,
whether authorized by Section 2 or otherwise, or
any omission by HCP or other failure of HCP to
pursue, or delay in pursuing, any other remedy in
HCP's power. Guarantor agrees that the payment and
performance of all obligations due under the
Leases or any part thereof or other act which
tolls any statute of limitations applicable to any
of the Leases shall similarly operate to toll the
statute of limitations applicable to Guarantor's
liability hereunder.
4. WAIVER OF RIGHTS OF SUBROGATION.
Notwithstanding anything to the contrary contained
herein or in any other document to which Guarantor
is a party, until all obligations under this
Guaranty are fully paid and performed, Guarantor
hereby expressly waives with respect to ESC and
any other person (including any surety) any and
all rights at law or in equity to subrogation, to
reimbursement, to exoneration, to contribution, to
setoff or to any other rights that could accrue to
a surety against a principal, to a guarantor
against a maker or obligor, to an accommodation
party against the party accommodated, or to a
holder or transferee against a maker, and which
Guarantor may have or hereafter acquire against
ESC or any other person in connection with or as a
result of Guarantor's execution, delivery and/or
performance of this Guaranty or any other document
to which Guarantor is a party. Guarantor agrees
that Guarantor shall not have or assert any such
rights against ESC or any other person (including
any surety), either directly or as an attempted
setoff to any action commenced against Guarantor
by ESC or any other person (whether as borrower or
in any other capacity) or by HCP unless and until
all obligations under this Guaranty are fully paid
and performed.
Guarantor hereby acknowledges and agrees that this
waiver is intended to benefit HCP
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and shall not limit or otherwise affect
Guarantor's liability to HCP hereunder, under any
other document to which Guarantor is a party, or
the enforceability hereof or thereof or
Guarantor's rights against ESC under any other
document except as expressly set forth herein.
5. GUARANTOR'S WARRANTIES AND COVENANTS.
Guarantor warrants and acknowledges that: (a) HCP
would not enter into the Leases and consummate the
transactions contemplated thereby but for this
Guaranty; (b) Guarantor has read and understands
the Leases; (c) there are no conditions precedent
to the effectiveness of this Guaranty and this
Guaranty shall be in full force and effect and
binding on Guarantor as of the date hereof,
regardless of whether HCP obtains other collateral
or any guaranties from others or takes any other
action not contemplated by Guarantor; (d)
Guarantor has established adequate means of
obtaining from sources other than HCP, on a
continuing basis, financial and other information
pertaining to ESC's and any other person's
financial condition, and the status of ESC's and
any other person's payment and performance of all
obligations due under the Leases, and Guarantor
agrees to keep adequately informed from such means
of any facts, events or circumstances which might
in any way affect Guarantor's risks hereunder, and
HCP has made no representation to Guarantor as to
any such matters; (e) the most recent financial
statements of Guarantor delivered to HCP are true
and correct in all material respects, have been
prepared in accordance with generally accepted
accounting principles consistently applied (or
other principles disclosed in writing and
acceptable to HCP) and fairly present the
financial condition of Guarantor as of the
respective dates thereof, and no material adverse
change has occurred in the financial condition of
Guarantor since the respective dates thereof; and
(f) except as permitted by Section 24.1.1 of each
of the Leases, Guarantor has not and shall not,
without the prior written consent of HCP, sell,
lease, assign, encumber, hypothecate, transfer or
otherwise dispose of all or substantially all of
Guarantor's assets, or any interest therein,
without HCP's prior written consent, which consent
may be given or withheld in HCP's sole discretion.
6. SUBORDINATION. Until all the obligations
under this Guaranty are fully paid and performed,
Guarantor hereby subordinates all present and
future indebtedness owing by ESC and any Affiliate
of ESC to Guarantor to the obligations at any time
owing by ESC or any Affiliate of ESC to HCP under
any of the Leases; provided, that payments under
any such indebtedness may be received by Guarantor
so long as no Event of Default exists under any of
the Leases. Guarantor agrees to make no claim for
such indebtedness until all obligations of ESC and
any Affiliate of ESC under each of the Leases and
all other direct and indirect obligations of
Guarantor to HCP have been fully discharged or
such Event of Default has been waived.
7. BANKRUPTCY OF ESC OR AN OTHER PERSON;
REINSTATEMENT AND REVIVAL. In any bankruptcy or
other proceeding in which the filing of claims is
required by law, Guarantor shall file, on or
before the date which is fifteen (15) days prior
to the expiration of the prescribed statutory
period for filing of claims, all claims which
Guarantor may have against ESC or any other person
relating to any indebtedness of ESC to Guarantor
and shall assign to HCP all rights of Guarantor
thereunder, but only to the extent necessary to
satisfy any obligations owing to HCP under the
Leases or hereunder. If Guarantor does not timely
file any such claim, HCP, as attorney-in-fact for
Guarantor, is hereby authorized to do so in the
name of Guarantor or, in HCP's discretion, to
assign the claim to a nominee and to cause proof
of claim to be
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filed in the name of HCP's nominee. The foregoing
power of attorney is coupled with an interest and
cannot be revoked. HCP or its nominee shall have
the right, in its reasonable discretion, to accept
or reject any plan proposed in such proceeding and
to take any other action which a party filing a
claim is entitled to do. In all such cases,
whether in administration, bankruptcy or
otherwise, the person or persons authorized to pay
such claim shall pay to HCP the amount payable on
such claim and, to the full extent necessary for
that purpose, Guarantor hereby assigns to HCP all
of Guarantor's rights to any such payments or
distributions; provided, however, Guarantor's
obligations hereunder shall not be satisfied
except to the extent that HCP receives cash by
reason of any such payment or distribution;
provided further, that HCP's rights in such sums
shall be limited to the amounts necessary to
satisfy the obligations owing to HCP under the
Leases or hereunder. If HCP receives anything
hereunder other than cash, the same shall be held
as collateral for amounts due under this Guaranty.
The liability of Guarantor hereunder shall be
reinstated and revived, and the rights of HCP
shall continue, with respect to any amount at any
time paid by ESC or any other person on account of
the obligations under the Leases which HCP shall
be required to restore or return upon the
bankruptcy, insolvency or reorganization of ESC or
any other person or for any other reason, all as
though such amount had not been paid.
8. DISCLOSURE OF INFORMATION. HCP shall
have the right at any time to sell, assign,
transfer, negotiate or grant participation in all
or any part of any of the Leases and/or this
Guaranty, and Guarantor acknowledges and agrees
that, in connection with any such action by HCP,
HCP may forward to each actual or prospective
assignee, transferee or participant all documents
and information in HCP's possession, relating to
this Guaranty or to Guarantor, whether such
documents and information were furnished by ESC or
Guarantor to HCP or otherwise.
9. ADDITIONAL, INDEPENDENT AND UNSECURED
OBLIGATIONS. This is a guaranty of payment and not
of collection and the obligations of Guarantor
hereunder shall be in addition to and shall not
limit or in any way affect the obligations of
Guarantor under any other existing or future
guaranties unless said other guaranties are
expressly modified or revoked in writing. This
Guaranty is independent of the obligations of ESC
and any other person under the Leases. HCP may
bring a separate action to enforce the provisions
hereof against Guarantor without taking action
against ESC or any other person or joining ESC or
any other person as a party to such action, and
without first or concurrently proceeding against
any security held by HCP. This Guaranty is secured
and shall be deemed to be secured by any security
instrument which recites that it secures this
Guaranty.
10. ATTORNEYS' FEES; ENFORCEMENT. If prior
to the filing of any legal action or proceeding
any attorney is engaged by HCP to enforce any
provision of this Guaranty after breach by
Guarantor of its obligations hereunder or to
enforce any provision of any of the Leases as a
consequence of any default or event of default
under any of the Leases, then Guarantor shall
immediately pay on demand all Attorneys' Fees and
Costs, as defined below, incurred by HCP in
connection therewith, together with interest
thereon from the date of such demand until paid,
at the then applicable Overdue Rate (as defined in
the Leases). In addition, if any action or
proceeding is commenced by HCP or Guarantor to
enforce or interpret this Guaranty or the Leases,
the party prevailing in such action or proceeding
and any appeal thereupon shall be paid all
Attorneys' Fees and Costs by the losing party. As
used in this Guaranty, "Attorneys' Fees and Costs"
shall
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mean all the fees and expenses of outside counsel
to HCP, which may include, without limitation,
costs incurred for printing, photostating,
duplicating, facsimile transmissions, record
searches, appraisals, air freight charges and
other expenses, and fees billed for law clerks,
paralegals, librarians, experts, accountants, and
others not admitted to the bar but performing
services under the supervision of or on behalf of
an attorney. The term "Attorneys' Fees and Costs"
shall also include, without limitation all such
fees and expenses incurred with respect to
appeals, arbitrations, and bankruptcy proceedings.
11. EFFECT OF WAIVERS. Guarantor
warrants and agrees that each of the waivers set
forth in this Guaranty is made with Guarantor's
full knowledge of its significance and
consequences, and that under the circumstances the
waivers are reasonable. If any of said waivers
shall hereafter be determined by a court of
competent jurisdiction to be contrary to any
applicable law or against public policy, such
waivers shall be effective only to the maximum
extent permitted by law.
12. RULES OF CONSTRUCTION. The term
"ESC" as used herein shall include any other
person at any time assuming or otherwise becoming
primarily liable for all or any part of the
obligations of ESC under any of the Leases. The
term "person" as used herein shall include any
individual, company, trust or other legal entity
of any kind whatsoever. If this Guaranty is
executed by more than one person, the term
"Guarantor" shall include all such persons. When
the context and construction so require, all words
used in the singular herein shall be deemed to
have been used in the plural and vice versa. All
headings appearing in this Guaranty are for
convenience only and shall be disregarded in
construing this Guaranty.
13. GOVERNING LAW. THIS GUARANTY SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF WASHINGTON EXCEPT TO THE
EXTENT PREEMPTED BY FEDERAL LAWS.
14. NO THIRD PARTY BENEFICIARIES. This
Guaranty is solely for the benefit of HCP and its
successors and assigns, and is not intended to nor
shall it be deemed to be for the benefit of any
third party, including, without limitation, ESC.
15. AMENDMENTS. Neither this Guaranty nor
any provision hereof may be amended, modified,
waived, discharged or terminated except by an
instrument in writing duly signed by or on behalf
of HCP and Guarantor.
16. MISCELLANEOUS. The provisions of this
Guaranty shall bind and benefit the successors and
assigns of Guarantor and HCP. The liability of all
persons and entities who are in any manner
obligated hereunder shall be joint and several. If
any provision of this Guaranty shall be determined
by a court of competent jurisdiction to be
invalid, illegal or unenforceable, that portion
shall be deemed severed from this Guaranty and the
remaining parts shall remain in full force as
though the invalid, illegal or unenforceable
portion had never been part of this Guaranty.
17. WAIVER OF RIGHT TO TRIAL BY
JURY. GUARANTOR ACKNOWLEDGES THAT IT HAS HAD THE
ADVICE OF COUNSEL OF ITS CHOICE WITH RESPECT TO
ITS RIGHTS TO TRIAL BY JURY UNDER THE CONSTITUTION
OF THE UNITED STATES, THE STATE OF WASHINGTON AND
THE STATE WHERE THE PROPERTIES ARE LOCATED.
GUARANTOR HEREBY
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EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (1)
ARISING UNDER THIS GUARANTY OR ANY OTHER
INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR
DELIVERED IN CONNECTION HEREWITH OR (2) IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE
DEALINGS OF HCP AND GUARANTOR WITH RESPECT TO THIS
GUARANTY OR ANY OTHER INSTRUMENT, DOCUMENT OR
AGREEMENT EXECUTED OR DELIVERED IN CONNECTION
HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR
THERETO, IN EACH CASE WHETHER NOW EXISTING OR
HEREAFTER ARISING, AND WHETHER SOUNDING IN
CONTRACT OR TORT OR OTHERWISE; AND GUARANTOR
HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED
BY COURT TRIAL WITHOUT A JURY, AND THAT HCP OR
GUARANTOR MAY FILE AN ORIGINAL COUNTERPART OR A
COPY OF THIS SECTION WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF GUARANTOR TO THE WAIVER
OF ITS RI HT TO TRIAL BY JURY.
18. ADDITIONAL PROVISIONS. Such additional
terms, covenants and conditions as may be set
forth on any exhibit executed by Guarantor and
attached hereto which recites that it is an
exhibit to this Guaranty are incorporated herein
by this reference.
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blank.]
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IN WITNESS WHEREOF, Guarantor has executed
this Guaranty as of the date first written above.
"Guarantor"
EMERITUS CORPORATION, a
Washington corporation
By: /s/ Xxxxxxx X. Xxxxxxxxxx
-----------------------------------------------
Name: Xxxxxxx X. Xxxxxxxxxx
Its: President
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