EX 10.79.5
PROJECT PLEDGE AND SECURITY AGREEMENT
(Pledge of General and Limited Partnership Interests--
Lubbock
Group, Ltd.)
This Pledge and Security Agreement (this
"Agreement") is made as of January 7, 1998 by Aurora
Bay. Investments, L.L.C., a Washington limited
liability company ("Aurora Bay"), Aurora Bay I, L.L.C.,
a Washington limited liability company ("General
Partner") (each individually a "Pledgor" and
collectively "Pledgors"), each having an office at ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, for
the benefit of Emeritus Corporation, a Washington
corporation ("Pledgee"), having an office at ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
RECITALS
A. Contemporaneously with the execution hereof,
Aurora Bay has entered into a Credit Agreement dated as
of January 7, 1998 between Aurora Bay and Emeritus (the
"Credit Agreement"), establishing a $5 million credit
facility in favor of Aurora Bay, and in connection
therewith executed and delivered to Emeritus a
Convertible Promissory Note (the "Note").
B. . Aurora Bay has used, or expects to use, a
portion of the proceeds borrowed under the Credit
Agreement to make loans to Lubbock Group, Ltd., a Texas
limited partnership ("Subco") and such loan will be
evidenced by a Project Promissory Note from Subco to
Aurora Bay.
C. Each of the Pledgors is a partner, directly or
indirectly, in Subco and will financially benefit from
the loans represented by the Project Promissory Note
and Pledgee's extension of credit under the Credit
Agreement to permit Aurora Bay's advancing funds to
Subco.
D. Subco is governed by and will operate pursuant
to the terms of that certain Amended and Restated
Limited Partnership Agreement dated as of January 6,
1998, by and among the Pledgors.(the "Partnership
Agreement").
E. In order to induce Pledgee to extend credit to
Aurora Bay, each of the Pledgors 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 Pledgor's right, title and
interest in Subco, including without limitation its
general and/or limited partnership interest in Subco,
and all of Pledgor's units representing any right,
title, and interest in Subco ("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 Partnership
Agreement, as such Partnership Agreement may be
modified from time to time;
(c) All indebtedness of Subco to Pledgor of
any kind or description;
(d) With respect to Aurora Bay, the Project
Promissory Note from Subco to Aurora Bay; and
(e) 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 Subco 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 Pledgee's interest in the Collateral. In
addition, Aurora Bay as the Pledgor shall endorse in
blank the Project Promissory Note and shall deliver
such note to the possession of Pledgee.
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 and the Pledgor shall be entitled to receive
any payments with respect to any indebtedness of Subco
to Pledgor to the extent that such payments are
permitted under such circumstances under the Credit
Agreement. 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.
In addition, prior to the occurrence of an Event
of Default, Pledgor may (i) receive, use, and dispose
of any distributions, allocations, and payments it
receives in the operation of its business but subject
to any limitations with respect to distributions to
Pledgor's members contained in the Credit Agreement and
(ii) use the proceeds of all payments made upon any
indebtedness of Subco to Pledgor to satisfy and make
payments upon the Note and to make
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additional Project Loans as defined in the Credit
Agreement.
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 Subco (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.
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 partners of Subco, 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
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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 call 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;
(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 Subco, 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 Subco 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
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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.
(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 pair 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").
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(a) Any misrepresentation, breach, 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,
Subco, or any guarantor, or the breach 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;
(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) Subco admits an additional Partner
without the prior written consent of Pledgee;
(h) The Pledgor terminates or amends the
Partnership Agreement without the prior written consent
of Pledgee;
(i) Any Unit, or any right, title or
interest, in Subco, whether or not evidenced by
certificates, is issued, granted, sold, assigned,
transferred, or otherwise conveyed to any party other
than the Pledgee;
(j) Subco 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:
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(i) There are no restrictions upon the
Pledgor's right to transfer or
encumber the Collateral in favor of
Pledgee, and the Pledgor has
the right to transfer such Collateral
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 partner of Subco, Subco, 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 Subco.
(iii) There are no other interests in
Subco other than the Collateral,
and Subco has no other Partners other
than Pledgors.
(b) Pledgor covenants that it shall deliver copies
of any proposed amendments to the Partnership 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 Subco to issue any additional
interests;
(iii) permit Subco to dissolve, reorganize,
recapitalize, liquidate or merge or
consolidate with any other person, firm,
limited liability company or corporation.
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
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
With a copy to: ▇▇▇▇▇▇ ▇▇▇▇, Esq.
▇▇▇▇▇▇▇ Coie
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ 98101-
3099
If to Aurora Bay: Aurora
Bay Investments, L.L.C.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
If to General Partner:
Aurora Bay I, L.L.C.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
with a copy to:
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇,
Esq.
Stollenwerck, ▇▇▇▇▇ &
▇▇▇▇▇▇▇▇▇▇, P.C. ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
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) Pledgor hereby appoints 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.
(The balance of the page left intentionally blank.)
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DATED this 7th day of January , 1998.
AURORA BAY:
Aurora Bay Investments,
L.L.C. a
Washington limited
liability company
By: /s/ ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇
---------------------------------------
Its: Manager
GENERAL PARTNERS:
Aurora Bay I, L.L.C., a
Washington limited
liability company
By: /s/ ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇
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---------------------
Its: Manager
EMERITUS CORPORATION, a
Washington corporation
By: /s/ ▇▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇
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Its: V.P. New Business
Development
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