AMENDMENT TO PROMISSORY NOTE
This Amendment to Promissory Note ("Amendment") is made and entered into as
of the 29th day of January, 2003 (the "Execution Date") by and among M&M
Properties, a Washington general partnership, Hearthside Group, Inc., a
Washington corporation (collectively "Holder") and Emeritus Corporation, a
Washington corporation ("Emeritus") and Emeritus Properties XIII, LLC, a
Washington limited liability company ("Emeritus Properties" and together with
Emeritus, "Maker").
RECITALS
A. Maker executed its Promissory Note dated February 15, 2000 in favor of
Holder in the original principal amount of $1,000,000 (the "Note"). A true and
correct copy of the Note is attached hereto as Exhibit A.
B. As of the Execution Date the outstanding principal balance of the Note is
$917,439.75.
C. The obligations of Maker under the Note are secured by (i) a Pledge and
Security Agreement dated as of February 15, 2000 executed by Emeritus in favor
of Holder, (ii) a guaranty dated as of February 15, 2000 executed by Emeritus in
favor of Holder and (iii) a UCC-1 financing statement executed by Emeritus, as
debtor, in favor of Holder, as secured party (the "Security Documents").
D. Maker and Holder have agreed to amend the Note as provided below.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants of the parties set forth herein, IT IS HEREBY AGREED AS FOLLOWS:
1. In consideration for the amendments to the Note provided for in this
Amendment, on or prior to February 3, 2003, Maker shall (a) pay to Holder the
sum of Two Hundred Thousand and no/100 Dollars ($200,000) as a principal
prepayment, thereby reducing the outstanding principal balance of the Note to
$717,439.75, (b) pay the Holder all accrued and unpaid interest on the Note, if
any, due as of the Execution Date, and (c) reimburse Holder for its reasonable
legal fees and expenses incurred in the review of this Amendment and transaction
provided for herein in the amount of $5,500.
2. From and after the Execution Date, the Note shall be amended as follows:
a. The Note Rate (as defined in Section 1 of the Note) shall be twelve (12%)
per annum.
b. The monthly payments provided for in Section 2 of the Note shall be
increased from Ten Thousand and no/100 dollars ($12,500), each of which payment
shall be applied first to the payment of interest accrued under the Note and
then to the reduction of the principal balance of the Note.
c. For purposes of defining the Maturity Date (as defined in Section 3 of
the Note) the reference in clause (ii) to March1, 2003 shall be deleted and
March 1, 2006 shall be inserted in lieu thereof.
3. The following paragraphs are added to Section 10 of the Note as the
following subsections:
h) This Amendment and the Note represent the entire and final agreement of
the parties with respect to the subject matter hereof and supersede all prior
negotiations, discussions or writings with respect thereto. This Amendment and
the Note may not be amended or modified nor may any provision thereof be waived
except by written instrument signed by the parties hereto or the party granting
the waiver, as applicable.
i) This Amendment may be executed in counterparts, each of which shall be
deemed to be an original, but all of which taken together shall constitute but
one and the same instrument.
j) Each of Maker and Holder acknowledge and agree that it has participated
in the drafting and negotiation of this Amendment. Accordingly, in the event of
dispute with respect to the interpretation or enforcement of this Amendment no
provision shall be construed so as to favor or disfavor any party hereto.
4. The Note, as amended by the Amendment, remains in full force and effect.
5. By its signature set forth below, Emeritus hereby ratifies and affirms
its obligations under the Security Documents.
IN WITNESS WHEREOF, the parties hereby execute this Amendment as of the day
and year first set forth above.
"HOLDER"
M&M PROPERTIES
By: /s/ Xxxxx X. XxXxxxxxx
-------------------------
Name: Xxxxx X. XxXxxxxxx
Its: Managing Partner
HEARTHSTONE GROUP, INC.
By: /s/ Xxxxx X. XxXxxxxxx
-------------------------
Name: Xxxxx X. XxXxxxxxx
Its: Partner
"MAKER"
EMERITUS CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxxxxx
----------------------------
Name: Xxxxxxx X. Xxxxxxxxxx
Its: Vice President of Finance
EMERITUS PROPERTIES XIII, LLC
By: Emeritus Corporation
Its: Sole Member
By: /s/ Xxxxxxx X. Xxxxxxxxxx
----------------------------
Name: Xxxxxxx X. Xxxxxxxxxx
Its: Vice President of Finance
