8
Execution Copy
GUARANTY
This GUARANTY ("Guaranty") is given as of August 15, 2003 ("Effective
-------- ---------
Date"), by EMERITUS CORPORATION, a Washington corporation, whose address is
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ("Guarantor"), in favor of
---------
WASHINGTON LESSOR - SILVERDALE, INC., a Maryland corporation ("Lessor") whose
------
address is ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇, with
reference to the following facts:
RECITALS
A. ESC-Silverdale, LLC, a Washington limited liability company ("Lessee"),
------
has executed and delivered to Lessor a Single Facility Lease dated the same date
as this Guaranty (the "Lease") pursuant to which Lessee is leasing from
-----
Lessor an assisted living facility located in the State of Washington (the
"Facility").
----
B. Guarantor is the owner of 100% of the outstanding equity interests in
Lessee, and it is to the advantage of Guarantor that Lessor enter into the
Lease.
C. As a material inducement to Lessor to lease the Facility pursuant to the
Lease, Guarantor has agreed to guarantee the payment of all amounts due from,
and the performance of all obligations undertaken by the Lessee under the Lease
and the other Transaction Documents, all as hereinafter set forth. The term
"Transaction Documents", as used herein, shall have the meaning given it in the
-------------------
Lease.
WHEREFORE, the parties hereby agree as follows:
1. Defined Terms. All capitalized terms used herein and not defined herein
--------------
shall have the meaning for such terms set forth in the Lease.
2. Guaranty. Guarantor hereby unconditionally and irrevocably guarantees to
--------
Lessor (i) the payment when due of all Rent and all other sums payable by the
Lessee under the Lease, and (ii) the faithful and prompt performance when due
of each and every one of the terms, conditions and covenants to be kept and
performed by Lessee and its Affiliates under the Transaction Documents, any and
all amendments, modifications, extensions and renewals of the Transaction
Documents, including without limitation all indemnification obligations,
insurance obligations, and all obligations to operate, rebuild, restore or
replace any facilities or improvements now or hereafter located on the real
estate covered by the Lease. In the event of the failure of Lessee to pay any
such amounts owed, or to render any other performance required of Lessee under
the Transaction Documents, when due, Guarantor shall forthwith perform or cause
to be performed all provisions of the Transaction Documents to be performed by
Lessee and its Affiliates thereunder, and pay all damages that may result from
the non-performance thereof to the full extent provided under the Transaction
Documents (collectively, the "Obligations"). As to the Obligations, Guarantor's
-----------
liability under this Guaranty is without limit.
3. Survival of Obligations. Unless otherwise expressly agreed in writing by
-----------------------
Lessor (which writing specifically references this section of this Guaranty),
the obligations of Guarantor under this Guaranty with respect to the Transaction
Documents shall survive and continue in full force and effect notwithstanding:
(a) any amendment, modification, or extension of any Transaction Document;
(b) any compromise, release, consent, extension, indulgence or other action
or inaction in respect of any terms of any Transaction Document or any other
guarantor;
(c) any substitution or release, in whole or in part, of any security for
this Guaranty which Lessor may hold at any time;
(d) any exercise or nonexercise by Lessor of any right, power or remedy
under or in respect of any Transaction Document or any security held by Lessor
with respect thereto, or any waiver of any such right, power or remedy;
(e) any bankruptcy, insolvency, reorganization, arrangement, adjustment,
composition, liquidation, or the like of the Lessee or any other guarantor;
(f) any limitation of Lessee's liability under any Transaction Document or
any limitation of Lessee's liability thereunder which may now or hereafter be
imposed by any statute, regulation or rule of law, or any illegality,
irregularity, invalidity or unenforceability, in whole or in part, of any
Transaction Document or any term thereof;
(g) any sale, lease, or transfer of all or any part of any interest in the
Facility to any other person, firm or entity other than to Lessor;
(h) any act or omission by Lessor with respect to any of the security
instruments or any failure to file, record or otherwise perfect any of the same;
(i) any extensions of time for performance under the Transaction Documents,
whether prior to or after maturity;
(j) the release of any collateral from any lien in favor of Lessor, or the
release of Lessee from performance or observation of any of the agreements,
covenants, terms or conditions contained in any Transaction Document by
operation of law or otherwise;
(k) the fact that Lessee may or may not be personally liable, in whole or in
part, under the terms of any Transaction Document to pay any money judgment;
(l) the failure to give Guarantor any notice of acceptance, default or
otherwise;
(m) any other guaranty now or hereafter executed by Guarantor or anyone else
in connection with any Transaction Document;
(n) any rights, powers or privileges Lessor may now or hereafter have
against any other person, entity or collateral; or
(o) any other circumstances, whether or not Guarantor had notice or
knowledge thereof, other than the payment or performance of all of the
Obligations.
4. Primary Liability. The liability of Guarantor with respect to the
------------------
Transaction Documents shall be primary, direct and immediate, and Lessor may
proceed against Guarantor: (i) prior to or in lieu of proceeding against Lessee,
its assets, any security deposit, or any other guarantor; and (ii) prior to
or in lieu of pursuing any other rights or remedies available to Lessor. All
rights and remedies afforded to Lessor by reason of this Guaranty or by law are
separate, independent and cumulative, and the exercise of any rights or remedies
shall not in any way limit, restrict or prejudice the exercise of any other
rights or remedies.
In the event of any default under any Transaction Document, a separate
action or actions may be brought and prosecuted against Guarantor whether or not
Lessee is joined therein or a separate action or actions are brought against
Lessee. Lessor may maintain successive actions for other defaults. Lessor's
rights hereunder shall not be exhausted by its exercise of any of its rights or
remedies or by any such action or by any number of successive actions until and
unless all indebtedness and obligations the payment and performance of which are
hereby guaranteed have been paid and fully performed.
5. Obligations Not Affected. In such manner, upon such terms and at such
--------------------------
times as Lessor in its sole discretion deems necessary or expedient, and without
notice to Guarantor, Lessor may: (a) amend, alter, compromise, accelerate,
extend or change the time or manner for the payment or the performance of any
obligation hereby guaranteed; (b) extend, amend or terminate any of the
Transaction Documents; or (c) release Lessee by consent to any assignment (or
otherwise) as to all or any portion of the obligations hereby guaranteed. Any
exercise or non-exercise by Lessor of any right hereby given Lessor, dealing by
Lessor with Guarantor or any other guarantor, Lessee or any other person, or
change, impairment, release or suspension of any right or remedy of Lessor
against any person including Lessee and any other guarantor will not affect any
of the obligations of Guarantor hereunder or give Guarantor any recourse or
offset against Lessor.
6. Waiver. With respect to the Transaction Documents, Guarantor hereby
------
waives and relinquishes all rights and remedies accorded by applicable law to
sureties and/or guarantors or any other accommodation parties, under any
statutory provisions, common law or any other provision of law, custom or
practice, and agrees not to assert or take advantage of any such rights or
remedies including, but not limited to:
(a) any right to require Lessor to proceed against the Lessee or any other
person or to proceed against or exhaust any security held by Lessor at any time
or to pursue any other remedy in Lessor's power before proceeding against
Guarantor or to require that Lessor cause a marshaling of Lessee's assets or the
assets, if any, given as collateral for this Guaranty or to proceed against
Lessee and/or any collateral, including collateral, if any, given to secure
Guarantor's obligation under this Guaranty, held by Lessor at any time or in any
particular order;
(b) any defense that may arise by reason of the incapacity or lack of
authority of any other person or persons;
(c) notice of the existence, creation or incurring of any new or additional
indebtedness or obligation or of any action or non-action on the part of Lessee,
Lessor, any creditor of Lessee or Guarantor or on the part of any other person
whomsoever under this or any other instrument in connection with any obligation
or evidence of indebtedness held by Lessor or in connection with any obligation
hereby guaranteed;
(d) any defense based upon an election of remedies by Lessor which destroys
or otherwise impairs the subrogation rights of Guarantor or the right of
Guarantor to proceed against Lessee for reimbursement, or both;
(e) 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 other
respects more burdensome than that of the principal;
(f) any duty on the part of Lessor to disclose to Guarantor any facts Lessor
may now or hereafter know about Lessee, regardless of whether Lessor has reason
to believe that any such facts materially increase the risk beyond that which
Guarantor intends to assume or has reason to believe that such facts are unknown
to Guarantor or has a reasonable opportunity to communicate such facts to
Guarantor, it being understood and agreed that Guarantor is fully responsible
for being and keeping informed of the financial condition of Lessee and of all
circumstances bearing on the risk of non-payment or non-performance of any
obligations or indebtedness hereby guaranteed;
(g) any defense arising because of Lessor's election, in any proceeding
instituted under the federal Bankruptcy Code, of the application of Section 1111
(b)(2) of the federal Bankruptcy Code; and
(h) any defense based on any borrowing or grant of a security interest under
Section 364 of the federal Bankruptcy Code.
(i) all rights and remedies accorded by applicable law to guarantors,
including without limitation, any extension of time conferred by any law now or
hereafter in effect and any requirement or notice of acceptance of this Guaranty
or any other notice to which the undersigned may now or hereafter be entitled to
the extent such waiver of notice is permitted by applicable law.
7. Warranties. With respect to the Transaction Documents, Guarantor
----------
warrants that: (a) this Guaranty is executed at Lessee's request; and (b)
Guarantor has established adequate means of obtaining from Lessee on a
continuing basis financial and other information pertaining to Lessee's
financial condition. 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 Guarantor further agrees that Lessor shall have
no obligation to disclose to Guarantor information or material acquired in
the course of Lessor's relationship with Lessee.
8. No-Subrogation. Until all obligations of Lessee and its Affiliates under
--------------
Transaction Documents have been satisfied and discharged in full for one (1)
year, Guarantor shall have no right of subrogation and waives any right to
enforce any remedy which Lessor now has or may hereafter have against Lessee and
any benefit of, and any right to participate in, any security now or hereafter
held by Lessor with respect to the Lease.
9. Intentionally omitted.
-----------------------
10. No Delay. Any payments required to be made by Guarantor hereunder shall
--------
become due on demand in accordance with the terms hereof immediately upon the
happening of an Event of Default under any Transaction Document.
11. Application of Payments. With respect to the Transaction Documents, and
-----------------------
with or without notice to Guarantor, Lessor, in Lessor's sole discretion and at
any time and from time to time and in such manner and upon such terms as Lessor
deems appropriate, may (a) apply any or all payments or recoveries from Lessee
or from any other guarantor under any other instrument or realized from any
security, in such manner and order of priority as Lessor may determine, to any
indebtedness or other obligation of the Lessee with respect to the Transaction
Documents and whether or not such indebtedness or other obligation is guaranteed
hereby or is otherwise secured or is due at the time of such application, and
(b) refund to Lessee any payment received by Lessor under the Transaction
Documents.
12. Guaranty Default.
-----------------
(a) As used herein, the term Guaranty Default shall mean one or more of the
following events (subject to applicable cure periods):
(i) the failure of Guarantor to pay the amounts required to be paid under
this Guaranty within five (5) Business Days of the times specified in this
Guaranty;
(ii) the failure of Guarantor to observe and perform any covenants,
conditions or agreement on its part to be observed or performed, other than as
referred to in Subsection (i) above, for a period of thirty (30) days after
written notice of such failure has been given to Guarantor by Lessor, unless
Lessor agrees in writing to an extension of such time prior to its expiration;
(iii) the occurrence of an Event of Default under the Lease, or any of the
other Transaction Documents.
(b) Upon the occurrence of a Guaranty Default and while it continues, Lessor
shall have the right to bring such actions at law or in equity, including
appropriate injunctive relief, as it deems appropriate to compel compliance,
payment or deposit, and among other remedies to recover its attorneys' fees in
any proceeding, including any appeal therefrom and any post-judgement
proceedings.
13. Financial Covenants. At all times while any Obligations guaranteed by
--------------------
Guarantor remain outstanding (the "Term of this Guaranty"), Guarantor shall
----------------------
comply with any and all financial covenants of the Lease applicable to
Guarantor, as the same may be amended, modified or restated from time to time
during the Term of this Guaranty.
14. Financial Statements. Within seventy five (75) days after the end of
---------------------
each of Guarantor's Fiscal Years, Guarantor shall deliver to Lessor a copy of
its audited Financial Statements, prepared in accordance with GAAP, consistently
applied, certified by Guarantor and reviewed by an independent certified public
accounting firm acceptable to Lessor ("Accounting Firm"). Together with
----------------
Guarantor's Financial Statements furnished in accordance with the preceding
sentence, Guarantor shall deliver a Certificate of Guarantor stating that
Guarantor is not in default in the performance or observance of any of the terms
of this Guaranty, or if Guarantor is in default, specifying all such defaults,
the nature thereof, and the steps being taken to remedy the same.
15. Miscellaneous.
-------------
(a) No term, condition or provision of this Guaranty may be waived except by
an express written instrument to that effect signed by Lessor. No waiver
of any term, condition or provision of this Guaranty will be deemed a waiver of
any other term, condition or provision, irrespective of similarity, or
constitute a continuing waiver of the same term, condition or provision, unless
otherwise expressly provided.
(b) If any one or more of the terms, conditions or provisions contained in
this Guaranty is found in a final award or judgment rendered by any court of
competent jurisdiction to be invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining terms, conditions and
provisions of this Guaranty shall not in any way be affected or impaired
thereby, and this Guaranty shall be interpreted and construed as if the invalid,
illegal, or unenforceable term, condition or provision had never been contained
in this Guaranty.
(c) THIS GUARANTY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF MARYLAND, EXCEPT THAT THE LAWS OF THE STATE IN WHICH A
FACILITY IS LOCATED SHALL GOVERN THIS AGREEMENT TO THE EXTENT NECESSARY (i) TO
OBTAIN THE BENEFIT OF THE- RIGHTS AND REMEDIES SET FORTH HEREIN WITH RESPECT TO
SUCH FACILITY, AND (ii) FOR PROCEDURAL REQUIREMENTS WHICH MUST BE GOVERNED BY
THE LAWS OF THE STATE IN WHICH SUCH FACILITY IS LOCATED. GUARANTOR CONSENTS TO
IN PERSONAM JURISDICTION BEFORE THE STATE AND FEDERAL COURTS OF MARYLAND AND
AGREES THAT ALL DISPUTES CONCERNING THIS GUARANTY BE HEARD IN THE STATE AND
FEDERAL COURTS LOCATED IN THE STATE OR STATES IN WHICH THE FACILITY OR
FACILITIES ARE LOCATED OR IN MARYLAND. GUARANTOR AGREES THAT SERVICE OF PROCESS
MAY BE EFFECTED UPON IT UNDER ANY METHOD PERMISSIBLE UNDER THE LAWS OF THE STATE
OR STATES IN WHICH THE FACILITY OR FACILITIES ARE LOCATED OR MARYLAND AND
IRREVOCABLY WAIVES ANY OBJECTION TO VENUE IN THE STATE AND FEDERAL COURTS OF THE
STATE OR STATES IN WHICH THE FACILITY OR FACILITIES ARE LOCATED AND OF MARYLAND.
(d) GUARANTOR AND LESSOR HEREBY WAIVE TRIAL BY JURY AND THE RIGHT THERETO IN
ANY ACTION OR PROCEEDING OF ANY KIND ARISING ON, UNDER, OUT OF, BY REASON OF OR
RELATING IN ANY WAY TO THIS GUARANTY OR THE INTERPRETATION, BREACH OR
ENFORCEMENT THEREOF.
(e) In the event of any suit, action, arbitration or other proceeding to
interpret this Guaranty, or to determine or enforce any right or obligation
created hereby, the prevailing party in the action shall recover such party's
actual costs and expenses reasonably incurred in connection therewith,
including, but not limited to, attorneys' fees and costs of appeal, post
judgment enforcement proceedings (if any) and bankruptcy proceedings (if any).
Any court, arbitrator or panel of arbitrators shall, in entering any judgment or
making any award in any such suit, action, arbitration or other proceeding, in
addition to any and all other relief awarded to such prevailing party, include
in such-judgment or award such party's costs and expenses as provided in this
paragraph.
(f) Guarantor (i) represents that it has been represented and advised by
counsel in connection with the execution of this Guaranty; (ii) acknowledges
receipt of a copy of the Transaction Documents; and (iii) further represents
that Guarantor has been advised by counsel with respect thereto. This Guaranty
shall be construed and interpreted in accordance with the plain meaning of its
language, and not for or against Guarantor or Lessor, and as a whole, giving
effect to all of the terms, conditions and provisions hereof.
(g) Except as provided in any other written agreement now or at any time
hereafter in force between Lessor and Guarantor, this Guaranty shall constitute
the entire agreement of Guarantor with Lessor with respect to the subject matter
hereof, and no representation, understanding, promise or condition concerning
the subject matter hereof will be binding upon Lessor or Guarantor unless
expressed herein.
(h) All stipulations, obligations, liabilities and undertakings under this
Guaranty shall be binding upon Guarantor and its respective successors and
assigns and shall inure to the benefit of Lessor and to the benefit of Lessor's
successors and assigns.
(i) Whenever the singular shall be used hereunder, it shall be deemed to
include the plural (and vice-versa) and reference to one gender shall be
construed to include all other genders, including neuter, whenever the context
of this Guaranty so requires. Section captions or headings used in the Guaranty
are for convenience and reference only, and shall not affect the construction
thereof.
Signatures on following page.
IN WITNESS WHEREOF, the undersigned has executed this Guaranty as of the date
first written above.
GUARANTOR:
EMERITUS CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
-----------------------
Title: Vice President of Finance
----------------------------
STATE OF _________________ )
-
) SS
COUNTY OF _______________ )
The foregoing instrument was acknowledged before me this ___ day of
_______, 2003, by _____________________, who is the _____________ of Emeritus
Corporation, a Washington corporation, known to me to be the person who executed
this Guaranty on behalf of the corporation.
Notary Public, ________ County, ___________
My Commission Expires:
------------------------