Document:

Exhibit 10.86.5 Promissory Note Emeritus and GE for Arkansas

    Loan
      No. 07-0004235

     

    PROMISSORY
      NOTE

     

    $15,930,000______________,
      2005

     

    	1.  	
            Promise
              to Pay.

          

     

    FOR
      VALUE
      RECEIVED, EMERITUS PROPERTIES-ARKANSAS, LLC, a Delaware limited liability
      company ("Borrower")
      whose
      address is c/o Emeritus Corporation, 3131 Elliott Avenue, Suite 500, Seattle,
      Washington 98121 promises to pay to the order of GENERAL
      ELECTRIC CAPITAL CORPORATION, INC.,
      a
      Delaware corporation, and its successors and assigns (in its individual
      capacity, "GECC",
      and as
      agent for Lenders (as defined below), "Agent"),
      the
      sum of Fifteen Million Nine Hundred Thirty Thousand and No/100 Dollars
      ($15,930,000), together with all other amounts added thereto pursuant to this
      Note or otherwise payable to GECC under the Loan Documents (as hereinafter
      defined), including, but not limited to, any Prepayment Premium as
      defined and set forth in the Loan Agreement of even date herewith among GECC
      and
      the other financial institutions who are or hereafter become parties to the
      Loan
      Agreement (together with GECC, collectively or individual, as the context may
      require, "Lender"),
      Borrower and Agent (as amended, modified, supplemented or restated from time
      to
      time, the "Loan
      Agreement")
      (or so
      much thereof as may from time to time be outstanding), together with interest
      thereon as hereinafter set forth, all payable in lawful money of the United
      States of America. Payments shall be made at the offices of Agent at GEMSA,
      File
      59229, Los Angeles, California 90074-9229 (or such other address as Agent may
      hereafter designate in writing to Borrower). Except as otherwise provided
      herein, capitalized terms used in this Note shall have the same meanings as
      are
      assigned to such terms in the Loan Agreement. 

     

    This
      Note
      is evidenced and secured by, among other things, the Loan Documents and
      those certain
      Security Documents encumbering, among other things, the Projects. ". Reference
      is hereby made to the Loan Agreement for a statement of all of the terms and
      conditions under which the Loan evidenced hereby is made and to be
      repaid.

     

     

    	2.  	
            Payments.
              

          

     

    The
      principal amount of the indebtedness evidenced hereby shall be payable in the
      amounts and on the dates specified in the Loan Agreement, the terms of which
      are
      hereby incorporated herein by reference. Interest thereon shall be paid until
      such principal amount is paid in full at such interest rates and at such times,
      and pursuant to such calculations, as are specified in the Loan Agreement.
      If
      any payment on this Note becomes due and payable on a day other than a Business
      Day, the maturity thereof shall be extended to the next succeeding Business
      Day,
      and, with respect to payments of principal, interest thereon shall be payable
      at
      the then applicable rate during such extension. Payments will be applied in
      accordance with the terms of the Loan Agreement. Borrower may prepay or defease
      this Note, if at all, only to the 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    extent
      permitted by and in accordance with the provisions of the Loan Agreement,
      including the payment of any applicable Prepayment Premium then due.

     

    	3.  	
            Default.

          

     

    Upon
      and
      after the occurrence of and during the continuance of any Event of Default,
      this
      Note may, as provided in the Loan Agreement, and without demand, notice or
      legal
      process of any kind, be declared, and immediately shall become, due and payable.
      

     

    	4.  	
            APPLICABLE
              LAW; SEVERABILITY.
              

          

     

    THIS
      NOTE
      SHALL BE GOVERNED BY AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH
      THE
      INTERNAL LAWS OF THE STATE OF ILLINOIS, WITHOUT REGARD TO CONFLICTS OF LAW
      PRINCIPLES. THE INVALIDITY, ILLEGALITY OR UNENFORCEABILITY OF ANY PROVISION
      OF
      THIS NOTE SHALL NOT AFFECT OR IMPAIR THE VALIDITY, LEGALITY OR ENFORCEABILITY
      OF
      THE REMAINDER OF THIS NOTE, AND TO THIS END, THE PROVISIONS OF THIS NOTE ARE
      DECLARED TO BE SEVERABLE.

     

    	5.  	
            Waiver.

          

     

    Borrower,
      for itself and all endorsers, guarantors and sureties of this Note, and their
      heirs, legal representatives, successors and assigns, hereby waives presentment
      for payment, demand, notice of nonpayment, notice of dishonor, protest of any
      dishonor, notice of protest and protest of this Note, and all other notices
      in
      connection with the delivery, acceptance, performance, default or enforcement
      of
      the payment of this Note, and agrees that their respective liability shall
      be
      unconditional and without regard to the liability of any other party and shall
      not be in any manner affected by any indulgence, extension of time, renewal,
      waiver or modification granted or consented to by Agent. Borrower, for itself
      and all endorsers, guarantors and sureties of this Note, including but not
      limited to Guarantor,
      and their heirs, legal representatives, successors and assigns, hereby consents
      to every extension of time, renewal, waiver or modification that may be granted
      by Agent with respect to the payment or other provisions of this Note, and
      to
      the release of any makers, endorsers, guarantors or sureties, and their
      respective heirs, legal representatives, successors and assigns, and of any
      collateral given to secure the payment hereof, or any part hereof, with or
      without substitution, and agrees that additional makers, endorsers, guarantors
      or sureties and their heirs, legal representatives, successors and assigns,
      may
      become parties hereto without notice to Borrower or to any endorser, guarantor
      or surety and without affecting the liability of any of them.

     

    	6.  	
            Miscellaneous.

          

     

    6.1.  Amendments.

     

    This
      Note
      may not be terminated or amended orally, but only by a termination or amendment
      in writing signed by Agent.

     

    6.2.  Lawful
      Rate of Interest.

     

    In
      no
      event whatsoever shall the amount of interest paid or agreed to be paid pursuant
      to this Note or any of the Loan Documents exceed the highest lawful rate of
      interest permissible under applicable law. If, from any circumstances
      whatsoever, fulfillment of any provision of this Note and the other Loan
      Documents shall involve exceeding the lawful rate of interest which a court
      of
      competent jurisdiction may deem applicable hereto ("Excess
      Interest"),
      then
ipso
      facto,
      the
      obligation to be fulfilled shall be reduced to the highest lawful rate of
      interest permissible under such law and if, for any reason whatsoever, Agent
      or
      Lender shall receive, as interest, an amount which would be deemed unlawful
      under such applicable law, such interest shall be applied to the Loan (whether
      or not due and payable), and not to the payment of interest, or refunded to
      Borrower if such Loan has been paid in full. None of Borrower, Guarantor, nor
      any guarantor, endorser or surety nor their heirs, legal representatives,
      successors or assigns shall have any action against Agent or Lender for any
      damages whatsoever arising out of the payment or collection of any such Excess
      Interest.

     

    6.3.  Captions.

     

    The
      captions of the Paragraphs of this Note are for convenience of reference only
      and shall not be deemed to modify, explain, enlarge or restrict any of the
      provisions hereof.

     

    6.4.  Notices.

     

    Notices
      shall be given under this Note in conformity with the terms and conditions
      of
      the Loan Agreement.

     

    6.5.  Time
      of Essence.

     

    Time
      is
      of the essence of this Note and the performance of each of the covenants and
      agreements contained herein.

     

    	7.  	
            Sale
              of Loan.

          

     

    Subject
      to the terms and conditions set forth in the Loan Agreement, Agent
      or
      Lender, at any time and without the consent of Borrower, may grant
      participations in or sell, transfer, assign and convey all or any portion of
      its
      right, title and interest in and to the Loan, this Note, the Security Documents
      and the other Loan Documents, any guaranties given in connection with the Loan
      and any collateral given to secure the Loan.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    IN
      WITNESS WHEREOF, Borrower has executed this Senior Note or has caused the same
      to be executed by its duly authorized representatives as of the date first
      set
      forth above.

     

    
      	
              BORROWER:

               

              EMERITUS
                PROPERTIES-ARKANSAS, LLC,
                a
                Delaware limited liability company

               

              By:EMERITUS
                CORPORATION, a Washington corporation, its sole member

               

              By:
                /s/ Raymond R. Brandstrom

              Name: 
                Raymond R. Brandstrom

              Its: Vice
                President of FinanceExhibit 10.2 - Consulting Agreement with Windston Financial Corp.

Exhibit 10.2

CONSULTING AGREEMENT

This Consulting Agreement ("Agreement") is made and entered into effective as of February 1st, 2006 by HIGH GRADE MINING CORP., a Nevada corporation ("Corporation"), and WINDSTONE FINANCIAL CORP., a British Columbia corporation (the "Consultant")

WHEREAS, the Corporation desires to retain the services of a corporate consultant and the services of its designated representative and the Consultant has agreed to accept such appointment on the terms and conditions herein contained:

NOW THEREFORE, IT IS AGREED AS FOLLOWS:

Section 1-Duties.  

The Consultant agrees to the appointment hereunder and during the term of this Agreement, the Consultant agrees to appoint its sole shareholder, Elden Schorn, to serve the Corporation as its Chief Executive Officer.  The Consultant's designated representative shall provide such Executive and other services as are customarily associated with or incidental to the Chief Executive Officer position and the representative shall perform such other duties and responsibilities for the Corporation as the Corporation may reasonably require, consistent with such position.  The services to be provided by the Consultant and its designated representative shall be provided from the consultant's head office or chief place of business located in the Municipality of West Vancouver, Province of British Columbia.  The Consultant shall ensure that a substantial amount of time is devoted to the business and affairs of the Corporation. 

Section 2-Term of Appointment

2.1  Definitions.  For the purposes of this Agreement the following terms shall have the following meanings:

2.1.1  "Termination For Cause" shall mean termination by the Corporation of the Consultant's engagement by reason of any representative or designated appointee of the Consultant engaging in acts of willful dishonesty towards, fraud upon, or deliberate injury or attempted injury to the Corporation.

2.1.2  "Termination Other Than For Cause" shall mean termination by the Corporation of the Consultant's engagement by the Corporation (other than in a Termination for Cause) and shall include constructive termination by reason of a material breach of this Agreement by the Corporation, such constructive termination to be effective upon notice from the Consultant to the Corporation of such constructive termination.

2.1.3  "Voluntary Termination" shall mean termination by the Consultant of its engagement other than (i) constructive termination as described herein, (ii) "Termination Upon a Change in Control," and (iii) termination by reason of the death or disability of the Consultant's representative as described herein.

2.1.4  "Termination Upon a Change in Control" shall mean a termination by the Consultant of the Consultant's engagement with the Corporation within 120 days following a "Change in Control."

CONSULTING AGREEMENT

Page 1

2.1.5  "Change in Control" shall mean (i) the time that the Corporation first determines that any person and all other persons who constitute a group (within the meaning of ' 13(d)(3) of the Securities Exchange Act of 1934 ("Exchange Act")) have acquired direct or indirect beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act) of twenty percent (20%) or more of the Corporation's outstanding securities, unless a majority of the "Continuing Directors" approve the acquisition not later than ten (10) business days after the Corporation makes that determination, or (ii) the first day on which a majority of the members of the Corporation's board of directors are not "Continuing Directors."

2.1.6  "Continuing Directors" shall mean, as of any date of determination, any member of the Corporation's board of directors who (i) was a member of that board of directors on the date of commencement of this Agreement, or (ii) was nominated for election or elected to the Corporation's board of directors with the affirmative vote of the greater of a majority of the Continuing Directors who were members of the Corporation's board of directors at the time of such nomination or election.

2.2  Initial Term.  The term of engagement of the Consultant by the Corporation shall be for a period of 24 months beginning with the Effective Date ("Initial Term"), unless terminated earlier pursuant to this Agreement.  At any time prior to the expiration of the Initial Term, the Corporation and the Consultant may by mutual written agreement extend the Consultant's engagement under the terms of this Agreement for such additional period as may be agreed.

2.3  Termination For Cause.  Termination For Cause may be effected by the Corporation at any time during the term of this Agreement and shall be effected by written notification to the Consultant and its representatives. 

2.4  Termination Other Than For Cause.  Notwithstanding anything else in this Agreement, the Corporation may effect a Termination Other Than For Cause at any time upon giving written notice to the Consultant of such termination.  Upon any Termination Other Than For Cause, the Consultant and its designated representative shall promptly be paid all accrued salary, bonus compensation to the extent earned, vested deferred compensation (other than pension plan or profit sharing plan benefits which will be paid in accordance with the applicable plan), any benefits under any plans of the Corporation in which the Consultant  or its designated representative is a participant to the full extent of the Consultant's rights under such plans (including accelerated vesting, if any, of awards granted to the Consultant under the Corporation's stock option plan) and any appropriate business expenses incurred by the Consultant in connection with its duties hereunder, all to the date of termination, and all Severance Compensation provided, but no other compensation or reimbursement of any kind.

2.5  Voluntary Termination.  In the event of a Voluntary Termination, the Corporation shall promptly pay all accrued salary, bonus compensation to the extent earned, vested deferred compensation (other than pension plan or profit sharing plan benefits which will be paid in accordance with the applicable plan), any benefits under any plans of the Corporation in which the Consultant or its designated representative is a participant to the full extent of the Consultant's rights under such plans and any appropriate business expenses incurred by the Consultant or its designated representative in connection with their respective duties hereunder, all to the date of termination, but no other compensation or reimbursement of any kind, including without limitation, Severance Compensation.

 

CONSULTING AGREEMENT

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2.6  Termination Upon a Change in Control.  In the event of a Termination Upon a Change in Control, the Consultant and its designated representative shall immediately be paid all accrued salary, bonus compensation to the extent earned, vested deferred compensation (other than pension plan or profit sharing plan benefits which will be paid in accordance with the applicable plan), any benefits under any plans of the Corporation in which the Consultant is a participant to the full extent of the Consultant's rights under such plans (including accelerated vesting, if any, of any awards granted to the Consultant under the Corporation's Stock Option Plan) and any appropriate business expenses incurred by the Consultant in connection with its duties hereunder, all to the date of termination, and all Severance Compensation, but no other compensation or reimbursement of any kind.

2.7  Notice of Termination.  The Corporation may effect a termination of this Agreement pursuant to the provisions of this Section upon giving thirty (30) days' written notice to the Consultant of such termination.  The Consultant may effect a termination of this Agreement pursuant to the provisions of this Section upon giving thirty (30) days' written notice to the Corporation of such termination.

Section 3-Compensation

3.1  Annual Base.  As payment for the services to be rendered by the Consultant as provided in Section 1 and subject to the terms and conditions of Section 2, the Corporation agrees to pay to the Consultant a "Base Compensation" of US$48,000 per annum payable in equal monthly installments of $4,000 each commencing December 1st, 2005 irrespective of the date of execution of this Agreement.

3.2  Additional Compensation.  The Consultant's designated representative shall receive options to acquire a number to be determined by the Board of Directors of shares of common stock under the Company's nonqualified incentive stock option plan filed on a Form S-8 with the United States Securities and Exchange Commission with an exercise price of $0.50 per share.  For the purpose of this Agreement once the number has been established it shall be dealt with as a fixed number provided for in this Consulting Agreement.

3.3.  Automobile Allowance.  For the term of this Agreement and any extensions thereof the Corporation will reimburse the Consultant for mileage accumulated upon its motor vehicle while being used for corporate matters..

3.4  Reimbursement for Expenses.  During the term of this Agreement, the Corporation shall reimburse the Consultant for reasonable and properly documented out-of-pocket business and/or entertainment expenses incurred by the Consultant in connection with its duties under this Agreement.

Section 4 - Severance Compensation.

4.1  Severance Compensation in the Event of a Termination Upon a Change in Control.  In the event the Consultant's employment is terminated in a Termination Upon a Change in Control, the Consultant shall be paid as severance compensation ("Severance Compensation") his Base Salary (at the rate payable at the time of such termination), for a period of twelve (12) months from the date of such termination.  Notwithstanding anything in this Section to the contrary, the Consultant may in the Consultant's sole discretion, by delivery of a notice to the Corporation within thirty (30) days following a Termination Upon a Change in Control, elect to receive from Compensation a lump sum Severance Compensation payment by bank cashier's check 

 

CONSULTING AGREEMENT

Page 3

equal to the present value of the flow of cash payments that would otherwise be paid to the Consultant pursuant to this Section.  The Consultant shall also be entitled to an accelerated vesting of any awards granted to the Consultant under the Corporation's Stock Option Plan to the extent provided in the stock option agreement entered into at the time of grant.  The Consultant shall continue to enjoy any benefits under any plans of the Corporation in which the Consultant is a participant to the full extent of the Consultant's rights under such plans, including any perquisites provided under this Agreement, though the remaining term of this Agreement.

4.2  Severance Compensation in the Event of a Termination Other Than for Cause.  In the event the Consultant's employment is terminated in a Termination Other Than for Cause, the Consultant shall be paid as Severance Compensation his Base Salary (at the rate payable at the time of such termination), for a period of twelve (12) months from the date of such termination, on the dates specified in Section 3.1. 

4.3  Limit on Aggregate Compensation Upon a Change in Control.  Notwithstanding anything else in this Agreement, solely in the event of a Termination Upon a Change in Control, the amount of Severance Compensation paid to the Consultant, but exclusive of any payments to the Consultant in respect of any stock options then held by the Consultant (or any compensation deemed to be received by the Consultant in connection with the exercise of any stock options at any time) or by virtue of the Consultant's exercise of a Limited Right under the Option Plan upon a Change in Control, shall not include any amount that the Corporation is prohibited from deducting for federal income tax purposes by virtue of ' 280G of the Internal Revenue Code or any successor provision.

Section 6 - Payment Obligations.  

The Corporation's obligation to pay the Consultant the compensation and to make the arrangements provided herein shall be unconditional, and the Consultant shall have no obligation whatsoever to mitigate damages hereunder.  If litigation after a Change in Control shall be brought to enforce or interpret any provision contained herein, the Corporation, to the extent permitted by applicable law and the Corporations' articles of incorporation and bylaws, hereby indemnifies and will pay the Consultant for the Consultant's reasonable attorneys' fees and disbursements incurred in such litigation.

Section 7 - Confidentiality.  

The Consultant agrees that all confidential and proprietary information relating to the Corporation's business shall be kept and treated as confidential both during and after the term of this Agreement, except as may be permitted in writing by the Corporation's board of directors or as such information is within the public domain or comes within the public domain without any breach of this Agreement.

Section 8 - Indemnification.  

The Corporation shall indemnify the Consultant at all times during and after the term of this Agreement to the maximum extent permitted under Nevada Business Corporation Act or any successor provision thereof and any other applicable state law, and shall pay the Consultant's expenses in defending any civil or criminal action, suit, or proceeding in advance of the final disposition of such action, suit or proceeding, to the maximum extent permitted under such applicable state laws.

 

CONSULTING AGREEMENT

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Section 9 - Notices.  

Notice under this Agreement shall be in writing and shall be effective when actually delivered.  If mailed, notice shall be deemed effective 48 hours after mailing as registered or certified mail, postage prepaid, directed to the other party at the address set forth below or such other address as the party may indicate by written notice to the other:

Section 10 - Time.  

Time is of the essence of this Agreement.

Section 11 - No Release.  

Both parties agree that the termination of this Agreement or the expiration of the term of this Agreement shall not release either party from any obligations under Sections this Agreement.

Section 12 - Survival.  

Any of the terms and covenants contained in this Agreement which require the performance of either party after Termination shall survive such Termination. 

Section 13 - Waiver.  

Failure of either party at any time to require performance of any provision of this Agreement shall not limit the party's right to enforce the provision, nor shall any waiver of any breach of any provision be a waiver of any succeeding breach of any provision or a waiver of the provision itself for any other provision.

Section 14 - Assignment.  

Except as otherwise provided within this Agreement, neither party hereto may transfer or assign this Agreement without prior written consent of the other party.

Section 15 - Law Governing.  

This Agreement shall be governed by and construed in accordance with the laws of the State of Nevada.

Section 16 - Attorney Fees.  

In the event a suit or action is brought by any party under this Agreement to enforce any of its terms, or in any appeal therefrom, it is agreed that the prevailing party shall be entitled to reasonable attorneys fees to be fixed by the trial court and/or appellate court.

Section 17 - Presumption.  

This Agreement or any section thereof shall not be construed against any party due to the fact that said Agreement or any section thereof was drafted by said party.

 

CONSULTING AGREEMENT

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Section 18 - Computation of Time.  

In computing any period of time pursuant to this Agreement, the day of the act, event or default from which the designated period of time begins to run shall be included, unless it is a Saturday, Sunday or a legal holiday, in which event the period shall begin to run on the next day which is not a Saturday, Sunday or a legal holiday, in which event the period shall run until the end of the next day thereafter which is not a Saturday, Sunday or legal holiday.

Section 19 - Titles and Captions.  

All articles, sections and paragraph titles or captions contained in this Agreement are for convenience only and shall not be deemed part of the context nor affect the interpretation of this Agreement.

Section 20 - Pronouns and Plurals.  

All pronouns and any variations thereof shall be deemed to refer to the masculine, feminine, neuter, singular or plural as the identity of the Person or Persons may require.

Section 21 - Entire Agreement.  

This Agreement contains the entire understanding between and among the parties and supersedes any prior understandings and agreements among them respecting the subject matter of this Agreement.

Section 22 - Prior Agreements.  

This document is the entire, final and complete agreement of the parties and supersedes and replaces all prior or existing written and oral agreements. 

Section 23 - Agreement Binding.  

This Agreement shall be binding upon the heirs, executors, administrators, successors and assigns of the parties hereto.

Section 24 - Savings Clause.  

If any provision of this Agreement, or the application of such provision to any person or circumstance, shall be held invalid, the remainder of this Agreement, or the application of such provision to persons or circumstances other than those as to which it is held invalid, shall not be affected thereby.

Section 25 - Separate Counsel.  

The parties acknowledge that Consultant has not been represented in this transaction by counsel and the Company has been represented by Conrad C. Lysiak, Attorney and Counselor at Law.

 

 

CONSULTING AGREEMENT

Page 6

IN WITNESS WHEREOF, the parties have executed this Agreement, the 1st day of February, 2006. 

	 	 	
HIGH GRADE MINING CORP.

	 
	 
	 	 	
By: ROBERT M. BAKER

	 	 
	 	 	
Title: Secretary

	 
	 
	
Attest:
	 
	 
	
[Seal]

	 
	 	 	
WINDSTONE FINANCIAL CORP.

	 
	 
	 	 	
By: ELDEN SCHRON

	 
	 	 	
Title: President

	 
	 
	
Attest:
	 
	 
	
[Seal]

 

 

 

 

 

 

 

 

 

 

CONSULTING AGREEMENT

Page 7

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