DEED OF TRUST, TRUST INDENTURE, ASSIGNMENT,
ASSIGNMENT OF RENTS, SECURITY AGREEMENT,
INCLUDING FIXTURE FILING AND FINANCING STATEMENT
Dated June 30, 1998
▇▇▇▇▇▇ ▇▇▇▇▇▇ PARTNERS LIMITED PARTNERSHIP,
Grantor
to
CHICAGO TITLE INSURANCE COMPANY
as Trustee
and
DEUTSCHE BANK AG, NEW YORK BRANCH,
Beneficiary
DEED OF TRUST, TRUST INDENTURE, ASSIGNMENT, ASSIGNMENT OF RENTS,
SECURITY AGREEMENT, INCLUDING FIXTURES, FIXTURE FILING AND
FINANCING STATEMENT (as the same may from time to time be
extended, spread, split, consolidated, modified, restated and
renewed, this "Deed of Trust") made as of June 30,1998 by ▇▇▇▇▇▇
▇▇▇▇▇▇ PARTNERS LIMITED PARTNERSHIP, a Washington limited
partnership having an address c/o Emeritus Corporation, ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Grantor"),
to CHICAGO TITLE INSLTRANCE COMPANY, a Missouri corporation having
an address at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, the trustee, (the "Trustee") for the benefit of, DEUTSCHE
BANK AG, a bank chartered under the laws of the Federal Republic
of Germany, acting by and through its New York Branch having an
address at ▇▇ ▇▇▇▇ ▇▇"▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ being the
beneficiary hereunder (the "Beneficiary")
WITNESSETH:
WHEREAS, Grantor has entered into that certain Credit Agreement
(said credit agreement, as it may be amended, modified or
supplemented from time to time, being the
"Credit Agreement", a copy of which may be examined at reasonable
times at the office of Beneficiary by persons who do or will hold
an interest in the Land (as hereinafter defined) or the
Improvements (as hereinafter defined)), dated as of June 19, 2001;
and
WHEREAS, pursuant to the Credit Agreement and subject to the terms
and conditions therein set forth, the Beneficiary has agreed to
make a loan to Grantor in a principal amount of NINE MILLION SEVEN
HUNDRED SIXTY-FIVE THOUSAND AND 00/100 DOLLARS ($9,765,000.00)
(the "Loan") with a maturity date of June 30, 2001; and
WHEREAS, to evidence such indebtedness Grantor has executed and
delivered the Credit Agreement and will execute and deliver a
promissory note (the "Note") to the order of Beneficiary in the
principal amount equal to the Loan and issued pursuant to, and
dated the same date as, the Credit Agreement and having a Maturity
Date of June 30, 2001; and
WHEREAS, the total indebtedness and liabilities to be secured by
this Deed of Trust are as follows (all such indebtedness and
liabilities or the instruments evidencing same, as applicable,
being herein collectively called the "Obligations"):
(i) the aggregate principal amount of NINE MILLION SEVEN HUNDRED
SIXTY-FIVE THOUSAND AND 00/100 ▇▇▇▇▇.▇▇ ($9,765,000.00) pursuant
to the Note; plus
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(ii) interest on such principal amount, as provided in the Credit
Agreement;
plus
(iii) all other amounts payable and all other obligations of
Grantor under the Credit Agreement, the Note, this Deed of Trust,
and any other document which relates to any of the Credit
Agreement or the Note or any of the security therefor (as the same
may be amended, modified, extended, renewed, or supplemented from
time to time, all of the foregoing being herein collectively
called the "Loan Documents"); and
WHEREAS, it has been agreed that the payment and performance of
the Obligations shall be secured by a deed of trust, trust
indenture, assignment, assignment of rents, security agreement,
including fixtures, fixture filing and financing statement, as
applicable, of certain property as hereinafter identified; and
NOW, THEREFORE, in consideration of the premises and other good
and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, to secure the punctual payment by Grantor
when due, whether at stated maturity, by acceleration or
otherwise, of the Obligations and the performance and observance
of all other covenants, obligations and liabilities of Grantor
under this Deed of Trust, as the same may be extended, modified or
renewed or repledged, Grantor does hereby grant, bargain, sell,
mortgage, warrant, convey, alien, remise, release, assign,
transfer, set over, deliver, confirm and convey unto Beneficiary
(where this instrument constitutes a mortgage) or Trustee (where
this instrument constitute a deed of trust or trust indenture),
upon the terms and conditions of this Deed of Trust, in trust with
power of sale and right of entry as provided hereinbelow, each and
all of the real properties described in the Granting Clauses
herein (which, together with all other property located therein or
described in the Granting Clauses herein, is hereinafter
collectively called the
"Mortgaged Property").
GRANTING CLAUSES
(a) All plots, pieces and parcels of land more particularly
described in Exhibit A attached hereto (the "Land"), together with
all of the easements, rights and appurtenances now or hereafter in
any way appertaining thereto, either at law or in equity, whether
now owned or hereafter acquired by Grantor;
(b) All structures, buildings and improvements of every kind and
description now or at any time hereafter located on the Land (the
"Improvements"), together with all the estate, right, title and
interest of Grantor in all fixtures and all appurtenances and
additions thereto and substitutions or replacements thereof owned
by Grantor and now or hereafter attached to the Premises (as
hereafter defined);
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(c) All right, title and interest of Grantor in and to (i) the
streets, roads, sidewalks and alleys abutting the Land, (ii)
strips and gores within or adjoining the Land, (iii) the air space
and right to use said air space above the Land and any
transferable development or similar rights appurtenant thereto,
(iv) all rights of ingress and egress by motor vehicles to parking
facilities on or within the Land, (v) all easements now or
hereafter affecting the Land, (vi) all royalties and all rights
appurtenant thereto to the use and enjoyment of the Land,
including alley, drainage, mineral, water, oil and gas rights,
(vii) all sewer rights, and (viii) all other emblements now or
hereafter located on the Land or under or above the same or any
part thereof, and all estates, rights, interests and
appurtenances, reversions and remainders whatsoever, in any way
belonging or appertaining to the Premises or any part thereof,
whether now owned or hereafter acquired by Grantor;
(d) All right, title and interest of Grantor in and to all water,
ditches, ▇▇▇▇▇, reservoirs and drains and all water, ditch, well,
reservoir and drainage rights which are appurtenant to, located
on, under or above or used in connection with the Land or the
Improvements, or any part thereof, whether now existing or
hereafter created or acquired by Grantor;
(e) All right, title and interest of Grantor in and to all
minerals, crops, timber, trees, shrubs, flowers and landscaping
features now or hereafter located on, under or above the Land;
All right, title and interest of Grantor in and to all building
materials, supplies and equipment now or hereafter placed on the
Land or in the Improvements and all architectural renderings,
models, drawings, plans, specifications, studies and data now or
hereafter relating to the Land or the Improvements;
(g) All "Equipment" (as defined in the Uniform Commercial Code),
now or hereafter located on, attached to or contained in or used
or usable in connection with the Mortgaged Property, and shall
also mean and include all of Grantor's right, title and interest
in and to, all building materials, construction materials, movable
(personal) property constituting furniture, fittings, appliances,
apparatus, leasehold improvements, machinery, devices, interior
improvements, appurtenances, equipment, plant, furnishings,
fixtures, computers, electronic data processing equipment,
telecommunications equipment, elevator, kitchen, medical, dental
or rehabilitation fixtures, cleaning apparatus, beds, linens,
televisions, carpeting, telephones, cash registers, computers,
lamps, glassware, rehabilitation equipment, medical, dental,
therapeutic and paramedical equipment and other fixed assets now
owned or hereafter acquired by Grantor and now or hereafter used
in the operation of the business conducted at the Premises, and
all proceeds thereof as well as all additions to, substitutions
for, replacements of or accessions to any of the items recited as
aforesaid and all attachments, components, parts (including spare
parts) and
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accessories, whether installed thereon or affixed thereto, and
wherever located, now or hereafter owned by Grantor and used or
intended to be used in connection with, or with the operation of,
the Premises or the buildings, structures, or other improvements
now or hereafter located at such Premises, or in connection with
any construction being conducted or which may be conducted
thereon, all regardless of whether the same are located on such
Premises or are located elsewhere (including, without limitation,
in warehouses or other storage facilities or in the possession of
or on the premises of a bailee, vendor or manufacturer) for
purposes of manufacture, storage, fabrication or transportation
and all extensions and replacements to, and proceeds of, any of
the foregoing. For purposes of the preceding sentence, "other
fixed assets" shall also be deemed to include any and all
"furniture, furnishings and equipment" of the Premises as such
term is commonly understood in the assisted living care industry
(including, without limitation, any and all fixtures, furnishings,
equipment, furniture, and other items of corporeal (tangible)
movable (personal) property now or hereafter located at the
Premises or used in connection with the use, occupancy, operation
and maintenance of all or any part. of the Premises, other than
stocks of food and other supplies held for consumption in normal
operation, but including, without limitation, appliances,
machinery, equipment, signs, artwork (including paintings, prints,
sculpture and other fine art), office furnishings and equipment,
guest room furnishings, and specialized equipment for kitchens,
laundries, bars, restaurant, public rooms, health and recreational
facilities, linens, dishwashers, two-way radios, all partitions,
screens, awnings, shades, blinds, floor coverings, hall and lobby
equipment, heating, lighting, plumbing, ventilating,
refrigerating, incinerating, elevators, escalators, air
conditioning and communication plants or systems with appurtenant
fixtures, vacuum cleaning systems, call or beeper systems,
security systems, sprinkler systems and other fire prevention and
extinguishing apparatus and materials, reservation system computer
and related equipment, all equipment, manual, mechanical or
motorized, for the construction, maintenance, repair and cleaning
of parking areas, walks, underground ways, truck ways, driveways,
common areas, roadways, highways and streets, and motor vehicles)
(the items described in Granting Clauses (a) through (g) are
herein collectively referred to as the "Premises");
(h) All right, title and interest of Grantor in and to all leases,
subleases, lettings and, to the extent permitted by Law, licenses
affecting the Premises, including, without limitation, any
assignments thereof (including, without limitation, all guarantees
of any such leases, assignment of leases and subleases) and, to
the extent assignable, other agreements affecting the use,
enjoyment or occupancy of the Mortgaged Property heretofore or
hereafter entered into, and all amendments, modifications,
supplements, additions, extensions and renewals thereof(the
"Leases"), and all right, title and interest of Grantor in the
Occupancy Agreements (as hereafter defined), and all right, title
and interest of Grantor under the Leases and the Occupancy
Agreements, including cash and securities deposited thereunder (as
down payments, security deposits or otherwise), the right to
receive and collect the rents, security deposits, income,
proceeds, earnings, royalties, revenues, issues and profits
payable thereunder (including any claims (i) based on holdover by
any lessee, (ii) for damages sustained by Grantor
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or (iii) arising under any federal, state or other law as a result
of or in connection with the bankruptcy or insolvency, of any
lessee) and the rights to enforce, whether at law or in equity or
by any other means, all provisions and options thereof or
thereunder (all of the foregoing hereinafter collectively referred
to as the "Rents") and the right to apply the same to the payment
and performance of the Obligations;
(i) All rights, dividends and/or claims of any kind whatsoever
relating to the Premises (including damage, secured, unsecured,
lien, priority and administration claims); together with the right
to take any action or file any papers or process in any court of
competent jurisdiction, which may in the opinion of Beneficiary be
necessary to preserve, protect, or enforce such rights or claims,
including the filing of any proof of claim in any insolvency
proceeding under any state, federal or other laws and any rights,
claims or awards accruing to or to be paid to Grantor in its
capacity as landlord under the Leases;
(j) All right, title and interest of Grantor in and to any
insurance policies covering the Mortgaged Property, including,
without limitation, all proceeds thereof and any unearned premiums
on any insurance policies covering the Mortgaged Property,
including, without limitation, the right to receive and apply the
proceeds of any insurance, judgments, or settlements made in lieu
thereof, for damage to the Mortgaged Property or any part thereof,
subject to and in accordance with the terms and conditions of the
Leases;
(k) Subject to the terms and provisions of this Deed of Trust, the
right, in the name and on behalf of Grantor, to appear in and
defend any action or proceeding brought with respect to the
Mortgaged Property and to commence any action or proceeding to
protect the interest of Beneficiary in the Mortgaged Property or
any part thereof;
(1) All of the right, title and interest of Grantor in and to all
franchises, trade names, trademarks, symbols, service marks,
books, records, plans and specifications, contracts, licenses,
approvals, consents, subcontracts, service contracts, management
contracts, permits and other agreements of any nature whatsoever
now or hereafter obtained or entered into by Grantor, or any
manager of the Mortgaged Property on behalf of Grantor, with
respect to the use, occupation, development, construction and/or
operation of the Mortgaged Property or any part thereof or the
activities conducted thereon or therein, or otherwise pertaining
to the Mortgaged Property or any part thereof;
(m) All accounts receivable, contract rights, interests, estate or
other claims, both in law and in equity, which Grantor now has or
may hereafter acquire in the Mortgaged Property or any part
thereof, and all reserve accounts, accounts for the deposit,
collection and/or disbursement of Rents and other accounts now or
hereafter in existence with respect to the Loan;
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(n) All rights which Grantor now has or may hereafter acquire, to
be indemnified and/or held harmless from any liability, loss,
damage, costs or expense (including, without limitation,
attorneys' fees and disbursements) relating to the Mortgaged
Property or any part thereof;
(o) All appurtenances in respect of or otherwise relating to the
Leases, including, but not limited to, all the estate and rights
of the Grantor of, in and to (i) all modifications, extensions and
renewals of the Leases and all rights to renew or extend the term
thereof, (ii) all of Grantor's rights, if any, pertaining to
deposits of the lessee under the Leases (including lessee security
deposits, if any), (iii) all the right or privilege of the Grantor
to terminate, cancel, abridge, surrender, merge, modify or amend
the Leases and (iv) any and all possessory rights of the Grantor
and other rights and/or privileges of possession, including,
without limitation, the Grantor's right to elect to take
possession of the Mortgaged Properly;
(p) All of the Grantor's claims and rights to damages and any
other remedies in connection with or arising from the rejection of
the Leases by the lessee or any trustee, custodian or receiver
pursuant to the U.S. Bankruptcy Code, as amended (the "Bankruptcy
Code") in the event that there shall be filed by or against the
Lessee any petition, action or proceeding under the Bankruptcy
Code or under any other similar federal or state law now or
hereafter in effect;
(q) All present and future monetary deposits given by Grantor to
any public or private utility with respect to utility services
furnished to any part of the Premises or the Improvements;
(r) All right, title and interest of Grantor in and to all refunds
and rebates of taxes and assessments relating to the Premises and
Improvements (except to the extent such refunds and rebates relate
to taxes or assessments paid by the lessee under the Leases);
(s) All right, title and interest of Grantor in and to all
proceeds, products, substitutions and accessions (including claims
and demands therefor) of the conversion, voluntary or involuntary,
of any of the foregoing into cash or liquidated claims, including,
without limitation, the proceeds of insurance and condemnation
awards; and
(t) All other or greater rights and interests of every nature in
the Premises and in the possession or use thereof and income
therefrom, whether now owned or hereafter acquired by Grantor.
TOGETHER with all right, title and interest of Grantor in and to
all extensions, improvements, betterments, renewals, substitutes
and replacements of, and all additions and appurtenances to, any
of the foregoing hereafter acquired by, or released to, Grantor or
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constructed, assembled or placed by Grantor on the Premises and
all conversions of the security constituted thereby, immediately
upon such acquisition, release, construction, assemblage,
placement or conversion, as the case may be, and in each such
case, without any further mortgage, conveyance, assignment or
other act by Grantor, shall become subject to the lien of this
Deed of Trust as fully and completely, and with the same effect,
as though now owned by Grantor and specifically described herein.
Notwithstanding anything to the contrary herein contained, this
Deed of Trust shall be deemed to be and shall be enforceable as a
deed of trust, assignment, assignment of
rents, fixture filing and financing statement.
Wherever herein contained, the phrase "Trustee and/or Beneficiary"
or any similar phrase shall be deemed to refer to Trustee for the
benefit of Beneficiary.
To the extent any of the foregoing Mortgaged Property is not
considered "real property" under the Uniform Commercial Code of
the state in which the Premises are located ("UCC"), Grantor
hereby grants to Beneficiary a security interest (the "Security
Interest") as security for the Obligations in all such items of
Mortgaged Property, and Beneficiary shall have, in addition to all
rights and remedies provided herein, and in any other agreements,
commitments and undertakings made by Grantor to Beneficiary, all
of the rights and remedies of a "secured party" under the UCC. To
the extent permitted under applicable law, this Deed of Trust
shall be deemed to be a "security agreement" for purposes of the
UCC.
TO HAVE AND TO HOLD the Mortgaged Property unto Trustee,
Beneficiary, and their respective successors and assigns, forever.
ARTICLE I
Representations, Warranties and Covenants of Grantor
SECTION 1.01. Payment of Obligations. Grantor shall punctually pay
when due, and timely perform, the Obligations.
SECTION 1.02. Legal Status, Authority and Other Matters. (a) Legal
Status. Grantor represents and warrants that it is a corporation
duly organized and existing in good standing under the laws of
Washington and has the full power and authority to own the
Mortgaged Property and carry out its business in the state in
which the Mortgaged Property is located.
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(b) No Actions Pending. Except as set forth on the Disclosure
Schedule (as defined in the Credit Agreement) there is no action,
suit or proceeding, judicial, administrative or otherwise, pending
or, to the best of Grantor's knowledge, overtly threatened or
contemplated against or affecting Grantor or the Mortgaged
Property which would cause a Material Adverse Effect.
SECTION 1.03. Warranty of Title. Grantor warrants that it has good
and marketable title to the Premises, in each case free and clear
of all liens, charges and encumbrances of every kind and
character, subject only to the encumbrances set forth on Exhibit B
hereto ("Permitted Encumbrances"); has and will continue to have
full power and lawful authority to encumber and convey the
Premises as provided herein; owns all other Mortgaged Property
free and clear of all liens, charges and encumbrances of every
kind and character, subject only to Permitted Encumbrances; and
this Deed of Trust is and will continue to remain a valid and
enforceable first mortgage lien on and security interest in the
Mortgaged Property, subject only to Permitted Encumbrances.
Grantor further covenants that it will preserve such title and
will forever warrant and defend the title to the Mortgaged
Property unto Trustee and Beneficiary against all lawful claims
whatsoever and will forever warrant and defend the validity,
enforceability and priority of the lien of this Deed of Trust
against the claims of all persons and parties whomsoever.
Grantor covenants that it will, at Grantor's sole cost and expense
and at the request of Trustee or Beneficiary, (i) promptly correct
any defect or error which may be discovered in the Loan Documents,
(ii) promptly do, execute, acknowledge and deliver, and record and
re-record, file and re-file and register and re-register, any and
all such instruments as Trustee or Beneficiary may require from
time to time in order to carry out more effectively the purposes
of this Deed of Trust and (iii) will promptly furnish Trustee and
Beneficiary with evidence satisfactory to Trustee and Beneficiary
of every such recording, filing or registration.
SECTION 1.04. Operation and Maintenance. (a) Repair and
Maintenance. Grantor will operate and maintain the Premises in
good order, repair and operating condition, will promptly make all
necessary repairs, restorations, renewals, replacements, additions
and improvements thereto, interior and exterior, structural and
nonstructural, foreseen and unforeseen, or otherwise necessary to
insure that the same as part of the security under this Deed of
Trust shall not in any way be diminished or impaired, and will not
cause or allow the Premises to be misused, wasted or to
deteriorate. No part of the Improvements shall be removed,
demolished or structurally or materially altered nor shall any new
building, structure, facility or other improvement be constructed
on the Land or the Leased Land without Beneficiary's prior written
consent in the case of each such removal, demolition, alteration
or construction.
(b) Replacement of Equipment. Grantor will keep the Premises fully
equipped and will replace all worn out or obsolete Equipment with
fixtures or personal property
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comparable thereto when new to the extent necessary to operate the
Deed of Trust, Property in accordance with prudent business
standards for assisted living facilities and will not, without
Beneficiary's consent, remove any Equipment or other personal
property from the Land, the Leased Land or the Improvements
unless, to the extent necessary to operate the Mortgaged Property
in accordance with prudent business standards for assisted living
facilities Grantor replaces the same with an article of equal
suitability and value when new, owned by Grantor free and clear of
any lien or security interest (other than Permitted Encumbrances).
(c) Zoning; Title Matters. Grantor will not, without the prior
written consent of Beneficiary, (i) initiate or support any zoning
reclassification of the Premises, seek any variance under existing
zoning ordinances applicable to the Premises or use or permit the
use of the Premises in a manner which would result in such use
becoming a non-conforming use under applicable zoning ordinances,
(ii) modify or amend any of the Permitted Encumbrances, (iii)
impose any restrictive covenants or encumbrances upon the
Premises, execute or file any subdivision plat affecting the
Premises or consent to the annexation of the Premises to any
municipality or (iv) permit or suffer the Premises to be used by
the public or any person in such manner as might make possible a
claim of adverse usage or possession or of any implied dedication
or easement.
(d) Status of the Premises. (i) The Premises is not located in an
area identified by the Secretary of Housing and Urban Development
or a successor thereto as an area having special flood hazards
pursuant to the terms of the National Flood Insurance Act of 1968,
or the Flood Disaster Protection Act of 1973, as amended, or any
successor law; or if the Premises is located in such an area,
Grantor will obtain and maintain insurance against damage or loss
by flood on such basis and in such amounts as shall be required by
Beneficiary; (ii) the Premises is served by all utilities required
for the current use thereof; (iii) all streets necessary to serve
the Land, the Leased Land and the Improvements for the current use
thereof have been completed and are serviceable and have been
dedicated or accepted by the appropriate governmental entities and
Grantor has access from public roads to the Land, the Leased Land
and the Improvements; and (iv) there is no condemnation or similar
proceeding pending or threatened affecting any part of the
Premises that might materially adversely affect the Premises.
(e) Use. Grantor will use the Premises for substantially the same
use as in effect as of the date hereof and for no other use unless
consented to in writing by Beneficiary.
SECTION 1.05. Insurance. (a) Coverage. Grantor shall obtain and
maintain, or cause to be maintained, insurance for Grantor and the
Mortgaged Property providing at least the following coverages:
(i) comprehensive all risk insurance on the Improvements and the
Personal Property, including, but not limited to, coverage for
steam, pressure exploding,
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earthquakes, riot and civil commotion, vandalism, malicious
mischief, burglary and theft and contingent liability from
Operation of Building Laws, Demolition Costs and Increased Cost of
Construction Endorsements, in each case (A) in an amount equal to
l00% of the "Full Replacement Cost", which for purposes of this
Deed of Trust shall mean actual replacement value (exclusive of
costs of excavations, foundations, underground utilities and
footings); (B) containing an agreed amount endorsement with
respect to the Improvements and Personal Property waiving all co-
insurance provisions; and (C) containing an "Ordinance or Law
Coverage" or "Enforcement" endorsement if any of the Improvements
or the use of the Premises shall at any time constitute legal non
conforming structures or uses. In addition, Trustor shall obtain
flood hazard insurance if any portion of the Premises is currently
or at any time in the future located in a federally designated
"special flood hazard area", in an amount equal to the lessor of
(y) the outstanding principal balance of the Loan or (z) the
maximum amount of such insurance available under the National
Flood Insurance Act of 1968, the Flood Disaster Protection Act of
1973 or the National Flood Insurance Reform Act of 1994, as each
case may be amended; provided that any such flood hazard insurance
shall be on terms consistent with the comprehensive all risk
insurance policy required under this Section 1.05 except that the
deductible on such insurance shall be commercially reasonable and
if not available from a private carrier then from the government
to the extent available;
(ii) comprehensive general liability insurance, including bodily
injury, death and property damage liability, and umbrella
liability insurance against any and all claims, including all
legal liability to the extent insurable, imposed upon Beneficiary
and all court costs and attorneys' fees and expenses, arising out
of or connected with the possession
,use, leasing, operation, maintenance or condition of the
Premises, in such amounts as are generally available at reasonable
premiums and are generally required by institutional lenders for
properties comparable to the Premises;
(iii) business interruption insurance, with loss payable to
Beneficiary, in an amount sufficient to avoid any co-insurance
penalty and to provide proceeds for a period not less than one (I)
year of loss of business income, the term "business income" to
mean the total anticipated gross income to be received by Grantor
from the use and occupancy of the Premises and the sale of goods
and rendering of services at the Premises, reduced to the extent
such amounts would not be received because of expenses not
incurred during a period of non-operation of that portion of the
Premises then not being operated. Beneficiary shall be entitled to
the insurance proceeds to the extent necessary to satisfy all
amounts due and payable to Beneficiary under the Note, which
insurance proceeds shall be held by Beneficiary and shall be
applied to the Obligations secured hereunder from time to time due
and payable hereunder and under the Note; provided, however, that
nothing herein contained shall be deemed to relieve Grantor of its
Obligations secured
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hereunder except to the extent such amounts are actually paid out
of the proceeds of such business income insurance;
(iv) workers' compensation, subject to the statutory limits ofthe
state in which the Premises are located, and employer's liability
insurance.
(v) comprehensive boiler and machinery insurance, if applicable,
in amounts as shall be reasonably required by Beneficiary on terms
consistent with the comprehensive all risk insurance policy
required under Subsection 1.05(a)(i);
(vi) umbrella liability insurance in an amount not less than
$30,000,000 on terms consistent with the commercial general
liability insurance policy required under Subsection 1.05(a)(ii);
and
(vii) such other insurance and in such amount as (a) Beneficiary
from time to time may reasonably request, or (b) Grantor, as a
prudent owner of the Premises, deems appropriate, against such
other insurable hazards which at the time are commonly insured
against for property similar to the Premises and used as an
assisted living facility.
(b) Ratings. All policies of insurance (the "Policies") required
pursuant to this Section 1.05 shall be issued by an insurer
authorized to do business in the state in which the Premises are
located and having an A.M. Best rating of A:V or better and a
Standard & Poor's claims-paying ability rating of not less than
the greater of(A) for so long as any Securities shall have been
issued and be outstanding, one rating category below the higher
rating assigned to any such outstanding Securities, and (B) "BBB."
(c) Blanket Policies. The insurance coverage required under
Subsection 1.05(a) may be effected under a blanket policy or
policies covering the Premises and other property assets not
constituting a part of the Premises provided that (i) each such
blanket policy, except in the case of liability insurance, shall
specify thereon the total insurance allocated to the Premises,
which amount shall be not less than that required hereunder, (ii)
each such blanket policy shall otherwise comply in all respects
with this Deed of Trust, and (iii) Beneficiary shall be named as
an additional insured under each such blanket policy to the extent
required hereunder.
(d) Additional Insured. All Policies of insurance provided for or
contemplated by Subsection 1.05(a), except for the Policy
referenced in Subsection 1.05(a)(iv), shall name Beneficiary and
Trustee as the insured or additional insured, as their respective
interests may appear, and in the case of property damage, boiler
and machinery, flood and earthquake insurance, shall contain a so-
called New York standard non-contributing mortgagee
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clause in favor of Beneficiary providing that the loss thereunder
shall be payable to Beneficiary notwithstanding the negligent or
willful acts of omissions of Grantor.
(e) Form and Endorsements. All Policies shall be in such form and
with such endorsements as are comparable to the forms of and
endorsements to the Policies in effect, on the date hereof or
otherwise in accordance with commercially reasonable standards
applied by prudent owners of assisted care facilities in the
general vicinity of the Mortgaged Property. A certificate of
insurance with respect to all such Policies has been delivered to
Beneficiary and originals or certified copies of all such Policies
shall be delivered to Beneficiary when the same are available and
shall be held by Beneficiary. All Policies shall contain: (i) to
the extent available at commercially reasonable rates, a waiver of
subrogation endorsement as to Beneficiary; (ii) a provision that
no Policy shall be impaired or invalidated by virtue of any act,
failure to act, negligence of, or violation of declarations,
warranties or conditions contained in such Policy by Grantor,
Beneficiary or Trustee or any other named insured, additional
insured or loss payee, except for the willful misconduct of
Beneficiary or Trustee knowingly in violation of the conditions of
such Policy; (iii) an endorsement providing for a deductible per
loss of an amount not more than that which is customarily
maintained by prudent owners of assisted care facilities in the
general vicinity of the Premises (but in no event greater than
$100,000); (iv) a provision that such Policies shall not be
canceled, terminated or expire without at lest thirty (30) days
prior written notice to Beneficiary in each instance; and (v) to
the extent Grantor determines such a waiver is available at
commercially reasonable rates, effective waivers by the insurer of
all claims for insurance premiums against all loss payees,
additional insureds and named insureds (other than Grantor).
Grantor shall deliver or cause to be delivered to Beneficiary (y)
not less than thirty (30) days prior to the expiration date of any
of the Policies required to be maintained hereunder, evidence
reasonably satisfactory to Beneficiary that such Policies will be
renewed or replaced and (z) prior to the expiration date of such
Policies, among other things, an original of the certificate of
insurance and evidence of payment of the applicable premium for
such renewal or replacement. Certified copies of such replacement
insurance policies shall be delivered to Beneficiary promptly
after Grantor's receipt thereof but in any case within thirty (30)
days after receipt thereof by Grantor. If Grantor fails to
maintain and deliver to Beneficiary the certificates of insurance
required by this Deed of Trust, Beneficiary may, in accordance
with the provisions hereof, procure such insurance at the expense
of Grantor, to be promptly reimbursed by Grantor.
Delivery of Statements. Grantor shall furnish to Beneficiary
annually a statement certified by Grantor or a duly authorized
officer of Grantor of the amounts of insurance maintained in
compliance herewith, of the risks covered by such insurance and of
the insurance company or companies which carry such insurance and,
if requested by Beneficiary, verification of the adequacy of such
insurance by an independent insurance broker or appraiser to
Beneficiary.
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(g) Protection of Beneficiary. If at any time Grantor fails to
maintain the insurance policies required hereunder, Beneficiary
shall have the right, without notice to Grantor, to take such
action as Beneficiary deems necessary to protect its interest in
the Premises, including, without limitation, the obtaining of such
insurance coverage as Beneficiary in its sole discretion deems
appropriate, and all reasonable expenses incurred by Beneficiary
in connection with such action or in obtaining such insurance and
keeping it in effect shall be paid by Grantor to Beneficiary upon
demand and until paid shall be secured by this Deed of Trust and
shall bear interest in accordance with Section 2.05(b) of the
Credit Agreement.
(h) Proceeds. All Insurance Proceeds shall be paid to Beneficiary
for application pursuant to Section 1.09. If the Mortgaged
Property shall be damaged or destroyed, in whole or in part, by
fire or other casualty, Grantor shall give prompt notice of such
damage to Beneficiary. Grantor shall promptly commence and
diligently prosecute the completion of the repair and restoration
of the Premises as nearly as possible to the condition the
Premises were in immediately prior to such fire or other casualty,
with such alterations as may be approved by Beneficiary (the
"Restoration") and otherwise in accordance with Section 1.09.
Grantor shall pay all costs of such Restoration whether or not
such costs are covered by insurance. Beneficiary may, but shall
not be obligated to make proof of loss if not made promptly by
Grantor. To the extent that the Insurance Proceeds received in
connection with such damage or destruction of the Mortgaged
Property are less than $15,000, then Grantor shall have the right
to use such Insurance Proceeds without Beneficiary's consent.
(i) Event of Foreclosure. In the event of foreclosure of this Deed
of Trust, or other transfer of title to the Premises in
extinguishment in whole or in part of the Obligations, all right,
title and interest of Grantor in and to such policies then in
force concerning the Premises and all proceeds payable thereunder
shall thereupon vest in the purchaser at such foreclosure or
Beneficiary or other transferee in the event of such other
transfer of title.
(j) No Separate Insurance. Grantor shall not carry separate or
additional insurance concurrent in form or contributing, in the
event of loss, with that required under the Credit Agreement
unless endorsed in favor of Beneficiary and Trustee as loss payee
or additional insured, as applicable, and otherwise applicable to
Beneficiary in all respects. Nothing contained herein shall
prohibit Grantor from holding or obtaining an owner's policy of
title insurance covering the Premises.
SECTION 1.06. Liens and Liabilities. (a) Discharge of Liens.
Grantor will pay, bond or otherwise discharge, from time to time
when the same shall become due, all claims and demands of
mechanics, materialmen, laborers and others which; if unpaid,
might result in, or permit the creation of, a lien on the
Mortgaged Property.
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(b) Creation of Liens. Grantor will not, without Beneficiary's
consent, create, place or permit to be created or placed or allow
to remain, and shall discharge and release within ten (10) days of
the placing thereof, any deed of trust, mortgage, trust deed,
voluntary or involuntary lien, security interest or other
encumbrance against or covering the Mortgaged Property, other than
Permitted Encumbrances, whether or not subordinate hereto.
(c) No Consent. Nothing in this Deed of Trust shall be deemed or
construed in any way as constituting the consent or request by
Trustee or Beneficiary, express or implied, to any contractor,
subcontractor, laborer, mechanic or materialman for the
performance of any labor or the furnishing of any material for any
improvement, construction, alteration or repair of the Premises.
Grantor further agrees that neither Trustee nor Beneficiary stands
in any fiduciary relationship to Grantor.
SECTION 1.07. Taxes and Other Charges. (a) Taxes on the Premises.
Grantor will promptly pay prior to delinquency and before any
penalty or interest may be added thereto, all taxes, assessments,
vault, water and sewer rents, rates, charges and assessments,
levies, permits, inspection and license fees and other
governmental and quasi-governmental charges and any penalties or
interest for non-payment thereof, heretofore or hereafter imposed,
or which may become a lien, upon the Mortgaged Property or arising
with respect to the occupancy, use or possession
thereof(collectively, "Impositions"). Grantor will also pay any
penalty, interest or cost for non-payment of Impositions which may
become due and payable.
(b) Receipts. Unless Grantor is making monthly deposits pursuant
to Section 1.08, Grantor will furnish to Beneficiary upon
Beneficiary's request, proof of payment at the time same is made,
and thereafter, upon receipt, validated receipts showing payment
in full of all Impositions.
(c) Increased Costs. In the event of the enactment after the date
hereof of any law in the state in which the Mortgaged Property is
located or any other governmental entity deducting from the value
of the Mortgaged Property for the purpose of taxation any lien or
security interest thereon, or changing in any way the laws for the
taxation of mortgages, deeds of trust or other liens or debts
secured thereby, or the manner of collection of such taxes, so as
to affect this Deed of Trust, the Obligations, Beneficiary or the
holders of the Obligations, then, and in such event; Grantor
shall, on demand, pay to Beneficiary or such holder, or reimburse
Beneficiary or such holder for payment of, all taxes, assessments,
charges or liens for which Beneficiary or such holder is or may be
liable as a result thereof, provided that if any such payment or
reimbursement shall be unlawful or would constitute usury or
render the Obligations wholly or partially usurious under
applicable law, then Beneficiary may, at its option, declare the
Obligations immediately due and payable or require Grantor to pay
or reimburse Beneficiary for payment of the lawful and non-
usurious portion thereof.
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SECTION 1.08. Tax and Insurance Deposits. (a) Amount of Deposits.
Beneficiary may require that each month Grantor deposit with
Trustee, Beneficiary or any service or financial institution
designated for such purposes by Beneficiary (whichever of the
foregoing is applicable being the "Depository"), one-twelfth
(1/12) of the annual Impositions and premiums for insurance
required under Section 1.05, and Grantor shall accordingly make
such deposits. In addition, if required by Beneficiary, Grantor
shall also deposit with the Depository a sum of money which,
together with the aforesaid monthly installments, will be
sufficient to make payments of Impositions and premiums at least
thirty (30) days before such payments are delinquent. If the
amount of any such payment is not ascertainable at the time any
such deposit is required to be made, the deposit shall be made on
the basis of Beneficiary's estimate thereof, and when such amount
is fixed for the then-current year, Grantor shall promptly deposit
any deficiency with the Depository.
(b) Use of Deposits. All funds so deposited, until so applied,
shall constitute additional security for the Obligations, shall be
held by the Depository with interest payable to Grantor (except to
the extent required under applicable law), may be commingled with
other funds of the Depository and, provided that no Event of
Default (as defined in Section 5.01) shall have occurred and be
continuing hereunder, shall be applied in payment of the aforesaid
amounts prior to their becoming delinquent. If an Event of Default
shall have occurred and be continuing hereunder, or if the
Obligations shall be accelerated as herein provided, all funds so
deposited may, at Beneficiary's option, be applied to the
Obligations in the order determined by Beneficiary. If such
deposits are being made with the Depository, at least fifteen (15)
days before the date on which such charges first become payable,
Grantor shall furnish the Depository with bills for the charges
for which such deposits are required to be made hereunder and/or
such other documents necessary for the payment of the same.
SECTION 1.09. Damage and Destruction. (a) Grantor's Obligations.
In the event of any damage to or loss or destruction of the
Premises, Grantor shall (i) promptly notify Beneficiary of such
event and take such steps as shall be necessary to preserve any
undamaged portion of the Premises and (ii) unless otherwise
instructed by Beneficiary, regardless whether the insurance
proceeds, if any, shall be sufficient for the purpose or shall be
otherwise applied by Beneficiary as provided herein, promptly
commence and diligently pursue to completion the restoration,
replacement and rebuilding of the Premises to the condition of the
Premises affected thereby immediately prior to such damage, loss
or destruction in accordance with plans and specifications
approved, and with other provisions for the preservation of the
security hereunder established, by Beneficiary.
(b) Trustee's and Beneficiary's Rights; Application of Proceeds.
In the event that any portion of the Premises is so damaged,
destroyed or lost, and such damage, destruction or loss is
covered, in whole or in part, by insurance required by Section
1.05, then, (i) Beneficiary or Trustee may, but shall not be
obligated to, make proof of loss if not made
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promptly by Grantor and is hereby authorized and empowered by
Grantor to settle, adjust or compromise any claims for damage,
destruction or loss thereunder, (ii) each insurance company
concerned is hereby authorized and directed to make payment
therefor directly to Beneficiary or Trustee; provided, however,
that if all of the conditions set forth in Section 1.09(c) are met
and Grantor delivers a written undertaking to expeditiously
commence and to satisfactorily complete with due diligence any
such damage or destruction in accordance with the terms hereof,
the insurance proceeds will be made available to Grantor in
accordance with Section 1.09(c).
(c) Proceeds for Restoration. Notwithstanding anything provided
herein to the contrary, if:
(i) less than (A) thirty percent (30%) of the Improvements and (B)
forty percent (40%) of the Land have been taken or destroyed;
(ii) no monetary Default or Event of Default has occurred and is
continuing hereunder or under any of the other Loan Documents and
has not been waived;
(iii) the Restoration can, in Beneficiary's judgment, with
diligent work, be completed prior to the expiration of business
interruption insurance required hereunder;
(iv) the taking, fire or casualty did not occur during the six (6)
months prior to the maturity of the Note;
(v) all necessary governmental approvals can be obtained for the
Restoration;
(vi) there are sufficient sums available (through insurance
proceeds or condemnation awards and contributions by Grantor, the
full amount of which shall have been deposited into an account
pledged to Beneficiary) for the Restoration (including, without
limitation, for any reasonable costs and expenses of Beneficiary
to be incurred in administering said restoration or repair) and
for payment of principal and interest to become due and payable
under the Note during the period necessary to complete the
Restoration;
(vii) Grantor so elects by written notice delivered to Beneficiary
within thirty (30) days after settlement of the aforesaid
insurance or condemnation claim; and
(viii) the Restoration is done and diligently completed by Grantor
in compliance with all applicable Laws,
then, Beneficiary shall, solely for the purposes of the
Restoration, release so much of the remainder of such sums as may
be required for the Restoration, and any funds deposited by
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Mortgagor therefor, to Mortgagor in the manner and upon such terms
and conditions as would be required by a prudent interim
construction lender, including, but not limited to, the prior
approval by Beneficiary of plans and specifications, contractors
and form of construction contracts and the furnishing to
Beneficiary of permits, bonds, lien waivers, invoices, receipts
and affidavits from contractors and subcontractors, in form and
substance reasonably satisfactory to Beneficiary in its reasonable
discretion, with any remainder being applied by Beneficiary, in
its sole discretion, for payment of the Obligations in whatever
order Beneficiary directs in its absolute discretion, with any
remainder being paid to Grantor.
(d) Effect on the Obligations. Notwithstanding any loss, damage or
destruction referred to in this Section, Grantor shall continue to
pay and perform the Obligations as provided herein. Any reduction
in the Obligations resulting from such application shall be deemed
to take effect only on the date of receipt by Beneficiary or
Trustee of such insurance proceeds and application against the
Obligations, provided that if prior to the receipt by Trustee or
Beneficiary of such insurance proceeds the Mortgaged Property
shall have been sold on foreclosure of this Deed of Trust, or
shall have been transferred by deed in lieu of foreclosure of this
Deed of Trust, Beneficiary shall have the right to receive the
same to the extent of any deficiency found to be due upon such
sale, with legal interest thereon together with attorneys' fees
and disbursements incurred by Trustee or Beneficiary in connection
with the collection thereof.
SECTION 1.10. Condemnation. (a) Grantor's Obligations;
Proceedings. Grantor, promptly upon obtaining knowledge of any
pending or overtly threatened institution of any proceedings for
the condemnation of the Premises, or of any right of eminent
domain, or of any other proceedings arising out of injury or
damage to or decrease in the value of the Premises, including a
change in grade of any street, will notify Beneficiary of the
threat or pendency thereof. Beneficiary may participate in any
such proceedings, and Grantor from time to time will execute and
deliver to Beneficiary all instruments requested by Beneficiary or
as may be required to permit such participation. Grantor shall, at
its expense, diligently prosecute any such proceedings, shall
deliver to Beneficiary copies of all papers served in connection
therewith and shall consult and cooperate with Beneficiary, its
attorneys and agents, in the carrying on and defense of any such
proceedings; provided that no settlement of any such proceeding
shall be made by Grantor without Beneficiary's consent.
(b) Trustee's and Beneficiary's Rights to Proceeds. All proceeds
of condemnation awards or proceeds of sale in lieu of
condemnation, and all judgments, decrees and awards for injury or
damage to the Premises (collectively, "Awards") are hereby
assigned and shall be paid to Beneficiary or Trustee. Grantor
authorizes Beneficiary and Trustee to collect and receive the
same, to give receipts and acquittances therefor, and to appeal
from any Awards.
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(c) Application of Proceeds. Beneficiary shall have the right to
apply any Awards, first, to reimburse Trustee and Beneficiary for
all costs and expenses, and, second, the remainder thereof in the
manner provided in Section 1.09. In the event that Grantor shall
have received all or any portion of such Awards, Grantor, upon
demand from Beneficiary, shall pay to Beneficiary or Trustee an
amount equal to the amount so received by Grantor, to be applied
as Beneficiary shall have the right pursuant to this subsection.
Notwithstanding anything herein or at law or in equity to the
contrary, none of the Awards paid to Beneficiary or Trustee under
this Section 1.10 shall be deemed trust funds and Beneficiary or
Trustee shall be entitled to apply the same as provided in this
Section 1.10.
(d) Effect on the Obligations. Notwithstanding any condemnation,
taking or other proceeding referred to in this Section 1.10,
Grantor shall continue to pay and perform the Obligations as
provided herein. Any reduction in the Obligations resulting from
such application shall be deemed to take effect only on the date
of receipt by Beneficiary or Trustee of such Awards and
application against the Obligations, provided that if prior to the
receipt by Trustee or Beneficiary of such Awards the Mortgaged
Property shall have been sold on foreclosure of this Deed of
Trust, or shall have been transferred by deed in lieu of
foreclosure of this Deed of Trust, Beneficiary shall have the
right to receive the same to the extent of any deficiency found to
be due upon such sale, with legal interest thereon together with
attorneys' fees and disbursements incurred by Trustee or
Beneficiary in connection with the collection thereof.
SECTION 1.11. Contest. Notwithstanding anything to the contrary
contained in Section 1.04(c),1.06 or 1.07, Grantor shall have the
right to contest in good faith and at its own expense the validity
or applicability of any duty or obligation described in Section
1.04(c), the validity of any lien, encumbrance, charge or security
referred to in Section 1.06 and any Imposition imposed upon the
Premises (a "Contest") by an appropriate legal proceeding which
proceeding must operate to prevent the collection of such
Impositions or other realization thereon and the sale or
forfeiture of the Mortgaged Property or any part thereof to
satisfy the same; provided that during the pendency of such
Contest, Grantor shall provide security satisfactory to
Beneficiary, assuring the discharge of Grantor's obligations that
are the subject of such Contest ("Contested Impositions") and of
any additional interest charge, penalty or expense arising fiom or
incurred as a result of such Contest; and provided, further, that
if at any time payment of such Contested Impositions shall become
necessary to prevent (i) the delivery of a tax deed conveying the
Mortgaged Property because of non-payment or (ii) the imposition
of any civil or criminal penalty or liability on Beneficiary,
Trustee or the holders of the Obligations, Grantor shall pay the
same in sufficient time to avoid the delivery of such tax deed or
the imposition of any such penalty or liability.
SECTION 1.12. Notice Limiting Amount. Grantor covenants that it
will not, without the prior written consent of Beneficiary, file
of record any notice limiting the maximum principal amount secured
by this Deed of Trust.
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ARTICLE II
Assignment of Leases, Rents and Other Sums
SECTION 2.01. Assignment. (a) Grantor hereby absolutely and
presently bargains, sells, transfers, assigns and sets over to
Beneficiary, as further security for the payment of the
Obligations, all of its right, title and interest in and to all
current and future Leases and Rents payable thereunder and all
rights of Grantor thereunder and any and all deposits held as
security under the Leases, whether before or after foreclosure or
during the full period of redemption, if any, and shall, upon
demand, deliver to Beneficiary an executed counterpart of each
Lease. The assignment of the Leases and Rents, and of the
aforesaid rights with respect thereto, is intended to be and is an
absolute present assignment from Grantor to Beneficiary and not
merely the passing of a security interest. Such assignment and
grant shall continue in effect until the Obligations are paid, the
execution of this Deed of Trust constituting and evidencing the
irrevocable consent of Grantor to the entry upon and taking
possession of the Premises by Beneficiary pursuant to such grant,
whether foreclosure has been instituted or not and without
applying for a receiver. Until the occurrence of an Event of
Default hereunder, Grantor shall be entitled to collect and
receive the Rents. Such right of Grantor to collect and receive
said Rents shall be automatically revoked upon the occurrence of
an Event of Default and thereafter Trustee or Beneficiary shall
have the right and authority to exercise any of the rights or
remedies referred to or set forth in Article V. In addition, upon
such an Event of Default, Grantor shall promptly pay to Trustee or
Beneficiary (i) all rent prepayments and security or other
deposits paid to Grantor pursuant to any lease assigned hereunder
and (ii) all charges for services or facilities or for escalation
which were paid pursuant to any such lease to the extent allocable
to any period from and after such Event of Default. Nothing
contained in this Section 2.01(a) shall be construed to bind
Beneficiary to the performance of any of the covenants, conditions
or provisions contained in any Lease or otherwise to impose any
obligation on Beneficiary (including any liability under the
covenant of quiet enjoyment contained in any Lease or under any
applicable law in the event that any tenant shall have been joined
as a party defendant in any action to foreclose this Deed of Trust
and shall have been barred and foreclosed thereby of all right,
title and interest and equity of redemption in the Premises),
except that Beneficiary shall be accountable for any money
actually received pursuant to such assignment. Grantor hereby
further grants to Beneficiary the right to notify the tenant under
any Lease of the assignment thereof and, after the occurrence of
an Event of Default hereunder (i) to demand that the tenant under
any Lease pay all amounts due thereunder directly to Beneficiary,
(ii) to enter upon and take possession of the Premises for the
purpose of collecting the Rents, (iii) to dispossess by the usual
summary proceedings any tenant defaulting in the payment thereof,
(iv) to let the Premises, or any part thereof, and (v) to apply
the Rents, after payment of all necessary charges and expenses, on
account of the Obligations.
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(b) If Grantor is not required to surrender possession of the
Premises hereunder in the event of any Event of Default, Grantor
will pay monthly in advance to Beneficiary, on its entry into
possession pursuant to Article V, or to any receiver appointed to
collect said Rents, the fair and reasonable rental value for the
use and occupation of the Premises or such part thereof as may be
in the possession of Grantor. Upon a default in any such payment,
Grantor will vacate and surrender such possession to Beneficiary,
Trustee or such receiver, and, in default thereof, may be evicted
by summary or any other available proceedings or actions.
(c) Grantor will, as and when requested from time to time by
Beneficiary, execute, acknowledge and deliver to Beneficiary, in
form approved by Beneficiary, one or more general or specific
assignments of the lessor's interest under any Lease. Grantor
will, on demand, pay to Beneficiary, or reimburse Beneficiary for
the payment of any costs or expenses incurred in connection with
the preparation or recording of any such assignment.
SECTION 2.02. Leases and Rents. (a) Grantor will (i) perform or
cause to be performed all the lessor's obligations under any
Lease, (ii) enforce (including the termination and cancellation of
any Lease, so long as the same is a bona fide enforcement of
Grantor's right as lessor under any such Lease and such
termination or cancellation, either by itself or in the aggregate
with other terminations and cancellations, will not diminish or
impair the security of this Deed of Trust) the performance by the
lessee under its respective Lease of all of said lessee's
obligations thereunder and (iii) give Beneficiary prompt notice
and a copy of any notice of default, event of default, termination
or cancellation sent or received by Grantor.
(b)(i) Grantor will not, without Beneficiary's consent, (1)
assign, mortgage, pledge or otherwise transfer, dispose of or
encumber, whether by operation of law or otherwise, any Lease or
the Rents, (2) accept or permit the acceptance of a prepayment of
any amounts payable under such Lease for more than one month in
advance of the due date therefor, (3) enter into, amend or modify
any Lease, (4) cancel, terminate or accept a surrender of any
Lease (5) enter into any Lease (A) with Grantor or any affiliate
of Grantor or its constituent partners or (B) which would be a
"disqualified lease", as defined in Section 168(h)(1)(B)(ii) of
the Internal Revenue Code of 1986, as amended. Grantor will not
enter into or amend, without Beneficiary's consent, any Occupancy
Agreement other than in the ordinary course of business for
prudent assisted living facilities. "Occupancy Agreement" means
any agreement by and between Grantor and any resident of the
Premises.
(ii) Supplementing the provisions of clause (i) of this Section
2.02(b), if the lessee under any Lease (or any receiver, trustee,
custodian or other party who succeeds to the rights of any lessee)
rejects or disaffirms such Lease pursuant to any Bankruptcy Law,
Grantor hereby assigns to Beneficiary the proceeds of any claims
(including the right to retain or apply any security deposits)
that Grantor may have against the lessee (or receiver, trustee,
custodian or other party who succeeds to the rights of any lessee)
and any guarantor of any of the Leases, under any one or more of
the Leases or any guaranty thereof based upon (1) any breach by
such
20
lessee of the terms and provisions of the applicable Lease
(including any claim that Grantor may have by reason of a
termination, rejection or disaffirmance of such Lease pursuant to
any Bankruptcy Law), and (2) the use and occupancy of the premises
demised thereby, whether or not pursuant to the applicable Lease
(including any claim for use and occupancy arising under any
Bankruptcy Law). Grantor, immediately upon obtaining knowledge of
any such breach or use by any such lessee, will notify Beneficiary
of any such breach or use. Upon the occurrence of an Event of
Default, Beneficiary shall have the sole right to elect, either:
(A) to proceed against such lessee or guarantor as if it were the
named lessor thereunder, in Grantor's name or in Beneficiary's
name as agent for Grantor and Grantor agrees to cooperate with
Beneficiary in such action and shall execute any and all documents
required in furtherance of such action; or
(B) to have Grantor proceed in Grantor's and Beneficiary's behalf
in which event Beneficiary may participate in any such
proceedings, and Grantor from time to time will deliver to
Beneficiary all instruments requested by Beneficiary or as may be
required to permit such participation. Grantor shall, at its
expense, diligently prosecute any such proceedings, shall deliver
to Beneficiary copies of all papers served in connection therewith
and shall consult and cooperate with Beneficiary, its attorneys
and agents, in the carrying on and defense of any such
proceedings; provided that no settlement of any such proceeding
shall be made by Grantor without Beneficiary's consent.
ARTICLE III
Additional Advances; Expenses; Indemnity
SECTION 3.01. Additional Advances and Disbursements. (a) Grantor
agrees that, upon the occurrence of an Event of Default, Trustee
or Beneficiary shall have the right without notice to Grantor to
advance all or any part of amounts owing or to perform any or all
required actions. No such advance or performance shall be deemed
to have cured such Default by Grantor or any Event of Default with
respect thereto. All sums advanced and all expenses incurred by
Trustee or Beneficiary in connection with such advances or
actions, and all other sums advanced or expenses incurred by
Trustee or Beneficiary hereunder or under applicable law (whether
required or optional and whether indemnified hereunder or not)
shall be part of the Obligations, shall bear interest at the
Default Rate and as provided in the Credit Agreement and shall be
secured by this Deed of Trust.
(b) This Deed of Trust secures not only existing indebtedness, but
also future or additional advances made pursuant hereto or to the
Credit Agreement, whether such advances are obligatory or
optional.
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SECTION 3.02. Other Expenses. Grantor will pay or, on demand,
reimburse Trustee, Beneficiary or any holder of the Obligations
for the payment of any and all costs or expenses (including
attorneys' fees and disbursements) incurred in connection with (i)
any default or Event of Default by Grantor hereunder, (ii) the
exercise or enforcement by or on behalf of Trustee, Beneficiary or
any holder of the Obligations of any of its rights or of Grantor's
obligations under the Loan Documents or (iii) the granting,
administration, enforcement and closing of the transactions
contemplated hereunder.
SECTION 3.03. Indemnity. Grantor agrees to indemnify and hold
harmless Trustee, Beneficiary, the holders of the Obligations and
their respective officers, directors, employees, agents and
shareholders (the "Indemnified Parties") from and against any and
all losses, damages, claims, costs and expenses (including
attorneys' fees and disbursements) which may be imposed on,
incurred by or asserted against any of the Indemnified Parties in
connection with any transaction in any way connected with the
Mortgaged Property or the Loan Documents, except to the extent any
such loss, damage, claim, cost or expense is the result of the
willful misconduct or gross negligence of the Indemnified Party.
Any amount payable under this Section 3.03 shall be deemed a
demand obligation, shall be added to and become a part of the
Obligations, shall bear interest at the rate and as provided in
the Credit Agreement, and shall be secured by this Deed of Trust.
Notwithstanding anything contained herein to the contrary, any
amount payable under Section 10.04(lb)(ii) of the Credit Agreement
shall be deemed a demand obligation, shall bear interest at the
rate provided in the Credit Agreement but shall not be secured a
obligation.
SECTION 3.04. Interest After Default. If any payment due hereunder
or under the other Loan Documents is not paid in full when due,
whether by acceleration or otherwise, then the same shall bear
interest hereunder at the Default Rate and as provided in the
Credit Agreement, and such interest shall be added to and become a
part of the Obligations and shall be secured hereby.
ARTICLE IV
Sale or Transfer of the Premises
SECTION 4.01. Continuous Ownership. Grantor acknowledges that the
continuous ownership of the Mortgaged Property by Grantor, except
as otherwise permitted in the other Loan Documents, is of a
material nature to the transaction hereinabove described and
Beneficiary's agreement to create the Obligations. Without
Beneficiary's prior written consent, Grantor will not, whether
voluntarily or involuntarily, (a) sell, grant, convey, assign or
otherwise transfer, by operation of law or otherwise, (b) permit
to be the subject of any transaction
22
described in clause (a) above, (c) enter into an agreement for any
transaction described in clause (a) above, or (d) grant an option
which or take any action which pursuant to the terms of any
agreement to which Grantor is a party may result in any
transaction described in clause (a) above of, the Mortgaged
Property, or any legal, beneficial or equitable interest therein,
other than any specific transfers permitted by the Credit
Agreement (the foregoing, collectively or severally,
"Transfer"). For purposes of this Deed of Trust, but without
limiting the foregoing, (i) the issuance of any equity interest in
Grantor (whether stock, partnership interest or otherwise) not in
accordance with and pursuant to the Credit Agreement, shall be
deemed a Transfer of the Mortgaged Property, (ii) a Transfer of
all or substantially all of the assets of Grantor shall be deemed
a Transfer of the Mortgaged Property, (iii) the execution and
delivery of any documentation relating to a proposed zoning lot
merger or the execution and delivery of any other documentation
effecting or purporting to effect, or the taking or suffering of
any other action effecting or purporting to effect, a transfer of,
or the granting of a right to utilize, any development rights
appurtenant to the Mortgaged Property shall be deemed a Transfer
of the Mortgaged Property, and (iv) any person or legal
representative of Grantor to whom Grantor's interest in the
Mortgaged Property passes by operation of law, or otherwise, shall
be bound by the provisions of this Deed of Trust. The provisions
of this Section shall apply to each and every such Transfer of all
or any portion of the Mortgaged Property or any legal or equitable
interest therein, regardless whether or not Beneficiary has
consented to, or waived by its action or inaction its rights
hereunder with respect to any previous Transfer of all or any
portion of the Mortgaged Property or any legal or equitable
interest therein.
SECTION 4.02. Intentionally Omitted.
ARTICLE V
Defaults and Remedies
SECTION 5.01. Events of Default. The term "Event of Default", as
used in this Deed of Trust, shall mean the occurrence of any of
the following events:
(a) if default shall be made in the payment, when and as the same
shall become due and payable, of any amounts required to be paid
under the Note, hereunder or under any other Loan Document,
whether of principal, interest within five (5) days after the same
becomes due, premium fee or otherwise, and whether on any stated
due date, upon demand, at maturity or upon acceleration;
(b) if default shall be made in the performance or observance of
any other term, covenant or agreement contained in this Deed of
Trust or in any other Loan Document; or
23
(c) if any Event of Default (as defined in the Credit Agreement)
occurs; or
(d) if Grantor abandons the Premises or ceases to do business or
terminates its business for any reason whatsoever; or
(e) if the Mortgaged Property shall be taken, attached or
sequestered on execution or other process of law in any action
against Grantor; or
if Grantor shall fail at any time to obtain, provide, maintain,
keep in force or, within ten (10) days after request therefor,
deliver to Beneficiary the insurance policies required by Section
1.05; or
(g) if any claim of priority (except a claim based upon a
Permitted Encumbrance) to this Deed of Trust or any other document
or instrument securing the Obligations by title, lien or otherwise
shall be upheld by any court of competent jurisdiction or shall be
consented to by Grantor; or
(h) if Grantor fails to cure any material default under any Lease
within the shorter of thirty (30) days following the giving of
notice of default by the lessor thereunder or the applicable grace
period set forth therein.
SECTION 5.02. Remedies. Upon the occurrence of any one or more
Events of Default, or any Transfer without the consent of
Beneficiary, Trustee or Beneficiary may, in addition to any rights
or remedies available to it hereunder or under the other Loan
Documents and to the extent permitted by applicable law, take such
action personally or by its agents or attorneys, with or without
entry, and without notice, demand, presentment or protest (each
and all of which are hereby waived), as it deems necessary or
advisable to protect and enforce its rights and remedies against
Grantor and in and to the Mortgaged Property, including the
following actions, each of which may be pursued concurrently or
otherwise, at such time and in such order as Trustee or
Beneficiary may determine, in its sole discretion, without
impairing or otherwise affecting its other rights or remedies:
(a) declare the entire balance of the Obligations to be
immediately due and payable, and upon any such declaration, the
entire unpaid balance of the Obligations shall become and be
immediately due and payable, without presentment, demand, protest
or further notice of any kind, all of which are hereby expressly
waived by Grantor, anything in any other Loan Documents to the
contrary notwithstanding; or
24
(b) institute a proceeding or proceedings, judicial or otherwise,
for the complete or partial foreclosure of this Deed of Trust in
any manner provided hereunder or under any applicable provision of
law; or
(c) sell the. Mortgaged Property, and all estate, right, title,
interest, claim and demand of Grantor therein, and all rights of
redemption thereof, at one or more sales, as an entirety or in
parcels, with such elements of real and/or personal property, and
at such time and place and upon such terms as it may deem
expedient, or as may be required by applicable law, and in the
event of a sale, by foreclosure or otherwise, of less than all of
the Mortgaged Property, this Deed of Trust shall continue as a
lien and security interest on the remaining portion of the
Mortgaged Property; or
(d) institute an action, suit or proceeding in equity for the
specific performance of any of the provisions contained in the
Loan Documents; or
(e) cause the Trustee to sell the Mortgaged Property in accordance
with the Trustee's power of sale contained herein and in
accordance with the Washington Deed of Trust Act, RCW Ch. 61.24,
as amended by Chapter 295, Laws of 1998. Following sale of the
Mortgaged Property pursuant to the Trustee's power of sale,
Grantor and any guarantor of the Loan secured hereby shall
continue to be liable for a deficiency to the extent permitted by
Chapter 295, Laws of 1998 or other applicable law. The power of
sale contained herein is not an exclusive remedy and Beneficiary
may foreclose this Deed of Trust judicially, in the same manner as
a mortgages, or ▇▇▇ directly on the Note or any guaranty in
accordance with applicable law.
enter upon the Premises, and exclude Grantor and its agents and
servants wholly therefrom, without liability for trespass, damages
or otherwise, and take possession of all books, records and
accounts relating thereto and all other Mortgaged Property, and
Grantor agrees to surrender possession of the Mortgaged Property
and of such books, records and accounts to Trustee or Beneficiary
on demand after the happening of any Event of Default; and having
and holding the same may use, operate, manage, preserve, control
and otherwise deal therewith and conduct the business thereof,
either personally or by its superintendents, managers, agents,
servants, attorneys or receivers, without interference from
Grantor; and upon each such entry and from time to time thereafter
may, at the expense of Grantor and the Mortgaged Properly, without
interference by Grantor and as Beneficiary may deem advisable, (i)
insure or reinsure the Premises, (ii) make all necessary or proper
repairs, renewals, replacements, alterations, additions,
betterments and improvements thereto and thereon and (iii) in
every such case in connection with the foregoing have the right to
exercise all rights and powers of Grantor with respect to the
Mortgaged Property, either in Grantor's name or otherwise; or
25
(g) with or without the entrance upon the Premises, collect,
receive, ▇▇▇ for and recover in its own name all Rents and cash
collateral derived from the Mortgaged Property, and after
deducting there from all costs, expenses and liabilities of every
character incurred by Trustee or Beneficiary in collecting the
same and in using, operating, managing, preserving and controlling
the Mortgaged Property, and otherwise in exercising Trustee's or
Beneficiary's rights under Subsection (of this Section, including
all amounts necessary to pay Impositions, insurance premiums and
other charges in connection with the Premises, as well as
compensation for the services of Trustee or Beneficiary and their
respective attorneys, agents and employees, to apply the remainder
as provided in Section 5.05; or
(h) release any portion of the Mortgaged Property for such
consideration as Beneficiary may require without, as to the
remainder of the Mortgaged Property, in any way impairing or
affecting the lien or priority of this Deed of Trust, or improving
the position of any subordinate lienholder with respect thereto,
except to the extent that the Obligations shall have been reduced
by the actual monetary consideration, if any, received by Trustee
or Beneficiary for such release and applied to the Obligations,
and may accept by assignment, pledge or otherwise any other
property in place thereof as Beneficiary may require without being
accountable for so doing to any other lienholder; or
(i) take all actions permitted under the UCC; or
(j) take any other action, or pursue any other right or remedy, as
Trustee or Beneficiary may have under applicable law, and Grantor
does hereby grant the same to Trustee or Beneficiary; or
In the event that Trustee or Beneficiary shall exercise any of the
rights or remedies set forth in subsections (f) and (g) of this
Section, Trustee or Beneficiary shall not be deemed to have
entered upon or taken possession of the Mortgaged Property except
upon the exercise of its option to do so, evidenced by its demand
and overt act for such purpose, nor shall it be deemed a
beneficiary or mortgagee in possession by reason of such entry or
taking possession. Neither Trustee nor Beneficiary shall be liable
to account for any action taken pursuant to any such exercise
other than for Rents actually received by Beneficiary, nor liable
for any loss sustained by Grantor resulting from any failure to
let the Premises, or from any other act or omission of Trustee or
Beneficiary except to the extent such loss is caused by the
willful misconduct or bad faith of Trustee or Beneficiary.
SECTION 5.03. Rights Pertaining to Sales. Subject to the
provisions or other requirements of law and except as otherwise
provided herein, the following provisions shall apply to any sale
or sales of all or any portion of the Mortgaged Property under or
by virtue of
26
this Article V, whether made under the power of sale herein
granted or by virtue of judicial proceedings or of a judgment or
decree of foreclosure and sale:
(a) Trustee or Beneficiary may conduct any number of sales from
time to time. The power of sale set forth in Section 5.02(c)
hereof shall not be exhausted by any one or more such sales as to
any part of the Mortgaged Property which shall not have been sold,
nor by any sale which is not completed or is defective in
Beneficiary's opinion, until the Obligations shall have been paid
in full.
(b) Any sale may be postponed or adjourned by public announcement
at the time and place appointed for such sale or for such
postponed or adjourned sale without further notice.
(c) After each sale, Beneficiary, Trustee or an officer of any
court empowered to do so shall execute and deliver to the
purchaser or purchasers at such sale a good and sufficient
instrument or instruments granting, conveying, assigning and
transferring all right, title and interest of Grantor in and to
the property and rights sold and shall receive the proceeds of
said sale or sales and apply the same as herein provided. Each of
Trustee and Beneficiary is hereby appointed the true and lawful
attorney-in-fact of Grantor, which appointment is irrevocable and
shall be deemed to be coupled with an interest, in Grantor's name
and stead, to make all necessary conveyances, assignments,
transfers and deliveries of the property and rights so sold, and
for that purpose Trustee and Beneficiary may execute all necessary
instruments of conveyance, assignment, transfer and delivery, and
may substitute one or more persons with like power, Grantor hereby
ratifying and confirming all that said attorney or such substitute
or substitutes shall lawfully do by virtue thereof. Nevertheless,
Grantor, if requested by Trustee or Beneficiary, shall ratify and
confirm any such sale or sales by executing and delivering to
Trustee, Beneficiary or such purchaser or purchasers all such
instruments as may be advisable, in Trustee's or Beneficiary's
judgment, for the purposes as may be designated in such request.
(d) Any and all statements of fact or other recitals made in any
of the instruments referred to in subsection (c) of this Section
5.03 given by Trustee or Beneficiary as to nonpayment of the
Obligations, or as to the occurrence of any Event of Default, or
as to Beneficiary having declared all or any of the Obligations to
be due and payable, or as to the request to sell, or as to notice
of time, place and terms of sale and of the property or rights to
be sold having been duly given, or as to the refusal, failure or
inability to act of Trustee, or as to the appointment of any
substitute or successor trustee, or as to any other act or thing
having been duly done by Grantor, Beneficiary, or by Trustee,
shall be taken as conclusive and binding against all persons as to
evidence of the truth of the facts so stated and recited. Trustee
or Beneficiary may appoint or delegate any one or more persons as
agent to perform any act or acts necessary or incident to any
27
sale so held, including the posting of notices and the conduct of
sale, but in the name and on behalf of Trustee.
(e) The receipt of Trustee or Beneficiary for the purchase money
paid at any such sale, or the receipt of any other person
authorized to receive the same, shall be sufficient discharge
therefor to any purchaser of any property or rights sold as
aforesaid, and no such purchaser, or its representatives, grantees
or assigns, after paying such purchase price and receiving such
receipt, shall be bound to see to the application of such purchase
price or any part thereof upon or for any trust or purpose of this
Deed of Trust or, in any manner whatsoever, be answerable for any
loss, misapplication or nonapplication of any such purchase money,
or part thereof, or be bound to inquire as to the authorization,
necessity, expediency or regularity of any such sale.
Any such sale or sales shall operate to divest all of the estate,
right, title, interest, claim and demand whatsoever, whether at
law or in equity, of Grantor in and to the properties and rights
so sold, and shall be a perpetual bar both at law and in equity
against Grantor and any and all persons claiming or who may claim
the same, or any part thereof or any interest therein, by, through
or under Grantor to the fullest extent permitted by applicable
law.
(g) Upon any such sale or sales, Beneficiary may bid for and
acquire the Mortgaged Property and, in lieu of paying cash
therefor, may make settlement for the purchase price by crediting
against the Obligations the amount of the bid made therefor, after
deducting therefrom the expenses of the sale, the cost of any
enforcement proceeding hereunder, and any other sums which Trustee
or Beneficiary is authorized to deduct under the terms hereof, to
the extent necessary to satisfy such bid.
(h) In the event that Grantor, or any person claiming by, through
or under Grantor, shall transfer or refuse or fail to surrender
possession of the Mortgaged Property after any sale thereof, then
Grantor, or such person, shall be deemed a tenant at sufferance of
the purchaser at such sale, subject to eviction by means of
forcible entry and unlawful detainer proceedings, or subject to
any other right or remedy available hereunder or under applicable
law.
(i) Upon any such sale, it shall not be necessary for Trustee,
Beneficiary or any public officer acting under execution or order
of court to have present or constructively in its possession any
of the Mortgaged Property.
(j) In the event a foreclosure hereunder shall be commenced by
Trustee or Beneficiary, Trustee or Beneficiary may at any time
before the sale of the Mortgaged Property abandon the sale, and
may institute suit for the collection of the Obligations and
28
for the foreclosure of this Deed of Trust, or in the event that
Trustee or Beneficiary should institute a suit for collection of
the Obligations, and for the foreclosure of this Deed of Trust,
Beneficiary may at any time before the entry of final judgment in
said suit dismiss the same and require Trustee or Beneficiary to
sell the Mortgaged Property in accordance with the provisions of
this Deed of Trust.
SECTION 5.04. Expenses. In any proceeding, judicial or otherwise,
to foreclose this Deed of Trust or enforce any other remedy of
Trustee or Beneficiary under the Loan Documents, there shall be
allowed and included as an addition to and a part of the
Obligations in the decree for sale or other judgment or decree all
expenditures and expenses (including, without, reasonable
attorney's fees) which may be paid or incurred in connection with
the exercise by Trustee or Beneficiary of any of its rights and
remedies provided or referred to in Section 5.02, or any
comparable provision of any other Loan Document, together with
interest thereon at the rate and as provided in the Credit
Agreement, and the same shall be part of the Obligations and shall
be secured by this Deed of Trust.
SECTION 5.05. Application of Proceeds. The purchase money,
proceeds or avails of any sale referred to in Section 5.02,
together with any other sums which may be held by Trustee or
Beneficiary hereunder, whether under the provisions of this
Article V or otherwise, shall, except as herein expressly provided
to the contrary, be applied as follows:
First: To the payment of the costs and expenses of any such sale,
including compensation to Trustee, Beneficiary, their agents and
counsel, and of any judicial proceeding wherein the same may be
made, and of all expenses, liabilities and advances made or
incurred by Trustee or Beneficiary hereunder, together with
interest thereon as provided herein, and all Impositions and other
charges, except any Impositions or other charges subject to which
the Mortgaged Property shall have been sold.
Second: To the payment in full of the monetary Obligations
(including principal, interest, premium and fees) in such order as
Beneficiary may elect.
Third: To the payment of any other sums secured hereunder or
required to be paid by Grantor pursuant to any provision of the
Loan Documents.
Fourth: To the extent permitted by applicable law, to be set aside
by Trustee or Beneficiary as adequate security in its judgment for
the payment of sums which would have been paid by application
under clauses First through Third above to Trustee or Beneficiary,
arising out of an obligation or liability with respect to which
Grantor has agreed to indemnify Beneficiary, but which sums are
not yet due and payable or liquidated.
29
Fifth: To the payment of any withholding tax requirements of the
Foreign Investment in Real Property Tax Act of 1980, as
amended.Sixth: To the payment of the surplus, if any, to
whomsoever may be lawfully entitled to receive the same.
SECTION 5.06. Additional Provisions as to Remedies. (a) No delay
or omission by Trustee or Beneficiary to exercise any right or
remedy hereunder upon any default or Event of Default shall impair
such exercise, or be construed to be a waiver of any such default
or Event of Default.
(b) The failure, refusal or waiver (by consent, waiver or
otherwise) of Trustee or Beneficiary to assert any right or remedy
hereunder upon any default or Event of Default or other occurrence
shall not be construed as waiving such right or remedy upon any
other or subsequent default or Event of Default or other
occurrence.
(c) Neither Trustee nor Beneficiary shall have any obligation to
pursue any rights or remedies it may have under any other
agreement prior to pursuing its rights or remedies hereunder or
under the other Loan Documents.
(d) Acceptance of any payment after the occurrence of any default
or Event of Default shall not be deemed a waiver or a cure of such
default or Event of Default, and acceptance of any payment less
than any amount then due shall be deemed an acceptance on account
only.
(e) In the event that Trustee or Beneficiary shall have proceeded
to enforce any right or remedy hereunder by foreclosure, sale,
entry or otherwise, and such proceeding shall be discontinued,
abandoned or determined adversely for any reason, then Grantor and
Beneficiary shall be restored to their former positions and rights
hereunder with respect to the Mortgaged Property, subject to the
lien hereof.
Each right of Trustee or Beneficiary provided for in this Deed of
Trust shall be cumulative and shall be in addition to every other
right provided for in this Deed of Trust or now or hereafter
existing at law or in equity, by statute or otherwise, and the
exercise by Trustee or Beneficiary of any one or more of such
rights shall not preclude the simultaneous or later exercise by
Trustee or Beneficiary of any other such right.
SECTION 5.07. Waiver of Rights and Defenses. To the full extent
Grantor may lawfully do so, Grantor agrees with Beneficiary as
follows:
30
(a) Grantor will not claim or take the benefit of any statute or
rule of law now or hereafter in force providing for any
appraisement, valuation, stay, extension, moratorium or
redemption, or of any statute of limitations, and Grantor, for
itself and its heirs, devisees, representatives, successors and
assigns, and for any and all persons ever claiming an interest in
the Mortgaged Property (other than Beneficiary and Trustee),
hereby waives and releases all rights of redemption, valuation,
appraisement, notice of intention to mature or declare due the
whole of the Obligations, and all rights to a marshaling of the
assets of Grantor, including the Mortgaged Property, or to a sale
in inverse order of alienation, in the event of foreclosure of the
liens and security interests created hereunder.
(b) Grantor shall not have or assert and hereby waives any right
under any statute or rule of law pertaining to any of the matters
set forth in subsection (a) of this Section 5.07, to the
administration of estates of decedents or to any other matters
whatsoever to defeat, reduce or affect any of the rights or
remedies of Trustee or Beneficiary hereunder.
SECTION 5.08. Exercise by Trustee. Notwithstanding anything herein
to the contrary, Trustee (a) shall not exercise, or waive the
exercise of, any of its rights or remedies hereunder (other than
its right to reimbursement) except upon the request of
Beneficiary, and (b) shall exercise, or waive the exercise of, any
or all of such rights or remedies upon the request of Beneficiary
and at the direction of Beneficiary as to the manner of such
exercise or waiver, provided that Trustee shall have the right to
decline to follow any of such request or direction if Trustee
shall be advised by counsel that the action or proceeding, or
manner thereof, so directed may not lawfully be taken or waived.
ARTICLE VI
Release of Lien
SECTION 6.01. Release of Lien. If(i) all of the Obligations have
been paid in full or (ii) Grantor shall have satisfied all of the
terms and conditions set forth in Section 8.01 of the Credit
Agreement with respect to the Mortgaged Property, then, and only
in such events, all rights and obligations hereunder (except for
the rights and obligations set forth in Section 3.03 and the
indemnities provided in the Loan Documents) shall terminate and
the Mortgaged Property shall become wholly released and cleared of
the liens, security interests, conveyances and assignments
evidenced hereby. In such event Beneficiary shall, at the request
of Grantor, execute and deliver to Grantor, in recordable form,
all such documents as shall be necessary to release the Mortgaged
Property, or a portion thereof, from the liens, security
interests, conveyances and assignments created or evidenced
hereby. Notwithstanding anything in the
31
preceding sentence to the contrary, Trustee shall so release the
Mortgaged Property only upon the direction of Beneficiary.ARTICLE
VIIAdditional Provisions
SECTION 7.01. Provisions as to Payments, Advances. To the extent
that any part of the Obligations is used to pay indebtedness
secured by any Permitted Encumbrance or other outstanding lien,
security interest, charge or prior encumbrance against the
Mortgaged Property or to pay in whole or in part the purchase
price therefor, Trustee or Beneficiary shall be subrogated to any
and all rights, security interests and liens held by any owner or
holder of the same, whether or not the same are released. Grantor
agrees that, in consideration of such payment by Trustee or
Beneficiary, effective upon such payment Grantor shall and hereby
does waive and release all demands, defenses and causes of action
for offsets and payments with respect to the same.
SECTION 7.02. Separability. If all or any portion of any provision
of this Deed of Trust or any other Loan Documents shall be held to
be invalid, illegal or unenforceable in any respect or in any
jurisdiction, then such invalidity, illegality or unenforceability
shall not affect any other provision hereof or thereof, and such
provision shall be limited and construed in such jurisdiction as
if such invalid, illegal or unenforceable provision or portion
thereof were not contained herein or therein.
SECTION 7.03. Notices. (a) Any notice, demand, consent, approval,
direction, agreement or other communication (any "Notice")
required or permitted hereunder or under any other documents
evidencing or securing the Note shall be in writing and shall be
validly given if mailed by United States mail, certified mail,
return receipt requested, postage prepaid, addressed as follows to
the person entitled to receive the same:
( 1 ) If to Grantor:
▇▇▇▇▇▇ ▇▇▇▇▇▇ Partners Limited Partnership
c/o Emeritus Corporation
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
32
and a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇
clo Emeritus Corporation
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
(2) If to Beneficiary:
Deutsche Bank AG, New York Branch
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
(3) If to Trustee:
Chicago Title Insurance Company
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Legal Department
Any Notice shall be deemed to have been validly given hereunder
when so mailed. Any person shall have the right to specify, from
time to time, as its address or addresses for purposes of this
Deed of Trust, any other address or addresses upon giving three
(3) days' notice thereof to each other person then entitled to
receive notices or other instruments hereunder.
SECTION 7.04. Right to Deal. In the event that ownership of the
Mortgaged Property becomes vested in a person other than Grantor,
Trustee and Beneficiary may, without notice to Grantor, deal with
such successor or successors in interest with reference to this
Deed of Trust or the Obligations in the same manner as with
Grantor, without in any way vitiating or discharging Grantor's
liability hereunder or for the payment of the Obligations or being
deemed a consent to such vesting.
SECTION 7.05. Continuation of Lease. (a) Upon the foreclosure of
the lien created hereby on the Mortgaged Property, as herein
provided, any leases then existing shall not be destroyed or
terminated as a result of such foreclosure unless Beneficiary or
any purchaser at a foreclosure sale shall so elect by notice to
the lessee in question.
33
(b) If both the lessor's and the lessee's interest under any lease
which constitutes a part of the Premises shall at any time become
vested in any one person, this Deed of Trust and the lien and
security interest created hereby shall not be destroyed or
terminated by the application of the doctrine of merger and, in
such event, Trustee and Beneficiary shall continue to have and
enjoy all of the rights and privileges of Trustee and Beneficiary
hereunder as to each separate estate.
(c) In the event that Grantor acquires the fee or any other
interest in any portion of the Land that is presently leased to
Grantor, such interest shall, immediately upon such acquisition,
become subject to the lien of this Deed of Trust as fully and
completely, and with the same effect, as though now owned by
Grantor and specifically described herein, without need for the
delivery and/or recording of a supplement to this Deed of Trust or
any other instrument.
SECTION 7.06. Applicable Law. This Deed of Trust shall be governed
by, and construed in accordance with, the laws of the State of
Washington.
SECTION 7.07. Sole Discretion of Trustee and Beneficiary. (a)
Whenever Trustee's or Beneficiary's judgment; consent or approval
is required hereunder for any matter, or either shall have an
option or election hereunder, such judgment, the decision whether
or not to consent to or approve the same or the exercise of such
option or election shall be in the sole discretion of Trustee or
Beneficiary, as the case may be.
(b) Notwithstanding anything contained herein to the contrary, in
the event that Trustee or Beneficiary fails or refuses to grant
consent or approval when required hereunder or under any other
Loan Document for any matter, the parties agree that the remedy of
specific performance shall be the sole remedy of Grantor with
respect to such actions and Trustor hereby waives all claims for
damages with respect thereto, unless a final nonappealable
judgment has been rendered against Beneficiary finding that
Beneficiary had acted in bad faith.
SECTION 7.08. Provisions as to Covenants and Agreements. All of
Grantor's covenants and agreements hereunder shall run with the
land and time is of the essence with respect thereto.
SECTION 7.09. Matters to be in Writing. This Deed of Trust cannot
be altered, amended, modified, terminated, waived, released or
discharged except in a writing signed by the party against whom
enforcement is sought.
SECTION 7.10. Submission to Jurisdiction. Without limiting the
right of Beneficiary to bring any action or proceeding against the
undersigned or its property arising out of or relating to the
Obligations (an "Action") in the courts of other jurisdictions,
Grantor hereby irrevocably submits to the jurisdiction of the
state court or Federal court in each jurisdiction in
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which the Mortgaged Property is located, and Grantor hereby
irrevocably agrees that any Action may be heard and determined in
such state or federal court. Grantor hereby irrevocably waives, to
the fullest extent that it may effectively do so, the defense of
an inconvenient forum to the maintenance of any Action in the
jurisdiction. Grantor hereby irrevocably agrees that the summons
and complaint or any other process in any Action in any
jurisdiction may be served by mailing to any of the addresses set
forth herein or by hand delivery to a person of suitable age and
discretion at any such address. Such service will be complete on
the date such process is so mailed or delivered.
SECTION 7.11. Construction of Provisions. The following rules of
construction shall be applicable for all purposes of this Deed of
Trust and all documents or instruments supplemental hereto, unless
the context otherwise requires:
(a) All references herein to numbered Articles or Sections or to
lettered Exhibits are references to the Articles and Sections
hereof and the Exhibits annexed to this Deed of Trust, unless
expressly otherwise designated in context. All Article, Section
and Exhibit captions herein are used for reference only and in no
way limit or describe the scope or intent of, or in any way
affect, this Deed of Trust.
(b) The terms "include", "including" and similar terms shall be
construed as if followed by the phrase "without being limited to".
(c) The terms "Land", "Leased Land", "Leasehold Estate",
"Improvements",
"Equipment", "Mortgaged Property" and "Premises" shall be
construed as if followed by the phrase "or any part thereof'.
(d) The term "Obligations" shall be construed as if followed by
the phrase "or any other sums secured hereby, or any part
thereof'.
(e) Words of masculine, feminine or neuter gender shall mean and
include the correlative words of the other genders, and words
importing the singular number shall mean and include the plural
number, and vice versa.
The term "person" shall include natural persons, firms,
partnerships,
corporations and any other public and private legal entities.
(g) The term "provisions", when used with respect hereto or to any
other document or instrument, shall be construed as if preceded by
the phrase "terms, covenants, agreements, requirements, conditions
and/or".
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(h) The cover page of and all recitals set forth in, and all
Exhibits to, this Deed of Trust are hereby incorporated in this
Deed of Trust.
(i) All obligations of Grantor hereunder shall be performed and
satisfied by or on behalf of Grantor at Grantor's sole cost and
expense.
(j) The term "lease" shall mean "tenancy, subtenancy, lease or
sublease", the term "lessor" shall mean "landlord, sublandlord,
lessor and sublessor" and the term
"lessee" shall mean "tenant, subtenant, lessee and sublessee".
(k) No inference in favor of or against any party shall be drawn
from the fact that such party has drafted any portion hereof.
(I) The term "Beneficiary and/or Trustee" shall be construed as if
followed by the phrase "as applicable".
SECTION 7.12. Successors and Assigns. The provisions hereof shall
be binding upon Grantor and the heirs, devisees, representatives,
successors and permitted assigns of Grantor, including successors
in interest of Grantor in and to all or any part of the Mortgaged
Property, and shall inure to the benefit of Trustee, Beneficiary,
the holders of the Obligations and their respective heirs,
successors, legal representatives, substitutes and assigns. Where
two or more persons have executed this Deed of Trust, the
obligations of such persons shall bejoint and several.
SECTION 7.13. Counterparts. This Deed of Trust may be executed in
counterparts, each of which shall be deemed to be an original, but
all of which shall constitute one and the same agreement.
SECTION 7.14. Agency. Beneficiary may deal with the Mortgaged
Property and may issue, or instruct Trustee to issue, as
applicable, any release to be given hereunder pursuant to Section
4.02 or 6.01 or grant any consent or approval or take any other
action, or instruct Trustee to take any other action, as
applicable, required or permitted hereunder, without reference to
or the approval of the holders of the Obligations and any third
party (including any title insurance company issuing a title
insurance policy, or a commitment to issue a title insurance
policy, in connection with the Mortgaged Property) may
conclusively rely on the due authority of Beneficiary (or Trustee,
if so instructed by Beneficiary) to do any or all of the
foregoing.
SECTION 7.15. The Security Agreement. In the event that a valid
and enforceable security interest has been created in any of the
Mortgaged Property under the terms of the Security Agreement (as
defined in the Credit Agreement) and the terms of the Security
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Agreement are inconsistent with the terms of this Deed of Trust,
then with respect to such Mortgaged Property, the terms of the
Security Agreement shall be controlling in the case of Equipment
and proceeds of insurance policies and the terms of this Deed of
Trust shall be controlling in all other cases.
ARTICLE VIII
Provisions as to Trustee
SECTION 8.01. Trustee's Appointment. Trustee may resign by an
instrument in writing addressed to Beneficiary, or Trustee may be
removed at any time with or without cause by an instrument in
writing executed by Beneficiary. In case of the death,
resignation, removal or disqualification of Trustee or if for any
reason Beneficiary shall deem it desirable to appoint a substitute
or successor Trustee to act instead of Trustee herein named or any
substitute or successor Trustee, then Beneficiary shall have the
right and is hereby authorized and empowered to appoint a
successor Trustee, or a substitute Trustee, without other
formality than appointment and designation in writing executed by
Beneficiary, and the authority hereby conferred shall extend to
the appointment of other successor and substitute Trustees
successively until the Obligations have been paid in full or until
the Mortgaged Property is sold hereunder. Such appointment and
designation by Beneficiary shall be full evidence of the right and
authority to make the same and of all facts therein recited. If
Beneficiary is a corporation or a national banking association and
such appointment is executed in its behalf by an officer of such
corporation or national banking association, such appointment
shall be conclusively presumed to be executed with authority and
shall be valid and sufficient without proof of any action by the
board of directors or any superior officer of the corporation or
national banking association. Upon the making of such appointment
and designation, all of the estate and title of Trustee in the
Mortgaged Property shall vest in the named successor or substitute
Trustee and it shall thereupon succeed to and shall hold, possess
and execute all the rights, powers, privileges, immunities and
duties herein conferred upon Trustee; but, nevertheless, upon the
written request of Beneficiary or of the successor or substitute
Trustee, Trustee ceasing to act shall execute and deliver an
instrument transferring to such successor or substitute Trustee
all of the estate and title in the Mortgaged Property of Trustee
so ceasing to act, together with all the rights, powers,
privileges, immunities and duties herein conferred upon Trustee,
and shall duly assign, transfer and deliver any of the properties
and moneys held by said Trustee hereunder to said successor or
substitute Trustee. All references herein to Trustee shall be
deemed to refer to Trustee (including any successor or substitute
appointed and designated as herein provided) from time to time
acting hereunder. Except as otherwise required by applicable law,
Trustee shall not perform any act or omit to act hereunder unless,
prior to such act or omission, Beneficiary delivers to Trustee
direction to so act or omit to act. Grantor hereby ratifies and
confirms any and all acts which
37
Tiustee herein named or its successor or successors, substitute or
substitutes, in this trust, shall do lawfully by virtue hereof.
SECTION 8.02. Exculpation. Trustee shall not be liable for any
error of judgment or act done by Trustee in good faith, or be
otherwise responsible or accountable under any circumstances
whatsoever, except for Trustee's gross negligence or willful
misconduct. Trustee shall have the right to rely on any
instrument, document or signature authorizing or supporting any
action taken or proposed to be taken by it hereunder, believed by
it in good faith to be genuine. All moneys received by Trustee
shall, until used or applied as herein provided, be held in trust
for the purposes for which they were received, but need not be
segregated in any manner from any other moneys (except to the
extent required by law), and Trustee shall be under no liability
for interest on any moneys received by it hereunder.
ARTICLE IX
Notices of Default
SECTION 9.01. Notices of Default. To the extent that the Mortgaged
Property is located in the State of California, Grantor hereby
requests that a copy of any Notice of Default and/or Notice of
Sale be sent to Grantor at Grantor's address set forth in Section
7.03 hereof.
ARTICLE X
Fixture Filing
SECTION 10.01. Fixture Filing. A portion of the Mortgaged Property
is or is to become fixtures upon the Premises. To the extent
permitted by applicable law, Grantor covenants and agrees that the
filing of this Deed of Trust in the real estate records of the
county in which the Mortgaged Property is located shall also
operate from the time of filing as a fixture filing with respect
to all goods constituting part of the Mortgaged Property which are
or are to become fixtures related to the real estate described
herein. For such purpose, the following information is set forth:
(a) Name and Address of Debtor:
▇▇▇▇▇▇ ▇▇▇▇▇▇ Partners Limited Partnership
c/o Emeritus Corporation,
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(b) Name and Address of Secured Party:
Deutsche Bank AG, New York Branch
38
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
(c) This document covers goods which are or are to become
fixtures.
(d) The real property on which the fixtures are or may be located
is described on Exhibit A.
(e) Grantor is the record owner of the real property.
(f) The fixture filing is to be recorded in the records of the
county where the real property is located.
ARTICLE XI
State Specific Clauses
SECTION 11.01. Washington. Grantor hereby represents and warrants
that, to the extent the Mortgaged Property is located in the State
of Washington, no part or portion of the Mortgaged Property is
used principally for agricultural or farming purposes.
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IN WITNESS WHEREOF, the undersigned has executed this Deed of
Trust the day first set forth above.
PLEASE BE ADVISED THAT ORAL AGREEMENTS OR ORAL
COMMITMENTS TO LOAN MONEY EXTEND CREDIT OR FORBEAR FROM ENFORCING
REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON LAW.
Signed, sealed and delivered in the presence of the
limited following witnesses:
/s/: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Name : ▇▇▇▇▇ ▇▇▇▇▇▇▇
/s/: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ PARTNERS LIMITED PARTNERSHIP
By: Columbia Pacific Master Fund 98 General Partnership, a
Washington general partnership, its general partner
By: Columbia Pacific Growth Fund 98 Limited
Partnership, a Washington limited partnership, its partner
By: B.F. Limited Partnership, a Washington limited partnership,
its general partner
By: Columbia Pacific Group, Inc., a Washington corporation. its
general partner
/s/: ▇▇▇▇▇▇ ▇. ▇▇▇▇
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: President
40
STATE OF WASHINGTON
COUNTY OF KING
I certify that I know or have satisfactory evidence that ▇▇▇▇▇▇ ▇.
▇▇▇▇ is the person who appeared before me, and said person
acknowledged that said person signed this instrument, on oath
stated that said person was authorized to execute the instrument
and acknowledged it as the President of Columbia Pacific Group,
Inc., the general partner of B.F. Limited Partnership, a
Washington limited partnership, the general partner of Columbia
Pacific Growth Fund 98 Limited Partnership, a Washington limited
partnership, the general partner of Columbia Pacific Master Fund
98 General Partnership, a Washington general partnership, the
general partner of ▇▇▇▇▇▇ ▇▇▇▇▇▇ Partners Limited Partnership, a
Washington limited partnership, to be the free and voluntary act
of such limited partnership for the uses and purposes mentioned in
the instrument.
Dated this 30th day of June, 1998
/s/: ▇▇▇▇▇▇ ▇▇▇
Name: ▇▇▇▇▇▇ ▇▇▇
(Signature of Notary)
Notary public in and for the state of Washington, residing at
Seattle
My appointment expires 01-05-02